Cement Manufacturers Association (CMA)

36 Key lessons for India include: a clear long-term price signal incentivises efficiency upgrades, fuel switching, and clinker substitution; and the Carbon Border Adjustment Mechanism (CBAM) on cement from 2026 onward provides a template for managing carbon leakage in trade-exposed sectors. 9.2 China's National Emissions Trading System China's national ETS began with power-sector coverage, accounting for more than 44% of global CO ₂ emissions covered by any carbon market.[12] Carbon prices have been approximately USD 7–10/tCO ₂ e, but the market is evolving toward broader coverage and tighter MRV requirements.[12] The Chinese experience demonstrates that even at low prices, a national ETS can build essential institutional infrastructure before the price signal intensifies — a design approach India's CCTS appears to be deliberately emulating. 10. Conclusions and Policy Implications India's Carbon Credit Trading Scheme represents a significant and timely intervention for the hard-to-abate cement sector. The scheme's intensity-based architecture — building on the PAT scheme's institutional legacy — allows a pragmatic, phased transition that is neither economically disruptive in the near term nor permissive of indefinite inaction. Several conclusions merit emphasis. On scheme design: The CCTS wisely leverages PAT-era monitoring infrastructure and sector familiarity with intensity-based targets. This continuity reduces friction in early compliance years while establishing regulatory credibility needed for long-term price formation. On cement-sector exposure: The GEI targets for FY 2025–26 and FY 2026–27 imply a combined CCC cost burden in the range of USD 50–130 million under conservative price assumptions. This is material but manageable for the sector in aggregate, though individual plant-level exposure will vary widely depending on clinker ratio, fuel mix, and kiln configuration. On technology pathways: Short- to medium- term abatement opportunities — supplemen- tary cementitious materials, alternative fuels, and waste-heat recovery — are technically available and economically viable. Deep decar- bonisation will ultimately require investment in carbon capture and possible redesign of kiln chemistry, which will not materialise without a credibly rising and stable carbon price. On international alignment: India's gradual approach mirrors the early developmental phases of both the EU ETS and China's national market. Establishing robust MRV systems, credible benchmarking, and market liquidity in the near term will be prerequisites for any future international carbon market linkage or recognition under Article 6 of the Paris Agreement. The Indian Carbon Market, if administered with institutional rigour, has the potential to become a meaningful instrument in India's climate transition — and a global reference point for emerging-economy carbon market design. References 1. Bureau of Energy Efficiency / Government of India. "Carbon Credit Trading Scheme (CCTS) Notification and Indian Carbon Market Framework — 2025–2026 Press Releases and Technical Notes." Ministry of Power, New Delhi, 2025–2026. 2. ICRA ESG / Business Standard. "Cement Firms May See Up to 19% Profit Hit under Carbon Scheme: ICRA." Business Standard, 22 April 2026. https://www.business- standard.com/industry/news/cement- firms-profit-hit-carbon-credit-trading- scheme-icra-126042201388_1.html 3. Outlook Business / Economic Times. "India Sets Emission Targets for Four More Sectors Amid Expansion of Carbon Market." Outlook Business, 21 January 2026. https://www.outlookbusiness.com/industry/i ndia-expands-carbon-market-adds-four- sectors 4. Vajiram & Ravi / Government of India. "What is the Perform, Achieve & Trade (PAT) Scheme?" Bureau of Energy Efficiency, Ministry of Power, New Delhi.