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The UK's HM Treasury has included India's Carbon Credit Trading Scheme (CCTS) in its indicative list of overseas carbon pricing mechanisms qualifying for relief under the UK Carbon Border Adjustment Mechanism.
The confirmation was conveyed to the Bureau of Energy Efficiency under the Ministry of Power, which administers the CCTS.
UK importers of eligible Indian goods can claim relief for the carbon price already paid in India, avoiding double carbon pricing.
The UK CBAM starts on 1 January 2027 and covers iron and steel, aluminium, fertilisers, hydrogen, ceramics, glass and cement.
Relief depends on the effective carbon price actually borne under the CCTS, and exporters must meet UK verification requirements on embedded emissions.
Amended the Energy Conservation Act, 2001 to empower the Central Government to specify a carbon credit trading scheme and provide for the issue of Carbon Credit Certificates - the statutory basis of the Indian Carbon Market.
Notified by the Ministry of Power on 28 June 2023; creates the compliance and offset mechanisms and the institutional architecture of the Indian Carbon Market.
Set the criteria an overseas carbon pricing mechanism must meet for its carbon price to be deducted from a UK CBAM liability.
Cut greenhouse gas emissions by giving emission reductions a tradable market value and accelerating the decarbonisation of Indian industry
Key: Runs a compliance mechanism, under which obligated entities are given emission intensity targets and earn certificates for beating them, and an offset mechanism open to non-obligated entities registering projects
Improve energy efficiency in energy-intensive industries through tradable energy saving certificates
Key: The predecessor market the CCTS transitions from - PAT traded energy savings, while the CCTS trades greenhouse gas emission reductions
Administers the CCTS - identifies sectors, sets target trajectories, issues Carbon Credit Certificates and accredits verification agencies; received the UK confirmation
Apex body constituted under the Carbon Credit Trading Scheme, 2023 to oversee the design and direction of the Indian Carbon Market
Notifies the greenhouse gas emission intensity targets for obligated entities under the compliance mechanism
| Feature | EU CBAM | UK CBAM |
|---|---|---|
| Transitional reporting phase | 1 October 2023 to 31 December 2025 | No separate reporting-only phase |
| Financial obligation begins | 1 January 2026 | 1 January 2027 |
| Sectors covered | Cement, iron and steel, aluminium, fertilisers, electricity, hydrogen | Iron and steel, aluminium, fertilisers, hydrogen, ceramics, glass, cement |
| Relief for carbon price paid abroad | Deduction for carbon price already paid in the country of origin | Relief for the effective carbon price paid under a recognised overseas scheme such as India's CCTS |
GS Paper 3 > Environment and Economy > Climate change, carbon markets and international trade
General Awareness > International Trade and the Economy
General Awareness > Environment and Economy
A border levy charging imports for their embedded carbon so they face a carbon cost comparable to domestic producers
The shifting of emissions-intensive production to countries with weaker carbon pricing, which border adjustments are designed to prevent
The greenhouse gases released in producing a good, which the importer must report and verify under a CBAM
The tradable unit under India's CCTS, each representing one tonne of CO2 equivalent reduced or removed