India's landmark emissions trading system — a sectoral, Greenhouse-Gas Emissions Intensity (GEI) based carbon market covering 8 key industrial sectors. Transitioning from the PAT scheme to a comprehensive GHG emissions trading system, with FY 2025–26 as the first compliance year.
CCTS operates through two pillars under the Indian Carbon Market (ICM). The first — and currently active — is the Compliance Mechanism (mandatory). Obligated facilities receive Greenhouse-Gas Emissions Intensity (GEI) targets — measured as tCO₂e per unit of product output. Facilities that outperform earn Carbon Credit Certificates (CCCs); those that miss must purchase and surrender CCCs.
The second pillar is the Offset Mechanism (currently voluntary only). Non-obligated entities can register GHG reduction projects to earn CCCs under ICM governance. Critically, offset credits cannot be used to meet compliance obligations — the two pillars are separate.
Established under the Energy Conservation (Amendment) Act, 2022, the CCTS represents India's transition from the Perform, Achieve & Trade (PAT) energy efficiency scheme to a comprehensive GHG emissions trading system aligned with the Paris Agreement.
Governance is shared between the Ministry of Power, MoEFCC, and BEE, with Grid India operating the national registry. All CCCs sit in a single unified ICM registry, creating a common price signal across all notified sectors.
GEI targets are set for FY 2025–26 (1–3% reduction) and FY 2026–27 (2–8% reduction), using FY 2023–24 as the baseline. The scheme covers CO₂ and perfluorocarbons (PFCs). Targets are facility-specific, measured as tCO₂e per unit of product output.
The CCTS introduces a carefully structured market with specific rules for trading, banking, compliance, and penalties — designed to balance ambition with market stability. Credit supply comes entirely from obligated facilities that outperform their GEI targets.
Greenhouse-Gas Emissions Intensity (GEI) targets are set as tCO₂e per unit of output, not absolute caps. Facility-specific benchmarks allow production growth while driving efficiency improvements.
CCCs can be banked indefinitely and either sold on the market or used for future compliance. No borrowing against future allocations is permitted.
FY 2025–26 targets require 1–3% GEI reduction; FY 2026–27 ratchets to 2–8%. BEE will notify targets through 2030, tightening the trajectory over time.
All CCC trading takes place on supervised power exchanges. No OTC trading initially — ensuring price transparency and market integrity.
Non-obligated entities can register GHG reduction projects under ICM governance. Critical: offset credits cannot be used for mandatory compliance — the two pillars are separate and not interchangeable.
Facilities that fail to surrender required CCCs face a penalty of 2× the average CCC market price. This steep penalty creates strong incentive to comply or procure credits early.
TerraNova delivers finance-grade CCTS intelligence for Facility Managers, CFOs, and Group Sustainability Officers — from obligation tracking through credit strategy and compliance reporting.
Monitor your Greenhouse-Gas Emissions Intensity (GEI) against assigned targets at site and corporate level. Track facility-specific benchmarks, Form A submissions, and compliance deadlines as BEE publishes GEI targets for all 8 sectors.
Cross-map GEI performance with carbon pricing scenarios, PAT transition credits, and BEE funding opportunities. Adjusted MACC reveals where to decarbonise across your portfolio and what to prioritise for maximum impact.
Finance-grade MACC sheets for best-fit regional projects, adjusted for CCTS carbon costs, PAT incentives, and BEE targets. Ready-to-use abatement pathways costed for each facility through FY 2030.
Manage Carbon Credit Certificate (CCC) generation lifecycle — from project registration through monitoring to credit monetisation on power exchanges. Track GHG reduction tracking and PAT credit stacking.
5-year compliance forecasting as stringency ratchets (1-3% FY25-26 to 2-8% FY26-27). Buy/sell/bank CCC recommendations optimised across facilities for cost-effective compliance through 2030.
Track BEE regulatory updates, target notifications, CCC trading activity, and GEI benchmark changes. Cross-reference with EU ETS and CBAM exposure to manage international carbon risk and protect export markets.
The EU's Carbon Border Adjustment Mechanism (CBAM) imposes carbon costs on imports from countries without equivalent carbon pricing. Indian exporters in steel, aluminium, cement, and petrochemicals face real economic exposure. With CCTS compliance, Indian entities can demonstrate a domestic carbon price — potentially reducing CBAM exposure and protecting export market access.
Deep-dive analysis and regulatory updates on India's carbon market from our compliance markets team.
A comprehensive guide to the Carbon Credit Trading Scheme — how it works, who must comply, and why it matters.
Impact on Indian exporters in steel, aluminium, cement, and petrochemicals under the EU Carbon Border Adjustment Mechanism.
Compliance budgets, credit strategy, and capital allocation for India's new carbon trading regime.
Answers to the most common questions about India's Carbon Credit Trading Scheme, compliance requirements, and corporate obligations.
India's CCTS is a compliance carbon market established under the Energy Conservation (Amendment) Act, 2022. It mandates GHG emission intensity reduction targets for designated industrial sectors. Entities that outperform their targets earn carbon credits they can sell; those that fall short must purchase credits to comply.
The CCTS covers 8 industrial sectors initially: iron & steel, aluminium, cement, pulp & paper, chlor-alkali, petrochemicals, petroleum refining, and thermal power. These were selected based on their high GHG intensity and existing coverage under the PAT (Perform, Achieve, Trade) scheme. Additional sectors may be added in future compliance cycles.
The first compliance cycle is expected to begin in FY 2025-26. The Bureau of Energy Efficiency (BEE) under the Ministry of Power administers the scheme, with the Indian Carbon Market (ICM) serving as the trading platform. Entities should begin preparing their emissions baseline data now.
The scheme uses a GHG emission intensity-based target system. Each covered entity receives a benchmark target. If an entity reduces its GHG intensity below the target, it earns Carbon Credit Certificates (CCCs) which can be traded on the Indian Carbon Market. Entities exceeding their targets must purchase CCCs to meet compliance.
Credit pricing will be determined by market dynamics once trading begins. Analysts expect prices to be influenced by the stringency of sector-specific targets, the cost of abatement technologies, and overall market liquidity. The government may introduce a price floor or ceiling mechanism to ensure market stability.
The PAT scheme focused on energy efficiency with Energy Savings Certificates (ESCerts), while the CCTS targets direct GHG emission intensity reductions with Carbon Credit Certificates. CCTS has a broader scope covering all greenhouse gases (not just energy), stricter MRV requirements, and is designed to align India with global carbon market standards.
Climate Decode's TerraNova platform provides end-to-end CCTS support: emission reporting and MRV, GHG intensity benchmarking, decarbonisation planning with hotspot identification, and compliance strategy. The platform helps corporates understand their obligations, identify reduction opportunities, and develop optimal credit strategies across India's carbon market landscape.
See how TerraNova delivers finance-grade CCTS intelligence — from obligation tracking and CCC pricing to 5-year compliance forecasting and EU CBAM readiness.