Tag: Indian Carbon Market

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-wp-aug25-wordpress.dock.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-wp-aug25-wordpress.dock.anaxee.com

Drone Tree Counting for Agroforestry Project in India

 

Corporate Leadership Convening on India’s Carbon Market: Key Mumbai Takeaways & What They Mean for Anaxee

Corporate Leadership Convening on the Indian Carbon Market: Mumbai Reflections & Anaxee’s Way Forward

When the Environmental Defense Fund (EDF) and Mahindra Group invited corporate leaders to Mumbai for a half‑day deep‑dive on India’s nascent Carbon Credit Trading Scheme (CCTS), we booked our tickets immediately. India’s carbon market architecture is being finalized right now; decisions made in 2025 will hard‑wire opportunity—or friction—into every project we run for the next decade. As a last‑mile execution partner that brings data fidelity to rural carbon projects, Anaxee needed to be in the room.

The Corporate Leadership Convening: Opportunities & Strategies for Corporates in the Indian Carbon Market promised three things we care about:

  1. Clarity on the rule‑book – How will the Indian Carbon Market (ICM) balance compliance and offset mechanisms?

  2. Signals on pricing & competitiveness – What carbon‑price range are Indian CFOs running in their scenarios?

  3. A reality check from peers – What’s keeping large emitters up at night, and where do they see openings for technology partners?

The agenda packed these promises into two high‑intensity hours, followed by an equally high‑intensity networking lunch.

2. Scene‑Setter: India’s Carbon Market Moment

India has declared its ambition to be the first major economy to industrialise without carbonising. Lofty? Yes. Impossible? No—if the incentives line up. The CCTS is the incentive engine. Nine high‑emitting sectors will face intensity targets under Phase I. That means every tonne we help save through credible NbS or tech‑based projects could soon have a domestic buyer mandated to retire it.

But the stakes run deeper:

-$7‑12 trillion in green investment by 2050 (3‑6 % of projected GDP) is on the line.

-Compliance credits will co‑exist with voluntary credits. The quality bar cannot afford to drop or the entire market will stall.

-Indian corporates must not just comply; they must stay competitive against peers operating in older, more liquid markets such as the EU ETS.

3. Decoding the Programme

Below is how the morning unfolded (our shorthand notes next to each slot):

(Agenda verbatim lines sourced from event brief.)

4. Five Things We Learned (and What We’ll Do About Them)

  1. Carbon price discovery will be messy. Early ICM auctions may clear below ₹800 / tCO₂e. That’s not enough to unlock agroforestry at scale, so we must keep bringing costs down through tech‑enabled, census‑based monitoring rather than waiting for price spikes.

  2. Data is the new collateral. EDF speakers hammered home that auditors and financiers now treat verifiable data streams as risk mitigants. Anaxee’s runner‑network already captures plot‑level imagery and metadata; next step is integrating MRV dashboards directly with broker platforms.

  3. Article 6 alignment is non‑negotiable. Even if initial CCTS phases stay domestic, exporters in steel and cement fear CBAM‑type border adjustments. Projects with dual eligibility (ICM + Article 6) will command a premium. Our SOP designs will therefore over‑comply with IC‑VCM Core Carbon Principles from day one.

  4. Legal clarity is two steps behind market momentum. Ownership questions—especially when credits derive from distributed smallholders—remain unresolved. We’re drafting farmer consent templates that anticipate future jurisprudence rather than react to it.

  5. Corporate treasuries are ready, but sceptical. Cash is waiting on the sidelines; the bottleneck is confidence in supply integrity. That’s precisely the credibility gap dMRV platforms like ours can plug.

5. Deep Dive: Session Highlights

5.1 Opening by Ankit Todi

Ankit’s blunt opener—“If we design a weak market, no one wins”—set the day’s no‑nonsense tone. He argued that sustainability teams must speak CFO language: risk‑adjusted IRR, not just tonnes avoided. We couldn’t agree more, but we’d add that CFOs also need field reality checks: many rural mitigation projects carry social licence risks that spreadsheets miss.

5.2 István Bart — Compliance vs Voluntary

István dissected how ETS pilots in Vietnam and Indonesia borrow best practices from EU ETS, yet still struggle with MRV. Key graph: EU ETS allowance volatility vs average monitoring cost per tonne. Our takeaway: Indian policymakers must budget for MRV capacity‑building, otherwise verification bottlenecks will choke supply.

5.3 Pedro Barata — Strategy Lessons

Pedro’s slides on “carbon as competitive lever” resonated. Companies that internalised a shadow price early (Ørsted, Microsoft) now book lower long‑term capital costs. For Anaxee, the signal is clear: we should pitch carbon‑resilient supply chains, not just credits.

5.4 Darcy Jones — Corporate Responses

Darcy showed that firms incorporating carbon costs into capex decisions outperformed peers by 4‑6 % EBITDA over five years. But she warned of “green‑hush,” the backlash when claims outrun evidence. Our field‑photo verification protocol addresses exactly that credibility gap.

5.5 Parthsarathi Jha — Legal Grey Zones

Parthsarathi listed three unresolved issues: (i) whether carbon credits count as “securities”; (ii) GST applicability on forward trades; (iii) double‑taxation risk across state lines. Until rulings arrive, contracts must bake in flexibility for tax treatment changes—something we’re now revisiting in all new PPAs.

6. Anaxee’s Action Plan Post‑Mumbai

7. Critical Reflections

  1. Too Many Polite Questions. Q&A barely scratched scope‑3 integration or small‑cap access to offset finance. Future convenings must bring suppliers and MSMEs into the room.

  2. Article 6 Elephant in the Hall. While everyone name‑checked the Paris Agreement, concrete guidance on corresponding adjustments was thin. Indian authorities must clarify double‑claiming rules before investors step in.

  3. MRV Talent Shortage. Several attendees admitted they can’t find auditors familiar with both ISO 14064 and domestic forestry protocols. This is a training gap we’re keen to fill via our Climate Training Academy.

8. Where Do We Go from Here?

India is late to the carbon‑market party but carries size advantage. If we get integrity right, ICM credits could set a new benchmark. If we don’t, we risk an oversupply of low‑trust units mirroring the boom‑and‑bust of early CERs.

For Anaxee, the path is clear:

-Double‑down on transparency tech that slashes MRV cost per hectare.

-Bridge boardroom‑to‑farm with bilingual dashboards that translate carbon jargon into farmer income projections.

-Push for policy clarity by sharing our field data with BEE and EDF to inform baseline and leakage factors.

Walking out of Mahindra Towers, the message was clear: the window to build a credible Indian carbon market is open, but it will not stay open for long. Anaxee is positioning to keep that window propped open—through data‑driven transparency, farmer‑first project design, and relentless focus on integrity.

We’re ready to partner with corporates who see carbon not as a compliance headache but as a strategic lever. Let’s get this right—while the carbon price is still in rupees, not regret.

Have feedback or want to explore a pilot? Reach out to us at sales@anaxee-wp-aug25-wordpress.dock.anaxee.com.

India’s Carbon Credit Trading System (CCTS) Explained- How to Navigate the New Indian Carbon Market in 2025

1. Why Another Carbon Market- and Why Now?

India’s greenhouse-gas (GHG) emissions still trail those of China and the US on a per-capita basis, but its overall share is climbing fast. To square rapid industrial growth with its updated Nationally Determined Contribution—45 % emissions-intensity cut by 2030 and net-zero by 2070—New Delhi is rolling out a two-tier carbon market: a compliance mechanism for big emitters and a voluntary offset window for everyone else. That umbrella framework is called the Carbon Credit Trading System (CCTS).

Global politics add urgency. From 2026 the EU’s Carbon Border Adjustment Mechanism (CBAM) will slap tariffs on carbon-heavy imports; Indian exporters risk losing price advantage unless they can prove decarbonization. The CCTS provides a domestic price signal and an internationally credible emissions ledger.

2. The Legislative Backbone: 2022–2025 in Fast-Forward

3. Who Regulates What?

– Ministry of Power (MoP) – overall custodian of the Indian Carbon Market (ICM).

– Ministry of Environment, Forest & Climate Change (MoEFCC) – notifies legally binding intensity targets under the Environment Protection Act.

– Bureau of Energy Efficiency (BEE) – administrator: sector analysis, target calculation, issuance of Carbon Credit Certificates (CCCs).

– Grid Controller of India (GCI) – runs the registry.

– Central Electricity Regulatory Commission (CERC) – licenses power exchanges and sets trading rules. Draft CERC regulations allow CCC trading on any recognised exchange; OTC deals remain barred for now.

4. Scope and Coverage: Phase 1 (FY 2026)

– Nine PAT-sectors migrate first: aluminium, chlor-alkali, cement, fertiliser, iron & steel, pulp & paper, petro-chemicals, petroleum refining, textiles.

– ~800 facilities above PAT thresholds expected.

– GHGs: CO₂ and PFCs initially.

– Metric: sector-specific emissions-intensity (t CO₂e / unit of product).

– Compliance cycle: annual reporting, three-year rolling targets.


Voluntary Window

Parallel rules enable non-covered sectors—agriculture, forestry, resi-buildings, green hydrogen—to register projects and generate CCCs. Renewable-energy credits formerly traded in the REC market can migrate once methodologies are approved.

5. How the Compliance Mechanism Works

  1. Baseline & Target Setting
    BEE calculates each sector’s trajectory factoring technology potential, historic energy data and 2023-24 emissions. Draft benchmarks for 2025-27 are open for comment until late July 2025.

  2. Monitoring & Verification (MRV)
    Gate-to-gate coverage of Scope 1 & 2 emissions; some Scope 3 (intermediate product trade) included. Entities must submit a verified GHG report within 4 months of FY close. Non-compliance triggers financial penalties under the Energy Conservation Act.

  3. Issuance of CCCs
    Over-achievers earn one CCC per tonne of CO₂e saved vs. target. Under-performers must buy and surrender CCCs.

  4. Trading
    Trades occur on power exchanges (IEX, HPOWERT, PXIL) under CERC oversight. No derivatives or short selling in phase 1; unlimited banking but no borrowing.

6. Timeline to First Trade- Reality Check

While initial MoP roadmaps imagined first trades in April 2025, institutional delays mean mid-2026 is more realistic, according to recent statements by the Power Minister. Petroleum-Economist analysis even warns of slippage into late 2026 if registry testing drags.

7. PAT to CCTS: What Changes for Industry?

Issue PAT (2012-24) CCTS (2025-on)
Instrument ESCerts (energy savings) CCCs (GHG reductions)
Coverage 13 sectors Initially 9 sectors (expandable)
Metric Energy/mass GHG tCO₂e/unit
Trading venue Power exchanges Same, but stricter MRV & penalties
Banking Limited across cycles Unlimited within compliance mechanism

PAT experience gives firms a head-start on data systems, but emissions accounting demands fuel-specific NCVs, process-emissions factors and third-party verification—a leap in complexity.

8. The Voluntary Crediting Piece: New Money for New Sectors

On 28 March 2025 the MoP green-lit eight methodologies—including mangrove afforestation and green hydrogen—under a domestic offset mechanism. Expect full guidelines by Q4 2025 and trading once registry APIs integrate project issuances. That opens doors for:

  • Agro-forestry & Soil Carbon projects—big rural job creators.

  • Distributed clean-cooking (ICS) roll-outs.

  • Digital MRV providers (remote sensing, blockchain).

9. What This Means for Corporates

Compliance Entities

  1. Model your intensity gap now using 2023-24 GHG data.

  2. Identify least-cost abatement (heat-recovery, fuel switch, electrification).

  3. Set up registry & exchange accounts early; auction windows may be thin.

  4. Budget for carbon price volatility; analysts expect ₹600-₹1 200 /t ($7–14) in phase 1.

Non-Covered Players

  1. Scout eligible project types (RE, hydrogen, mangroves, cookstoves).

  2. Register early to benefit from first-mover credit scarcity.

  3. Bundle small projects—volume matters for liquidity.

10. Challenges Nobody Should Ignore

Risk Details Mitigation
MRV capacity gap India has <250 accredited verifiers; ~800 plants need annual audits. Outsource to global auditors; build domestic capacity quickly.
Price discovery Single-commodity exchanges could see thin volumes, wide bid-ask spreads. CERC exploring market-maker role, but clarity pending.
Overlaps with REC/RPO, HPO Firms could face multiple, sometimes conflicting, certificate obligations. Government promised harmonisation, but rules still in draft.
CBAM alignment EU may not recognise intensity-based credits. Seek bilateral equivalence or use CCTS as step toward absolute caps post-2030.
Data fraud High stakes may tempt mis-reporting. Blockchain registry pilots, AI-based anomaly detection (where firms like Anaxee can add value).

11. Strategic Playbook for 2025–27

  1. Map Exposure: Quantify both compliance burden and offset opportunity.

  2. Invest in Data Infrastructure: Digital MRV will be a licence to operate.

  3. Engage Policy Consultation: Target-setting drafts are live; lobby for realistic baselines.

  4. Train Teams: Carbon accounting skills are scarce—build them in-house or partner.

  5. Communicate: Investors increasingly price transition plans—use the CCTS narrative to showcase readiness.

12. Looking Ahead

India’s CCTS is not a quick copy-paste of the EU ETS; it’s an intensity-based hybrid tuned to India’s growth trajectory. The upside? Flexibility and political feasibility. The downside? Complexity and a risk of weak price signals if targets are soft. 2025-26 will be the shakedown period. Early movers—either reducing emissions or minting high-integrity credits—stand to lock in low-cost advantages before the scheme tightens post-2030.

For companies that treat carbon management as a side-desk issue, CBAM and domestic penalties will be an expensive wake-up call. For those who treat CCTS as a strategic lever, it’s a chance to turn carbon compliance into competitive edge—and, with the right partners, an entirely new revenue stream.

Planning or Executing a Carbon Project? Need help with consultation or implementation? Connect with Anaxee at sales@anaxee-wp-aug25-wordpress.dock.anaxee.com

Field Worker Sapling nursery agroforestry carbon project in India

References

ICAP ETS Database, “Indian Carbon Credit Trading Scheme” (July 2024 update) icapcarbonaction.com
Hindustan Times, “Govt notifies draft carbon rules for industries” (1 July 2025) hindustantimes.com
Press Information Bureau, “Carbon Pricing in India: Market Mechanisms for Climate Leadership” (23 June 2025) pib.gov.in
LinkedIn Article, A. Sheikh, “India’s CCTS: Policy in Motion” (26 Jun 2025) linkedin.com
SolarQuarter, “India Proposes New Emission Intensity Targets Under CCTS 2025” (26 Jun 2025) solarquarter.com
Economic Times Energy, “India to launch carbon market by 2026” (22 Feb 2025) energy.economictimes.indiatimes.com
CERC draft regulations summary, Mercom India (Nov 2024) mercomindia.com