India Launches Carbon Credit Trading Scheme: What You Need to Know

As global efforts to combat climate change intensify, countries are adopting innovative frameworks to measure, manage, and reduce emissions. India has taken a significant step in this direction with the introduction of the Carbon Credit Trading Scheme (CCTS)—a market-based mechanism designed to support the nation’s climate goals while enabling sustainable economic growth.

What Is the Carbon Credit Trading Scheme (CCTS)?

The CCTS establishes a national framework that allows verified carbon credits to be traded across sectors. It enables organizations to monetize emission reductions and meet regulatory climate targets more efficiently. By combining regulatory oversight with market incentives, the scheme is poised to reshape how Indian businesses engage with climate action.

At its core, the CCTS aims to:

  · Cap emissions from high-emitting sectors.

   · Incentivize energy efficiency and low-carbon technologies.

   · Facilitate a cost-effective transition to sustainability.

   · Create a credible and transparent carbon market in India.

Key Features of the Scheme

1.      Dual Mechanism:
        The CCTS is built on two pillars:

                 a. Compliance Mechanism: Targets energy-intensive industries with binding emission reduction obligations.

                 b. Voluntary Offset Mechanism: Encourages other entities (not covered under compliance) to undertake greenhouse gas (GHG) reduction projects and earn tradable carbon credits.

2.      Institutional Framework:

                 a. Bureau of Energy Efficiency (BEE): Administers the scheme and develops technical standards.

                 b. Grid Controller of India: Manages the Indian Carbon Market (ICM) registry, where credits are recorded and tracked.

                 c. Trading Platform: Carbon Credit Certificates will be traded via electronic platforms such as power exchanges.

3.      Project Eligibility & Scope:

                 a. Carbon Projects must begin on or after January 1, 2025.

                 b. Eligible sectors (inthe first phase) include:

                       i. Energy

                      ii. Industry

                      iii. Agriculture

                      iv. Waste Management

                      v. Forestry

                      vi. Transport

                c. The scheme currently covers carbon dioxide (CO₂) and perfluorocarbons (PFCs), withscope to include additional GHGs in the future.

                d. It addresses both direct(Scope 1) and indirect (Scope 2) emissions.

How CCTS Enhances Credibility and Market Confidence

Unlike earlier voluntary programs, the CCTS is enforceable, and performance based. Carbon credits must be verified against national standards and independently audited by accredited third party before they can be issued and traded. This enhances transparency and trust—critical factors for attracting institutional investors and serious market participants.

Mandatory annual emissions reporting, evolving sectoral targets, and penalty provisions for non-compliance introduce a much-needed accountability structure into India’s carbon market.

Why This Matters for Investors and Sustainable Businesses

India’s CCTS is more than just a regulatory compliance tool—it is a strategic lever for:

   · Accessing new revenue streams through surplus credit sales.

   · Aligning with international ESG (Environmental, Social, Governance)expectations.

   · Attracting climate finance and green investment.

  · Gaining a competitive edge in sustainability performance.

As the market matures, it is expected to catalyze innovation, improve emissions transparency, and foster cross-sector collaboration.

Our Role at Green Story

At Green Story, we believe that combining robust regulation with traceable, data-driven storytelling is key to driving meaningful climate action. We partner with businesses to ensure their sustainability efforts are not only compliant but also credible and compelling to stakeholders. We also help clients with CCTS eligible carbon credits, where they can go for credible action towards climate mitigation.

Looking Ahead
India’s Carbon Credit Trading Scheme marks a transformative step toward a low-carbon economy.For forward-looking businesses, early engagement with the CCTS is not just a regulatory requirement—it’s a strategic investment in long-term resilience,reputation, and growth.

We're excited to build a future where climate action drives market leadership. For more information, please reach out to Green Story at connect@greenstory.io .

‍