How Carbon Credit Trading Will Work in India: BEE's Draft Procedure Explained

In October 2026, the Bureau of Energy Efficiency (BEE) released the Draft Detailed Procedure for Transaction of CCCs under Compliance Mechanism for public comments. The draft sets out how Carbon Credit Certificates (CCCs) issued under the Carbon Credit Trading Scheme (CCTS) will be registered, traded on power exchanges, settled and surrendered.

CCTS was notified in 2023, and CERC notified the trading regulations in February 2026. The draft addresses the remaining operational questions: how entities register with the ICM Registry, when and how bids are placed, and how trades are settled. The final procedure may differ, but the draft indicates what obligated entities should prepare for.

Who runs carbon credit trading in India

The draft assigns defined roles to four institutions, alongside the participating entities.

Who can buy and sell carbon credits

The draft lists five types of participants. Only one of them can sell.

An obligated entity that misses its target must cover the shortfall by buying CCCs from the compliance market, as required by Clause 11(7) of CCTS 2023.

Step 1: Registration would be automatic

There is no new application form. Any obligated or non-obligated entity already registered with BEE on the ICM Portal would be pushed to the ICM Registry through an API. The Registry would then:

• Register the entity using the data already on the ICM Portal.
• Issue an electronic Certificate of Registration for that compliance year.
• Share the list of registered entities with the power exchanges and BEE.

Registration stays valid unless revoked. But entities still need to register within the timeline BEE announces. If the deadline is missed, the Registry may revoke the registration. Sellers would lose access to the exchange, and buyers that needed CCCs would face penalties under the GEI Target Rules, 2025.

Step 2: CCCs are credited to your Registry account

Once BEE issues CCCs for a compliance year, they land in the entity's Registry account only after it pays the crediting fee (plus GST) set by CERC. All fees are paid electronically, and the Registry sends an invoice through the ICM Portal.

Each certificate gets a unique serial number built from four parts: compliance year, serial number, the obligated entity's registration number and the date of issue. That makes every CCC traceable from issuance to retirement.

From here, the holder has two choices: bank the CCCs for later use, or sell them to another obligated or voluntary buyer before they expire.

Step 3: How a carbon credit trading day works

Under the draft, CCCs trade on the last Thursday of every month. If that day is a public or bank holiday, trading moves to the next working day. BEE would publish the holiday list for each year by 31 December of the year before.

The auction is a closed, double-sided uniform price auction. Buyers and sellers submit sealed bids, and everyone who clears pays or receives the same price. Sellers can bid on several exchanges at once, as long as the total does not exceed what they hold.

After each session, exchanges must publish demand and supply curves on their websites, giving participants visibility into market conditions. Trades are settled on a First-In-First-Out (FIFO) basis, meaning the oldest CCCs in an account move first.

Step 4: What happens after you buy carbon credits

The draft places firm limits on purchased CCCs. A CCC bought on an exchange cannot be sold again.

At the end of each compliance year, BEE tells the Registry how many CCCs each obligated entity must surrender. The Registry extinguishes them, and whatever remains is treated as banked CCCs for that year.

CCCs can be issued, banked, sold once and retired. They cannot be resold.

Defaults, bans and revocation

The Registry checks every seller's total bids across all exchanges against its frozen holdings. If the bids exceed the holdings, the seller is treated as a defaulter for that session and all its bids are voided. They are left out of price discovery entirely.

• More than 3 defaults in a quarter leads to a 6-month trading ban.
• 7 working days to fix a default after a Registry notice.
• 14 working days' notice before any revocation.

Registration can also be revoked if an entity fails to pay fees, cannot show it can meet its obligations, breaks the regulations, or is ordered off by CERC, the Ministry of Power or MoEFCC. The proposed process is:

The Registry would publish the list of barred entities every month. Penalties under the Energy Conservation Act, 2001 and the Environment (Protection) Act, 1986 can apply on top.

What obligated entities should do now

• Read the draft and send comments. This is the stage where industry feedback can still shape the final rules.
• Check your ICM Portal profile. Your Registry account is built from it, so CIN, PAN, GST, TAN and contact details must be correct.
• Budget for the crediting fee. Issued CCCs only reach your account after it is paid.
• Decide early: bank or sell. Sellers need to know their surplus before the 11:00 freeze.
• Never over-bid. Track total sell bids across all exchanges against your Registry balance.
• Plan purchases for the full compliance cycle. Excess CCCs can be banked but never sold back.

Why it matters

Once finalised, these rules complete the trading pipes for India's compliance carbon market. What flows through them depends on how many CCCs BEE actually issues, and that depends on verified emissions data. Every certificate on the exchange traces back to a measured, reported and verified cut in emissions intensity.