ANNOUNCEMENTS
This research explores the historical evolution, legal architecture, governance mechanisms, and implementation challenges of carbon credit markets, with a specific focus on India’s emerging Emissions Trading System (ETS) under the Carbon Credit Trading Scheme (CCTS), 2023. Tracing the global origins from the Kyoto Protocol to the Paris Agreement’s Article 6 framework, it outlines the rise of both voluntary and compliance carbon markets and highlights the key governance components essential for effective ETS functioning—actors, tools, and processes. The paper details India’s domestic efforts, including the role of institutions such as the Bureau of Energy Efficiency (BEE), Central Electricity Regulatory Commission (CERC), and GRID-India in operationalizing the Indian Carbon Market (ICM).
The study analyzes the market’s three-pillar governance architecture:
1. Regulatory Oversight: Bureau of Energy Efficiency (BEE) as administrator, Central Electricity Regulatory Commission (CERC) as market regulator.
2. Institutional Framework: National Steering Committee (NSCICM) for target-setting, Grid-India as registry operator.
3. Operational Mechanisms: GHG intensity targets for "obligated entities," issuance/trading of The study critically assesses the legal and institutional frameworks governing carbon trading in India, examining the institutional roles, compliance cycles, registry functions, and trading dynamics for both obligated and non-obligated entities. It also identifies several legal and governance challenges including fragmented regulatory authority, disputes over classification of carbon credits, weak enforcement mechanisms, lack of dispute resolution forums, and jurisdictional overlaps between CERC and SEBI. Furthermore, it delves into the interplay between voluntary and compliance markets, risks of greenwashing, and the regulatory uncertainty surrounding integration of international carbon markets under Article 6 of the Paris Agreement.
The research employs qualitative legal analysis of statutes, policy documents (e.g., BEE’s Compliance Mechanism, GHG Target Rules 2025), and institutional mandates to evaluate the CCM’s viability. Findings underscore the need for harmonized legislation, robust dispute resolution mechanisms, and cross-market interoperability to position India as a credible player in global carbon finance while balancing economic growth and climate resilience.
Finally, the paper argues that India's carbon market success hinges on legal clarity, inter-agency coordination, robust monitoring and verification systems, and the establishment of a credible, transparent, and enforceable governance framework. By addressing these gaps, India can unlock the potential of carbon markets as an effective climate mitigation tool, attract global investment, and position itself as a climate leader among emerging economies.
