UK Recognizes India's Carbon Credit Trading Scheme Under CBAM Framework

#GS-3 #Environment #Climate Change #Sustainable Development #Economy #Carbon Trading #CCTS #CBAM

Key takeaways

The United Kingdom officially recognized India's Carbon Credit Trading Scheme (CCTS) under its CBAM pricing framework.
First notified in June 2023 under the Energy Conservation (Amendment) Act, 2022, detailed CCTS rules took effect in July 2024.
Outperforming companies earn Carbon Credit Certificates (CCCs), where 1 certificate represents 1 tonne of CO2 equivalent saved.
Administered by BEE, CCTS absorbs the older PAT scheme to limit both direct (Scope 1) and indirect (Scope 2) emissions.

The United Kingdom has officially recognized India's Carbon Credit Trading Scheme (CCTS) as an approved carbon pricing framework under its Carbon Border Adjustment Mechanism (CBAM).

The Carbon Credit Trading Scheme (CCTS) is a national market framework designed to create the Indian Carbon Market (ICM).
It sets a price on greenhouse gas emissions and issues tradable Carbon Credit Certificates (CCCs) to encourage industrial decarbonization.
The government notified this scheme in June 2023 using powers under the Energy Conservation (Amendment) Act, 2022.
It later introduced detailed compliance rules in July 2024 to operationalize the framework.
The main objective is to accelerate economic decarbonization and help India meet its Nationally Determined Contributions (NDCs) under the Paris Agreement through a transparent market.

The scheme uses a dual-track model that combines a mandatory compliance system for heavy industries with a voluntary offset mechanism for other entities.
The National Steering Committee for the Indian Carbon Market (NSCICM) governs the scheme, co-chaired by the Ministry of Power and MoEFCC.
The Bureau of Energy Efficiency (BEE) serves as the primary administrative authority managing day-to-day operations.
CCTS will absorb and replace the older Perform, Achieve, and Trade (PAT) energy efficiency program.
It moves industrial units away from simple energy consumption goals toward strict carbon emission intensity benchmarks.
Facilities that cut emissions below their set target receive Carbon Credit Certificates (CCCs), where 1 certificate equals 1 tonne of CO2 equivalent.
Entities that fail to achieve their target must buy certificates from the market to meet their regulatory compliance.
The scope follows a gate-to-gate method covering direct operational emissions (Scope 1) and indirect electricity emissions (Scope 2).
The mechanism focuses on reducing CO2 and perfluorocarbons (PFCs) in its initial implementation phase.

This recognition helps protect Indian exports like steel and aluminium from heavy carbon border tariffs in international markets.
Assigning a clear price to carbon emissions motivates companies to invest in clean technologies and sustainable production methods.