Central Electricity Regulatory Commission Notifies Carbon Credit Trading Regulations, 2026

On February 27, 2026, the Central Electricity Regulatory Commission (CERC) notified the CERC (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2026 (CCC Regulations). The CCC Regulations have been issued in exercise of powers under the Electricity Act, 2003, to operationalize the trading of Carbon Credit Certificates (CCCs) under the framework of the Carbon Credit Trading Scheme, 2023 (CCTS), earlier notified by the Ministry of Power. The CCC Regulations establish the institutional and operational framework required to facilitate a transparent and efficient market for carbon credits in India, categorizing participants into compliance and voluntary segments.

The key regulatory highlights are outlined below:

1. Institutional Framework: The regulations designate specific national bodies to manage the lifecycle of CCCs with the Bureau of Energy Efficiency (BEE) appointed as the administrator. Its responsibilities include formulating detailed procedures for the compliance and offset mechanisms, registering eligible entities, and monitoring the market. The Grid Controller of India Limited (GRID-INDIA) shall function as the Registry. It will maintain electronic accounts for all participants, record transactions, and ensure the technical infrastructure for certificate transfer.

2. Market Structure: Compliance vs. Offset Markets: To cater to different sets of participants, the regulations establish two distinct market segments:

• • Compliance Market: Restricted to “obligated entities” (sectors such as cement, steel, and aluminium) that must meet mandatory emission intensity targets under the relevant rules. Shortfalls are met by purchasing CCCs, while overachievement results in issuance.

• • Offset Market: Open to “non-obligated entities” that can purchase the CCCs on a voluntary basis. In the offset mechanism, non-obligated entities can register activities that lead to emission reductions or avoidance or removals for issuance of CCCs.

3. Trading and Price Discovery Mechanism: The CCC Regulations mandate that trading primarily occurs through authorized electronic platforms such as power exchanges. To ensure market stability and prevent volatility, the CERC will approve a floor price (minimum) and a forbearance price (maximum) for CCCs, based on recommendations from the BEE. 

4. Transaction Integrity and Default Safeguards: The regulations introduce strict checks to prevent market manipulation by prohibiting sellers from placing bids exceeding the actual balance of CCCs available in their Registry accounts. GRID-INDIA will cross-check cumulative sale bids across all power exchanges against available holdings before price discovery. If an entity attempts to sell more certificates than it owns more than three times in a single quarter, it will be suspended from CCC trading for six months. 

5. Technical Specifications and Validity: One CCC is equivalent to one tonne of carbon dioxide equivalent (tCO2e) reduction, removal, or avoidance. The procedures for banking (carrying forward) and surrendering CCCs to meet targets will be governed by detailed procedures issued by the BEE under the CCTS. 

Conclusion

The CCC Regulations represent a foundational step in India’s transition toward a market-linked decarbonization strategy. By providing a clear legal structure for price discovery and market oversight, the CERC has paved the way for India to host one of the world’s largest emissions trading systems.