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India's Carbon Credits Are About to Get a Trading Rulebook

Writer: Pratiksha More
Pratiksha More
7 days ago
5 min read

On 19 October 2026, the Bureau of Energy Efficiency put out a document that will decide how India's carbon credits actually change hands. It is called the Draft Detailed Procedure for Transaction of Carbon Credit Certificates under the Compliance Mechanism of the Carbon Credit Trading Scheme. The name is heavy, but the idea is simple. Before a single Carbon Credit Certificate can be bought or sold, the market needs plumbing. This draft is that plumbing.

What BEE has published

The Bureau of Energy Efficiency (BEE) has invited public comments on a draft procedure that spells out three things. How obligated and non-obligated entities register with the market registry. How the power exchanges, the registry and the administrator talk to each other. And how Carbon Credit Certificates, or CCCs, are dealt, transferred and settled.

The draft is open for comments for 15 days from the publication of the notice. After BEE considers the comments, the procedure goes to the Central Electricity Regulatory Commission (CERC) for approval. So nothing here is final yet. It is a consultation draft, and the final version can change.

The legal chain behind it

India notified the Carbon Credit Trading Scheme in June 2023 and amended it in December 2023. CERC, which regulates trading under the Indian Carbon Market, notified its regulations for the purchase and sale of CCCs on 27 February 2026. Those regulations require BEE, working with Grid Controller of India Limited as the registry, to write this detailed procedure. That is the document now open for comment.

Who would be allowed to trade

The draft draws a clear map of who sits on each side of the market.

Obligated entities that beat their greenhouse gas emission intensity targets receive CCCs from BEE. They can bank those certificates or sell them on the power exchanges.

Obligated entities that miss their targets buy CCCs to cover the shortfall. This is their compliance route.

Non-obligated entities can buy CCCs voluntarily. But whatever they buy is retired. It cannot be resold and it cannot be banked.

Registration itself is designed to be light. An entity already registered with the administrator on the Indian Carbon Market portal is automatically registered with the registry through an API-based handover. No separate application, and the registry issues an electronic certificate of registration.

The strict rules inside the draft

Three rules in the draft give this market its character.

First, no bilateral trading. Even two companies in the same corporate group cannot trade CCCs directly with each other. Every trade must go through a power exchange.

Second, no resale of purchased certificates. A CCC bought on the exchange can never be sold again. If an obligated entity buys more than it needs for a compliance year, the excess can be banked for future compliance years, but it still cannot be resold.

Third, voluntary purchases end in retirement. A non-obligated buyer purchases a CCC to use it against its own claims, and the certificate is extinguished.

These are conservative choices. In our reading, they point to a market built for compliance first, not for speculation. That reading is ours, not the draft's own words.

How a trading day would work

The draft sets out a monthly rhythm with minute-level discipline.

Trading happens on the last Thursday of every month, or the next working day if that Thursday is a holiday. On the morning of the session, at 11:00, the registry freezes every obligated entity's CCC inventory so the sellable quantity is fixed. Bidding opens on all designated power exchanges at the same time, from 12:00 to 14:00.

By 14:30 the exchanges send the collected bids to the registry. By 15:00 the registry has cross-checked every seller's total bids against the CCCs actually sitting in its account. If a seller has bid more than it holds, its bids are void for that session and it is treated as a defaulter.

By 16:00 each exchange discovers a single market clearing price and volume through a closed, double-sided, uniform price auction. Confirmation reports reach the registry by 16:15, and by 16:45 the registry has debited the sellers, credited the buyers and unfrozen the inventory. Transactions follow a first-in-first-out principle.

What happens when an entity breaks the rules

The draft is direct about enforcement. An entity with more than three default cases in a quarter is barred from trading for six months, and the registry publishes a monthly list of defaulting entities. Registration can be revoked after notice, with seven working days to fix the problem and at least fourteen working days' notice before revocation takes effect.

Entities that simply fail to register face their own consequences. An obligated entity holding CCCs cannot sell them, and one that needed to buy for compliance is liable for penalty under the Greenhouse Gases Emission Intensity Target Rules, 2025.

Why this matters for Indian businesses

S&P Global reported on 21 October 2026 that around 490 obligated entities are going through emissions verification under the scheme, with the first issuance of CCCs expected as the next step. Once certificates exist, they need somewhere to move. This procedure is the route they would take.

For an obligated company, the compliance question is no longer abstract. Meeting the emissions intensity target earns tradable certificates. Missing it means buying them at a market clearing price discovered in a monthly auction.

For a company outside the obligated list, the draft opens a regulated way to buy and retire Indian carbon credits, as long as the goal is use rather than trading.

What is still open

The consultation window runs for 15 days from the publication of the notice, which is dated 19 October 2026. The notice invites comments from stakeholders, including obligated entities, non-obligated entities and power exchanges. It does not state a fixed calendar deadline or a submission channel.

Fees are not in the draft. The crediting fee and other charges will be notified separately by CERC. The draft also does not announce a date for the first trading session. That will depend on the final procedure, the exchanges' approved bye-laws and the first issuance of certificates.

The bigger picture is still settling. But the direction is clear. India's carbon market is moving from targets and verification toward an actual trading floor, and this draft is the rulebook that floor would run on.

Pratiksha More, CEO and Director, Sustainability 101

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