Carbon Pricing in India: Decoding the Carbon Credit Trading Scheme (CCTS) and What It Means for Business in 2025‑30

Carbon Pricing in India: Decoding the Carbon Credit Trading Scheme (CCTS) and What It Means for Business

1. Why Carbon Pricing and Why Now?

India’s climate targets have teeth only if the cost of emitting carbon shows up on a CFO’s balance sheet. That is the simple logic behind carbon pricing—a policy tool that forces emitters to internalise the social cost of greenhouse‑gas (GHG) pollution. New Delhi is no stranger to market‑based regulation (think PAT, RECs), but 2025 is different. We now have a formal rate‑based Emissions Trading System (ETS) embedded in the Carbon Credit Trading Scheme, 2023–24 (CCTS), backed by amendments to the Energy Conservation Act.

In other words, India is putting a price on carbon intensity rather than absolute tonnes. The shift is subtle but game‑changing for a fast‑growing economy that still needs to expand energy supply.

Infographic titled “5 Benefits of Carbon Pricing for Indian Businesses” summarising advantages—drives efficiency, attracts green finance, boosts export competitiveness, sparks innovation, and funds community projects—using simple green icons against a blue background with Anaxee logo.

2. India in the Global Carbon‑Pricing League

According to the World Bank’s “State and Trends of Carbon Pricing 2025”, India now sits in the same emerging‑economy cohort as Brazil, China, and Türkiye when it comes to regulated carbon markets.

– Coverage: Nine energy‑intensive sectors at launch—power, iron & steel, cement, aluminium, fertiliser, pulp & paper, petro‑refining, chemicals and textiles.

– Instrument: Rate‑based ETS + domestic voluntary offset window.

– Benchmark: Emission‑intensity targets, not a hard cap.

– Timing: Compliance cycle expected FY 2025‑26; voluntary methodologies approved March 2025.

Is this ambitious enough? Maybe not. But it’s a pragmatic design for an economy where absolute caps could stifle growth.


3. A Quick History of India’s Carbon‑Pricing Instruments

What sticks out?

  1. Tax vs Trade: India leaned on an implicit coal tax while the EU went cap‑and‑trade.
  2. Intensity, not Caps: Every scheme is benchmarked to intensity—consistent with a developing economy narrative.
  3. Administrative Lean: BEE is the common operator, so institutional memory transfers over.

4. The Legal Backbone: Energy Conservation (Amendment) Act, 2022

This amendment gave the central government explicit power to issue, trade, and retire carbon‑credit certificates. It also created statutory room for voluntary credits—a carve‑out many exporters wanted as CBAM pressure rose.

Key Provisions:

-Section 14A: Authorises central registry for carbon certificates.

-Section 58: Empowers BEE as market administrator.

-Penalty Clause: Non‑compliance fines up to two times market price of CCCs—enough to make CFOs sweat.


5. Anatomy of the Carbon Credit Trading Scheme (CCTS)

Infographic illustrating how India’s Carbon Credit Trading Scheme (CCTS) works, showing sequential steps—measure emissions, report data, record in registry, earn or buy carbon credits via trading platform, comply, and penalty for non‑compliance—using factory, chart, database, and warning icons with a map of India and Anaxee logo.

5.1 Compliance Mechanism

-Obligated entities must meet annual emission‑intensity targets.

-Over‑achievers receive Carbon Credit Certificates (CCCs); under‑performers must buy them or pay a penalty.

-MRV protocol follows ISO 14064 and IPCC 2006 guidelines.

5.2 Offset Mechanism (Domestic Voluntary Market)
Eight approved methodologies (renewables, green hydrogen, energy efficiency, mangrove AR, etc.) allow non‑ETS players to generate credits. Credits can be sold into the compliance market or to corporates chasing net‑zero pledges.

5.3 Registry & Trading Platform
An electronic trading platform is being built on power‑exchange infrastructure (IEX/PXIL) to avoid reinventing the wheel. Settlement cycle mirrors India’s short‑term power market (T + 1).


6. Rate‑Based ETS vs Cap‑Based ETS: A Critical Look

The trade‑off is clear: India opts for economic flexibility over guaranteed tonnage reductions. That choice invites scrutiny from trading partners—hence the CBAM threat.


7. CBAM: The External Price Tag India Can’t Ignore

The EU’s Carbon Border Adjustment Mechanism enters its financial phase in January 2026. Analysts estimate Indian steel exporters could face ₹19,000 cr in CBAM charges by 2030 unless they decarbonise.

Negotiators are scrambling to protect exports, but the simplest antidote is a robust domestic carbon‑pricing system that proves “equivalent effort.” India’s shift from coal cess to CCTS is partly a CBAM‑defence strategy.


8. Sector‑by‑Sector Readiness


9. Numbers That Matter

-Coal Cess Pool: ~₹54,000 cr collected (FY 2010‑25). Little of it has flowed to climate projects—an efficiency gap CCTS aims to fix.

-Potential Market Size: BEE projects CCC demand at 180 MtCO₂e by 2030—roughly a ₹45,000‑crore annual market assuming ₹250/t average price.

-Voluntary Credits Pipeline: 8 approved methodologies could unlock 50 MtCO₂e offsets annually by end‑decade.


10. The Data & MRV Challenge—And Why Tech Players Like Anaxee Matter

Carbon pricing lives or dies on Measurement, Reporting & Verification (MRV). India’s grid is patchy with emission‑factor data, and many mid‑tier plants lack automated monitoring.

Where Anaxee fits:

  1. Last‑Mile Data Collection: With runners in 26,000+ villages, field‑level energy audits and biomass assessments feed verifiable project data into the registry.
  2. Digital MRV (dMRV): Mobile‑first data capture plus blockchain‑anchored audit trails reduce double‑counting risk—critical for credit quality.
  3. Community Projects: CCTS offset window covers mangroves, clean cooking, agro‑forestry. Anaxee’s rural network accelerates baseline surveys and credit issuance.

Bottom line: Carbon pricing is as strong as its data plumbing; that plumbing is a tech and outreach problem more than a policy one.


11. Pain Points No One Should Ignore

  1. Price Volatility: Without a price collar, CCCs could swing like RECs did in 2016.
  2. Registry Interoperability: Alignment with international standards (ICVCM, VCMI) is still work‑in‑progress.
  3. Delayed Penalties: Collection of non‑compliance fines historically lags in India’s power market—watch this space.
  4. Equity Concerns: SMEs outside top nine sectors risk being left behind unless voluntary credit pathways become affordable.

12. What Indian Corporates Should Do in the Next 12 Months


13. Policy Recommendations (Straight Talk)

  1. Transition Coal Cess into a True Carbon Tax
    Hypothecate proceeds to a Price‑Stability Fund for CCCs rather than general revenue.
  2. Introduce a Price Collar
    Floor ₹150, ceiling ₹600/t to avoid the REC‑type boom‑bust.
  3. Fast‑Track Scope‑3 Methodologies
    Especially for agriculture and logistics—critical to decarbonise rural supply chains.
  4. Integrate with GST IT Backbone
    Automate certificate retirement and penalty collection through existing e‑invoice rails.
  5. Build a CBAM‑Readiness Portal
    Public carbon‑intensity disclosure for exporters; makes customs paperwork smoother.

14. The Road Ahead: Intensity Today, Absolute Caps Tomorrow?

India’s rate‑based ETS is a start, not an end. The net‑zero 2070 goal will eventually require tonnage caps and negative‑emission pathways (biochar, DAC). Expect:

-CCTS Phase 2 (2028‑30): Expand to shipping and aviation bunkers.

-Cap‑Hybrid by 2032: Combine intensity with sectoral caps once GDP growth stabilises below 6 %.

-International Linkages: Potential pilot linkage with Singapore’s carbon market for tokenised credit swaps.


15. Conclusion

Carbon pricing in India is no longer an academic debate. With the CCTS clock ticking and CBAM looming, the cost of carbon will soon appear on every corporate ledger—either as a tradable certificate, an import tax, or a reputational hit. Companies that invest early in credible data, verifiable reductions, and community‑positive offsets will not just dodge penalties; they’ll gain an export edge and access to cheaper green capital.

For players like Anaxee, the opportunity is to convert last‑mile execution expertise into the plumbing that India’s carbon market desperately needs. Data is the new oil, but in carbon pricing, data is the new oxygen—without it, nothing survives.


Call to Action
Ready to future‑proof your carbon strategy? Connect with us at sales@anaxee.com


About Anaxee: 

Anaxee drives large-scale, country-wide Climate and Carbon Credit projects across India. We specialize in Nature-Based Solutions (NbS) and community-driven initiatives, providing the technology and on-ground network needed to execute, monitor, and ensure transparency in projects like agroforestry, regenerative agriculture, improved cookstoves, solar devices, water filters and more. Our systems are designed to maintain integrity and verifiable impact in carbon methodologies.

Beyond climate, Anaxee is India’s Reach Engine- building the nation’s largest last-mile outreach network of 100,000 Digital Runners (shared, tech-enabled field force). We help corporates, agri-focused companies, and social organizations scale to rural and semi-urban India by executing projects in 26 states, 540+ districts, and 11,000+ pin codes, ensuring both scale and 100% transparency in last-mile operations.

Ready to collaborate on your next Climate or Carbon project?
Email us at: sales@anaxee.com

Drone Tree Counting for Agroforestry Project in India

 

India’s Carbon Credit Trading Scheme: Emission Targets 2025 and the New Green Mandate

🇮🇳 India’s Big Carbon Shift: CCTS 2023 and GHG Targets 2025

India is undergoing a major climate policy transformation. On 23rd June 2025, the Government of India released a Gazette notification announcing the next operational phase of its Carbon Credit Trading Scheme (CCTS), 2023. The focus? Setting clear, industry-specific greenhouse gas (GHG) emission intensity targets for key sectors like steel, aluminum, and power for compliance years 2025-26 and 2026-27.

This is no longer a voluntary move- it is regulation-backed, compliance-enforced, and GHG-accounted.

To download ‘The Gazette of India’- Click below:



What is the Carbon Credit Trading Scheme (CCTS), 2023?

CCTS was first notified in June 2023. It was designed to create a formal, compliance-based carbon market in India. Think of it as a stock exchange—except, instead of trading shares, industries trade carbon credit certificates, representing a reduction or avoidance of one tonne of CO₂ equivalent.

Under this system, each eligible industry has to meet specific Emission Intensity Targets (EI targets)—defined as tonnes of CO₂ emitted per tonne of product output. If they emit less than their allocated target, they can earn credits. If they emit more, they must purchase credits or face penalties.

The scheme’s primary legal basis comes from:

  • The Energy Conservation Act, 2001
  • The Environment (Protection) Act, 1986
  • The Electricity Act, 2003

The Bureau of Energy Efficiency (BEE) acts as the nodal implementation body under the Ministry of Environment, Forest and Climate Change (MoEFCC).


What Was Notified in the June 2025 Gazette?

The notification lists 118 companies across sectors and their:

  • Baseline GHG Emission Intensity (2023-24)
  • Assigned GHG Emission Intensity Targets for 2025-26 and 2026-27
  • Primary production output (e.g., crude steel, aluminum)

This step operationalizes the compliance mechanism of the CCTS and sets the tone for India’s decarbonization via market forces.


Emission Intensity Targets: What Does the Data Say?

To give you a clearer picture, here’s a sample table extracted from the Gazette:

Company Name Sector Baseline Intensity (tCO₂e/ton) Target 2025-26 Target 2026-27
Hindalco Industries Ltd (Taloja) Aluminum 1.3386 1.3057 1.2563
Tata Steel Ltd (Jamshedpur) Iron & Steel 2.3804 2.3362 2.2699
JSW Steel Ltd (Dolvi) Iron & Steel 2.6662 2.6107 2.5275
SAIL Bokaro Plant Iron & Steel 3.2056 3.1254 3.0052
Bhushan Power & Steel Iron & Steel 3.6421 3.5386 3.3833

What you see here is the government creating a linear decarbonization path—each company must reduce its emission intensity by ~3–5% over two years.


Key Terms You Should Know

Understanding CCTS requires knowing a few core terms:

– Emission Intensity (EI): Emissions per unit of output, usually in tonnes CO₂ equivalent per tonne of product.

– Banked Certificates: Extra credits earned for exceeding targets can be stored (“banked”) for use in future years.

– Compliance Cycle: The period (typically yearly) in which the performance against targets is evaluated.

– Non-Compliance Penalty: If a company fails to meet its targets and does not buy equivalent credits, a financial penalty is imposed—2× the market price of the credit shortfall.


Why This Matters: National and Global Relevance

India has made a Nationally Determined Contribution (NDC) commitment to reduce the emissions intensity of its GDP by 45% by 2030 from 2005 levels. The CCTS operationalization is the first step toward real domestic enforcement.

It’s also relevant for:

– Carbon project developers: as this market can soon become a source of demand for offsets

– Climate finance players: looking to invest in verifiable carbon mitigation

– Industries: navigating the complex transition to net-zero while staying profitable


Who Are the First Movers?

Here are the top 5 largest emitters (by output volume) included in the Gazette:

Series Company Output 2023-24 (Tonnes) Baseline EI
1 JSW Steel Ltd (Dolvi) 8.9 million 2.6662
2 SAIL, Bhilai Steel Plant 5.67 million 3.1487
3 Tata Steel Ltd (Jamshedpur) 10.7 million 2.3804
4 Rashtriya Ispat Nigam Ltd 4.4 million 2.9781
5 JSPL (Raigarh) 3.25 million 3.2231

These companies are now part of a high-stakes, market-driven push toward decarbonization.


Compliance Rules: How Does It Work?

Every designated unit must:

  1. Register on the Indian Carbon Market (ICM) portal.
  2. Submit verified documents and data using the official protocol.
  3. Show either:- Achieved GHG intensity target, or

    – Bought carbon credits from the ICM exchange, or

    – Used banked credits

If not, penalties kick in via the Central Pollution Control Board (CPCB).


How Are Credits Calculated?

There’s a specific formula for computing tradable credits:

Credits Earned = (EI Target − Actual EI) × Output

And for those falling short:

Credits to be Bought = (Actual EI − EI Target) × Output

This is a transparent, formula-based system—favoring those that proactively decarbonize.


 Road Ahead: A Market in the Making

The CCTS isn’t just another scheme—it is the birth of India’s compliance carbon market, like the EU ETS or China’s national trading platform. And it’s different from voluntary offsets. It’s mandatory for large emitters.

Some predictions:

– Expect a secondary market for trading excess certificates.

– Tech companies will emerge for MRV (Monitoring, Reporting, Verification).

– Integration with Article 6 of the Paris Agreement could follow, allowing international trade.


What Should Companies Do Now?

If you’re an industrial entity in India with significant emissions, this notification is your wake-up call. Immediate steps:

– Audit your emissions and production data

– Check your EI targets vs. your baseline

– Engage with accredited verifiers and BEE procedures

– Plan internal decarbonization OR credit purchase strategy


The Carbon Credit Trading Scheme 2023, now backed by enforceable GHG intensity targets, is a landmark reform. It shifts India from voluntary green gestures to enforceable emission regulation- with a built-in market mechanism. It aligns environmental responsibility with business competitiveness.

If implemented with transparency and rigor, this system can help India leap ahead in its climate commitments while building a robust domestic carbon economy.

Are you a heavy emitter, industrial SME, or climate consultant? Anaxee’s Tech-for-Climate network is ready to support your MRV, compliance documentation, and grassroots engagement.
Reach out today- sales@anaxee.com and be part of India’s green transition.

Field Worker Sapling nursery agroforestry carbon project in India