Carbon Credit Trading Scheme (CCTS) India Explained

India's first compliance carbon market is no longer a proposal. Under the Carbon Credit Trading Scheme, roughly 490 obligated entities across nine industrial sectors now carry binding greenhouse gas emission intensity targets, and the first compliance filings are due by 31 July 2026. Trading of carbon credit certificates is expected to follow within months.

Most coverage of the scheme stops at the announcement. What a sustainability or compliance head actually needs is the working detail: who is covered, how the two mechanisms operate, what a certificate is worth, and which dates matter.

This guide explains the carbon credit trading scheme end to end, from its legal basis to how certificates will change hands.

What is the carbon credit trading scheme (CCTS)?

The Carbon Credit Trading Scheme (CCTS full form) is India's compliance carbon market. Notified in June 2023 under the Energy Conservation (Amendment) Act 2022, it sets greenhouse gas emission intensity targets for industrial sectors and creates a tradeable instrument, the carbon credit certificate, for entities that beat or miss those targets.

In practical terms, the CCTS simply means: emit less per unit of output than your target and you earn certificates; emit more and you must buy them. The Bureau of Energy Efficiency (BEE) administers the scheme, and the market it creates is expected to cover more than 700 million tonnes of CO2e, which would place India among the largest emissions trading systems in the world.

Why India created the CCTS

India committed under its updated Nationally Determined Contribution to reduce the emissions intensity of GDP by 45 per cent by 2030, against a 2005 baseline. A market mechanism gives industry a price signal to find the cheapest reductions first, rather than forcing uniform cuts.

The carbon credit trading scheme India has adopted also consolidates two decades of experience with market instruments. The Perform, Achieve and Trade (PAT) scheme priced energy intensity from 2012 onwards. CCTS extends that logic from energy to greenhouse gases, and sectors are progressively moving from PAT cycles to CCTS targets. The legal foundation came with the Energy Conservation (Amendment) Act 2022, and the scheme itself was notified by the Ministry of Power in June 2023.

Who runs the scheme

Five institutions share responsibility for the Indian carbon market, each with a defined role.

The official Indian Carbon Market portal consolidates scheme documents, notified targets and registry information in one place.

The two CCTS mechanisms

The scheme operates through two channels: a mandatory compliance mechanism for notified industry, and a voluntary offset mechanism for everyone else.

The compliance mechanism

Obligated entities receive an emission intensity target, expressed as tonnes of CO2e per unit of output, for each compliance year. An entity that performs better than its target is issued carbon credit certificates for the difference. An entity that falls short must purchase and surrender certificates to cover the gap, or face environmental compensation under the Environment (Protection) Act 1986.

Because the CCTS compliance mechanism prices intensity rather than absolute emissions, a plant can grow output and still earn certificates, provided each unit is produced with lower emissions.

The offset mechanism

The CCTS offset mechanism allows entities without targets to participate voluntarily. A project developer registers an eligible project, has its emission reductions verified by an accredited agency, and receives certificates for the verified tonnes. Those certificates can then be sold to obligated entities that need them for compliance. This channel is how India's voluntary project pipeline connects to the compliance market. For the fundamentals of how credits are generated and valued, see our guide to carbon credits.

Obligated sectors and entities

Greenhouse gas emission intensity targets have been notified for nine sectors: aluminium, chlor-alkali, cement, fertiliser, iron and steel, pulp and paper, petrochemicals, petroleum refining and textiles. The Press Information Bureau announcement confirms the sector list and the target-setting approach.

The Greenhouse Gases Emission Intensity Target Rules 2025, notified by the Ministry of Environment, Forest and Climate Change, set entity-level targets for two compliance years, FY 2025-26 and FY 2026-27, with the second year's targets tightening on the first. The first cycle covers roughly 490 obligated entities. Each entity's target is specific to its baseline, so two cement plants can carry different numbers.

If your company sits outside the CCTS scheme's notified list today, the direction of travel matters. PAT began with eight sectors and expanded cycle by cycle. Building the measurement foundation before a mandate arrives is considerably cheaper than building it under one.

Carbon credit certificates (CCCs)

A carbon credit certificate is the currency of the scheme. One certificate represents one tonne of carbon dioxide equivalent reduced beyond the notified target. Certificates are issued by the administrator into the registry maintained by the Grid Controller of India.

Three properties define how certificates behave in practice. They are issued for overachievement, so supply depends on how aggressively industry beats its targets. They can be banked, so an entity can hold certificates against future compliance years. And they are surrendered for compliance, which retires them permanently.

How CCC trading works in India

Carbon trading in India will run through the power exchanges, under the regulatory oversight of the Central Electricity Regulatory Commission. Obligated entities with a surplus sell; entities with a shortfall buy. Price discovery happens on the exchange, the way it already does for energy saving certificates under PAT.

The first trading of carbon credit certificates is expected around October 2026, after the first compliance filings are assessed. Non-obligated buyers and the treatment of offset-mechanism credits on the exchanges will follow the detailed procedures published on the Indian Carbon Market portal.

CCTS compliance timeline

As of July 2026, the dates that matter are these:

CCTS vs PAT vs CBAM

Three instruments are often discussed together, and confusing them leads to bad planning. The comparison below separates them.

An Indian exporter in a sector such as steel or aluminium can face both carbon prices at once: CCTS targets at home and CBAM costs on European sales. Our guide to the Carbon Border Adjustment Mechanism covers the EU side in the same depth.

How Oren can help

Every obligation under the scheme reduces to one question: how precisely can you measure emissions per unit of output? GEI targets are won or lost on measurement quality, because certificates are issued and surrendered against verified intensity data. Oren's GHG accounting platform gives obligated entities an audit-ready emissions baseline, tracks intensity against notified targets through the year, and produces the evidence trail verifiers ask for. If CCTS compliance is on your desk for FY 2026-27, schedule a demo and we will walk through your sector's targets with you.

Key takeaways

The Carbon Credit Trading Scheme is India's compliance carbon market: notified in June 2023, administered by BEE, with binding emission intensity targets now live for roughly 490 entities across nine sectors.

Two mechanisms feed one registry. The compliance mechanism covers notified industry; the voluntary offset mechanism lets other entities earn certificates for verified reductions.

The near-term dates are concrete: Form A filings by 31 July 2026, first certificate trading expected around October 2026, and tighter FY 2026-27 targets already notified.

Entities that treat the scheme as a measurement problem first, and a trading problem second, will enter the market with certificates to sell rather than a shortfall to cover. That is where a reliable decarbonisation and data foundation pays for itself.