Will CCTS move the needle for a clean transport sector?

s India gears up to launch its own independent carbon market, the Carbon Credit Trading Scheme (CCTS), by mid-next year, the transport sector emerges as a potential beneficiary. However, the sector—the third-largest contributor to national greenhouse gas (GHG) emissions, over 90 per cent of which stem from road transport—faces some key questions too. Can CCTS meaningfully accelerate decarbonisation in this sector? What are the actual opportunities created, and who benefits the most?

Recognising the crucial role of the transport sector in emission reduction, the central government has included the same in the offset mechanism—one of the two carbon-credit-earning mechanisms under CCTS that involves a voluntary project-based credit method. Emission reduction technologies, such as electric vehicles (EVs), and their corresponding methodologies and procedures to estimate and register for carbon credits have been published by the Bureau of Energy Efficiency (BEE), which is spearheading the CCTS implementation. Most of the methodologies regarding EVs seem to be adapted from the United Nations Framework Convention on Climate Change (UNFCCC) Clean Development Mechanism (CDM) and Article 6.4 of the Paris Agreement.

Some recent government policy signals are encouraging too. For instance, the Delhi government plans to facilitate the earning of carbon credits by EV users as part of their upcoming EV Policy 2.0. The Ministry of Finance recently published the country’s Climate Finance Taxonomy to streamline capital inflows to GHG emission reduction projects. CCTS, in conjuncture with these developments, could create a more enabling environment for decarbonising road transport with its financial incentives. However, it remains to be seen how quickly and ambitiously the sector responds.

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