India’s Carbon Credit Trading Scheme: Sectors and Timeline
Why in the news
The Government was set to announce emissions intensity targets for nine industrial sectors by the end of February. Industries get one year to put compliance steps in place before trading can begin, expected by October 2026.
Key facts
- The Indian Carbon Market (ICM) is meant to cut, remove or avoid greenhouse gases. It asks for better efficiency, for example burning less coal per unit of steel, rather than simply capping output.
- Nine sectors covered: iron and steel, aluminium, chlor-alkali, cement, fertilizers, pulp and paper, petrochemicals, petroleum refineries and textiles.
- The Central Government will frame the trading scheme and the market supports India’s net-zero goal.
- Climate pledge: reduce emissions intensity of GDP by 45% from 2005 levels by 2030.
About the Carbon Credit Trading Scheme (CCTS)
CCTS is a market-based system to cut greenhouse gas emissions and help India meet its climate goals.
| Component | Role |
|---|---|
| Compliance mechanism | Obliges energy-intensive industries to reduce emissions |
| Offset mechanism | Encourages voluntary action by entities outside compliance |
| MRV | Measurement, Reporting and Verification for accurate, transparent compliance |
How credits work
- Entities emitting from fossil fuels must buy credits; those using non-fossil energy earn credits they can sell.
- Voluntary offsets such as afforestation projects also create credits, which may be sold internationally for compliance; an offsets scheme could start this year if rules are ready.
European vs Indian model
| Feature | European model | Indian model |
|---|---|---|
| Credit unit | One tonne of CO₂ avoided | Based on emissions intensity (GHG per unit of production) |
| Cap | Companies trade reductions beyond their caps | No direct cap; firms pushed to adopt cleaner technology |
Significance
- Cuts reliance on fossil fuels and helps industry meet global emission norms.
- Benefits cited: coastal protection, better farm productivity and biodiversity conservation.
Exam angle
- Abbreviations: ICM, CCTS, MRV.
- Expected start of trading: October 2026; target: 45% intensity cut by 2030.