India Finalizes Framework for Indian Carbon Market Under CCTS

The Government of India has finalised the framework for the Indian Carbon Market (ICM) under the Carbon Credit Trading Scheme (CCTS).

According to a written reply in the Lok Sabha by Minister of State for Power, Shripad Yesso Naik, the institutional structure for the carbon market will include a National Steering Committee, co-chaired by the Secretaries of the Ministry of Power (MoP) and the Ministry of Environment, Forest and Climate Change (MoEF&CC).

Under this setup, Grid India will function as the Registry, responsible for maintaining transaction records, while the Bureau of Energy Efficiency (BEE) will serve as the Administrator, overseeing the scheme’s design and implementation.

Two Mechanisms of Operation

The CCTS will operate through two distinct mechanisms – the Compliance Mechanism and the Offset Mechanism.

Compliance Mechanism: Under this route, emission-intensive industries designated as Obligated Entities must meet assigned Greenhouse Gas Emission Intensity (GEI) targets. Entities achieving better-than-required performance will be eligible for issuance of Carbon Credit Certificates (CCCs), which can be traded within the market framework.

Offset Mechanism: This mechanism allows Non-Obligated Entities to voluntarily register projects aimed at reducing, removing, or avoiding greenhouse gas emissions. Upon verification, these entities may also receive carbon credit certificates, providing a platform for voluntary climate action.

Transition from PAT Scheme

The government has also initiated the transition of specific industrial sectors from the existing Perform, Achieve and Trade (PAT) scheme to the Compliance Mechanism under the CCTS. The sectors include aluminium, cement, chlor-alkali, petrochemicals, petroleum refineries, pulp and paper, and textiles.

However, thermal power plants will continue to remain under the PAT scheme and have not been transitioned to the new carbon market mechanism.