As India prepares to launch its Carbon Credit Trading Scheme (CCTS) by mid-2026, the spotlight turns to the road transport sector the country third-largest greenhouse gas emitter. With over 90% of emissions from this sector coming from road vehicles the government inclusion of transport in the carbon credit offset mechanism aims to financially reward emission reductions and accelerate the adoption of cleaner alternatives.
A Market Boost for EV Projects
The CCTS could create a breakthrough moment for the electric vehicle (EV) sector. New guidelines from the Bureau of Energy Efficiency (BEE) outline how transport projects especially those involving EVs can earn carbon credits under methodologies aligned with global frameworks like the UN Clean Development Mechanism and the Paris Agreement’s Article 6.4.
So far, India’s participation in global carbon markets has been dominated by renewable energy and forestry, with transport projects contributing less than 2% globally. The launch of CCTS could change that, making EV-based projects more attractive to investors and giving fleet operators a new revenue stream.
Who Stands to Benefit?
Fleet operators particularly those running electric buses, trucks, taxis and commercial vehicles are expected to gain the most. Their larger vehicle sizes and higher daily mileage mean more emissions avoided and, thus, more credits earned. However, some segments like electric two-wheelers may struggle to qualify under the CCTS’s ‘additionality’ clause, which requires proof that the project wouldn’t happen without carbon finance.
Carbon Credit Math: Why Renewable Energy Matters
The source of electricity used to charge EVs also plays a major role. For instance, an electric bus using grid electricity in a state with higher emissions could earn an annual revenue of ₹4,000–₹7,000 from carbon credits. But in states with a cleaner electricity mix higher renewable energy share this revenue can jump to ₹17,000–₹30,000 per bus. For state transport utilities with large EV fleets, this adds up quickly.
Delhi and Beyond: Policy Signals Encourage Carbon Trading
Delhi’s upcoming EV Policy 2.0 includes measures to help EV users access carbon credit markets. Meanwhile, the Ministry of Finance has launched a Climate Finance Taxonomy to guide investments into emission reduction projects. Together, these steps are building a supportive ecosystem for CCTS implementation.
Challenges Ahead
Despite its promise, the CCTS will demand compliance with monitoring and reporting rules and verification of emission reductions. The pace at which the transport sector adapts will depend on how these processes are streamlined, how incentives are distributed, and whether small players can participate without being overwhelmed by technical hurdles.
Final Word
CCTS offers India a chance to align its decarbonisation ambitions with market-based rewards, particularly in transport a sector with immense emissions and equally immense potential for transformation. Whether this scheme becomes a turning point for green mobility or another missed opportunity depends on swift policy execution, inclusive participation, and genuine climate ambition.