India's Carbon Credit Trading Scheme (CCTS): Compliance Mechanism, Eligible Sectors and Timelines

What Is the Carbon Credit Trading Scheme (CCTS) and Why It Matters

India's Carbon Credit Trading Scheme (CCTS) is India’s first legislative compliance carbon market introduced through the Energy Conservation (Amendment) Act, 2022. CCTS India was notified in June 2023 and imposes legally mandated GHG emission intensity targets for energy-intensive industrial sectors. It also provides a regulatory marketplace for Carbon Credit Certificates (CCCs), each equal to one tonne of CO2 equivalent (tCO2e) below the facility’s target.

The CCTS India carbon credit market follows a “carbon intensity” baseline-and-credit approach. Instead of controlling total emissions, this scheme aims at limiting GHG Emission Intensity (GEI): tCO2e/unit of product. Facilities that outperform their targets earn CCCs, which they may sell. Those that fall short must purchase and surrender CCCs or face a statutory financial penalty.

With the carbon credit trading scheme in India covering over 700 million tCO2e, it places India among the world's largest emissions trading systems (ICAP, 2026). For obligated entities, CCTS readiness is now a direct legal obligation, not a future aspiration.

CCTS Background: From PAT Scheme to India's First Compliance Carbon Market

The Indian carbon compliance market started out with the implementation of the Perform, Achieve and Trade (PAT) scheme, which is a mandatory energy efficiency scheme that covers more than 1,000 units in 13 energy-intensive industries. ESCerts were awarded according to improvement in energy intensity under PAT.

The Carbon Credit Trading Scheme (CCTS) of India improves upon PAT because it focuses not on the improvement in energy efficiency, but in reduction of GHG emission intensity – as per India's Nationally Determined Contribution (NDC), which calls for a 45% reduction in GHG emission intensity relative to the 2005 level in 2030 and net zero emissions by 2070. CCCs in this case are different from ESCerts under PAT because they have a GHG accounting basis – compliant with Article 6 of the Paris Agreement.

The nine industrial segments under PAT which would move over to CCTS are aluminium, chlor-alkali, cement, fertiliser, iron and steel, pulp and paper, petrochemicals, petroleum refinery, and textile.

CCTS Compliance Mechanism vs Offset Mechanism: Core Differences

Eligible and Obligated Sectors Under CCTS

The carbon credit trading scheme covers nine energy-intensive sectors, accounting for approximately 16% of India's total GHG emissions (Carbon Market Network, 2026):

1. Aluminium (GEI reduction target: 2.8-7.06% over compliance period)

2. Cement (4.7-7.6%)

3. Chlor-Alkali (3.3-11%)

4. Pulp and Paper (up to 15%)

5. Petroleum Refinery

6. Petrochemicals

7. Textile

8. Iron and Steel (2-3% in FY 2025-26; 4-6% in FY 2026-27)

9. Fertiliser

As of March 2026, GEI targets are formally notified for all nine sectors under CCTS India, with approximately 490 entities across seven sectors holding active compliance obligations. Entities exceeding a prescribed energy consumption threshold within a notified sector are automatically designated as obligated entities.

Both obligated entities with surplus CCCs and non-obligated buyers must register on the ICM registry at the carbon credit exchange operated by Grid Controller of India Limited (GCIL) before trading begins.

CCTS Implementation Timeline and Key Phases

Key Stakeholders and Regulatory Framework

How Carbon Credit Certificates (CCCs) Are Issued, Traded, and Used for Compliance

Carbon credit trading process includes the issuance of CCCs for 1 ton of CO2 equivalent saved from the entity’s notified GEI target. It goes through a three-step process:

Issuance:

Required entities provide the ACVA-validated GHG emissions data (Form A) to the BEE annually on or before 31 July. Thereafter, BEE completes a data completeness check (within 10 working days) and a technical review (more than 30 days). The NSC-ICM suggests the issuance of CCCs, and BEE credits the CCCs into the ICM registry account of the required entity on the GCIL ICM.

Trading:

Trading of all CCCs takes place via power exchanges in India regulated by CERC. Over-the-counter trading is prohibited to achieve price transparency. CCCs can be stored indefinitely and be used to buy CCCs by those entities that have shortfalls.

Compliance and penalty:

Entities with a GEI shortfall must purchase and surrender sufficient CCCs by the compliance deadline. Failure triggers an environmental compensation of 2x the average market CCC price per unit of shortfall, enforced by CPCB. Early estimates place CCC prices at Rs 250 to Rs 1,500 per tonne (Indian Carbon Market, 2026).

CCTS Compliance Readiness: Step-by-Step Guide for Obligated Entities

Step 1:

Confirm applicability. Check if your industry belongs to any sector that is included under Section 8 (3) (a). You should check the gazette notification by MoEFCC and the ICM website by BEE.

Step 2:

Establish your GHG baseline. Developing a Baseline. Compute your GHG emissions for FY 2023-24 as tCO2e per unit of output, based on gate-to-gate methodology including Scope 1 and Scope 2 emissions.

Step 3:

Register on the ICM portal and GCIL registry. Obligated entities must register on the BEE ICM portal and on the GCIL ICM registry within four weeks of first CCC issuance.

Step 4:

Appoint an Accredited Carbon Verification Agency (ACVA). Select from BEE's empanelled ACVA list. Your ACVA verifies GHG data and prepares the Form A required for CCC issuance or shortfall identification.

Step 5:

Submit Form A by 31 July 2026. This is your annual GHG performance report for FY 2025-26. Missing this deadline triggers immediate CPCB enforcement action.

Step 6:

Develop a CCC trading strategy. If you project a shortfall, identify sellers on the carbon credit exchange and budget for CCC purchases. If you outperform your GEI target, plan to sell surplus CCCs and generate carbon market revenue.

How Oren Helps Companies Prepare for CCTS Compliance

The carbon credit trading scheme India is entering its first active compliance cycle, with the 31 July 2026 Form A deadline firmly approaching. Obligated entities that have not yet measured their FY 2023-24 GEI baseline, registered on the ICM portal, or appointed an ACVA are already behind schedule.

Oren provides end-to-end CCTS compliance advisory: GHG baseline measurement aligned with BEE's gate-to-gate methodology; ACVA coordination and Form A preparation; ICM portal and GCIL registry registration support; GEI gap analysis; and CCC trading strategy (buy, sell, or bank). Oren also designs MRV systems to sustain compliance through FY 2026-27 and beyond.

For entities outside the compliance mechanism, Oren's offset advisory supports voluntary project registration on the ICM portal, earning CCCs through BEE-approved methodologies, and accessing the carbon credit exchange as verified sellers.