Home>Carbon Markets and Industrial Energy Efficiency: Assessing India's Transition from PAT to CCTS
29 July 2026
Carbon Markets and Industrial Energy Efficiency: Assessing India's Transition from PAT to CCTS
This student report was produced as part of the course 'The Future of European Energy Efficiency Policies' at Sciences Po and is one of a series of publications showcasing the work of students in the course. Through applied research and policy analysis, students explore the future of energy efficiency policies in Europe: How existing regulation could be updated and which additional policy measures could be taken.
By Mathias Brynildsen, Michael Gillesberger, Sara Kosberg Bredin, Maxim Mouret, Thomas Roland
Abstract
This paper examines how emissions trading systems affect industrial energy efficiency incentives, drawing on India’s transition from the energy efficiency-focused Perform, Achieve and Trade (PAT) scheme to the carbon-intensity-based Carbon Credit Trading Scheme (CCTS). Using a mixed-methods approach combining literature review, quantitative analysis, and expert interviews, this report provides three overarching insights. First, the impact of emissions trading systems on industrial energy efficiency is neither straightforward nor uniform, and depends on policy design, market conditions, and institutional context. Second, the Indian transition highlights both opportunities and risks: stronger market incentives may enhance energy efficiency investments under the CCTS, but more compliance options may also dilute them. Third, complementary measures are needed to fully unlock industrial energy efficiency potential, as structural barriers persist even under a well-functioning domestic carbon market. Building on these insights, five key policy recommendations to enhance industrial energy efficiency gains under the CCTS are derived: (i) ensuring market stability through consignment auctions, (ii) strengthening institutional implementation capacity, (iii) providing forward-looking guidance to industry, (iv) supporting MRV and energy management capacity building, and (v) introducing targeted financial support measures to incentivise energy efficiency investments. This study also carries broader relevance, as the EU Carbon Border Adjustment Mechanism has reignited debates on carbon market development to retain domestic revenues in many jurisdictions, including emerging economies like India. Ensuring that such systems reinforce, rather than weaken, incentives for industrial energy efficiency will be critical for cost-effective decarbonisation.