Carbon Credit Trading Scheme, 2023

On 28 June 2023, the Ministry of Power enacted a Carbon Credit Trading Scheme (“CCTS”), which is set to take effect by 2025-2026. The Government has identified nine energy-intensive sectors for inclusion under the CCTS, including Refinery and Petrochemicals.

The CCTS introduces two mechanisms: (1) a compliance mechanism; and (2) an offset mechanism. Under the compliance mechanism, the Ministry of Environment, Forest and Climate Change notifies of GHG emission reduction targets to business entities (known as obligated entities) based on recommendations from the Ministry of Power. Emission reduction below the notified target entitles the entity to obtain a Carbon Credit Certificate (“CCS”). In contrast, any shortfall in meeting the target would require the entity to purchase CCS from the Indian carbon market. In parallel, under the offset mechanism, non-obligated entities are permitted to voluntarily register and seek CCS for reduction, removal or avoidance of GHG emissions. 

 

At present, the compliance mechanism only covers emissions of carbon dioxide and perfluorocarbon gases, but other GHGs may be added in the future. Further, the offset mechanism, in Phase 2 of its implementation, would include fugitive emissions from fuels (solid, oil and gas). Illustratively, this would permit non-obligated entities that recover and utilise gas from oil fields to seek CCS. 

Want to know more about this policy ? Learn more (https://beeindia.gov.in/sites/default/files/2024-10/OM%20for%20approved%20Sectors%20in%20Offset%20Mechanism%20under%20CCTS.PDF)