Comprehensive Guide to the Carbon Credit Trading Scheme (CCTS)

What is the Carbon Credit Trading Scheme (CCTS)?

The Carbon Credit Trading Scheme (CCTS) is a strategic initiative implemented by India’s Power Ministry in collaboration with the Bureau of Energy Efficiency (BEE). This scheme aims to promote the reduction, removal, or avoidance of greenhouse gas emissions. Through this program, Carbon Credit Certificates (CCCs) are traded, where each certificate represents one tonne of CO2 equivalent that has been reduced, removed, or avoided from the atmosphere.

Compliance Mechanism vs. Offset Mechanism

Within the CCTS, two main mechanisms exist: the compliance mechanism and the offset mechanism.

• Compliance Mechanism: This mechanism targets obligated entities that are legally bound to reduce emissions. These entities receive a specific number of credits reflecting their permissible emission levels, which they can trade to maintain compliance.
• Offset Mechanism: This is open to non-obligated entities seeking to voluntarily reduce their carbon footprint. These entities can register projects that contribute to greenhouse gas (GHG) reduction and earn tradable CCCs.

Eligibility to Participate in the CCTS

Participation in the CCTS is open to both obligated and non-obligated entities. Obligated entities have legal mandates to reduce emissions, while non-obligated entities may participate for ethical, social, or business reasons, such as achieving internal climate goals or fulfilling public commitments.

Issuance of Carbon Credit Certificates (CCCs)

CCCs are issued following a comprehensive evaluation by a BEE-accredited agency. This evaluation assesses projects that successfully demonstrate quantifiable GHG reduction, removal, or avoidance.

Can Non-obligated Entities Generate and Trade CCCs?

Yes, the revised CCTS allows non-obligated entities to engage actively in the voluntary carbon market. By registering projects that lead to GHG reduction, these entities can earn CCCs, which they can subsequently trade after verification.

Support for Hard-to-abate Sectors

CCC trading offers a crucial mechanism for sectors that inherently produce high GHG emissions, such as cement and steel production. It allows these sectors to invest in offsets or innovative reduction technologies indirectly, thereby easing the challenges associated with direct emission reductions.

Linking CCC Trading with Other Environmental Credits

The integration of CCC trading with energy saving certificates (ESCerts) and renewable energy certificates (RECs) has been proposed. Such integration would provide broader trading options and facilitate the fungibility of various environmental credits, thus enhancing the scheme’s flexibility and impact.

Frequently Asked Questions (FAQs)

Q1. What are Carbon Credit Certificates?
Answer: Carbon Credit Certificates (CCCs) represent a reduction, removal, or avoidance of one tonne of CO2 equivalent emissions. They are tradable under the Carbon Credit Trading Scheme to incentivize emissions reduction.

Q2. Who can be part of the CCTS?
Answer: Both obligated entities with legal emissions reduction mandates and non-obligated entities aiming for voluntary carbon footprint reductions can participate in the CCTS.

Q3. How are emissions reductions verified?
Answer: Emissions reductions are verified by BEE-accredited agencies that evaluate projects to ensure they meet the criteria for quantifiable GHG reduction before issuing CCCs.

Q4. Can CCC trading help achieve climate goals?
Answer: Yes, CCC trading supports both obligated and non-obligated entities in achieving their climate goals by providing a market for trading emissions reductions, thereby fostering sustainable practices.

Q5. What is the offset mechanism in CCTS?
Answer: The offset mechanism allows non-obligated entities to voluntarily register projects that reduce emissions, earning tradable CCCs as a result of their efforts.

UPSC Practice MCQs

Question 1: What is the primary goal of the CCTS?
A) To eliminate all greenhouse gases
B) To reduce, remove, or avoid greenhouse gas emissions
C) To regulate energy prices
D) To promote fossil fuel use
Correct Answer: B

Question 2: Which entities are obligated under the compliance mechanism of the CCTS?
A) All businesses
B) Non-profit organizations
C) Entities with legal mandates to reduce emissions
D) Individuals
Correct Answer: C

Question 3: What do Carbon Credit Certificates represent?
A) A monetary value
B) A reduction of CO2 emissions
C) A legal obligation
D) A type of renewable energy
Correct Answer: B

Question 4: Are non-obligated entities allowed to trade CCCs?
A) No, only obligated entities can trade
B) Yes, they can register projects and earn CCCs
C) Only large corporations can trade
D) Non-obligated entities cannot participate
Correct Answer: B

Question 5: How does CCC trading benefit high GHG emission sectors?
A) By increasing emissions
B) By providing a mechanism for investment in offsets and technologies
C) By limiting their operations
D) By raising funds for fossil fuels
Correct Answer: B