India and the Global Carbon Market: The Opportunity and Risks of Joining the New Climate Coalition
With its domestic carbon market now operational, India faces a critical choice on whether to join a new global coalition shaping the rules of carbon pricing, a decision with significant economic and geopolitical implications.
What is the Open Coalition on Compliance Carbon Markets?
The Open Coalition on Compliance Carbon Markets (OCCCM) is a government-led initiative launched in Florence in May 2026. Its founding members are the European Union, China, and Brazil—three of the world's largest economies and operators of significant carbon markets. The coalition's stated purpose is to foster collaboration on domestic compliance carbon markets. According to its first work plan, adopted in Wuhan on September 14, 2026, its focus areas include aligning Monitoring, Reporting, and Verification (MRV) systems and standardising carbon accounting. Since its launch, the coalition has expanded to include Germany, New Zealand, Canada, France, Norway, Singapore, Türkiye, and the United Kingdom, indicating growing momentum to harmonise carbon pricing approaches.
How does India's domestic carbon market work?
India's Carbon Credit Trading Scheme (CCTS) is a mandatory, compliance-driven market. The government's stated objective is to create a robust domestic market to help India achieve its NDC targets and its long-term goal of reaching net-zero emissions by 2070. The scheme is being implemented in phases, with the first compliance cycle covering nearly 500 companies across seven key sectors, including steel, cement, and petrochemicals. Following the submission of compliance reports in July 2026, the first carbon credits are scheduled to be issued in October 2026. Trading on designated power exchanges is expected to commence between November 2026 and January 2027, making India one of the few major developing countries with an operational carbon pricing mechanism.
What is the argument for India joining the coalition?
Proponents argue that joining the OCCCM is a strategic imperative. According to Vaibhav Chaturvedi of the Council on Energy, Environment and Water (CEEW), linking India's CCTS to other international markets could create a significant revenue stream. Indian industries could potentially sell surplus carbon credits to jurisdictions with higher emission reduction costs. Being part of the coalition would allow India to influence the rules of such linkages from the outset.
Keep reading this explainer
This is the opening of a 1447-word explainer. An account brings you the rest, a PDF to keep and the whole Explained archive.
Takes about a minute. Your email and a password is all it needs.