Overview

Description

The Carbon Credit Trading Scheme (CCTS) was created through a 2022 amendment to the Energy Conservation Act, 2001, and notified by the government in June 2023. The detailed compliance regulations followed in July 2024. The scheme works as an intensity-based baseline-and-credit market where each obligated entity gets a target in tCO2e per unit of product, set for three years at a time. The CCTS builds on the existing Perform, Achieve and Trade (PAT) scheme, a mandatory energy efficiency program covering more than 1,000 entities across 13 energy-intensive sectors. A phased transition from PAT to the compliance mechanism began in 2025, with seven sectors (aluminium, cement, chlor-alkali, pulp and paper, petroleum refining, petrochemicals, and textiles) moving to the CCTS from FY2026. Targets for these sectors were notified in two phases: the first four sectors in October 2025, the remaining three in January 2026. Approximately 490 entities are covered under the first compliance period (FY2026–FY2027), using FY2024 emissions data as the baseline.

Recent Developments

In July 2024, the government adopted detailed regulations for the compliance mechanism under the CCTS, formally establishing it as an intensity-based baseline-and-credit system covering eight energy-intensive industrial sectors. Emissions intensity targets for seven sectors (aluminium, cement, chlor-alkali, pulp and paper, petroleum refining, petrochemicals, and textiles) were subsequently notified in two phases: October 2025 (first four sectors) and January 2026 (remaining three). Targets for iron and steel had not been notified as of February 2026. The first CCC trading cycle is expected to launch by mid-2026.

Coverage

Not Specified

Pricing and Allocation Approaches

Baselines (intensity)

Compliance Approaches

Not Specified

Relation to Other Compliance CPIs

Not Specified

Covered Sectors

Industry

Mining and extractives

Buildings