New Delhi, 23 June 2025 — India is strengthening its commitment to decarbonization by building a structured carbon pricing ecosystem through the Carbon Credit Trading Scheme (CCTS). This marks a key milestone in the country’s transition toward a regulated carbon market under the broader Indian Carbon Market (ICM) framework.
Adopted in July 2024 under the Energy Conservation (Amendment) Act, 2022, the CCTS establishes a rate-based Emissions Trading System (ETS). Unlike traditional cap-and-trade systems, it sets emissions intensity benchmarks (performance standards) rather than absolute emission caps. This approach provides flexibility for economic growth while incentivizing efficiency improvements in energy-intensive industries.
The national ETS will initially cover nine high-emission industrial sectors, with Credit Certificates (CCC) issued to facilities that outperform their assigned emissions intensity benchmarks. Obligated entities can trade these credits to meet compliance requirements. The scheme includes both a compliance mechanism for designated industries and a voluntary offset mechanism open to projects in non-ETS sectors such as agriculture, forestry, and clean energy.
On 28 March 2025, the Ministry of Power approved eight crediting methodologies for voluntary carbon credits, covering areas including renewable energy, green hydrogen production, industrial energy efficiency, and mangrove afforestation/reforestation. A gradual transition from the existing Perform, Achieve and Trade (PAT) scheme to the new CCTS framework is underway throughout 2025.
Strategic Importance of CCTS
The CCTS positions India among leading emerging economies advancing carbon pricing, alongside countries like China, Brazil, and Indonesia. It supports key national goals, such as achieving 500 GW of non-fossil fuel capacity by 2030 and producing 5 million metric tonnes (MMT) of green hydrogen annually under the National Green Hydrogen Mission.
Governance is led by the National Steering Committee for the Indian Carbon Market (NSC-ICM) and the Bureau of Energy Efficiency (BEE) under the Ministry of Power. The scheme aims to mobilize private capital, enhance international competitiveness, and align with India’s climate commitments while balancing developmental priorities under the principle of Common but Differentiated Responsibilities (CBDR-RC).
As global scrutiny on carbon borders intensifies, India’s pragmatic, intensity-based approach is seen as a balanced pathway to drive sustainable industrial growth and contribute to global climate finance flows. Trading under the CCTS is expected to gain momentum in the coming months as infrastructure and verification systems mature.
Source. : PIB Carbon Pricing in India
