Carbon Credit Trading Scheme (CCTS)

Carbon Credit Trading Scheme (CCTS) Latest News

Recently, the Indian government announced greenhouse gas emissions intensity targets for entities in eight of the nine heavy industrial sectors participating in the Carbon Credit Trading Scheme’s compliance mechanism.

What is CCTS?

• The Carbon Credit Trading Scheme (CCTS) is a market-based framework developed under the Indian Carbon Market (ICM) to regulate and trade carbon credits.
• It aims to accelerate India’s transition to a low-carbon economy by assigning a monetary value to greenhouse gas (GHG) emissions.
• Objective: The primary aim of CCTS is to decarbonise industrial sectors by shifting focus from energy efficiency (PAT Scheme) to GHG emissions intensity reductions.
• The CCTS is overseen by the Bureau of Energy Efficiency (BEE) and the National Steering Committee for Indian Carbon Market (NSCICM), ensuring transparent and accountable governance.

Transition from PAT to CCTS

• India’s earlier Perform, Achieve, and Trade (PAT) scheme emphasised energy efficiency improvements in energy-intensive sectors through Energy Saving Certificates (ESCerts).
• The CCTS supersedes PAT, focusing on direct GHG emissions intensity and issuing Carbon Credit Certificates (CCC), each representing 1 tonne of CO₂ equivalent reduced.
• Target sectors (Compliance Mechanism): CCTS mandates participation from eight high-emission sectors: aluminium, cement, pulp & paper, chlor-alkali, iron & steel, textiles, petrochemicals, and refineries. These sectors account for ~16% of India’s total GHG emissions.
• Power sector exclusion: The power sector, which contributes ~40% of India’s total GHG emissions, is currently excluded from the compliance mechanism but may be included in later phases.

Key Mechanisms under CCTS

• Compliance mechanism: Entities in obligated sectors must meet sector-specific emission intensity targets. Those who exceed targets earn tradable CCCs, while others must buy credits.
• Offset mechanism: Entities outside the compliance mandate can voluntarily participate by reducing emissions and earning carbon credits, promoting broader climate participation.
• Under its Nationally Determined Contributions (NDCs), India targets a 45% reduction in emission intensity of its GDP by 2030 (relative to 2005 levels). The CCTS is a key policy instrument toward achieving this goal.
• The eight sectors include aluminium, cement, paper and pulp, chlor-alkali, iron and steel, textiles, petrochemicals, and petro refineries.

Source: TH

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