India notifies Carbon Credit Trading Scheme 2023 for national market

On 28 June 2023 India's Ministry of Power notified the Carbon Credit Trading Scheme 2023, establishing a national carbon-credit market under the Energy Conservation Act 2001. The scheme creates compliance obligations for designated entities and a regulated trading framework affecting emissions-intensive Indian sectors.

On 28 June 2023, India's Ministry of Power announced the Carbon Credit Trading Scheme 2023, framed under clause (w) of section 14 of the Energy Conservation Act 2001 in consultation with the Bureau of Energy Efficiency. The scheme establishes a national carbon-credit market, defining a carbon credit as one tonne of carbon dioxide equivalent (tCO2e) of emissions reduced, removed or avoided. The Bureau of Energy Efficiency is designated administrator, identifying sectors, developing emission targets and issuing carbon credit certificates on National Steering Committee recommendations.

Obligated entities determined by the Ministry of Power must meet greenhouse gas emission intensity targets set by the Ministry of Environment, Forest and Climate Change. Entities exceeding targets receive carbon credit certificates, while those falling short must purchase credits from the market. Governance involves the National Steering Committee for the Indian Carbon Market, drawing representatives from ministries including Power, Environment, Finance, Niti Aayog, Steel, Coal, and Chemicals and Fertilizers. Trading is regulated by the Central Electricity Regulatory Commission via registered power exchanges.

Emissions-intensive Indian companies in sectors likely to be designated as obligated entities should prepare for forthcoming emission intensity targets and monitor the detailed procedures the National Steering Committee will issue covering monitoring, reporting, verification, certificate issuance, validity and pricing. Firms should track the Bureau of Energy Efficiency's accreditation of carbon verification agencies and the Central Electricity Regulatory Commission's market oversight rules, and assess whether to position as net credit sellers through early adoption of cleaner technologies.

Key figure — Carbon credit unit: one tonne of carbon dioxide equivalent (tCO2e)