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Power and Carbon Markets · Carbon MarketsIndia’s Carbon Credit Certificate Market: How CCC Trading Will Work Under the CCTS from 2026
When Shri Manohar Lal Ji inaugurated the Indian Carbon Market Portal at Prakriti 2026 in March 2026 and indicated that Carbon Credit Certificate trading would begin within four months, he signalled that India’s carbon market is no longer a policy blueprint — it is an operational institution that industry must engage with in real time. The CERC has already issued its Terms and Conditions for Purchase and Sale of Carbon Credit Certificates Regulations. The Grid Controller of India is building the registry. The floor price and forbearance band will be set. The first trades are expected by July 2026. This article explains what the market actually looks like, who participates, how prices form, and what the CBAM offset deduction means for Indian exporters once the market is live.
The Indian Carbon Market Portal was launched on March 21, 2026 at the Prakriti 2026 International Conference on Carbon Markets in New Delhi, inaugurated by Shri Manohar Lal Ji, Union Minister for Power. The portal (www.indiancarbonmarket.gov.in) is the central digital platform for administering India’s carbon market — including the CCTS compliance mechanism, the voluntary offset mechanism, and the registry interface for all market participants.
Carbon Credit Certificates (CCCs) will be traded exclusively on power exchanges — the Indian Energy Exchange (IEX), Power Exchange of India (PXIL), and Hindustan Power Exchange (HPX) — under CERC oversight, as specified in the CERC Terms and Conditions for Purchase and Sale of Carbon Credit Certificates Regulations 2026. No OTC (over-the-counter) trading is permitted in the initial phase. No derivatives or short selling are allowed. Trading is exchange-only, price-transparent, and centrally cleared.
The CCTS has two market segments operating on the same power exchanges: the compliance market for obligated entities (who buy CCCs to cover target shortfalls or sell CCCs from target outperformance); and the offset market for non-obligated entities (who earn CCCs by registering and executing projects under one of the eight BEE-approved voluntary methodologies). Both markets are live: BEE opened offset mechanism registrations in June 2025, and over 40 entities have registered projects in biogas, green hydrogen, and forestry as of March 2026.
CCC prices will be discovered on the power exchanges within a floor price and forbearance price band, which will be approved by CERC based on a proposal submitted by BEE. These price bands — analogous to the floor and forbearance prices in India’s REC market — are not yet set as of March 2026. Their design will be one of the most consequential regulatory decisions for the CCTS’s initial price signal. IEEFA analysis warns that an intensity-based system with moderate initial targets and unlimited banking may produce weak price signals in early years unless the band is set with genuine ambition.
Each CCC represents one tonne of CO₂ equivalent reduced or avoided. CCCs are issued by BEE, registered in the Grid Controller of India’s ICM Registry, and tagged with their vintage year. Unlimited banking is permitted — entities that earn CCCs in early years can hold them for future compliance. Borrowing is not permitted. CCCs must be formally retired upon use for compliance, preventing double-counting. CCCs are not classified as financial instruments in the initial phase of the CCTS.
CBAM’s Article 9 offset deduction mechanism would allow Indian exporters to deduct the carbon price paid under the CCTS from their CBAM certificate obligation when exporting to the EU. Formal activation requires EU recognition of the CCTS as an equivalent carbon pricing mechanism — which is being advanced through the India-EU FTA technical working group on CBAM and carbon pricing. Once recognised, this linkage would make the CCTS directly relevant to India’s export competitiveness in EU markets for steel, aluminium, fertilisers and other CBAM-covered sectors.
The market structure — two segments, one infrastructure
India’s carbon market is architecturally different from cap-and-trade systems like the EU ETS. It does not set an absolute cap on total emissions; instead it sets emission intensity targets for each obligated entity — defined as tonnes of CO₂ equivalent per unit of output. Entities that reduce their emission intensity below the target generate a surplus and earn CCCs. Entities that exceed their target must acquire and surrender CCCs to cover the shortfall. The market price emerges from the interaction between these surplus sellers and deficit buyers on the power exchanges.
Within this architecture, the CCTS operates two distinct but interconnected market segments. Understanding the difference between them is essential for any entity considering market participation — whether as a CCTS-obligated industrial plant, a voluntary project developer, or an investor in the nascent carbon market ecosystem.
The two-segment design is deliberate and important. The compliance market creates a mandatory price signal driven by industrial necessity — obligated entities must either perform or purchase, creating genuine demand for CCCs. The voluntary offset market creates a broader ecosystem where non-obligated actors can participate — bringing liquidity, generating credits from new sectors (agriculture, forestry, MSMEs), and building the institutional infrastructure (verification agencies, project developers, registrars) that any mature carbon market requires.
One critical design parameter that will materially affect market dynamics: as of March 2026, offset-sector CCCs cannot be used by obligated entities to meet compliance obligations. If this restriction remains, the compliance and voluntary markets will trade separately at potentially different price levels. If it is relaxed in future (which IETA and other observers expect), the two markets will converge and mutual liquidity will deepen the price signal.
The institutional architecture — who does what
The CCTS involves an unusually large number of institutions for a single market, each with distinct and non-overlapping roles. Clarity on the institutional structure is essential for any entity engaging with the market.
| Institution | Role in CCTS | Key authority |
|---|---|---|
| Ministry of Power (MoP) | Overall policy authority, leads implementation, defines emission targets, chairs National Steering Committee | Energy Conservation Act 2001 (as amended 2022) |
| Ministry of Environment, Forest and Climate Change (MoEFCC) | Notifies legally binding GHG emission intensity targets for each sector; ensures Paris Agreement alignment | Environment Protection Act 1986 |
| Bureau of Energy Efficiency (BEE) | CCTS administrator — identifies sectors, develops targets, issues CCCs, accredits ACVAs, maintains digital infrastructure, monitors compliance, monitors transparency in CCC trading | Energy Conservation Act 2001 |
| Grid Controller of India (GCI) | Operates the ICM Registry — the ledger where all CCCs are issued, held, transferred and retired; provides interface between registry and power exchanges | CCTS 2023 |
| CERC | Regulates all CCC trading activity on power exchanges; approves exchange business regulations; provides market oversight; sets floor price and forbearance band (based on BEE proposal); prevents fraud and market manipulation | CERC Terms and Conditions for Purchase and Sale of CCCs Regulations 2026 |
| Power Exchanges (IEX, PXIL, HPX) | Provide the electronic trading platforms for CCC transactions; ensure price discovery; submit to CERC oversight | CERC Power Market Regulations |
| Accredited Carbon Verification Agencies (ACVAs) | Independently verify obligated entities’ MRV data and offset project performance; required for CCC issuance under both compliance and offset mechanisms | BEE accreditation framework |
| National Steering Committee (NSCICM) | Policy direction body — recommends procedures, rules, regulations and sector-specific targets to BEE; chaired by Secretary, Ministry of Power | CCTS 2023 |
The implementation timeline — from blueprint to live market
Carbon Credit Trading Scheme 2023 notified under the Energy Conservation (Amendment) Act 2022. Legal framework established, transitioning from PAT to CCTS.
The operational roadmap for the compliance market — registration, MRV, CCC issuance, banking, surrender — published by BEE. The governing document for obligated entities.
MoEFCC notified emission intensity targets in two tranches — April 2025 (aluminium, cement, chlor-alkali, pulp and paper) and June 2025 (iron and steel, fertiliser, petroleum refining, petrochemicals, textiles). Final notification October 8, 2025. Approximately 740 entities now have legally binding targets.
BEE opened registration for non-obligated entities under the offset mechanism. Eight methodologies approved: renewable energy, green hydrogen, industrial energy efficiency, landfill methane, mangrove afforestation, RE with storage, offshore wind, compressed biogas.
BEE published a list of provisionally eligible Accredited Carbon Verification Agencies and invited stakeholder comments (letter dated January 2, 2026). ACVAs are critical for MRV credibility in both compliance and offset mechanisms.
CERC issued the CCC trading regulations. Indian Carbon Market Portal (www.indiancarbonmarket.gov.in) launched at Prakriti 2026 by Shri Manohar Lal Ji. 40+ offset entities registered. First compliance year (FY 2025-26) underway with FY 2023-24 baseline. Shri Manohar Lal Ji indicated trading within four months.
First CCC trades expected on IEX, PXIL and HPX. Floor price and forbearance band to be set by CERC. Surplus-earning entities from FY 2025-26 performance can begin selling; deficit entities can begin covering shortfalls.
Second compliance year targets are materially more demanding (3–7% reductions vs 2–3% in year one). As abatement costs rise and easier reductions are exhausted, CCC demand should strengthen and price discovery should improve.
How CCC prices will form — and why the initial signal may be weak
The CCC price emerges from demand and supply dynamics on the power exchange. Demand comes from obligated entities whose emission intensity exceeds their target and who must purchase CCCs to comply. Supply comes from over-achieving obligated entities (compliance surplus) and from offset market project developers (voluntary CCCs). The equilibrium between these two sides determines the market price — within the floor and forbearance price band set by CERC.
IEEFA’s analysis of the CCTS design identifies two structural features that may suppress the initial price signal. First, the intensity-based architecture allows total emissions to grow as output grows — meaning that a rapidly expanding industry can increase absolute emissions while still earning CCCs if its per-unit intensity improves faster than the target requires. This is appropriate for a fast-growing economy but means the compliance market’s demand side may be softer than it would be under a hard cap. Second, the initial targets for FY 2025-26 are relatively modest — 2 to 3% reduction for most sectors — meaning that many entities may outperform easily without significant abatement investment, producing more CCCs than the market needs in the early years. Combined with unlimited banking (which allows over-performers to accumulate CCCs indefinitely), the early market may face oversupply conditions.
IEEFA recommends that BEE propose a Price or Supply Adjustment Mechanism (PSAM) to CERC — a rule-based, transparent tool for adjusting CCC supply when prices fall below a trigger threshold, analogous to the Market Stability Reserve used in the EU ETS. A PSAM would prevent the kind of prolonged price collapse that undermined the EU ETS in its early years (2009–2012), when prices fell close to zero and the market lost credibility as a decarbonisation signal. Whether BEE incorporates such a mechanism into the floor/forbearance band proposal to CERC will be the single most important design decision for the CCTS’s long-term effectiveness.
India’s previous market mechanism — the Perform Achieve and Trade (PAT) scheme — issued Energy Saving Certificates (ESCerts) on power exchanges under CERC oversight. The architecture was similar to the CCTS: surplus energy savers sold ESCerts; deficit entities bought them; CERC regulated exchange trading. The historical ESCert price range was approximately Rs 200 to 500 per certificate, with significant periods of weak trading and low prices driven by over-allocation of targets. ESCerts were measured in tonnes of oil equivalent; CCCs are in tCO₂e — different units, different sectors — so direct price comparison is not appropriate. But the institutional pattern is informative: India’s first market-based environmental compliance mechanism produced weak and volatile prices due to soft targets and low enforcement pressure. The CCTS is structurally better designed — with greenhouse gas-based targets that are harder to game than energy-based ones — but the early target ambition and enforcement trajectory will determine whether the CCC market avoids the ESCert pattern.
The CBAM-CCTS Article 9 connection — what recognition would mean for exporters
Article 9 of the EU CBAM regulation provides for the deduction of carbon prices already paid in the country of production from the CBAM certificate obligation. The mechanism is designed to prevent double taxation — an Indian producer who has already paid for the carbon embedded in their exports through a domestic carbon price should not have to pay again at the EU border. Article 9 is one of the most commercially valuable provisions of the CBAM framework for countries that have credible domestic carbon markets.
For the Article 9 deduction to apply to India’s CCTS, two conditions must be met. First, the EU must formally recognise the CCTS as an equivalent carbon pricing mechanism under CBAM’s implementing regulations. Second, the Indian exporter must demonstrate that a specific carbon price was paid for the embedded emissions of the exported product — which requires plant-level MRV data aligned with CBAM’s emission calculation methodology. Neither condition is currently satisfied: formal EU recognition of the CCTS is pending, and the CCTS MRV framework is still being finalised and aligned with EU CBAM methodologies.
The India-EU FTA technical working group on CBAM and carbon pricing is specifically tasked with advancing the recognition process. This group will work toward verifier accreditation recognition (allowing Indian ACVA-verified data to be accepted for CBAM declarations) and carbon pricing equivalence (enabling the Article 9 deduction to flow once the CCTS is operational and recognised). The timeline for formal recognition is likely to be 2027 to 2028 — well after the CCTS begins trading — but the groundwork being laid now through the FTA technical dialogue will determine how quickly and smoothly that recognition comes.
Under Article 9, the CBAM certificate cost for an Indian steel exporter would be reduced by the amount of carbon price already paid under the CCTS for the embedded emissions of the exported tonne of steel. If the CCTS price is Rs 500/tCO₂e (approximately €5.50 at current exchange rates) and the CBAM ETS price is €80/tCO₂e, the CBAM obligation per tonne of embedded CO₂e would be reduced by €5.50 to €74.50 — a modest reduction at current Indian carbon prices. As the CCTS price rises over time toward Rs 1,000 to 2,000/tCO₂e (anticipated in later years of the scheme), the Article 9 deduction becomes materially more significant. The commercial incentive for Indian exporters to participate in the CCTS and document their carbon price payments is therefore a long-term one — it builds the evidence base for a progressively growing Article 9 deduction as CCTS prices increase. This is why CCTS participation and CBAM preparation are strategically inseparable for India’s hard-to-abate exporters.
The offset market — eight pathways and 40+ early movers
The voluntary offset mechanism under the CCTS allows non-obligated entities to earn CCCs by registering and executing approved emission reduction projects. This opens the carbon market to a far wider universe of participants than the compliance mechanism — renewable energy developers, green hydrogen producers, biomass project operators, forestry project managers, landfill operators and biogas plant developers can all participate without being CCTS-obligated industrial plants.
BEE approved eight project methodologies in March 2025. Each defines the eligible project types, baseline calculation approach, additionality criteria, and monitoring and verification requirements for earning CCCs. As of March 2026, over 40 entities have registered projects across biogas, green hydrogen and forestry — the earliest movers in the offset market. This is a promising start but the project pipeline will need to scale significantly to provide meaningful liquidity in the compliance market once trading begins.
| Approved methodology | Eligible project types | Strategic significance |
|---|---|---|
| Renewable energy (incl. hydro and pumped storage) | Solar, wind, small hydro, pumped hydro projects not covered under compliance mechanism | Largest potential volume; provides liquidity baseline for the offset market |
| Green hydrogen production (electrolysis and biomass) | Electrolysers, biomass-to-H₂ projects | Directly supports NGHM/SIGHT developers with additional CCC revenue stream |
| Industrial energy efficiency | Process improvements, waste heat recovery, motor efficiency — in non-covered sectors | Accessible to SME manufacturers not obligated under CCTS; broad reach |
| Landfill methane recovery | Landfill gas capture, flaring to energy conversion, biogas generation | High-GWP methane (27×CO₂) means high CCC yield per project |
| Mangrove afforestation and reforestation | Coastal mangrove restoration, community forestry | Aligns with India’s NDC carbon sink target of 3.5–4 Bt by 2035 |
| Renewable energy with storage | Solar + BESS, wind + BESS, hybrid with pumped hydro | Incentivises the storage investment needed for 24-hour RE supply to industry |
| Offshore wind | Offshore wind projects commissioned under Indian maritime framework | Forward-looking: India’s offshore wind programme is early-stage; this methodology is preparatory |
| Compressed biogas (CBG) | Agricultural waste, food waste, municipal solid waste to compressed biogas | SATAT scheme alignment; rural and agricultural sector entry point to carbon market |
Frequently Asked Questions
Can a non-industrial company participate in India’s carbon market?
Yes — through the voluntary offset mechanism. Any non-obligated entity (including renewable energy developers, green hydrogen producers, biogas project operators, forestry project managers, and MSMEs) can register under one of the eight BEE-approved offset methodologies, earn CCCs from verified emission reductions, and sell those CCCs on the power exchanges to either compliance buyers or voluntary buyers. Registration opened in June 2025 via the BEE portal. Projects must have a start date no earlier than January 1, 2025. As of March 2026, over 40 entities have already registered projects.
Can an obligated entity use offset CCCs to meet its compliance obligation?
Not in the initial phase of the CCTS. As of March 2026, the use of offset mechanism CCCs for compliance obligations by obligated entities is not permitted. Only CCCs generated within the compliance mechanism can be surrendered by obligated entities to meet their targets. This restriction is expected to be relaxed in later phases as the market matures and the integrity of offset project methodologies is established through operational track record. IETA and other market observers anticipate that some level of offset fungibility will be introduced in the post-2027 target cycle.
How does an obligated entity earn Carbon Credit Certificates?
An obligated entity earns one CCC for every tonne of CO₂ equivalent by which its actual GHG emission intensity falls below its notified target. The process: (1) Entity monitors and measures its GHG emissions across Scope 1 and Scope 2 under BEE’s MRV framework. (2) An Accredited Carbon Verification Agency independently verifies the emission data. (3) BEE issues CCCs to the entity’s ICM Registry account, tagged with the relevant vintage year. (4) The entity can then sell these CCCs on IEX, PXIL or HPX, or bank them for future compliance or sale.
What happens if an obligated entity misses its CCTS target?
An entity that fails to meet its GHG emission intensity target must purchase and surrender a number of CCCs equivalent to its shortfall — one CCC per tonne of CO₂e above its target. If the entity cannot source sufficient CCCs on the exchange, it faces penalties as specified under the Energy Conservation Act 2001. Banking allows entities to use CCCs earned in previous years to cover current shortfalls. Borrowing — using future CCCs to cover present shortfalls — is not permitted.
Is the CCTS linked to any international carbon market?
Not currently. The CCTS is a domestic scheme with no formal linkage to international carbon markets as of March 2026. However, India is an active participant in Article 6.2 bilateral cooperation agreements under the Paris Agreement, and the National Designated Authority for Article 6 was constituted by MoEFCC in September 2025. India’s Joint Crediting Mechanism (JCM) with Japan also provides a bilateral pathway for Japanese investment in Indian decarbonisation projects. The India-EU FTA technical working group is working toward formal CBAM recognition of the CCTS, which would effectively create a functional financial link between the two carbon pricing systems through the Article 9 deduction mechanism.