Are Data Centres Next in India's Carbon Market?
What a Later CCTS Phase Could Mean?
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Introduction
As of 1 October 2026, data centres are not among the sectors covered by India's Carbon Credit Trading Scheme (CCTS). The government has identified nine energy-intensive sectors for the compliance mechanism, and no official source reviewed for this article shows data centres being added.
The question is being asked because data centre electricity demand is rising and large energy users are drawing closer scrutiny. Some commentary suggests later phases of the scheme could widen coverage, but that is not confirmed policy.
This article sets out the verified position, explains how the compliance and voluntary carbon markets differ, and describes what data centre companies can prepare without assuming future inclusion.
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Background: How the CCTS Works
India's Carbon Credit Trading Scheme was notified by the Ministry of Power on 28 June 2023 under the Energy Conservation (Amendment) Act, 2022. It is meant to put a price on emissions and move energy-intensive industries from the older Perform, Achieve and Trade (PAT) energy-efficiency scheme to a carbon market.
The scheme works on emission intensity, meaning emissions per unit of output, rather than a fixed cap on total emissions. The Ministry of Environment, Forest and Climate Change (MoEFCC) notifies targets and the Bureau of Energy Efficiency (BEE) administers the scheme. The first compliance years are 2025-26 and 2026-27, measured against a 2023-24 baseline.
Covered entities report emissions to BEE, and BEE accredits carbon verification agencies to check the data. This process of measurement, reporting and verification, known as MRV, is what makes certificates credible. A baseline is the starting level against which later performance is judged.
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Data Centres and the CCTS: The Current Position
Which sectors are covered today?
The government has identified nine energy-intensive sectors for the compliance mechanism: aluminium, cement, steel, paper, chlor-alkali, fertiliser, refinery, petrochemical and textile. ICAP reports that targets were notified for aluminium, cement, chlor-alkali and pulp and paper in October 2025, and for refining, petrochemicals and textiles in January 2026. ICAP estimates the nine sectors account for about 16% of India's total emissions and roughly 740 entities once all are notified.
Where data centres stand?
Data centres are not on that list, and no official announcement adding them was found in the sources reviewed for this article. Some industry commentary suggests later phases could widen coverage to sectors such as data centres, but that remains unconfirmed and should not be read as policy.
Compliance and voluntary markets
In the compliance mechanism, obligated entities that beat their emission-intensity target earn Carbon Credit Certificates, and those that miss it must buy certificates. Certificates are to be traded through the power exchanges. The offset mechanism is voluntary: entities outside the compliance sectors may register projects under approved methodologies. The two markets serve different purposes and should not be confused.
Direct and indirect exposure
A direct obligation needs a government notification that names the sector and sets targets. Without one, a data centre has no compliance duty under the scheme. Indirect exposure would be different: it could arise if suppliers of electricity or materials become covered and pass costs along. ICAP reports that the government plans a later expansion, notably to coal-fired power generation. None of this is confirmed for data centres.
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Implications and What to Watch
Readiness steps
Measuring Scope 1 and Scope 2 emissions, fixing a baseline year and keeping records that an independent party could verify are sensible steps whatever policy decides. They also help answer investor and customer questions about carbon accounting.
Monitoring and verification
A data centre does not need the CCTS reporting process today. If coverage ever changed, familiar practices such as metering, clear data trails and third-party assurance would apply.
Certificates are not interchangeable
A renewable energy certificate records renewable electricity generation. A Carbon Credit Certificate under the CCTS represents emission reductions against a target or through a registered offset project. Buying one does not substitute for the other.
What to watch?
Watch BEE and MoEFCC notifications, any official statement on sector expansion, and the start of certificate trading on the power exchanges.
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Conclusion
India's CCTS does not currently cover data centres, and no official announcement suggests they will be added. The compliance and voluntary offset mechanisms serve different purposes, and neither is a substitute for renewable energy certificates.
Stakeholders should watch BEE and MoEFCC notifications and any official statement on sector expansion, rather than treating commentary as policy.
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Frequently Asked Questions
Are data centres covered by India's CCTS?
No, data centres are not among the nine sectors identified for the compliance mechanism as of 1 October 2026.
What is the CCTS and which sectors does it cover?
It is India's carbon market, where entities in nine energy-intensive sectors (aluminium, cement, steel, paper, chlor-alkali, fertiliser, refinery, petrochemical and textile) face emission-intensity targets.
Could data centres receive carbon compliance obligations?
Only if the government adds them through a future notification, and no official announcement to that effect was found.
How can a data centre prepare for carbon-market regulation?
Measure Scope 1 and Scope 2 emissions, set a baseline year and keep records that an independent party could verify.
Are renewable-energy certificates the same as carbon credits?
No, a renewable energy certificate records renewable electricity generation, while a Carbon Credit Certificate represents emission reductions under the CCTS.
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