Background
CERC (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2026 have been notified by the Central Electricity Regulatory Commission (CERC) under the Electricity Act, 2003, read with the Energy Conservation (Amendment) Act, 2022. These Regulations establish the regulatory framework governing the purchase and sale of Carbon Credit Certificates (CCCs) through Power Exchanges and other Commission-permitted entities in India, as part of the Carbon Credit Trading Scheme, 2023 (CCTS, 2023) notified by the Central Government under the Energy Conservation Act, 2001.
Applicability
The CERC (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2026 apply to all persons and entities involved in the purchase, sale, banking, and surrender of Carbon Credit Certificates in India.
Compliance Requirement Under the Regulations:
The value of a Carbon Credit Certificate (CCC) shall be as specified in sub-paragraph 1(c) of Section 2 of the Carbon Credit Trading Scheme, 2023 (CCTS, 2023), as amended from time to time. The validity of the CCC shall be as specified in the Detailed Procedure for the Compliance Mechanism — for certificates issued under the Compliance Mechanism — and in the Detailed Procedure for the Offset Mechanism — for certificates issued under the Offset Mechanism — both developed under Section 12 of the CCTS, 2023, as amended from time to time.
All Obligated Entities and Non-Obligated Entities that intend to participate in the dealing of Carbon Credit Certificates (CCCs) on a Power Exchange or a Commission-permitted entity must register themselves with the Power Exchange or the permitted entity before participating in any dealing session.
On issuance of CCCs by the Bureau (Administrator), an Obligated or Non-Obligated Entity must pay the stipulated fees to the Registry to have the CCCs credited in its Registry Account before placing them for dealing on any Power Exchange or Commission-permitted entity. The CCCs credited in the Registry Account may then be placed for dealing in accordance with the Rules, Business Rules, and Bye-Laws of the relevant entities, pursuant to the CCTS and these Regulations.
Power Exchanges or Commission-permitted entities shall obtain the prior approval of the Commission on their Rules, Business Rules, and Bye-Laws before commencing dealings in CCCs. This approval requirement covers the eligibility criteria for participants, the price discovery mechanism for CCCs, and the process of interaction between the Power Exchange or any other permitted entity and the Registry.
The frequency of CCC transactions for all registered entities shall be on a monthly basis or in such other periodicity as may be approved by the Commission through a procedure issued for this purpose.
Unless otherwise specifically permitted by the Commission by order pursuant to the CCTS, CCCs shall be dealt with only through the Power Exchange and not through any other means or mode. There shall be two separate market segments for dealing in CCCs: (a) the Compliance Market, for Obligated Entities; and (b) the Offset Market, for Non-Obligated Entities. All CCCs shall be dealt with in accordance with the Energy Conservation Act, 2001, the Environment Protection Act, 1986, the CCTS 2023, and these Regulations, as amended from time to time.
In any bidding session, an Obligated or Non-Obligated Entity shall not place sale bids in excess of the total CCCs held in its Registry Account. The Registry shall cross-check cumulative sale bids placed on all Power Exchanges or permitted entities against the availability of CCCs in the respective Registry accounts. In case a breach is detected, the Registry shall intimate the Power Exchange or permitted entity to treat such entity as a defaulter; any bid submitted by such entity shall not be considered for price discovery purposes, and all bids by such entities shall become void and ineffective if total sale bids exceed available CCCs in their Registry account.
After each dealing session in CCCs, the Power Exchange or permitted entity must send reports covering executed transactions, financial obligations, and all other relevant information to the respective Obligated and Non-Obligated Entities. The Power Exchange or permitted entity shall also report to the Registry, after every dealing session, the details of all CCCs transacted by eligible entities. On a successful transaction, the Registry Accounts of the participating entities shall be updated — with sellers’ accounts debited and buyers’ accounts credited — accordingly.
The banking and surrender of Carbon Credit Certificates shall be undertaken as specified in the Detailed Procedure for the Compliance Mechanism and the Offset Mechanism developed under the CCTS 2023, as amended from time to time.
One CCC shall be denominated as per Clause 2(1)(c) of the CCTS 2023 and shall be equivalent to a reduction, removal, or avoidance of greenhouse gas emissions equal to one tonne of carbon dioxide equivalent (1 tCO2e). The market price of a CCC shall be as discovered at the respective Power Exchange or permitted entity through the Commission-approved price discovery process. CCCs under the Compliance Mechanism shall be exchanged within the floor and forbearance price as approved by the Commission on a proposal submitted by the Bureau. The Commission may, by order, issue such directions to the Power Exchange(s), permitted entity, or Registry as may be necessary upon being satisfied that: (a) there is an abnormal increase or decrease in CCC prices; (b) there is sudden volatility in CCC prices; or (c) there is sudden high or low dealing volume on the Power Exchange or permitted entity.
Carbon Credit Certificates (CCCs) are instruments issued under the Carbon Credit Trading Scheme, 2023 (CCTS 2023), notified by the Central Government under the Energy Conservation Act, 2001. The CCC framework operates through two mechanisms: (a) the Compliance Mechanism, applicable to Obligated Entities who are required to achieve specified emission reduction or energy efficiency targets; and (b) the Offset Mechanism, applicable to Non-Obligated Entities who voluntarily undertake emission reduction activities and receive CCCs for their verified reductions. The CERC (Terms and Conditions for Purchase and Sale of Carbon Credit Certificates) Regulations, 2026 govern the conditions under which CCCs may be purchased and sold through Power Exchanges or other Commission-permitted entities, with the Central Electricity Regulatory Commission acting as the market regulator for CCC trading.
Penalty & Consequences
Section 146 of the Electricity Act, 2003 — General Penalty for Non-Compliance
Whoever fails to comply with any order or direction issued under the Electricity Act, 2003, or contravenes — or attempts or abets the contravention of — any provision of the Act or any rules or regulations made thereunder, shall be punishable with imprisonment for a term which may extend to three months, or with a fine which may extend to one lakh rupees, or with both, in respect of each offence. In the case of a continuing failure, a further fine which may extend to five thousand rupees for every day during which the failure continues after conviction of the first such offence shall also be imposed.
Section 26 of the Energy Conservation Act, 2001 — Penalty for Failure to Meet Compliance Targets
If an Obligated Entity fails to meet its emission reduction or compliance target and does not surrender the required CCCs, it may face penalties under Section 26 of the Energy Conservation Act, 2001. Non-compliance may attract a penalty that can extend to ₹10 lakh, and for a continuing failure, an additional penalty may be imposed for every day the non-compliance continues beyond the initial default.
Regulation 9(8) — Defaulter Status for Excess Sale Bids
Where an Obligated or Non-Obligated Entity places sale bids in excess of the CCCs held in its Registry Account, the Registry shall intimate the Power Exchange or permitted entity to treat such entity as a defaulter. Any bid submitted by such entity shall not be considered for price discovery, and all bids shall become void and ineffective if total sale bids exceed available CCCs in the entity’s Registry account.
Regulation 9(9) — Six-Month Bar from Dealing for Repeat Defaulters
Obligated or Non-Obligated Entities with more than three cases of default specified under Regulation 9(8) in a quarter shall be barred from dealing in CCCs for the next six months, notwithstanding any penalty due to be imposed under the Energy Conservation Act, 2001. The list of such defaulting entities shall be published by the Power Exchange or permitted entity and notified to the Registry and the Commission.
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