India Unveils Carbon Market Framework to Drive Industrial Decarbonisation

Ziraat Times Team Report

New Delhi, December 4:
The Government of India has formally established the framework for the Indian Carbon Market under the Carbon Credit Trading Scheme (CCTS), marking a major step toward industrial decarbonisation. The structure, announced by the Ministry of Power, aims to incentivise emission reduction across key sectors through a transparent, market-based mechanism.

According to details shared in the Lok Sabha by Minister of State for Power, Shri Shripad Yesso Naik, the institutional setup for the scheme includes a National Steering Committee co-chaired by the Secretaries of the Ministry of Power and the Ministry of Environment, Forest and Climate Change. Grid India will act as the Registry, while the Bureau of Energy Efficiency (BEE) will serve as the Administrator.

Dual Mechanisms Under the Scheme

The CCTS will operate through two key mechanisms:

• Compliance Mechanism:
  Emission-intensive industries designated as Obligated Entities must meet assigned Greenhouse Gas Emission Intensity (GEI) targets. Industries that surpass these targets will earn Carbon Credit Certificates, helping promote efficient and cleaner operations.

• Offset Mechanism:
  Non-obligated entities, including private and voluntary players, may register climate-friendly projects that reduce, remove or prevent greenhouse gas emissions. These projects will also be eligible for Carbon Credit Certificates.

Sectors Transitioned from PAT Scheme

Several major industrial sectors have now shifted from the Perform, Achieve and Trade (PAT) scheme to the CCTS Compliance Mechanism. These include:

• Aluminium

• Cement

• Chlor-alkali

• Petrochemicals

• Petroleum refineries

• Pulp & paper

• Textiles

The government clarified that thermal power plants have not been moved to the CCTS compliance framework.

A Push Toward Low-Carbon Growth

The new structure is expected to create a robust carbon market, driving industries to adopt cleaner technologies and more efficient processes. By rewarding performance and enabling voluntary climate action, the CCTS aims to accelerate India’s progress toward its national decarbonisation and climate commitments.

The announcement is part of India’s ongoing efforts under the Azadi Ka Amrit Mahotsav initiative to strengthen environmental governance and promote sustainable development.