Compliance Mechanism Under India's Carbon Credit Trading Scheme

On June 28, 2023, the Ministry of Power ("MoP") in India notified the Carbon Credit Trading Scheme ('CCTS') under the Energy Conservation Act, 2001, which inter alia aims to reduce greenhouse gas ("GHG") emissions through a market-based mechanism. This approach quantifies environmental losses by assigning costs to emissions and incentivizing reduction efforts.

The CCTS introduced a compliance mechanism requiring obligated entities to meet GHG emission intensity targets. It was further amended on December 19, 2023, inter alia to include an 'Offset Mechanism' allowing non-obligated entities to register and seek Carbon Credit Certificates ("CCCs") for projects that reduce or avoid GHG emissions.