Compliance Obligations Under CCTS – What 490 Entities Must Do Now
Introduction: The Compliance Era Has Begun
The Carbon Credit Trading Scheme (CCTS) is no longer a future proposal. It is not a pilot project. It is not something to prepare for "someday."
It is here. It is the law. And it has real consequences.
As of fiscal year 2025–26 (starting 1 April 2025) , compliance obligations under the CCTS are in force for approximately 490 entities across seven energy-intensive sectors. Covered entities now have legally binding GHG emission intensity targets for the compliance years 2025–26 and 2026–27, using fiscal year 2023–24 as the baseline.
The first compliance date is July 31, 2026 for the 2025-26 compliance year. Entities that outperform their targets will be eligible to receive Carbon Credit Certificates (CCCs), tradeable on India's power exchanges; those that fall short must purchase and surrender an equivalent number.
This is the moment CCTS moves from a designed instrument to a tested one. The July 31 filing deadline is the first real test of India's compliance carbon market, with genuine stakes for every obligated entity.
This guide provides a comprehensive overview of the compliance obligations under the CCTS, what obligated entities must do, and how to avoid penalties.
The Legal Framework: Energy Conservation Act, 2001
The Foundation
The CCTS derives its legal authority from the Energy Conservation Act, 2001 (52 of 2001) .
Key Amendments
| Amendment | What It Did |
|---|---|
| Energy Conservation (Amendment) Act, 2022 | Inserted Section 14AA, empowering the Central Government to specify a Carbon Credit Trading Scheme and issue Carbon Credit Certificates |
| CCTS, 2023 (S.O. 2825(E)) | Notified on June 28, 2023, establishing the institutional architecture |
| CCTS Amendment (S.O. 5369(E)), 2023 | Added the Offset Mechanism on December 19, 2023 |
| Greenhouse Gases Emission Intensity Target Rules, 2025 | Made GEI reduction targets legally binding for obligated entities |
The Greenhouse Gases Emission Intensity Target Rules, 2025
The Greenhouse Gases Emission Intensity Target Rules, 2025 make GEI reduction targets legally binding for an initial set of obligated entities in aluminum, cement, chlor-alkali, and paper and pulp, with targets expressed for FY 2025–2026 and FY 2026–2027.
The Institutional Framework
| Institution | Role |
|---|---|
| Bureau of Energy Efficiency (BEE) | Administrator — develops procedures, registers participants, monitors compliance |
| Grid Controller of India | Registry — maintains electronic accounts, verifies transfers, records ownership |
| Central Electricity Regulatory Commission (CERC) | Regulator — sets price bands, oversees market operations, intervenes in abnormal price movements |
The 490 Obligated Entities: Who Is Covered
The Sectors and Entities
| Sector | Number of Entities | Status |
|---|---|---|
| Aluminium | ~13 | Notified October 2025 |
| Cement | ~186 | Notified October 2025 |
| Chlor-Alkali | ~30 | Notified October 2025 |
| Pulp and Paper | ~53 | Notified October 2025 |
| Subtotal (Phase 1) | 282 | |
| Petroleum Refining | ~25 | Notified January 2026 |
| Petrochemicals | ~30 | Notified January 2026 |
| Textiles | ~173 | Notified January 2026 |
| Secondary Aluminium | ~15 | Notified January 2026 |
| Subtotal (Phase 2) | 208 | |
| Total | 490 |
The Two-Phase Notification Process
The targets were notified in two phases:
Phase 1 (October 2025): The first four sectors — aluminum, cement, chlor-alkali, and pulp and paper — were notified in October 2025.
Phase 2 (January 2026): Followed by petroleum refining, petrochemicals, and textiles in January 2026.
The Remaining Sectors
Final targets for the remaining two covered sectors — iron and steel and fertilizer — are still pending.
Future Coverage
Once all nine energy-intensive sectors are notified, around 740 entities will have legally binding emission intensity targets for the compliance years 2025-26 and 2026-27, using fiscal year 2023-24 as the baseline.
The Nine Sectors: Full Sector-Wise Breakdown
The Nine Sectors Under CCTS
| Sector | Status | Entities | Key Companies |
|---|---|---|---|
| Aluminium | Notified (October 2025) | 13 | Hindalco, Vedanta, NALCO |
| Cement | Notified (October 2025) | 186 | UltraTech, ACC, Ambuja, Shree Cement |
| Chlor-Alkali | Notified (October 2025) | 30 | Gujarat Alkalies, DCW Ltd |
| Pulp and Paper | Notified (October 2025) | 53 | ITC, JK Paper, Tamil Nadu Newsprint |
| Petroleum Refining | Notified (January 2026) | 25 | Reliance, Indian Oil, BPCL, HPCL |
| Petrochemicals | Notified (January 2026) | 30 | Reliance Industries, GAIL |
| Textiles | Notified (January 2026) | 173 | Welspun, Arvind, Vardhman |
| Iron and Steel | Draft notified (June 2026) | 255 | Tata Steel, JSW Steel, SAIL |
| Fertilizer | Pending | 35+ | IFFCO, Coromandel, GSFC |
The Transition from PAT
This marks the start of a gradual transition from India's existing Perform, Achieve and Trade (PAT) energy efficiency program, which previously governed these sectors, to the CCTS compliance mechanism.
Sector Coverage by Emissions
The CCTS compliance mechanism is set to initially cover over 700 million tonnes of CO₂e, placing India among the world's largest emissions trading systems.
The Compliance Years and Key Deadlines
The Compliance Years
Covered entities have legally binding GHG emission intensity targets for the compliance years 2025–26 and 2026–27.
Retroactive Application
Compliance obligations apply retroactively, with the first compliance date on July 31, 2026 for the 2025-26 compliance year.
Key Deadlines
| Deadline | Event | Description |
|---|---|---|
| July 31, 2026 | Form A Filing | Submit Performance Assessment Document to BEE |
| September 30, 2026 | Verification Submission | Submit GHG emissions report and verification (within 2 months of Form A) |
| October 2026 | First CCC Trading | First trading of carbon credit certificates expected on power exchanges |
The Compliance Cycle
| Step | Description | Timeline |
|---|---|---|
| 1. Monitoring | Track emissions and production data | Throughout compliance year |
| 2. Form A Filing | Submit Performance Assessment Document | July 31, 2026 |
| 3. Verification | Submit GHG emissions report and verification | Within 2 months of Form A filing |
| 4. Assessment | BEE assesses compliance | Following verification |
| 5. Credit Trading | Trade CCCs on Power Exchanges | Starting October 2026 |
Form A: The Performance Assessment Document
What Is Form A?
Form A is the Performance Assessment Document that obligated entities must submit to the Bureau of Energy Efficiency (BEE). It is the primary compliance filing document under the CCTS.
What Form A Requires
- Verified emissions data for the compliance year
- GHG emissions report
- Compliance assessment
- Performance against emission intensity targets
- Monitoring and verification plans
The Filing Deadline
Form A must be filed by July 31, 2026.
The Submission Process
The obligated entity within four months of the completion of the compliance year shall submit the GHG emissions report and GHG. This submission is based on the claim made by the obligated entity in Form 'A' and must occur within two months from the final date of submission of the aforementioned Form 'A'.
What Happens If You Don't File
Failure to file Form A by the deadline constitutes non-compliance under the Energy Conservation Act, 2001, and triggers the Environmental Compensation penalty (2× average market price of CCCs).
Preparation Checklist
| Item | Action |
|---|---|
| Baseline Data | Gather 2023-24 production and emissions data |
| Emission Intensity | Calculate baseline emission intensity |
| Target | Understand your notified target |
| Gap Analysis | Calculate compliance gap |
| Reduction Measures | Document any in-house reductions |
| Credit Procurement | Document any CCCs procured |
| Verification | Ensure data is verified by an ACV agency |
Step-by-Step: What Obligated Entities Must Do
Step 1: Confirm Your Obligated Status
Action: Check if your facility appears on the notified list of obligated entities.
Timeline: Immediate
Step 2: Calculate Your Baseline
Action: Using your 2023-24 data, calculate your emission intensity.
Emission Intensity = Total GHG Emissions (tCO₂e) / Total Output (units)
Timeline: 1-2 weeks
Step 3: Understand Your Target
Action: Your target is notified at the sub-sector level. Confirm your specific target.
Timeline: 1-2 weeks
Step 4: Assess Your Compliance Gap
Action: Calculate the difference between your current emission intensity and your target.
Gap = Current Intensity – Target Intensity
Timeline: 1-2 weeks
Step 5: Develop a Compliance Strategy
Pathway A: In-House Reduction
- Identify cost-effective reduction opportunities
- Implement energy efficiency, fuel switching, or process optimization
Pathway B: Credit Procurement
- Determine the number of CCCs required
- Procure CCCs through a trusted broker
Timeline: 2-4 weeks
Step 6: File Form A
Action: Submit Form A with all required documentation through the Indian Carbon Market Portal.
Timeline: Before July 31, 2026
Step 7: Submit Verification
Action: Submit the GHG emissions report and verification within 2 months of Form A filing.
Timeline: Within 2 months of July 31, 2026
Step 8: Engage an Accredited Carbon Verification Agency
Action: Data quality, audit trails, and energy management integration are not just reporting tasks. They become cost items and compliance inputs.
Timeline: 2-4 weeks
Step 9: Register on the Indian Carbon Market Portal
Action: Complete registration on the ICM Portal for CCC management and trading.
Timeline: 1-2 weeks
The Role of Accredited Carbon Verification Agencies
What Is an ACV Agency?
An Accredited Carbon Verification (ACV) agency is an independent third-party entity that verifies GHG emissions data and compliance with CCTS requirements.
ACV Agency Requirements
| Requirement | Details |
|---|---|
| Accreditation | Must be accredited by BEE or equivalent authority |
| Financial Stability | Must demonstrate financial resources and stability |
| Expertise | Sector-specific expertise in GHG emissions |
| Independence | Must be independent and impartial |
The ACV Process
| Step | Description |
|---|---|
| 1. Data Submission | Obligated entity submits emissions data |
| 2. Document Review | ACV agency reviews documentation |
| 3. Site Visit | ACV agency conducts site visit (if required) |
| 4. Verification Report | ACV agency prepares Verification Report |
| 5. Certificate of Verification | ACV agency issues Certificate of Verification |
Why Verification Matters
Verification ensures:
- Data accuracy and integrity
- Compliance with methodology requirements
- Credibility of emission reduction claims
- Eligibility for Carbon Credit Certificates
GHG Emissions Report: Submission and Verification
What Is the GHG Emissions Report?
The GHG Emissions Report is a comprehensive document that reports the obligated entity's GHG emissions for the compliance year.
Submission Requirement
The obligated entity within four months of the completion of the compliance year shall submit the GHG emissions report.
The Verification Requirement
This submission is based on the claim made by the obligated entity in Form 'A' and must occur within two months from the final date of submission of the aforementioned Form 'A'.
Key Components
| Component | Description |
|---|---|
| Scope 1 Emissions | Direct emissions from fuel combustion and industrial processes |
| Scope 2 Emissions | Indirect emissions from electricity and heat consumption |
| Production Data | Total output in appropriate units |
| Emission Intensity | Calculated emission intensity |
| Monitoring Plan | How emissions were monitored |
| Verification Statement | Independent verification of data |
The Verification Timeline
| Step | Timeline |
|---|---|
| Form A Submission | July 31, 2026 |
| Verification Submission | Within 2 months of Form A filing |
| GHG Emissions Report | Within 4 months of completion of compliance year |
Penalties for Non-Compliance
The Consequences
Obligated entities that fail to meet their targets face significant consequences:
| Consequence | Description |
|---|---|
| Environmental Compensation | Financial penalty equal to 2× average market price of CCCs |
| Reputational Damage | Market perception as an efficiency laggard |
| Legal Consequences | Violation of the Energy Conservation Act, 2001 |
| Export Competitiveness | Higher CBAM liability for exporters |
The Environmental Compensation
The Central Pollution Control Board (CPCB) is empowered to levy environmental compensation equivalent to twice the average market price of carbon credit certificates for the relevant period.
Environmental Compensation = Shortfall (tonnes CO₂e) × Average Market Price × 2
Example Calculation
| Variable | Assumption |
|---|---|
| Shortfall | 10,000 tonnes CO₂e |
| Average carbon credit price | ₹800 per tonne |
| Value of shortfall | ₹80,00,000 |
| Environmental Compensation (2×) | ₹1,60,00,000 |
Payment Timeline
The penalty must be paid within 90 days of the imposition order.
The Environmental Compensation Penalty
What Is Environmental Compensation?
Environmental Compensation is a financial penalty imposed on obligated entities that fail to meet their GHG emission intensity targets under the CCTS.
The Amount
Environmental Compensation = Shortfall (tonnes CO₂e) × Average Market Price × 2
Who Imposes the Penalty?
The Central Pollution Control Board (CPCB) is empowered to levy environmental compensation.
The Process
| Step | Description |
|---|---|
| 1. Assessment | The CPCB assesses the entity's compliance position |
| 2. Calculation | The CPCB calculates the shortfall |
| 3. Price Determination | The CPCB determines the average market price |
| 4. Penalty Order | The CPCB issues a penalty order |
| 5. Payment | The entity must pay the penalty within 90 days |
Where the Money Goes
The penalties collected are deposited into a dedicated Environmental (Protection) Fund:
- 75% to State Consolidated Funds
- 25% retained by the Centre
The Transition from PAT to CCTS: What Has Changed
What Was PAT?
The Perform, Achieve and Trade (PAT) scheme was India's mandatory energy efficiency program covering more than 1,000 entities from 13 energy-intensive sectors.
PAT vs. CCTS
| Aspect | PAT | CCTS |
|---|---|---|
| Focus | Energy efficiency | GHG emissions |
| Metric | Tonnes of oil equivalent | Tonnes of CO₂ equivalent |
| Scope | Energy consumption | Direct and indirect emissions |
| Compliance | Energy intensity targets | Emission intensity targets |
Why the Transition Matters
While PAT focused on energy efficiency, the CCTS directly targets GHG emissions, aligning more closely with India's climate commitments under the Paris Agreement.
What This Means for Entities
- Entities must now measure emissions, not just energy consumption
- The scope of compliance has expanded significantly
- New skills and systems are required for emissions monitoring and reporting
- Carbon credits can be earned and traded, creating new revenue opportunities
The Indian Carbon Market Portal: Registration and Use
What Is the Portal?
The Indian Carbon Market Portal was launched on March 21, 2026, serving as the central digital backbone of the Indian Carbon Market.
Portal Functions
| Function | Description |
|---|---|
| Entity Registration | Register obligated and non-obligated entities |
| CCC Issuance | Track and issue Carbon Credit Certificates |
| Validation and Verification | Manage third-party MRV processes |
| MRV Accreditation | Accredited monitoring, reporting, and verification bodies |
| Trading Integration | Connect with power exchanges for CCC trading |
Registration Requirements
All obligated entities must register on the portal to:
- Submit compliance documents
- Manage CCCs
- Participate in trading
The Registration Process
| Step | Description |
|---|---|
| 1 | Visit www.indiancarbonmarket.gov.in |
| 2 | Create an account and select entity type |
| 3 | Complete KYC and submit required documents |
| 4 | Submit for verification (2-5 working days) |
| 5 | Account activation upon verification |
The First Trading of Carbon Credits
When Will Trading Begin?
The first CCC trading is expected to launch by mid-2026, with the first trades potentially in October 2026.
Where Will Trading Occur?
CCCs will be traded on India's power exchanges (IEX, PXIL).
Who Can Trade?
- Obligated entities with surplus CCCs
- Obligated entities needing to purchase CCCs
- Non-obligated entities participating in the offset mechanism
The Trading Mechanism
- Monthly trading sessions
- Market-driven pricing within floor-and-forbearance price bands
- Registry reconciliation and transaction reporting
What This Means
The first trading of carbon credits marks the culmination of India's carbon market journey from policy design to operational reality.
How Carboned.in Can Help
At Carboned.in, we help obligated entities navigate the CCTS compliance process with clarity and confidence.
Our Services
| Service | What We Do |
|---|---|
| Compliance Assessment | Understand your obligations and assess your position |
| Baseline Calculation | Calculate your 2023-24 emission intensity |
| Target Interpretation | Understand your notified target |
| Gap Analysis | Assess your compliance position |
| Compliance Strategy | Develop a cost-effective plan to meet your target |
| Form A Filing | Assist with documentation and submission |
| Verification Support | Coordinate with ACV agencies |
| Portal Registration | Guide you through ICM Portal registration |
| Credit Procurement | Help you buy CCCs at the best price |
Why Choose Carboned.in?
| Reason | Why It Matters |
|---|---|
| Legal Expertise | Led by Siddharth Gupta, Advocate, Calcutta High Court |
| Regulatory Knowledge | Deep understanding of CCTS, BEE, and MoEFCC requirements |
| Practical Experience | Real-world experience with compliance and credit procurement |
| End-to-End Support | From assessment to compliance |
Your first consultation is completely free. No obligation. Just honest advice.
Conclusion
The Carbon Credit Trading Scheme is operational. The first compliance deadline is July 31, 2026. The penalties for non-compliance are severe. The opportunities for surplus credits are significant.
Key Takeaways
| Aspect | What You Need to Know |
|---|---|
| Compliance Effective Date | April 1, 2025 |
| First Deadline | July 31, 2026 |
| Entities Covered | 490 |
| Baseline Year | 2023-24 |
| Compliance Years | 2025-26 and 2026-27 |
| Penalty | 2× average market price |
| Trading Launch | October 2026 |
The Choice Is Yours
| Option | Outcome |
|---|---|
| Act now | Meet compliance, avoid penalties, earn credits, gain competitive advantage |
| Wait and see | Face penalties, buy credits at higher prices, suffer reputational damage |
How Carboned.in Can Help
At Carboned.in, we help obligated entities navigate the CCTS with clarity and confidence.
- Compliance Assessment: Understand your obligations
- Gap Analysis: Calculate your shortfall
- Form A Filing: Ensure timely compliance
- Credit Procurement: Buy CCCs at the best price
- Legal Documentation: Ensure regulatory compliance
Your first consultation is completely free. No obligation. Just honest advice.
How Carboned.in can help
Our team covers every dimension of India's carbon market — pick the service that matches where you are.
Frequently Asked Questions
When did compliance obligations come into force?+
April 1, 2025.
How many entities are covered?+
Approximately 490 entities across seven sectors.
What are the compliance years?+
2025-26 and 2026-27.
What is the baseline year?+
Fiscal year 2023-24.
When is the first compliance deadline?+
July 31, 2026.
What is Form A?+
The Performance Assessment Document that obligated entities must submit to BEE.
What is the Environmental Compensation?+
A financial penalty equal to 2× average market price of CCCs.
How is the penalty calculated?+
Shortfall (tonnes CO₂e) × Average Market Price × 2.
What is the transition from PAT to CCTS?+
The CCTS replaces the PAT energy efficiency program with a GHG emissions-based compliance mechanism.
What is the Indian Carbon Market Portal?+
The central digital backbone launched on March 21, 2026.
When will trading begin?+
Expected by mid-2026.
What are Carbon Credit Certificates?+
Tradable units representing one tonne of CO₂ equivalent reduced, avoided, or removed.
How can I avoid penalties?+
Meet your target through in-house reduction or procure sufficient CCCs.
How can Carboned.in help?+
We provide compliance assessment, baseline calculation, target interpretation, gap analysis, Form A filing, verification support, portal registration, and credit procurement.
Siddharth Gupta is the founder of Carboned.in and specialist counsel for India's carbon compliance framework — advising obligated entities, project developers, and buyers on CCTS, CR-I registration, and credit transactions.
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