06 · GS-III: Climate Mitigation, Carbon Markets & Energy Conservation
Carbon Credit Trading Scheme (CCTS): Domestic Carbon Market, Obligated Entities and Green Credit Programme
NEWS PEG
- The Bureau of Energy Efficiency (BEE) and Ministry of Power finalized the operational roadmap for the Carbon Credit Trading Scheme (CCTS) under the Energy Conservation (Amendment) Act, 2022.
- The scheme transitions India from the energy-saving certificates under PAT to a full-fledged compliance carbon market, setting mandatory greenhouse gas emission reduction trajectories for designated industrial sectors (Iron & Steel, Cement, Pulp & Paper, Petrochemicals).
- Obligated entities that exceed their greenhouse gas emission reduction targets will receive tradeable Carbon Credit Certificates (CCCs) that can be traded on registered domestic power exchanges.
STATIC FOUNDATION
- Energy Conservation (Amendment) Act, 2022: Empowers the Central Government to establish a domestic Carbon Credit Trading Scheme and mandate non-fossil energy consumption minimum shares.
- Carbon Credit Certificate (CCC): One CCC represents one metric tonne of carbon dioxide equivalent (tCO2e) reduced or avoided through energy efficiency and clean technology adoption.
- Green Credit Programme (GCP): Voluntary market-based initiative launched by MoEFCC under LiFE (Lifestyle for Environment) to incentivize non-carbon environmental actions (afforestation, water conservation, sustainable agriculture).
- Article 6 of Paris Agreement: Governs international carbon market mechanisms; Article 6.2 (bilateral cooperation) and Article 6.4 (multilateral centralized carbon crediting mechanism).
PRELIMS TRAP & PYQ BRIDGE
MAINS ENHANCEMENT
- Domestic Carbon Pricing Standard: Insulating Indian Exports from CBAM — Creating a verified domestic carbon price to claim full offsets against EU border carbon adjustments.
- Transitioning from PAT to CCTS: Expanding Beyond Energy Efficiency to Direct GHG Reductions — Driving deep process decarbonization in heavy manufacturing.
- Market Liquidity & Integrity: Preventing Double-Counting under Article 6.4 — Establishing a robust national carbon registry to maintain international certification integrity.