Modelling insights and design choices for a credible Indian carbon market: Workshop summary report
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Key Findings
Firms’ first compliance cycles will anchor expectations on carbon price, credibility, and policy intent. If early cycles are characterised by even modest but credible price signals, the right foundations are laid for long-term market acceptance and investment decisions.
Market performance will be driven by the level and trajectory of targets. Trading, banking, and other design features can improve efficiency, but cannot substitute for underlying stringency. India’s Perform, Achieve and Trade (PAT) scheme, for instance, delivered compliance but saw limited price discovery in cycles where targets were relatively easy to meet. The Carbon Credit Trading Scheme (CCTS) should actively aim to avoid repeating this.
When and how to introduce flexibility mechanisms, including domestic offsets, credit banking provisions, and potential international linkages under Article 6 of the Paris Agreement, will be crucial. Introducing too much flexibility too early could increase credit supply and dampen price signals before the market has matured.
A workshop held on 9 March 2026 in New Delhi, co-organised by the Institute for Energy Economics and Financial Analysis (IEEFA), the Indian Institute of Technology Roorkee (IIT Roorkee), and the Environmental Defense Fund (EDF), brought together policymakers, researchers, technical experts, and representatives from India’s obligated sectors to examine modelling insights and design choices for a credible Carbon Credit Trading Scheme (CCTS).
The half-day workshop was part of an 18-month joint project between IEEFA, IIT Roorkee, and EDF, launched in October 2024. The project includes three policy research reports and the development of a preliminary simulation model to inform carbon market participants and key stakeholders such as the Bureau of Energy Efficiency (BEE).
A summary of the workshop is available for stakeholders who were unable to attend in person. It captures the key analytical findings and policy discussions held across two sessions, including modelling methodology, expert perspectives, and roundtable deliberations.
Session 1 of the workshop was titled ‘Modelling to inform the Indian carbon market’, covering the Carbon Credit Trading Scheme (CCTS) modelling framework, sectoral abatement potential, marginal abatement cost (MAC) curve construction, compliance scenario analysis, and indicative carbon price signals. Session 2, ‘Market stability, design choices, and the road ahead’, considered price stability mechanisms and future design pathways for the CCTS.
The summary reflects the views shared during the event and is not a verbatim record.
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