Understanding India's CCTS and the Indian Carbon Market

The Carbon Credit Trading Scheme, notified in 2023 under the Energy Conservation (Amendment) Act, 2022, gave India its first statutory domestic carbon market. It runs on two parallel tracks that are easy to confuse but serve very different participants.

The compliance mechanism

Large energy-intensive industries already covered under the Perform, Achieve and Trade scheme, think cement, steel, aluminium, and fertiliser plants, are assigned greenhouse gas intensity reduction targets by the Bureau of Energy Efficiency. A facility that beats its target earns Carbon Credit Certificates for the surplus. A facility that misses its target must acquire enough certificates to cover the shortfall, or face a financial penalty under the Act.

The offset mechanism

Entities not covered by a compliance obligation, including private project developers, can register eligible projects, have them verified against BEE-approved methodologies, and receive Carbon Credit Certificates for the emissions they avoided or removed. This is the track relevant to rice-AWD, afforestation, biochar, mangrove, and renewable-energy project developers, the same project types TrueCarbon Xchange's sibling DMRV platforms already generate verified activity data for.

Who runs what

• Bureau of Energy Efficiency (BEE): sets methodologies, approves projects, sets compliance targets.
• Grid Controller of India (Grid-India), through the National Carbon Credit Registry: issues and tracks Carbon Credit Certificates. This is the actual system of record.
• IEX, PXIL, HPX: the CERC-licensed power exchanges where Carbon Credit Certificates are bought and sold. There is no separate carbon-only trading venue.

Why trading was routed through existing power exchanges

India deliberately did not create a new licensed exchange for carbon trading. Instead, it extended the mandate of power exchanges that already had a CERC trading license, market surveillance infrastructure, and settlement systems in place. This was a regulatory choice, not an oversight, and it has a direct consequence for anyone building software in this space: a platform that wants to help a project developer register, track, and eventually monetise its certificates has a real, valuable role to play right up until the point of trade execution, at which point the transaction has to move to IEX, PXIL, or HPX.

This is exactly why TrueCarbon Xchange positions itself as registry and pre-trade infrastructure rather than as an exchange in the CCTS sense. Building a CERC-licensed trading venue is a multi-year regulatory undertaking that would compete with, rather than complement, the existing power exchanges.