India has proposed monthly auctions of carbon credits on power exchanges and a six-month trading ban for repeat offenders, setting out the operational rules of its intensity-based emissions trading system, according to Carbon Pulse. The proposal converts the Carbon Credit Trading Scheme from a framework law into a market with a trading calendar, a regulated price corridor and an enforcement clock. For obligated industries and for developers of offset projects, the design choices now on the table will determine how liquid, and how predictable, India’s compliance carbon price will be.

Monthly Auction Sessions on Registered Power Exchanges

The trading architecture is exchange-based and periodic. Carbon Credit Certificates (CCCs) must be traded exclusively on power exchanges registered with the Central Electricity Regulatory Commission (CERC), namely the Indian Energy Exchange, Power Exchange India Limited and Hindustan Power Exchange, unless the CERC specifically permits another mode, according to TT&A. Trading takes place during designated sessions held on a monthly basis, or at whatever other periodicity the CERC approves, with entities placing buy and sell bids on the exchange during those windows, according to TT&A.

The legal foundation is the CERC (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2026, notified on 27 February 2026, which formalise the framework for exchange-traded carbon credits, according to The Legal 500. These regulations sit under the Carbon Credit Trading Scheme, 2023, amended in December 2023, which itself draws its statutory basis from the Energy Conservation Act, 2001, as amended in 2022.

A Floor and a Ceiling for Every Trade

Price discovery will not be free-floating. Under the compliance mechanism, CCCs trade within a band defined by a floor price, the minimum, and a forbearance price, the maximum, approved by the CERC on the basis of a proposal submitted by the Bureau of Energy Efficiency (BEE), according to The Legal 500. The corridor gives the regulator two levers over the carbon price at every monthly session.

For buyers, the band caps short-term price risk but also limits the upside for sellers of surplus credits. For compliance planners, the floor price matters as much as the ceiling: it sets a lower bound on the cost of falling short of an intensity target, which anchors the internal abatement-versus-purchase calculation at covered facilities.

Three Defaults, Six Months Out

Enforcement targets market integrity rather than emissions directly. An entity that defaults, bidding or offering more certificates than it holds, more than three times in a quarter will be barred from trading CCCs for the following six months, according to TT&A. The trading ban applies without prejudice to penalties available under the Energy Conservation Act, according to The Legal 500.

The rule puts settlement discipline at the center of market conduct. Because trading is concentrated in monthly sessions, a six-month exclusion means missing roughly six auction windows, a material compliance risk for any obligated entity relying on purchases to close a target gap.

Who Must Comply: Nine Hard-to-Abate Sectors

The compliance segment is reserved for obligated entities subject to greenhouse gas emission intensity targets under the Greenhouse Gases Emission Intensity Target Rules, 2025, amended in January 2026 and notified by the Ministry of Environment, Forest and Climate Change, with validity until 31 March 2027, according to TT&A. The rules currently cover nine hard-to-abate sectors: aluminium, chlor-alkali, cement, pulp and paper, iron and steel, petroleum refineries, petrochemicals, secondary aluminium and textiles.

The scheme follows a baseline-and-credit design rather than a cap. Entities that beat their intensity targets earn CCCs, issued by the BEE as the central government’s authorized agency under Section 14AA of the Energy Conservation Act, while those that miss must buy certificates to comply, according to TT&A. Non-obligated entities implementing approved mitigation projects can also earn CCCs, giving developers a regulated route into the same market. Each certificate represents one tonne of carbon dioxide equivalent reduced, removed or avoided.

The shift is strategic. Building on the earlier PAT and REC mechanisms, the Carbon Credit Trading Scheme moves India’s regulatory focus from energy efficiency to greenhouse gas emission intensity, according to The Legal 500. That aligns the market with India’s Paris pledge to cut the emissions intensity of GDP by 45% from 2005 levels by 2030 and to reach net zero by 2070, a significant task for the world’s third-largest emitter, accounting for roughly 7% of global emissions.

What This Means for Buyers and Developers

For obligated buyers, the monthly cadence concentrates liquidity into fixed windows, so procurement strategy becomes calendar-driven. The price band reduces volatility but introduces regulatory risk: the CERC and BEE effectively control both edges of the corridor, and revisions to the band will move compliance costs directly.

For developers, the inclusion of non-obligated entities creates a domestic compliance outlet for project credits, but one whose demand depends entirely on how tightly intensity targets are set for the nine covered sectors. The current target rules expire on 31 March 2027, making their successor the single most important demand signal in the market.

What to Watch

  • CERC approval of the floor and forbearance price band proposed by the BEE.
  • The first monthly trading sessions and observed liquidity on the three power exchanges.
  • Successor intensity targets beyond 31 March 2027 and any expansion of the obligated sector list.
  • Enforcement of the three-default rule and its effect on bidding discipline.