The Carbon Credit Trading Scheme (CCTS) is India’s national carbon market framework, notified in June 2023 under the Energy Conservation (Amendment) Act, 2022.
It aims to reduce greenhouse gas (GHG) emissions by allowing entities to earn, trade, and purchase carbon credits — creating a market-based incentive for decarbonisation.
Key Objectives
- Promote cost-effective emission reduction across industries.
- Encourage investment in low-carbon and energy-efficient technologies.
- Help India achieve its Nationally Determined Contributions (NDCs) under the Paris Agreement.
- Move India toward its Net Zero by 2070 target.
Nodal Authorities
- Ministry of Power (MoP): Overall policy oversight.
- Bureau of Energy Efficiency (BEE): Scheme administrator and technical regulator.
- Central Electricity Regulatory Commission (CERC): Market regulator for carbon credit trading.
- Grid Controller of India: Responsible for registry and transaction platform operations.
How CCTS Works
- Carbon Credit Certificate:
- Issued to an entity that reduces or avoids carbon emissions through approved projects (renewable energy, energy efficiency, waste management, etc.).
- Trading Platform:
- Credits can be sold to entities exceeding emission limits or voluntarily offsetting emissions.
- Compliance vs Voluntary Market:
- Initially launched as a voluntary market, to later evolve into a compliance market with mandatory caps for sectors.
- Measurement, Reporting, Verification (MRV):
- Ensures transparency and integrity of emission reductions before credits are issued.
Sectors Covered (Initial Phase)
- Power generation and distribution
- Iron & steel
- Cement and fertiliser industries
- Refineries
- Transport
- Buildings and MSMEs (later phases)
Linkages and Evolution
- Builds on India’s existing market mechanisms such as:
- Perform, Achieve and Trade (PAT) scheme — energy efficiency in industries.
- Renewable Energy Certificates (REC) — renewable power generation.
- CCTS aims to integrate these existing mechanisms into a unified national carbon market.