Emission targets stop being paperwork and start costing money
India's compliance carbon market is close to its first trade. Under the Carbon Credit Trading Scheme, plants that beat their emission intensity target earn Carbon Credit Certificates, each representing one tonne of CO2 equivalent, and plants that miss have to buy them. Certificates trade only on power exchanges registered with the Central Electricity Regulatory Commission: IEX, PXIL and HPX, with no over-the-counter trading permitted. Trading has been expected around October, and no first trade had been confirmed at the time of writing.
Who is already inside
Around 740 entities across nine sectors are covered, iron and steel and aluminium among them, together accounting for more than 700 million tonnes of CO2 equivalent. That places India among the largest emissions trading systems in the world by coverage.
Seven sectors already carry binding targets covering roughly 490 entities, including aluminium, notified from late 2025 onward.
Iron and steel came later. The June draft notification covers 255 units with combined baseline emissions of 358.6 million tonnes, the largest sectoral share, and the sector's first compliance year is FY 2026-27, the year now running.
What happens when a plant falls short
A shortfall carries environmental compensation at twice the average certificate price for that compliance cycle, levied by the Central Pollution Control Board.
Offset certificates earned by non-obligated entities cannot be surrendered against a compliance obligation. Only compliance certificates count.
Certificates can be banked without limit, but not borrowed against future years, and FY 2026-27 targets are tighter than the first year's.
Early estimates place prices between ₹250 and ₹1,500 a tonne. Nothing is settled until trading opens.
The bigger picture
Once a certificate carries a traded price, an emission target becomes a line on the balance sheet. Beating the target is revenue; missing it is a cost at a published rate. That reaches procurement, fuel choice and furnace scheduling rather than only the environment desk. For exporters, the same price is the number India will ask Europe to recognise against its carbon border levy.