CURRENT AFFAIRS
CURRENT AFFAIRS
Description
In a significant move towards achieving its climate goals, the Government of India has recently established greenhouse gas (GHG) emission intensity reduction targets for entities operating in eight of the nine high-emission industrial sectors. These targets form part of the Carbon Credit Trading Scheme (CCTS), a core component of India’s evolving climate policy framework under the Indian Carbon Market (ICM) initiative.
About Carbon Credit Trading Scheme (CCTS)
The CCTS is a market-based regulatory mechanism designed to promote the reduction of greenhouse gas emissions by assigning tradable value to emission reductions. Developed under the Indian Carbon Market architecture, it marks a shift from energy-efficiency-centric models to direct regulation of GHG emissions intensity.
Purpose: The scheme incentivizes industries to adopt cleaner, low-carbon technologies by rewarding those who emit less than their assigned targets and penalizing those who exceed them.
Supervisory Authorities: It is jointly managed by the Bureau of Energy Efficiency (BEE) and the National Steering Committee for the Indian Carbon Market (NSCICM) to ensure transparency, accountability, and effective implementation.
Transition From PAT To CCTS
Prior to CCTS, India operated the Perform, Achieve, and Trade (PAT) scheme, which focused on improving energy efficiency in energy-intensive sectors. PAT participants earned Energy Saving Certificates (ESCerts) for surpassing efficiency benchmarks.
However, the CCTS introduces a more advanced framework by:
Shifting focus from energy efficiency to direct GHG emissions intensity.
Replacing ESCerts with Carbon Credit Certificates (CCCs), where each certificate represents the reduction of one metric tonne of carbon dioxide equivalent (tCO2e).
Enabling a carbon credit trading system that creates financial incentives for emission reductions.
Sectors Covered Under CCTS Compliance Mechanism
The compliance component of the scheme mandates participation from eight major GHG-emitting sectors. These industries are among the most energy and resource-intensive and collectively contribute approximately 16% of India’s total GHG emissions.
The sectors include: Aluminium, Cement, Pulp and Paper, Chlor-Alkali, Iron and Steel, Textiles, Petrochemicals, Petroleum Refineries
Note: The power generation sector, which is responsible for around 40% of India’s total emissions, is currently excluded from the initial phase but may be incorporated in future expansions of the scheme.
How the CCTS Operates
Compliance Mechanism
Industrial entities are assigned sector-specific emission intensity targets.
If an entity emits less than its assigned target, it earns Carbon Credit Certificates (CCCs).
Entities that exceed their emission limits must purchase CCCs to comply with regulations.
Offset Mechanism (Voluntary Market)
Businesses and sectors not mandated to participate in the compliance market can voluntarily reduce their emissions.
Verified reductions can be converted into tradeable carbon credits, allowing wider participation in climate action efforts.
Alignment With India Climate Commitments
The CCTS is an essential tool in India’s strategy to meet its Nationally Determined Contributions (NDCs) under the Paris Agreement. As per its NDCs, India aims to:
Reduce the emission intensity of its GDP by 45% by 2030, relative to 2005 levels.
Increase the share of non-fossil fuel-based power capacity to 50%.
The CCTS is expected to provide both a regulatory push and a market-driven pull for industries to adopt greener practices and technologies.
Future Outlook And Strategic Significance
The implementation of the CCTS marks a significant evolution in India’s climate policy, transitioning from voluntary or energy-efficiency-based systems to binding emission intensity targets. As the scheme matures, more sectors, including power generation, transport, and construction, could be brought under its scope.
By establishing a transparent carbon credit marketplace, the CCTS:
Encourages investment in clean technology
Supports green financing mechanisms
Contributes to India’s long-term net-zero ambition by 2070
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