India's Carbon Credit Trading Scheme (CCTS): status in 2026
The India carbon credit trading scheme (CCTS) is the country's domestic carbon market. Under its compliance mechanism, about 490 plants in seven energy-intensive sectors must cut their greenhouse gas emission intensity against plant-level targets for FY 2025-26 and FY 2026-27; plants that beat their targets earn carbon credit certificates, and plants that miss them must buy and surrender certificates. A separate offset mechanism lets non-obligated entities register projects and earn certificates.
Legal basis and who runs the scheme
The CCTS rests on the 2022 amendment to the Energy Conservation Act, 2001, which allowed the central government to set up a carbon credit trading scheme. The Ministry of Power notified the scheme in June 2023, and the Bureau of Energy Efficiency (BEE) published a detailed procedure for the compliance mechanism in 2024. Emission intensity targets are notified by the Ministry of Environment, Forest and Climate Change (MoEFCC) under the Environment (Protection) Act, 1986, through the Greenhouse Gases Emission Intensity Target Rules.
- National Steering Committee for the Indian Carbon Market — oversees the market, with representation from the power and environment ministries.
- BEE — administers the scheme: develops trajectories and targets, accredits verification agencies and issues certificates.
- Grid Controller of India (Grid-India) — operates the registry.
- Central Electricity Regulatory Commission (CERC) — regulates trading, which takes place on power exchanges.
The Indian Carbon Market portal, launched in March 2026, handles registration, monitoring and verification workflows and certificate issuance for both obligated and non-obligated entities.
The compliance mechanism
Sectors and entities notified
The CCTS is gradually replacing the Perform, Achieve and Trade (PAT) energy efficiency scheme for energy-intensive industry. GHG emission intensity targets have been notified in two rounds:
| Notification | Sectors | Obligated entities |
|---|---|---|
| October 2025 | Aluminium, cement, chlor-alkali, pulp and paper | 282 |
| January 2026 | Petroleum refining, petrochemicals, textiles, secondary aluminium | 208 |
| Draft (re-issued mid-2026) | Iron and steel | Not yet final |
| Pending | Fertilisers | Not yet notified |
That brings the total to about 490 obligated entities. Iron and steel, the largest industrial emitter, was still at draft stage at the time of writing, so steel producers should track the final notification closely.
GHG emission intensity targets
Targets are set per plant as tonnes of CO2 equivalent per unit of product, such as per tonne of cement or aluminium, with FY 2023-24 as the baseline year. Each obligated entity has a target for FY 2025-26 and a tighter one for FY 2026-27. Because targets are intensity-based, there is no absolute cap: a plant can grow output and still comply if its emissions per unit fall.
Coverage is broadly gate-to-gate: direct emissions from fuels and processes, plus indirect emissions from purchased electricity and certain imported or exported intermediate products. The gases currently in scope are CO2 and perfluorocarbons (PFCs).
Monitoring, reporting and verification
Each obligated entity monitors its emissions under a monitoring plan using BEE's templates, and its annual report must be verified by a BEE-accredited carbon verification agency. Reporting runs on the Indian fiscal year. For FY 2025-26, the first compliance year, the performance assessment was due by 31 July 2026.
Carbon credit certificates and trading
A carbon credit certificate (CCC) represents one tonne of CO2 equivalent. At the end of a compliance year, the gap between a plant's actual intensity and its target, multiplied by its output, determines its position:
- Surplus. A plant that beats its target receives CCCs from BEE. It can sell them or bank them for later years.
- Shortfall. A plant that misses its target must acquire and surrender CCCs to cover the gap.
- Penalty. Shortfalls that are not covered attract environmental compensation, which ICAP and other summaries describe as twice the average CCC trading price for that compliance year.
Certificates are not auctioned; supply comes only from over-achieving plants and, separately, from the offset mechanism. CERC notified its regulations on the purchase and sale of carbon credit certificates in February 2026, and trading takes place on India's power exchanges. With the first compliance year closed, the first trades were expected around October 2026. Check the latest CERC and exchange notices for current sessions and prices.
Illustrative example: a plant with a target of 0.60 tCO2e per tonne that achieves 0.58 on 1,000,000 tonnes of output would be eligible for about 20,000 certificates. At 0.62 it would need to surrender about 20,000.
The offset mechanism
The offset mechanism is voluntary and open to entities that are not obligated under the compliance mechanism. Project developers register activities under methodologies approved by BEE, have them validated and verified, and receive CCCs for the reductions or removals achieved. BEE has approved methodologies in areas such as green hydrogen, pumped hydro storage, industrial energy efficiency, biogas and mangrove afforestation; check the Indian Carbon Market portal for the current list. Offset certificates are not used to meet compliance obligations in the current design. The portal also supports registration of activities for cross-border crediting under Article 6 of the Paris Agreement.
For buyers of credits in the voluntary market, our guide to carbon credit quality explains how to assess projects.
What obligated entities should be doing now
- Reconcile your baseline. Make sure the FY 2023-24 data behind your target matches your own records, plant by plant.
- Track intensity monthly. Waiting for year end hides the trend. Monthly fuel, process, electricity and production data shows early whether you will be long or short.
- Keep evidence with each entry. Verifiers will trace figures back to meter readings, invoices and production logs.
- Fix your factors. Record which emission factors and versions were used, including for grid electricity, so the calculation can be reproduced.
- Decide a trading strategy. Whether to bank, sell or buy depends on your expected position over both compliance years, and on certificate prices once they are established.
- Align with BRSR and CBAM. The same plant data supports BRSR GHG disclosures and, for exporters, CBAM embedded emissions. Calculating them separately invites inconsistencies.
How EKOTRACE helps
EKOTRACE records fuel, process, electricity and production data at plant and process level, with evidence attached and maker-checker approval before any entry counts. Emissions are calculated with versioned emission factors, so a verifier can reproduce each figure, and intensity can be tracked monthly against your target. The same approved data feeds your corporate inventory, BRSR reporting and CBAM embedded emissions, and a carbon credits register keeps certificates and offsets in one place. See GHG accounting and compliance risk for more.
Frequently asked questions
When did carbon credit trading start in India?
The legal framework, registry and CERC trading regulations were in place by March 2026, and compliance obligations apply from FY 2025-26. The first certificates are issued after verification of that year, and trading on power exchanges was expected to begin around October 2026. Check CERC and exchange announcements for the latest position.
Which sectors are covered by CCTS?
Targets have been notified for aluminium, cement, chlor-alkali, pulp and paper, petroleum refining, petrochemicals, textiles and secondary aluminium, covering about 490 entities. Draft targets for iron and steel have been issued, and fertilisers are expected to follow.
Is CCTS a cap-and-trade system?
No. It is an intensity-based baseline-and-credit system. Each plant has a target for emissions per unit of product, so total emissions are not capped.
Can a company that is not obligated earn carbon credit certificates?
Yes, through the offset mechanism. A non-obligated entity can register an eligible project under a BEE-approved methodology and, after verification, receive certificates.
What happened to the PAT scheme?
The CCTS compliance mechanism is replacing PAT for the sectors where GHG intensity targets have been notified. Designated consumers in sectors without targets should check BEE guidance on how the transition applies to them.