India’s carbon market runs on two mechanisms. Know which one applies to you.
The Carbon Credit Trading Scheme sets emission intensity targets for obligated entities and lets every other entity earn credits through registered projects.
LEGISLATIVE FOUNDATION
How India’s carbon credit trading scheme was built
Energy Conservation Act, 2001
Recognizing the need to reduce GHG emissions in India, the Act was amended in 2022.
June 2023
The Central Government notified the CCTS, 2023 vide S.O. 2825(E), introducing the compliance mechanism of the scheme.
December 2023
The scheme was amended vide S.O. 5369(E) to introduce the offset mechanism.
Two mechanisms
The scheme runs a compliance mechanism and an offset mechanism, each with its own aim, participants and process.
Compliance mechanism
Offset mechanism
Two mechanisms under CCTS
Compliance mechanism
AIM
To reduce the greenhouse gas emission intensity (GEI) for industries in line with India’s national climate goals.
DEFINITION
A mechanism under CCTS where the Obligated Entities (OEs) shall comply with the greenhouse gas emission intensity (GEI) norms as notified by the Central Government.
Detailed procedure for compliance mechanism under CCTS
Offset mechanism
AIM
To incentivize the voluntary actions from entities (not covered under compliance) for GHG reduction, thus providing a comprehensive approach to decarbonization of the economy.
DEFINITION
A mechanism under CCTS where the Non-Obligated Entities (Non-OEs) can register their projects for accounting GHG emission reduction or removal or avoidance for issuance of Carbon Credit Certificates (CCCs).
Detailed procedure for offset mechanism under CCTS
Compliance and offset, side by side
How the two mechanisms differ, feature by feature.
How each mechanism works
Compliance cycle timeline
Each compliance year runs from April to March. Emissions are monitored by the OE all year, then verification, assessment, issuance and trading follow.
Offset Mechanism Timeline
Seven steps take a project from account registration to issued carbon credits, across four phases.
Account registration
Any entity can register itself as a Non-OE on the ICM portal.
Prepare project design document
Non-OE to prepare and submit a draft PDD to the Administrator, which will be published on the ICM portal for public comments.
Validation by ACVA
Third party validation to be conducted by ACVA. Additionally, Non-OE to address the comments received during the public consultation period.
Project registration
ACVA to submit a request for registration for the project activity to the Administrator. The project activity is registered as an ‘Offset Project’ upon successful review.
Monitoring
Non-OE to record and monitor all relevant data in accordance with the project monitoring plan described in the registered PDD.
Verification
During verification, Non-OE will appoint a different ACVA to review the project as per the Verification Standard and verify the actual GHG emission reductions or removals achieved in the verification period.
Issuance of carbon credits
The ACVA recommends the project for issuance of CCCs to the Administrator. Based on successful reviews of the verification report, CCCs are issued.
Sectors covered under the offset mechanism
Ten sectors are covered. Sub-sectors are not exhaustive.
Energy distribution
Energy demand
Chemical industries
Mining/mineral production
Metal production
From industrial gases (halocarbons and sulfur hexafluoride)
India’s carbon market, designed for your industry.
Whether you have an emission intensity target to meet or credits to earn, we plan the route that fits your sector.
India’s CCTS questions, answered plainly
Find the basics on how each mechanism works. For anything about your own obligation or project, talk to us.
It allows non-obligated entities to register projects that lead to GHG emission reductions, avoidance, or removals for the issuance of Carbon Credit Certificates (CCCs).
The Bureau of Energy Efficiency (BEE) is the Administrator of the CCTS and is responsible for registering projects and issuing CCCs in the Offset Mechanism.
January 1, 2025 is kept as the start date for ICM project activity registrations, and no retrospective projects will be considered.
A fixed crediting period of ten years, or a renewable crediting period of five years per period with a maximum of two renewals (total fifteen years).
Account registration is INR 5,000, annual maintenance INR 2,000, project registration INR 50,000–1,50,000 based on annual average reductions, post-registration change INR 25,000 per request, and issuance INR 5 per CCC, all non-refundable.
No — the ACVA (carbon auditor) performing verification must be different from the ACVA that performed the validation of the same project activity for any crediting period.
It is the mechanism under which obligated entities must comply with greenhouse gas emission intensity targets notified by the Central Government (MoEFCC).
BEE develops the sectoral trajectory, the technical committee evaluates each entity's baseline intensity, and MoEFCC notifies the annual targets for the trajectory period based on MoP's recommendations.
Carbon dioxide (CO₂) and perfluorocarbons (PFCs) from the obligated entities' operations, converted to CO₂ equivalent using IPCC GWP values.
Cement, Pulp & Paper, Aluminum, Petrochemicals, Petroleum Refining, etc with more sectors to be included as approved by the Central Government.