CCTS: India's Carbon Credit Trading Scheme
How India's domestic carbon market works, who participates, and how companies can earn or buy credits
What is CCTS?
The Carbon Credit Trading Scheme (CCTS) is India's official carbon market, launched under the Energy Conservation Act, 2001 (amended 2022).
Simple Explanation — How it works:
- Government sets emission intensity targets for each industry
- Companies that beat their targets earn carbon credits
- Companies that miss targets must buy credits or pay penalty
- Credits are traded on power exchanges (IEX, PXIL, HPX) like commodities
Governed by
Bureau of Energy Efficiency (BEE)
Trading starts
Mid-2026 on NSE/BSE
First compliance year
2025–26
Who Must Participate? The 9 Sectors
490 "Obligated Entities" across 9 energy-intensive sectors:
Iron & Steel
~140 companies
Blast furnaces, electric arc furnaces, sponge iron
Cement
~56 companies
Clinker production (high process emissions)
Aluminum
~20 companies
Smelters, refineries, secondary aluminum
Pulp & Paper
~28 companies
Integrated mills
Chlor-Alkali
~38 companies
Caustic soda, chlorine production
Fertilizers
~11 companies
Ammonia, urea plants
Petroleum Refineries
~31 companies
Crude oil refining
Petrochemicals
~20 companies
Ethylene, polymers
Textiles
~31 companies
Integrated textile mills (spinning, weaving, dyeing)
Total: ~490 companies covering 700+ million tonnes CO₂/year
How It Works: Step by Step
1
Government Sets Targets
BEE assigns each company an emission intensity target based on industry type, production capacity, technology baseline, and historical performance.
2
Company Tracks Actual Emissions
Throughout the year, company measures fuel consumed, electricity used, process emissions, and total CO₂ generated — monthly, not yearly.
3
Calculate Surplus or Deficit
If actual emissions < target → Surplus = Carbon Credit Certificates (CCCs) earned.
If actual emissions > target → Deficit = Must buy CCCs.
4
Trading on Exchange
Surplus companies sell credits. Deficit companies buy credits. Price determined by market (supply & demand). Expected range: ₹400–600/credit.
5
Settlement (Sept 30 deadline)
Submit purchased credits for retirement. Or pay penalty = 2× average market price for the year. Non-negotiable.
Emission Intensity Targets by Sector
| Sector | Baseline (2023–24) | Target 2025–26 |
|---|---|---|
| Cement | 0.68–0.85 tCO₂/tonne cement | 3–5% reduction |
| Steel (Blast Furnace) | 2.90 tCO₂/tonne crude steel | 2–3% reduction |
| Aluminum (Smelter) | 16.98 tCO₂/tonne aluminum | 2.8–4% reduction |
| Textiles | 0.98–2.88 tCO₂/tonne fabric | 2–3% reduction |
Annual Compliance Cycle
April 1 – March 31
Compliance year runs
By April 30
Companies submit emissions data to BEE
By May 31
BEE verifies data, calculates surplus/deficit
By June 30
Credits issued to surplus companies
July – September
Trading period on NSE/BSE
By September 30
Deficit companies must settle or pay penalty
⚠️ Penalty
2× average market price of credits for the year. Non-negotiable. Example: If market price = ₹500/credit and you're short 100 credits → Penalty = ₹1,00,000 (vs ₹50,000 if bought on time).
Real-World Case Study: XYZ Cement Pvt Ltd
Baseline (2023–24)
Production: 180,000 tonnes/year
Intensity: 0.72 tCO₂/tonne
Total emissions: 129,600 tCO₂
After Investment
₹2 Cr waste heat recovery
₹1.5 Cr solar panels (1 MW)
New intensity: 0.65 tCO₂/tonne ✓
Financial Impact
7,200
Surplus credits earned
₹36 lakh
Credit revenue (@₹500)
₹80 lakh
Annual energy savings
Investment payback: 3 years
Not in the 490? You Can Still Participate
Voluntary Offset Projects
Generate credits through renewable energy, efficiency, afforestation. Sell on CCTS marketplace. Small solar farm (500 kW) = ~500–700 credits/year.
Supply Chain Programs
Large CCTS companies need Scope 3 reductions. Become their "verified low-carbon supplier." Earn supply contracts + possible credit revenue share.
Aggregators
Join cooperatives/aggregators pooling small projects. Combined credits sold on exchange. Lower transaction costs.
Future Inclusion
CCTS will expand to smaller thresholds. Start measuring now, be ready when mandatory.
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