CERC Carbon Credit Certificate Trading Regulations 2026: India's First Exchange-Traded Carbon Market

On 27 February 2026, the Central Electricity Regulatory Commission (CERC) notified the CERC (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2026. These regulations mark a watershed moment for India's climate policy: they are the first comprehensive set of rules that govern how carbon credits will be traded on power exchanges in the country. Built on the foundation laid by the Energy Conservation (Amendment) Act, 2022, and the Carbon Credit Trading Scheme, 2023, the new framework translates policy intent into enforceable trading rules, institutional obligations, and market safeguards. For businesses, compliance officers, and legal practitioners, these regulations create new rights and obligations that demand close attention.

Legislative Background: From the EC Act to the CCTS

The legal authority for India's carbon market traces back to Section 14A of the Energy Conservation Act, 1951, inserted by the Energy Conservation (Amendment) Act, 2022. This provision empowers the Central Government to establish a Carbon Credit Trading Scheme (CCTS). Acting on this mandate, the Ministry of Power notified the Carbon Credit Trading Scheme, 2023, which created the institutional architecture: the Bureau of Energy Efficiency (BEE) serves as the Administrator responsible for issuing carbon credit certificates, the Grid Controller of India (GRID-INDIA) functions as the Registry that maintains accounts and tracks certificate ownership, and the Central Electricity Regulatory Commission (CERC) acts as the market regulator overseeing trading activities on power exchanges. The 2026 Regulations issued by CERC are the final piece of this architecture, providing the detailed rules under which the market will actually operate on a day-to-day basis.

What Is a Carbon Credit Certificate?

Under the CCTS and the new CERC Regulations, each Carbon Credit Certificate (CCC) represents the reduction, removal, or avoidance of greenhouse gas emissions equivalent to one tonne of carbon dioxide equivalent (CO2e). CCCs are issued by BEE upon Central Government approval and are credited to Registry accounts maintained by GRID-INDIA. The Regulations distinguish between two types of participants: obligated entities, which are industries and establishments that have mandatory emission reduction targets under the CCTS, and non-obligated entities, which are voluntary participants such as renewable energy generators or businesses that reduce emissions beyond any regulatory requirement. Both categories can earn, hold, and trade CCCs on designated power exchanges. This dual-track system ensures that compliance-driven demand coexists with voluntary market activity, creating liquidity and depth in the carbon market.

Key Features of the CERC Regulations

The 2026 Regulations set out the operational mechanics of CCC trading. Power exchanges that wish to host CCC trading must obtain prior approval from CERC and comply with detailed requirements on market surveillance, price transparency, settlement procedures, and dispute resolution. The Regulations prescribe the trading platform requirements, including the obligation to maintain real-time order books, publish trade data, and ensure anonymity of counterparties during trading sessions. Settlement of trades is to be conducted through a clearing mechanism approved by CERC, with timelines for delivery of certificates and payment of consideration clearly specified. The Regulations also address market misconduct: insider trading, price manipulation, and fraudulent practices in CCC trading are expressly prohibited, with CERC empowered to investigate and impose penalties. Registry accounts maintained by GRID-INDIA must accurately reflect all issuances, transfers, retirements, and cancellations of CCCs, creating an auditable chain of custody for every certificate. Additionally, the Regulations provide for periodic review of market rules and thresholds, ensuring that the framework can adapt as the market matures.

Relationship with Renewable Energy Certificates

One important aspect of the new framework is its interaction with the existing Renewable Energy Certificate (REC) mechanism. RECs have been traded on Indian power exchanges since 2011 under separate CERC regulations. The CCC framework is distinct from RECs: while RECs certify the generation of one megawatt-hour of electricity from renewable sources and are primarily used to meet Renewable Purchase Obligations (RPO), CCCs certify the reduction of one tonne of CO2e and are used to meet emission intensity targets under the CCTS. CERC notified a separate amendment to the REC Regulations on 30 March 2026, updating terms and conditions for renewable energy generation certificates. The coexistence of these two instruments means that a single renewable energy project could potentially earn both RECs (for the clean power generated) and CCCs (for the emissions avoided), though the specific rules on double counting and additionality will need careful navigation by project developers and their legal advisors.

Practical Takeaways for Businesses and Legal Practitioners

The CERC Carbon Credit Certificate Trading Regulations 2026 signal that India's compliance carbon market is moving from policy design to operational reality. Industries designated as obligated entities under the CCTS should begin assessing their emission baselines and determining whether they will need to purchase CCCs to meet their targets or whether they can generate surplus certificates for sale. Companies with emission reduction projects, particularly in renewable energy, energy efficiency, and waste management, should evaluate whether their projects qualify for CCC issuance and begin the registration process with BEE. Power exchanges and financial intermediaries will need to apply for CERC approval and build the technical infrastructure for CCC trading, clearing, and settlement. Legal teams should review existing compliance frameworks to integrate CCC obligations, and businesses operating across multiple jurisdictions should monitor how India's CCC framework interacts with international carbon markets and border adjustment mechanisms. As the market operationalises in the coming months, early movers who understand both the regulatory requirements and the commercial opportunities will be best positioned to benefit from India's emerging carbon economy.