India's Carbon Credit Trading Scheme (CCTS): A Complete Guide for 2025
India's Carbon Credit Trading Scheme (CCTS) is the country's first mandatory domestic carbon market. Launched under the amended Energy Conservation Act 2022, it creates a compliance-grade mechanism for India's most energy-intensive industries to reduce GHG emission intensity and trade Indian Carbon Credits (ICCs). This guide explains how CCTS works, which sectors it covers, and how to manage CCTS compliance.
What is the Carbon Credit Trading Scheme (CCTS)?
The Carbon Credit Trading Scheme (CCTS) is India's mandatory domestic carbon market — established by the Ministry of Power under Section 14A of the Energy Conservation (Amendment) Act, 2022. It is administered by the Bureau of Energy Efficiency (BEE) under the Ministry of Power.
Unlike voluntary carbon offset markets, CCTS is a compliance market. Designated entities in covered sectors must either:
Beat your target → Earn ICCs
Reduce GHG emission intensity below your BEE-assigned target and receive tradeable Indian Carbon Credits (ICCs) proportional to your over-achievement.
Miss your target → Buy ICCs
Fail to meet your emission intensity target and you must purchase ICCs on the exchange to cover the shortfall — or face penalties under the Energy Conservation Act.
Which sectors are covered under CCTS?
The initial CCTS notification covers 9 energy-intensive sectors— these are the same Designated Consumers (DCs) previously under BEE's Perform Achieve and Trade (PAT) scheme:
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Cement
India is the 2nd largest cement producer globally. CCTS targets specific energy and emission intensity per tonne of cement.
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Iron & Steel
Largest GHG-emitting sector. BEE sets emission intensity targets per tonne of crude steel produced.
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Aluminium
Energy-intensive smelting process. CCTS targets cover both thermal and electrical energy-related emissions.
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Petroleum Refinery
Process emissions and fuel use. Refineries have complex emission boundaries across multiple units.
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Fertilisers
Ammonia production is highly energy- and GHG-intensive. N₂O process emissions are also tracked.
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Petrochemicals
Covers ethylene, propylene, and other base chemical producers with high fuel combustion emissions.
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Chlor-Alkali
Electrolysis-intensive process. Scope 2 (electricity) emissions are the dominant category.
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Pulp & Paper
Both process and bioenergy emissions are tracked. BEE target is per tonne of paper produced.
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Textiles
Covers spinning, weaving, and dyeing processes. Energy use across thermal and electrical equipment.
How does the CCTS compliance cycle work?
CCTS operates on multi-year compliance cycles. Here's how each cycle works end-to-end:
Designation
BEE designates entities in covered sectors with annual energy consumption above a threshold (typically > 500 MTOE or as notified). These become Designated Consumers (DCs) under CCTS.
Baseline assessment
BEE assigns a GHG emission intensity baseline for each DC based on historical data and sector-specific methodology. The baseline year is typically the most recent 3-year average before the compliance cycle.
Target setting
BEE notifies each DC's GHG emission intensity reduction target for the compliance cycle (typically 3 years). Targets vary by sub-sector and plant efficiency.
Annual monitoring
DCs track and report their actual GHG emission intensity each year using BEE's prescribed methodology. Third-party verification of reported data is mandatory.
Credit issuance or obligation
At the end of the compliance cycle: companies that beat their target earn ICCs (proportional to over-achievement); companies that miss their target must purchase ICCs to cover the shortfall or face penalties.
Trading on exchanges
ICCs are traded on BEE-recognised power exchanges (IEX, PXIL). Prices are set by market demand and supply — unlike fixed-price offset schemes.
CCTS vs PAT: what changed?
| Dimension | PAT Scheme | CCTS |
|---|---|---|
| Metric | Specific Energy Consumption (SEC) | GHG Emission Intensity (tCO₂e/unit) |
| Tradeable unit | Energy Saving Certificates (ESCerts) | Indian Carbon Credits (ICCs) |
| Exchange | IEX / PXIL | IEX / PXIL (same exchanges) |
| Regulator | Bureau of Energy Efficiency (BEE) | Bureau of Energy Efficiency (BEE) |
| Scope of measurement | Energy only (fuel + electricity) | GHG emissions (includes process emissions) |
| Alignment | India's National Energy Efficiency Policy | GHG Protocol, Paris Agreement NDC |
CCTS and BRSR: the overlap Indian companies must manage
Companies in CCTS-designated sectors that are also among India's top 1,000 listed companies face a dual reporting burden:
CCTS requires:
- GHG emission intensity tracking (per unit production)
- Third-party verification of emission data
- Annual reporting to BEE
- ICC issuance or purchase at end of cycle
BRSR Core requires:
- Scope 1, 2, 3 GHG disclosures (absolute and intensity)
- Third-party assurance
- Annual disclosure in Annual Report / Stock Exchange
- GHG Protocol-compliant methodology
The underlying GHG emission data is largely the same for both. A unified carbon accounting platform like CarbonLens lets you collect data once and generate both CCTS compliance reports and BRSR Core disclosures — eliminating duplicated data collection.
Frequently asked questions about CCTS India
What is CCTS in India?
The Carbon Credit Trading Scheme (CCTS) is India's mandatory carbon market launched under the Energy Conservation Act 2001 (as amended in 2022). Administered by the Bureau of Energy Efficiency (BEE), it sets GHG emission intensity reduction targets for designated industries. Companies that beat their targets earn tradeable Indian Carbon Credits (ICCs); those that miss targets must purchase ICCs to comply.
Which sectors are covered under CCTS?
The initial CCTS notification covers 9 sectors: Aluminium, Cement, Chlor-Alkali, Fertilisers, Iron & Steel, Petrochemicals, Petroleum Refinery, Pulp & Paper, and Textiles. These are energy-intensive sectors previously covered under BEE's PAT (Perform Achieve and Trade) scheme.
What is an Indian Carbon Credit (ICC)?
An Indian Carbon Credit (ICC) is a tradeable instrument issued by BEE to entities that reduce their GHG emission intensity below their assigned target. One ICC represents one tonne of CO₂ equivalent (1 tCO₂e) of avoided emissions. ICCs can be traded on recognised power exchanges (IEX, PXIL) in India.
How is CCTS different from PAT?
The Perform Achieve and Trade (PAT) scheme focused on energy intensity reduction (specific energy consumption). CCTS shifts the focus to GHG emission intensity reduction, which is a superset of energy efficiency — it also captures fuel-switching, process changes, and renewable energy adoption. CCTS is GHG-based; PAT was energy-based.
Does CCTS compliance require BRSR reporting?
CCTS and BRSR use overlapping data — both require verified GHG emission data for Scope 1 and Scope 2. For companies in both CCTS-designated sectors and SEBI's top 1,000 listed companies, the same carbon accounting platform can serve both purposes. CarbonLens is designed for exactly this dual-compliance scenario.