Sector Coverage — Reclimatize.in
Power and Carbon Markets
The carbon intensity of India’s electricity grid determines the Scope 2 emissions of every industrial consumer in the country. The power sector is not just one sector among five — it is the foundation that every other sector’s decarbonisation sits on. And India is now building a domestic carbon market on top of it.
India’s power sector has undergone one of the fastest renewable energy build-outs in the world over the past fifteen years. Solar tariffs have fallen from over Rs 17 per unit in 2010 to below Rs 2.50 in recent competitive auctions run by SECI and state nodal agencies. Combined solar and wind installed capacity now exceeds 200 GW, with India committed under its Nationally Determined Contributions to reaching 500 GW of non-fossil capacity by 2030. This transformation is the single most important enabling condition for industrial decarbonisation — cheap renewable electricity is what makes the switch away from coal-based captive power financially viable for aluminium, steel, chemicals and other energy-intensive sectors.
At the same time, India is building a domestic carbon market from scratch. The Carbon Credit Trading Scheme, notified in 2023, creates the institutional framework for issuing, verifying, registering and trading carbon credits. It builds on the PAT Scheme’s existing Energy Saving Certificate mechanism and is designed to eventually evolve into a comprehensive compliance carbon market. The parallel development of a cheap renewable electricity market and a functioning carbon pricing mechanism — both administered by the Ministry of Power through the Bureau of Energy Efficiency and the Central Electricity Regulatory Commission — is the foundation of India’s industrial decarbonisation strategy.
See the Industrial Decarbonisation Policy Map for a structured view of how the power sector and carbon market connect to all five covered sectors. For India’s NDC targets — including the 500 GW non-fossil capacity goal and the net-zero 2070 commitment — that set the long-term direction for this sector, see the India Decarbonisation page. To compare power with the other four covered sectors, visit the Sectors overview.
Key Dynamics We Track
The power sector and carbon market are interconnected and both are changing rapidly. These are the dynamics that matter most for industrial stakeholders.
Industrial tariffs, open access and renewable procurement
The Green Energy Open Access Rules 2022 and the ISTS waiver have materially improved industrial consumers’ ability to procure renewable electricity directly from generators. The economics of open access procurement vary significantly by state — cross-subsidy surcharges, wheeling charges and banking policies differ across State Electricity Regulatory Commissions. The CERC’s open access regulations govern inter-state transactions. Understanding the landed cost of renewable electricity in a given state is the starting point for any industrial decarbonisation investment calculation. See the State Renewable Policies page for how key industrial states compare.
Electricity Market repositoryCCTS, PAT Scheme and carbon credit pricing
The Carbon Credit Trading Scheme is operational in framework but still being fully operationalised with sector-specific targets and verification procedures. Its design is intended to avoid the oversupply problems that plagued the PAT Scheme’s ESCert market. The Bureau of Energy Efficiency administers both schemes and maintains the national carbon credit registry. The eventual integration of PAT and CCTS into a unified carbon market — where energy efficiency and carbon performance are priced on the same platform — will significantly change the compliance landscape for thermal power producers and large industrial consumers alike.
Carbon Markets repositoryRPO trajectory, RCO and the Energy Storage Obligation
Distribution companies and large open-access consumers face Renewable Purchase Obligations that increase each year toward 43.33% by 2029-30. The Renewable Consumption Obligation extends mandatory renewable consumption directly to large industrial Designated Consumers. The Energy Storage Obligation adds a parallel requirement to procure storage capacity alongside renewable power. The official trajectory document published by the Ministry of Power sets the year-by-year targets through 2029-30. Together, these three obligations are reshaping electricity procurement economics for every large industrial consumer in India.
Renewable Obligations repositoryEmission standards, fly ash and EIA for new capacity
Thermal power plants face stack emission standards for particulate matter, sulphur dioxide and nitrogen oxides under the Air Act, with CPCB periodically tightening the limits. The Fly Ash Utilisation Notification creates obligations linking power plants to cement and construction users within a specified radius. New power capacity — including renewable projects above threshold sizes — requires environmental clearance under the EIA Notification from MoEFCC.
Environmental Regulations repositoryHow power sector transformation drives industrial decarbonisation
The power sector’s transition from coal to renewables is not just about reducing its own emissions — it is the enabling condition for decarbonising every other industrial sector in India.
Near term
Scaling renewable capacity and improving open access
India’s renewable build-out needs to continue at pace to make clean electricity available at industrial scale. Removing barriers to open access in states with high cross-subsidy surcharges or slow approval processes is essential to connecting renewable supply with industrial demand under the Green Energy Open Access Rules.
Medium term
Carbon market operationalisation and integration
The CCTS needs to become fully functional with sector-specific compliance targets, robust MRV systems and a price discovery mechanism that avoids oversupply. Its integration with the PAT Scheme’s ESCert market will determine whether India’s carbon market becomes a genuine driver of decarbonisation investment or a compliance formality.
Long term
Grid decarbonisation and green hydrogen electrolysis
A deeply decarbonised grid approaching 500 GW of non-fossil capacity changes the Scope 2 emissions profile of every industrial consumer. It also creates the renewable electricity surplus needed to power the electrolysis capacity at the heart of India’s green hydrogen ambition, closing the loop between power sector and industrial decarbonisation.
Key external references
Official government sources, regulators and research institutions tracking India’s power sector and carbon market development.
Ministry of Power, India
Electricity policy, RPO trajectory, open access rules and energy storage policy
Central Electricity Regulatory Commission
Open access regulations, REC mechanism and power market rules
Bureau of Energy Efficiency
PAT Scheme, Carbon Credit Trading Scheme and national carbon credit registry
Ministry of New and Renewable Energy
National Solar Mission, wind and hybrid policies, RPO and RCO framework
Indian Energy Exchange
Power market data, REC trading and carbon market platform
IEA — India Energy Profile
Independent data on India’s electricity mix, capacity additions and emissions
Regulations that apply to this sector
The power sector and carbon market sit at the intersection of virtually every decarbonisation regulation in India. These repository pages cover each area in detail.
Other sectors we cover
Power sector decarbonisation is the foundation for every other sector’s transition. Follow the links to see how it connects to each one.
Latest Research on Power and Carbon Markets
Analysis of India’s renewable energy market, carbon credit trading scheme development, open access economics and grid decarbonisation trajectory. Also see our full Research section.
How the Carbon Border Adjustment Mechanism Works: A Guide for Exporters
