Critically evaluate the Carbon Credit Trading Scheme as an instrument for industrial decarbonisation in India, with special reference to the cement sector.

The Ministry of Power and MoEFCC developed the Carbon Credit Trading Scheme (CCTS) together. It aims to decarbonise the economy by putting a price on greenhouse gas emissions through tradable Carbon Credit Certificates (CCCs) [3]. Cement produces about 6–7% of India's GHG emissions [1], which makes it the scheme's hardest test.

Strengths

• Market efficiency: Plants that beat their GHG Emission Intensity (GEI) targets earn CCCs, and plants that miss them must buy CCCs. This means emissions get cut first wherever cutting is cheapest [2].
• Fast, phased coverage: Cement was one of the first four sectors notified in October 2025 (282 entities). By January 2026, coverage had grown to 490 entities [2].
• Builds on existing institutions: Sectors moved over from the PAT scheme. BEE acts as administrator and Grid India as registry [4].
• Room for growth: Targets are set per tonne of output. This lets cement output grow for Viksit Bharat 2047 while emissions per tonne fall.
• Trade protection: A domestic carbon price strengthens India's position against the EU's CBAM. CBAM covers cement, and importers start paying it in 2026 [6].

Weaknesses (cement focus)

• No absolute cap: Targets limit emissions per tonne, not in total [2]. Cement output is projected to rise about sevenfold by 2070 [1], so total emissions can still grow.
• Process emissions are left out: About 55% of the sector's emissions come from limestone calcination [1]. Efficiency gains and renewable power cannot remove these.
• Ambition gap: Carbon intensity must fall from 0.63 to about 0.09–0.13 tCO₂e per tonne by 2070, a cut of roughly 80–85% [1]. Small near-term cuts would leave too many credits in the market and keep prices low.
• Finance gap: A low credit price cannot pay for CCUS (carbon capture, utilisation and storage). NITI Aayog estimates industry alone needs about $6.1 trillion of the $22.7 trillion required for net zero [5].
• Measurement burden: The scheme is only credible if monitoring, reporting and verification (MRV) are robust across hundreds of plants.

Verdict: CCTS is a sound foundation, but on its own it is not enough to decarbonise cement.

CCTS has made carbon pricing part of how Indian industry is governed. However, its intensity-based design does not yet match the scale of cement's process emissions. The way forward:

• Publish a schedule of steadily tighter GEI targets, moving towards an absolute cap over time.
• Combine the scheme with the main levers in NITI Aayog's roadmap: refuse-derived fuel (RDF), clinker substitution and CCUS [1].
• Back these with dedicated climate finance [5].

With these steps, CCTS can support India's net-zero 2070 pledge and SDG 13.