New Delhi, July 5 -- India has turned its climate commitments into action through a broad and increasingly sophisticated policy architecture.

At the centre sits the Carbon Credit Trading Scheme (CCTS), its first explicit carbon-pricing mechanism that establishes emissions-intensity benchmarks for energy-intensive sectors such as cement, aluminium, petrochemicals, refining, pulp and paper, and textiles. Firms performing better than the benchmarks earn tradable carbon credits while underperformers must purchase credits or face penalties.

The emission intensity-based approach of the CCTS is an intelligent policy choice for a fast industrializing economy. Unlike absolute emission caps such as those followed by the EU, which fix total emissi...