Carbon Credit Trading Scheme (CCTS) India Explained

India's first compliance carbon market now has a deadline attached. Under the Carbon Credit Trading Scheme, 490 obligated entities across eight carbon-intensive sector groups carry binding greenhouse gas emission intensity targets, the first compliance filings for FY 2025-26 are due by 31 July 2026, and draft targets for 255 iron and steel units would take coverage to roughly 745 entities once finalised.

Most coverage of the scheme stops at the announcement. This guide explains the carbon credit trading scheme end to end: who is covered, how the two mechanisms operate, what a certificate represents, and which dates matter.

What Is The Carbon Credit Trading Scheme (CCTS)?

The Carbon Credit Trading Scheme (CCTS) 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 scheme works on one rule: emit less per unit of output than your target and you earn certificates, while emitting more means you must buy them. The Bureau of Energy Efficiency (BEE) administers the scheme on behalf of the Ministry of Power.

Why India Created It

India committed under its updated Nationally Determined Contribution to cut the emissions intensity of GDP by 45 per cent by 2030, against a 2005 baseline. A market mechanism supports that commitment in two ways:

• It gives industry a price signal to find the cheapest reductions first, rather than forcing uniform cuts

• It builds on the Perform, Achieve and Trade (PAT) scheme, which has priced energy intensity since 2012

As sectors move from PAT cycles to CCTS targets, the same logic extends from energy to greenhouse gases.

Who Runs The Indian Carbon Market?

Five institutions share responsibility for the CCTS, each with a defined role.

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. On the other hand, 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 reductions verified by an accredited agency, and receives certificates for the verified tonnes, which can then be sold to obligated entities that need them for compliance. For the fundamentals of how credits are generated and valued, see our guide to carbon credits.

Which Sectors Have GEI Targets?

Targets arrived in two waves, and the distinction matters for planning:

• October 2025: the GEI Target Rules 2025, notified by the Ministry of Environment, Forest and Climate Change, set entity-level targets for aluminium, cement, chlor-alkali, pulp & paper and fertiliser, covering 282 entities

• January 2026: the Amendment Rules added petroleum refineries, petrochemicals, textiles and secondary aluminium, bringing 208 more entities into the framework

Together they cover 490 obligated entities, with targets set for FY 2025-26 and FY 2026-27 and the second year tightening on the first. Each entity's target is specific to its baseline, which means two cement plants can carry different numbers.

Iron and steel is the last major sector without final targets, though not for long: a revised draft notification issued in June 2026 proposes GEI targets for 255 units and is open for public comment. Once finalised, coverage rises to roughly 745 entities, which is why building the measurement foundation before the mandate lands is considerably cheaper than building it under one.

Carbon Credit Certificates and How Trading Works

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

Three properties define how certificates behave in practice:

• Issued for overachievement: so supply depends on how aggressively industry beats its targets

• Bankable: so an entity can hold certificates against future compliance years

• Surrendered for compliance: which retires them permanently

Carbon trading in India will run through the power exchanges under CERC oversight, the way energy saving certificates already trade under PAT. Entities with a surplus sell, entities with a shortfall buy, and price discovery happens on the exchange, with first trading expected around October 2026 once the initial compliance filings are assessed.

CCTS Compliance Timeline

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

CCTS vs PAT vs CBAM

Three instruments are often discussed together, and confusing them leads to bad planning.

An Indian exporter in a sector such as aluminium can face both carbon prices at once: CCTS targets at home and CBAM costs on European sales. Our guide to how the EU CBAM impacts India 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 baseline, tracks intensity against notified targets, and produces the evidence trail verifiers ask for. If CCTS compliance is on your desk for FY 2026-27, Schedule a Demo.