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CCTS compliance carbon market
What it is
The Carbon Credit Trading Scheme, notified under the Energy Conservation (Amendment) Act 2022, is India's compliance carbon market. Obligated entities receive GHG intensity targets and surrender Carbon Credit Certificates, each one tonne of CO2 equivalent
Phase one covers 282 plants in aluminium, cement, chlor-alkali and pulp and paper, with steel, refining, fertilisers and textiles to follow. Trading is expected in H2 2026
Impact on industries
- Converts emissions intensity into a direct financial liability - FY26 reductions average roughly 2-3%, tightening to 3.3-7.5% and higher in FY27 by sub-sector
- Falls hardest on coal-based captive power users, so the cost advantage in ferro alloys, chlor-alkali and cement becomes a carbon cost
- Efficient plants can sell surplus certificates, so the scheme rewards the operators who already invested in energy efficiency and renewable captive capacity
- Unlimited banking lets surplus carry forward, and it is the domestic analogue of CBAM - a firm exposed to both faces carbon pricing twice on the same emissions