Understanding the Carbon Credit Trading Scheme: India - Legal Update

Introduction

The Carbon Credit Trading Scheme (CCTS) is a significant step by the Indian government to combat climate change and reduce greenhouse gas (GHG) emissions. Launched in 2023 under the Energy Conservation Act of 2001, the Carbon Credit Scheme India aims to establish a national framework for carbon trading, which incentivizes emission reductions through a market-based approach.

Under the CCTS, companies that reduce their GHG emissions below a set target receive Carbon Credit Certificates (CCC). These credits can be traded, allowing companies that exceed their emission targets to purchase additional credits, thus ensuring compliance. This system not only encourages companies to adopt greener practices but also fosters a market for carbon credits, making emission reductions economically viable.

The compliance mechanism is a core component of the CCTS. The Ministry of Environment, Forest and Climate Change (MoEFCC) sets GHG emission intensity targets, which are expressed as tonnes of CO2 equivalent per unit of product. Companies must meet these targets or purchase CCCs to cover any excess emissions. This compliance mechanism ensures that companies consistently work towards reducing their carbon footprint.

The CCTS also includes robust monitoring, reporting, and verification processes to ensure transparency and accuracy in emission reporting. Companies must adhere to stringent guidelines for monitoring their emissions, and independent verification bodies assess their compliance.

Conclusion

The CCTS represents a proactive approach by India to meet its climate goals. By integrating market mechanisms with regulatory oversight, the CCTS not only helps in reducing emissions but also promotes sustainable development and innovation in green technologies. This scheme is a crucial element in India’s strategy to combat climate change and transition towards a low-carbon economy.

Download: Understanding the Carbon Credit Trading Scheme: India