Why in News?
The United Kingdom has included India’s Carbon Credit Trading Scheme (CCTS) in its indicative list of overseas carbon pricing mechanisms that may qualify for relief under the UK’s Carbon Border Adjustment Mechanism (CBAM).
How Will Indian Exporters Benefit?
- Under the arrangement, UK importers can claim relief for the eligible carbon price already paid in India under the CCTS.
- This can help prevent double carbon pricing—once in India and again under the UK’s CBAM. However, the relief will be subject to evidence and verification requirements under UK rules.
What is the UK CBAM?
The UK Carbon Border Adjustment Mechanism (CBAM) is a carbon-pricing system for certain carbon-intensive imports.
The UK plans to introduce CBAM from 2027, covering products such as:
- Iron and steel
- Aluminium
- Fertilisers
- Hydrogen
- Ceramics
- Glass
- Cement
Indian exporters of these products could face additional carbon-related costs when exporting to the UK.
Why is Recognition Important?
- Helps prevent double carbon pricing on eligible Indian goods.
- Can improve the competitiveness of Indian exports in the UK market.
- Gives greater international recognition to India’s domestic carbon-pricing framework.
- Encourages India-UK cooperation on carbon markets.
- Supports the transition towards low-carbon and sustainable production.
What is India’s CCTS?
The Carbon Credit Trading Scheme (CCTS) is a market-based mechanism under India’s Indian Carbon Market (ICM) framework. It aims to reduce, remove or avoid greenhouse gas emissions by putting a price on emissions and enabling the trading of Carbon Credit Certificates (CCCs).
The scheme is implemented through a multi-institutional framework led by the Bureau of Energy Efficiency (BEE).
