India is poised to revolutionize its emissions management with the launch of a Carbon Credit Trading Scheme (CCTS), aimed at reducing greenhouse gas (GHG) emissions while sustaining economic growth. Set for implementation in 2026-27, the CCTS is a cornerstone of India’s carbon neutral strategy, providing a market-driven framework to incentivize industrial sustainability. 

The Bureau of Energy Efficiency (BEE) is leading the initiative, collaborating with sector-specific committees to monitor emissions from industries such as steel, cement, petrochemicals, and pulp and paper. These sectors will form the foundation of the program, with other industries gradually integrated over time. The initiative excludes the power generation sector initially, which emits 1.4 billion metric tons of CO2 annually—nearly half of India’s total GHG emissions of 2.9 billion metric tons in 2024. 

Under the scheme, companies exceeding their emission reduction targets will earn Carbon Credit Certificates (CCCs), which can be traded, fostering investments in cleaner technologies. Industries failing to meet their targets must purchase credits to offset excess emissions, driving compliance and innovation. However, carbon-neutral sources like biomass and renewable energy, as well as carbon capture technologies, are excluded from the credit calculations. 

The government plans to transition the existing Perform Achieve Trade (PAT) program into the CCTS, a move currently under discussion with stakeholders. Key elements, including CCC issuance, pricing, and validity, are under development to ensure smooth execution and long-term sustainability. 

India’s CCTS reflects its commitment to ESG principles by aligning industrial growth with environmental responsibility. As the world’s third-largest emitter of CO2, India’s strategic efforts could serve as a model for balancing climate action with economic development. This initiative reinforces its leadership in sustainable practices, advancing the global energy transition. 

Sources: 

https://energynews.pro/en/india-a-carbon-market-to-reduce-industrial-emissions/ 

https://www.spglobal.com/commodityinsights/en/market-insights/blogs/energy-transition/112124-charting-the-future-of-indias-carbon-market 

https://icapcarbonaction.com/en/news/india-adopts-regulations-planned-compliance-carbon-market 

https://www.investindia.gov.in/team-india-blogs/indias-carbon-market-revolution-balancing-economic-growth-climate-responsibility