Context: India has notified draft emission-intensity targets for 255 iron and steel units under the Carbon Credit Trading Scheme (CCTS), making steel the largest sector covered under the compliance carbon market from FY 2026–27.
Explanation
- Carbon Credit Trading Scheme (CCTS) is India’s compliance carbon market, notified under the Energy Conservation (Amendment) Act, 2022, and implemented by the Bureau of Energy Efficiency (BEE)
- It follows an Emission Intensity approach, measuring CO₂ emissions per unit of production, unlike absolute emission caps.
- Units performing better than targets earn Carbon Credit Certificates (CCCs), while non-compliant units must purchase credits.
- Steel contributes 10–12% of India’s CO₂ emissions and is the second-largest steel producer globally.
- Major steelmaking routes include BF-BOF (Blast Furnace–Basic Oxygen Furnace), DRI-IF (Direct Reduced Iron–Induction Furnace) and EAF (Electric Arc Furnace); EAF is relatively less carbon-intensive.
- The move aims to reduce emissions per tonne of steel while supporting India’s decarbonisation commitments.
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Carbon Credit Trading Scheme and Industrial Decarbonisation