**Carbon Credit Trading Scheme (CCTS) **
**1. Latest Development **
- Sectoral Targets Announced: GHG emission intensity norms set for 8 high-emission industrial sectors under CCTS compliance mechanism.
- Power Sector Excluded: Despite contributing ~40% of India’s GHG emissions, power sector not included in Phase 1 (may be added later).
2. Core Concepts & Definitions
| Term | Definition | Significance |
|---|---|---|
| Carbon Credit (CCC) | 1 certificate = 1 tonne CO₂ equivalent reduced | Tradable unit under CCTS |
| GHG Emission Intensity | Emissions per unit of economic output (e.g., per tonne of steel) | Key compliance metric |
| NDC Target | 45% reduction in emission intensity/GDP by 2030 (vs. 2005) | CCTS is a key policy tool to achieve this |
3. Governance & Legal Framework
- Nodal Bodies:
- Bureau of Energy Efficiency (BEE) → Implementation
- National Steering Committee (NSCICM) → Policy oversight
- Legal Basis:
- Energy Conservation Act (2001) amended in 2022 to enable carbon markets.
- CCTS rules notified in 2023.
4. Key Mechanisms
A. Compliance Mechanism (Mandatory):
- Applies to 8 sectors: Aluminium, Cement, Pulp & Paper, Chlor-Alkali, Iron & Steel, Textiles, Petrochemicals, Refineries.
- Entities must meet sector-specific emission intensity targets.
- Surplus → Sell CCCs | Deficit → Buy CCCs.
B. Offset Mechanism (Voluntary):
- Non-obligated entities (e.g., MSMEs, farms) can generate credits via emission reductions.
5. Transition from PAT to CCTS
| Aspect | PAT Scheme | CCTS |
|---|---|---|
| Focus | Energy Efficiency | GHG Emission Intensity |
| Tradable Unit | ESCerts (Energy Saving Certificates) | Carbon Credit Certificates (CCC) |
| Scope | Energy-intensive industries | Direct GHG emitters (8 sectors) |
| Goal | Reduce energy consumption | Decarbonize industry |
6. Strategic Importance & Challenges
- Why CCTS?
- Drives low-carbon transition while maintaining industrial growth.
- Aligns with Panchamrit Goals (COP26) and NDC targets.
- Challenges:
- Data Accuracy: Robust MRV (Monitoring, Reporting, Verification) systems needed.
- Power Sector Exclusion: Critical gap (40% emissions uncovered).
- Market Liquidity: Ensuring sufficient CCC supply/demand.