India's first Carbon Credit Certificates (CCCs) are expected to trade in October 2026 on the country's power exchanges: IEX, PXIL and HPX. Each certificate represents one tonne of CO2 equivalent, trading is monthly and exchange-only, and the price will move between a floor and a ceiling approved by the regulator.
The start of carbon credit trading in India turns the country's Carbon Credit Trading Scheme (CCTS) from a reporting exercise into a market with a price. For hundreds of industrial companies, that means the cost of missing an emissions target, and the reward for beating one, become real numbers for the first time. This article explains how the market works, who takes part, what will shape the opening price, and what it means for Indian exporters facing the EU's carbon border tax.
- The CCTS is India's compliance carbon market, notified in June 2023 under the Energy Conservation (Amendment) Act, 2022. It sets emission intensity targets for obligated industrial entities.
- The first compliance filings, covering FY 2025-26, were due on 31 July 2026. Trading of Carbon Credit Certificates is expected around October 2026.
- Trading happens only on regulated power exchanges (IEX, PXIL and HPX), in monthly sessions, with no over-the-counter deals at launch.
- The market has a compliance segment for obligated entities and an offset segment for registered projects from non-obligated entities.
- The regulator will approve a floor price and a ceiling before trading starts. Analysts' opening price scenarios vary widely, so treat early figures as estimates.
- What the CCTS is
- Who must take part
- How Carbon Credit Certificates are created
- How trading works on the exchanges
- Who runs what
- What will shape the first price
- What it means for obligated companies
- What it means for project developers
- What it means for exporters facing CBAM
- How the CCTS compares with the EU ETS
- What to watch in the first months
- Frequently asked questions
What the CCTS is
The Carbon Credit Trading Scheme is India's mandatory domestic carbon market. The government notified it in June 2023, using powers created by the Energy Conservation (Amendment) Act, 2022, and it establishes what officials call the Indian Carbon Market.
It builds on more than a decade of experience with the Perform, Achieve and Trade (PAT) scheme, which set energy efficiency targets for large industrial plants and let them trade Energy Saving Certificates. The CCTS keeps that idea but changes the unit: instead of energy saved, it measures greenhouse gas emission intensity, meaning the emissions produced per unit of output, such as per tonne of cement or aluminium.
That design choice matters. The CCTS is not a cap-and-trade system with an absolute limit on total emissions, like the EU Emissions Trading System. A plant that grows its output can emit more in total and still meet its target, as long as its emissions per unit fall to the required level. Supporters see intensity targets as a practical fit for a fast-growing economy. Critics argue they give less certainty about total emissions cuts. Either way, they shape how credits are created and how many there will be.
Who must take part
Companies covered by the scheme are called obligated entities. Roughly 490 of them now carry binding emission intensity targets, drawn from energy-intensive industrial sectors. The first targets were notified in October 2025 for aluminium, cement, chlor-alkali, and pulp and paper, with further sectors being phased in.
Targets use FY 2023-24 as the baseline and apply to the compliance years FY 2025-26 and FY 2026-27, with tighter targets in the second year. Each obligated entity reports its performance for the year, has it checked by an accredited carbon verification agency, and files the result. The first of those filings, known as Form A, were due on 31 July 2026 for FY 2025-26.
The CCTS also includes an offset mechanism for non-obligated entities. Organisations outside the compliance sectors can register qualifying emission reduction or removal projects under approved methodologies and earn certificates for them.
How Carbon Credit Certificates are created
A Carbon Credit Certificate is the scheme's tradable unit. One CCC represents one tonne of CO2 equivalent.
In the compliance segment, certificates come from performance against targets. An obligated entity whose verified emission intensity falls below its target earns CCCs for the difference, converted into tonnes. An entity that misses its target has a shortfall, which it must cover by buying and surrendering CCCs.
In the offset segment, certificates come from registered projects run by non-obligated entities, issued after their results are verified.
The Bureau of Energy Efficiency issues certificates into accounts held in the scheme's registry. Once issued, they can be traded on the exchanges and, for obligated entities, surrendered to meet compliance. Surrender is the compliance counterpart of retirement in the voluntary market: the certificate is used and cannot be used again. Our guide explains what retiring a credit means.
How trading works on the exchanges
The Central Electricity Regulatory Commission (CERC) set the trading rules in its Terms and Conditions for Purchase and Sale of Carbon Credit Certificates Regulations, 2026, notified in February 2026 and published in the official gazette in April 2026.
The main features:
| Feature | Rule |
|---|---|
| Where | Only on CERC-registered power exchanges: Indian Energy Exchange (IEX), Power Exchange India Limited (PXIL) and Hindustan Power Exchange (HPX) |
| How often | Monthly trading sessions |
| Over-the-counter deals | Not permitted at launch |
| Segments | A compliance segment for obligated entities and an offset segment for non-obligated entities |
| Unit | One CCC equals one tonne of CO2 equivalent |
| Price band | A floor price and a forbearance (ceiling) price approved by CERC before trading starts |
| Registration | Participants register on the Indian Carbon Market portal, the registry and a power exchange |
The exchange-only design is deliberate. Keeping all trades on regulated exchanges at launch is meant to make price discovery transparent from day one, rather than leaving the first prices hidden in private bilateral deals. India's power exchanges already run monthly markets for Renewable Energy Certificates, so the infrastructure and the trading rhythm are familiar to many participants.
Who runs what
Several institutions share responsibility, and knowing which does what saves time.
- Ministry of Power: oversees the scheme.
- Ministry of Environment, Forest and Climate Change: notifies the emission intensity targets.
- Bureau of Energy Efficiency (BEE): administers the scheme, registers participants, monitors compliance and issues certificates.
- Grid Controller of India (Grid-India): operates the scheme's registry, where certificates are held and transactions recorded.
- Central Electricity Regulatory Commission (CERC): regulates trading on the power exchanges.
- Power exchanges (IEX, PXIL, HPX): run the trading sessions.
- Accredited carbon verification agencies: check entities' reported performance before certificates are issued.
What will shape the first price
No Carbon Credit Certificate has yet traded on an exchange, so there is no market price yet. Four things will decide where the first sessions clear.
- The price band. CERC's floor and ceiling set the outer limits. Until they are published, any price estimate is a guess within an unknown range.
- Supply and demand from the first compliance year. The balance between entities with surpluses and entities with shortfalls in FY 2025-26 will drive the first sessions. That balance depends on how demanding the targets proved to be, which the market will learn from the verified results.
- Offset supply. How many offset-segment certificates are ready to trade at launch will affect the price, especially if offset and compliance certificates compete for the same buyers.
- Banking and future targets. If certificates can be held for use against tighter future targets, holders may keep them rather than sell, supporting the price.
Analysts have published scenarios. One analysis suggests the first phase could open somewhere between Rs 400 and Rs 900 per tonne. Treat such ranges as informed estimates, not forecasts, until the price band is published and the first sessions clear.
For context, India's power exchanges cleared Renewable Energy Certificates between Rs 350 and Rs 370 in August 2026. RECs are a different instrument covering renewable electricity rather than emissions, but they show the price levels Indian environmental certificate markets currently trade at.
What it means for obligated companies
For obligated entities, the launch converts a compliance obligation into a balance sheet item.
- Know your position. An entity's verified intensity against its target decides whether it holds a surplus to sell or a shortfall to cover. Getting that number right, and verified, is the foundation of everything else.
- Register in time. Trading requires registration on the Indian Carbon Market portal, the registry and at least one power exchange. Entities that wait until they need to buy may find themselves unable to act in the session that matters.
- Plan across both compliance years. FY 2026-27 targets are tighter. A surplus sold now might be needed later, and a shortfall left uncovered now carries consequences under the scheme.
- Treat the price as a cost of production. Once the market has a price, an emission intensity gap has a rupee value. Investment cases for efficiency, fuel switching and process changes can now be compared directly against the cost of buying certificates.
What it means for project developers
India is one of the largest sources of credits in the global voluntary carbon market. Many Indian projects are registered with international programmes such as Verra and Gold Standard; CRBN.credit's database lists the carbon credit projects in India across seven registries, with their issuance and retirement records.
The CCTS offset segment opens a second route for some developers: selling certificates into a regulated domestic market with transparent exchange prices, rather than, or alongside, selling internationally. Which route makes sense depends on eligibility under the scheme's approved methodologies, on relative prices, and on how India handles authorisation of credits for international transfer under Article 6 of the Paris Agreement, so that the same reduction is not counted both at home and abroad.
What it means for exporters facing CBAM
The CCTS launch has a direct connection to the EU's Carbon Border Adjustment Mechanism, which entered its definitive phase on 1 January 2026 and covers imports of iron and steel, aluminium, cement, fertilisers, hydrogen and electricity.
CBAM allows an importer to deduct a carbon price that was effectively paid in the country of origin. In principle, that creates a question every Indian exporter in a CBAM sector will ask: can costs paid under the CCTS reduce what an EU importer owes under CBAM?
The honest answer today is that it is not settled. The CCTS is an intensity-based scheme in which only entities with shortfalls pay, and only for the shortfall. How, and whether, the EU treats such costs as a carbon price paid depends on the EU's rules for recognising carbon prices paid abroad and on how they apply to India's scheme. Exporters should not build a CBAM cost plan that assumes a deduction until the position is clear.
What exporters can do now is prepare the data CBAM requires. Much of what obligated entities already report under the CCTS overlaps with what a CBAM declaration needs, but not all of it. Our guide to how CBAM works covers the rest of the regime.
Find the gaps before the verifier does.
The India CBAM Center sets out what CCTS and PAT reporting covers for CBAM, and its free calculator and readiness tools help exporters see where the gaps are.
How the CCTS compares with the EU ETS
Comparisons with the EU's market are common, and they help clarify what the CCTS is and is not.
| Aspect | India CCTS | EU ETS |
|---|---|---|
| Target type | Emission intensity per unit of output | Absolute cap on total emissions |
| Unit | Carbon Credit Certificate, 1 tCO2e | EU Allowance, 1 tCO2e |
| How units are created | Earned by beating intensity targets, or from registered offset projects | Created under the cap and auctioned or allocated free |
| Where trading happens | Power exchanges only at launch, monthly | Exchanges and over the counter, continuously |
| Price controls | Floor and ceiling approved by CERC | Market Stability Reserve manages supply |
The EU's system took years to mature, through several phases and reforms. Our guide to how the EU ETS works explains that history, which is a useful reference for how early compliance markets tend to evolve.
What to watch in the first months
- The price band. CERC's floor and ceiling will frame the first sessions.
- First session volumes. Thin early trading would be normal for a new market. Volume in the first few months will show whether enough surplus holders are willing to sell.
- The split between segments. How many offset certificates trade compared with compliance certificates.
- New sectors. Targets for further sectors widen the market and change the balance of supply and demand.
- CBAM recognition. Any EU guidance on how intensity-based schemes count as a carbon price paid would change the economics for Indian exporters immediately.
The Compliance Calendar tracks CBAM, EU ETS and other dates that bind, and the compliance regulation tracker covers the status of carbon pricing regimes worldwide.
CRBN.credit provides data and research on carbon markets. It does not broker, sell or execute trades in carbon credits or Carbon Credit Certificates.
Frequently Asked Questions
What is the CCTS in India?
The Carbon Credit Trading Scheme is India's compliance carbon market, notified in June 2023 under the Energy Conservation (Amendment) Act, 2022. It sets greenhouse gas emission intensity targets for obligated industrial entities and lets them trade Carbon Credit Certificates.
When does carbon credit trading start in India?
The first trades of Carbon Credit Certificates are expected around October 2026, on CERC-registered power exchanges.
Where are carbon credit certificates traded in India?
Only on CERC-registered power exchanges: the Indian Energy Exchange (IEX), Power Exchange India Limited (PXIL) and Hindustan Power Exchange (HPX). Over-the-counter trading is not allowed at launch.
What is a Carbon Credit Certificate?
The CCTS's tradable unit. One CCC represents one tonne of CO2 equivalent, earned by beating an emission intensity target or issued to a registered offset project.
What will a carbon credit certificate cost in India?
There is no market price yet. CERC will approve a floor and a ceiling before trading, and analysts' opening scenarios range widely, so early estimates should be treated with caution.
Can companies outside the obligated sectors take part?
Yes. Non-obligated entities can register qualifying projects under the scheme's offset mechanism and trade certificates in the offset segment.
Does paying under the CCTS reduce CBAM costs?
That is not settled. CBAM allows a deduction for a carbon price effectively paid in the country of origin, but how this applies to India's intensity-based scheme depends on EU rules that have not yet confirmed it.
Sources
- Central Electricity Regulatory Commission, CERC (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2026
- Ministry of Power, Carbon Credit Trading Scheme notification (June 2023)
- Bureau of Energy Efficiency, Indian Carbon Market portal
- Saur Energy, "India's Carbon Market Edges Toward Its First Trade" (August 2026)
- Bilancia Group, "How Carbon Credit Trading Will Work in India" (September 2026)
- Reclimatize, "India's Carbon Credit Certificate Market" (September 2026)
A note on this article. This article reflects the CCTS framework and published reporting as of 3 October 2026, before the first trading session. It will be updated when the first session clears. It is general information, not legal or investment advice.