CERC Notifies 2026 Regulations To Formalize India’s Carbon Credit Trading Market

The Central Electricity Regulatory Commission (CERC) has officially notified the “Terms and Conditions for Purchase and Sale of Carbon Credit Certificates Regulations, 2026,” creating a formal structure for carbon credit trading in India. Issued on February 27, 2026, the regulations lay down the legal and operational framework for the exchange of Carbon Credit Certificates (CCCs) and strengthen the government’s larger Carbon Credit Trading Scheme (CCTS).

Under the new rules, the Bureau of Energy Efficiency (BEE) has been appointed as the Administrator of the carbon market. BEE will be responsible for preparing detailed procedures for trading, registering eligible entities, and monitoring the overall functioning of the market. Its role will focus on ensuring transparency, proper compliance, and smooth implementation of the scheme.

The Grid Controller of India has been designated as the Registry. It will maintain electronic accounts of all participants and set up the technical infrastructure required for the exchange of certificates. The Registry will also verify and record all transactions. Whenever a trade takes place on a Power Exchange, the Registry will automatically debit the seller’s account and credit the buyer’s account. It will also cross-check bids in real time to ensure that sellers do not offer more certificates than they actually hold.

The regulations apply to two categories of participants: “Obligated Entities” and “Non-Obligated Entities.” Obligated Entities are those with specific compliance requirements under environmental or energy efficiency rules. Non-Obligated Entities can voluntarily participate in the carbon market. Trading will mainly take place through Power Exchanges and will be divided into two segments. The Compliance Market will be for obligated participants to meet their targets, while the Offset Market will allow non-obligated entities to buy and sell credits voluntarily.

Each Carbon Credit Certificate represents the reduction, removal, or avoidance of one metric ton of carbon dioxide equivalent (1 tCO2e). To maintain market stability, the Commission has introduced price controls. Certificates traded under the compliance mechanism will have a Floor Price, which is the minimum price, and a Forbearance Price, which is the maximum price. Both limits will be approved by CERC.

Trading is expected to take place on a monthly basis, unless the Commission decides otherwise. The rules also include strict bidding restrictions. Entities cannot place sale bids for more certificates than what is available in their Registry accounts. If any entity tries to sell more certificates than it owns more than three times in a single quarter, it will be barred from trading for six months.

CERC has retained strong oversight powers. It can intervene in case of abnormal price movements or sudden changes in trading volume. The Commission may also relax certain provisions or issue additional directions if implementation challenges arise. Fees for operating the Registry and its software platform will be decided by CERC in consultation with BEE. The regulations came into effect immediately after their publication in the Official Gazette, marking an important step in developing India’s carbon market system.