In June 2026, India presented its Carbon Credit Trading Scheme (CCTS) at the WTO, demonstrating climate progress: 53.21% of electricity capacity now comes from non-fossil sources, and emission intensity of GDP has fallen by 37.38% against 2005 levels. The CCTS is an industrial policy aimed at establishing a domestic carbon market and protecting exporters from international carbon border taxes like the EU’s CBAM.
Institutional Governance
- Legislative Basis: Derived from the Energy Conservation (Amendment) Act, 2022, which empowers the government to mandate non-fossil energy use and establish a carbon market.
- NSCICM: The apex governance council co-chaired by the Secretaries of the Ministry of Power and MoEFCC.
- Bureau of Energy Efficiency (BEE): The central administrator responsible for setting sector-specific GHG intensity benchmarks.
- Market Regulators: The Grid Controller of India Limited (GCIL) acts as the registry operator, while the Central Electricity Regulatory Commission (CERC) regulates secondary trading.
Functional Mechanism
- Compliance: Targets 461 entities across nine energy-intensive sectors (e.g., steel, cement, petrochemicals).
- Trading: One Carbon Credit Certificate (CCC) equals the reduction of one tonne of CO2e. Overperforming facilities sell surplus credits to those that breach targets.
- Flexibility: Unlimited banking of surplus credits is permitted; borrowing future credits is prohibited.
IASPOINT Booster Facts
- CBAM Mitigation: By creating a domestic carbon price, India allows exporters to claim deductions against foreign levies, keeping tax revenues national.
- Green Hydrogen: MNRE mandates a maximum of 2 kg CO2e per kg of hydrogen for “Green” classification.
- Global Principles: India emphasizes CBDR-RC (Common but Differentiated Responsibilities and Respective Capabilities) and utilizes GATT Article XX for climate-related trade measures.
- Legal Status: CCCs are currently classified as regulatory compliance instruments, not financial derivatives.