BharatNotes What is Carbon Trading Scheme (CCTS)?
The Carbon Credit Trading Scheme (CCTS) is India's national framework for a domestic compliance carbon market, notified by the Ministry of Power in June 2023. It puts a price on greenhouse-gas (GHG) emissions through tradeable Carbon Credit Certificates (CCCs) and establishes the Indian Carbon Market (ICM). Its legal foundation is the Energy Conservation Act, 2001, as amended by the Energy Conservation (Amendment) Act, 2022, which empowered the government to specify carbon-credit certificates and the trading scheme.
CCTS supersedes the earlier Perform, Achieve and Trade (PAT) scheme, moving the focus from energy-savings to GHG emission-intensity targets. An amendment in December 2023 added an offset mechanism alongside the original compliance mechanism.
Two Mechanisms
| Mechanism | Who participates | How it works |
|---|---|---|
| Compliance | Designated "obligated entities" in energy-intensive sectors | MoEFCC notifies GHG emission-intensity targets (on recommendation of the Ministry of Power); entities beating their target earn CCCs, while those falling short must buy CCCs |
| Offset | Non-obligated entities (e.g. farming, forestry, waste) | Voluntary registration of projects that reduce, remove or avoid GHG emissions, earning CCCs for sale |
Institutional Framework
- Bureau of Energy Efficiency (BEE) — scheme administrator; accredits verification agencies and issues CCCs.
- Central Electricity Regulatory Commission (CERC) — regulator for trading, conducted via power exchanges.
- Grid Controller of India — operates the central registry of certificates and transactions.
- National Steering Committee for the Indian Carbon Market (NSCICM) — policy oversight, chaired by the Secretary, Ministry of Power, co-chaired by the Secretary, MoEFCC.
Current Status (as of June 2026)
Emission-intensity targets have been notified for seven energy-intensive sectors — aluminium, cement, chlor-alkali, pulp & paper, petroleum refining, petrochemicals and textiles — covering roughly 490 units. Targets for the first four sectors were notified in October 2025 and the remaining three in January 2026. The first compliance phase spans FY2026–FY2027, using FY2024 as the baseline year. Verified emission data must be submitted within four months of each compliance year's end. The first trading of compliance CCCs on power exchanges is expected around 2026.
Significance and Challenges
CCTS is central to India's climate strategy — supporting its Paris Agreement Nationally Determined Contributions (NDCs) and the net-zero-by-2070 goal — by creating market incentives to decarbonise heavy industry. It also aligns with Article 6 of the Paris Agreement on internationally transferred mitigation outcomes. Analysts have flagged concerns over price stability, the stringency of intensity targets versus absolute caps, robust Monitoring, Reporting and Verification (MRV), and avoiding the over-allocation pitfalls seen in the EU ETS. Its success will depend on credible target-setting and a liquid, transparent market.
UPSC Angle
Examiners favour CCTS for GS3 because it sits at the intersection of environment, economy and governance. Know the parent Act, the body that administers it (BEE), the regulator (CERC), and that it replaces PAT. For Mains, frame it within debates on carbon tax vs cap-and-trade and India's broader energy transition.
