The Carbon Credit Trading Scheme 2023 by Ministry of Power: A New Era of Sustainable Energy

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The Ministry of Power has recently launched the Carbon Credit Trading Scheme 2023, a revolutionary initiative designed to curb greenhouse gas emissions and foster sustainable energy. This scheme is a testament to the government’s commitment to the Paris Agreement and its goal of limiting global warming to well below 2 degrees Celsius.

Understanding the Carbon Credit Trading Scheme

The Carbon Credit Trading Scheme is a market-based strategy to control pollution, which allows corporations to earn credits by reducing their carbon emissions. These credits can then be traded on a marketplace. The scheme sets a limit or cap on the amount of carbon dioxide and other greenhouse gases that can be emitted by large companies. Companies that emit less than their quota earn carbon credits, which they can sell to other companies that exceed their limits.

The Mechanism of the Scheme

The scheme operates on the principle of ‘cap and trade’. The ‘cap’ sets a limit on the total amount of certain greenhouse gases that can be emitted by factories, power plants, and other installations. The cap is reduced over time so that total emissions fall.

Companies receive emission allowances within the cap, which they can sell to or buy from one another as needed. The trade brings flexibility that ensures emissions are cut where it costs least to do so.

The Role of Different Entities

The scheme involves several key entities, each with specific roles and responsibilities:

Sequence Diagram


Bureau of Energy Efficiency (BEE)

The BEE serves as the Administrator for the Indian carbon market. It identifies sectors and potential for reduction of greenhouse gases emissions in such sectors and recommends to the Ministry of Power to include such sectors in the Indian carbon market. The BEE also develops trajectory and targets for the entities under compliance mechanism and issues the carbon credits certificate based on the recommendation of the National Steering Committee for the Indian carbon market and subsequent approval of the Central Government. Furthermore, it develops a market stability mechanism for carbon credits.

Central Electricity Regulatory Commission (CERC)

The CERC acts as a regulator to the Indian Carbon Market. It regulates matters relating to trading of carbon credit certificates, safeguards the interest of both sellers and buyers, and regulates the frequency of carbon credit certificates trading.

Accredited Carbon Verification Agency (ACVA)

The ACVA is determined by the BEE with prior approval of the Central Government. The ACVA performs functions for the purposes of this Scheme as determined by the BEE from time to time.

The Trading Process

The trading of carbon credits takes place in a regulated market where sellers, who have earned credits by reducing their emissions, meet buyers who need to purchase credits to comply with their emission caps. The price of carbon credits is determined by supply and demand dynamics in the market.


The Carbon Credit Trading Scheme 2023 is a significant step towards a sustainable future. By putting a price on carbon emissions, it makes environmental protection a part of the business model. The scheme is expected to drive significant investment in low-carbon and renewable energy technologies, ultimately leading to a reduction in greenhouse gas emissions. It is a clear indication that the government is committed to meeting its climate change obligations and transitioning to a low-carbon economy.