Carbon Credit Trading Scheme (CCTS)

CCTS

India’s Carbon Credit Trading Scheme (CCTS)

Carbon Credit Trading Scheme (CCTS): Proposed under the Energy Conservation (Amendment) Act of 2022, CCTS is a national compliance-based carbon market.

CCTS Objectives

Set emission intensity reduction targets for specific sectors.

Allow entities exceeding emission allowances to purchase carbon credits from those who reduce emissions below their caps.

Provide financial incentives for businesses to lower their carbon footprint.

Regulatory Carbon Market

The Energy Conservation (Amendment) Act 2022 lays the groundwork for a domestic regulatory carbon market.

PAT Scheme

The CCTS will build on the PAT (Perform, Achieve, and Trade) Scheme, introduced in 2012, which sets specific energy reduction targets for energy-intensive sectors to enhance efficiency and reduce emissions.

PAT Scheme Outcomes:

PAT II led to an excess of ESCerts (Energy Savings Certificates) due to target overachievement, highlighting issues like surplus ESCerts, low market activity, lenient targets, and increased non-compliance

Risk of unambitious target setting noted by CSE; the CCTS must set ambitious targets for individual entities and sectors to prevent surplus carbon credits and ensure genuine progress.

Importance of establishing a high floor price and implementing market stability mechanisms to drive effective emissions reductions.

CCTS Impact

The scheme will reinforce India’s climate change commitment and mobilize financing for regional carbon projects.

CCTS & Prithvi

Prithvi will play a key role in the CCTS market as an active participant, striving to become a certified carbon credit seller. The company will provide India-based carbon projects, developed and registered within the country, to generate carbon credits for the scheme. This strategy ensures that India’s carbon credit needs are met with locally sourced solutions, addressing national challenges effectively.