Cement & CCTS: India's Largest Credit Supplier

Why cement remains structurally net long and anchors market liquidity through the decade.

By Abhishek Das • January 14, 2026 • 9 min read

In This Article

Cement's Position Under CCTS • Why Cement Is Structurally Net Long • Decarbonisation Levers & Their Limits • From Surplus Position to Revenue Opportunity • Strategic Implications

Why This Matters

India's cement sector is uniquely positioned within CCTS: unlike energy-intensive sectors facing mounting compliance costs, cement is structurally net long—meaning it generates more carbon credits than it needs. With 186 facilities receiving final benchmarks and a 1.57% annual reduction trajectory, the sector is projected to hold a surplus rising from ~27 lakh to ~33 lakh CCCs by FY 2029-30. This structural long position makes cement the anchor of market liquidity in India's CCTS marketplace. For cement producers, this is not a compliance burden—it is a revenue opportunity. For market participants, understanding cement's credit supply dynamics is essential to understanding CCTS price discovery and sector equilibrium.

Cement is among the first sectors to receive final, notified Greenhouse Gas Emission Intensity (GEI) benchmarks under CCTS. The sector encompasses 186 obligated facilities spanning clinkerisation units, integrated plants, composite plants, grinding units, and speciality segments. The regulatory scope is comprehensive: every significant cement manufacturer in India is now subject to compliance obligations effective immediately. (Source: Climate Decode, India CCTS Market Outlook, Annex B)

Each cement facility receives a facility-specific GEI benchmark measured in tonnes of CO₂e per tonne of cement. This intensity-based design means compliance exposure scales directly with cement production volumes. However, the critical distinction is that cement's GEI is characterised by a compressed reduction trajectory: a Weighted Average Reduction (WAR) of just 1.57% annual tightening. This is significantly lower than energy-intensive sectors like aluminium (2.27%) or steel, creating a favourable compliance environment for most facilities. (Source: BEE, CCTS Framework & GEI Notifications)

For facility operators, this means you must track cement-level emissions against regulator-specified baselines and forecast compliance position across production scenarios. But unlike other sectors, most cement facilities are likely to find themselves in credit surplus—producing fewer emissions than their benchmark allows. This surplus is the foundation of cement's role as a credit supplier within CCTS.

Cement's structural long position—meaning surplus of credits—stems from two distinct but complementary factors. First, cement production has inherent, well-established pathways to efficiency and emission reduction. Second, the industry has been delivering on these pathways for years, creating a head start relative to CCTS benchmarks.

Unlike aluminium's multi-lever exposure, where both electricity and process components are difficult to address, cement has clear, implementable levers. The industry has been executing on these pathways for the past decade. As a result, most cement facilities are likely to be substantially below their GEI benchmarks—generating surplus credits rather than facing deficits.

The key insight: cement's structural net long position is not an accident or temporary feature. It reflects the reality that decades of efficiency-driven decarbonisation have already positioned the sector well ahead of CCTS benchmarks. This head start is the foundation of cement's role as a credit supplier within CCTS.

While cement's established efficiency pathways are powerful, understanding their limits is essential to long-term strategy. According to Climate Decode's analysis of the CEEW Cement Decarbonisation Report, cement's decarbonisation toolkit includes multiple levers, each with distinct economics and saturation characteristics: (Source: CEEW, How Can India Decarbonise for Net-Zero: Sustainable Cement Production)

• • Energy Efficiency (Negative Abatement Cost): WHR, efficient grinding, cooler upgrades, and kiln enhancements are all financially attractive—they reduce operating costs while lowering emissions. However, penetration is already high (22–56% of the fleet), and remaining deployment is capital-constrained. These easy wins are nearing saturation.
• • Alternative Fuels & Raw Materials (AFRM): The sector can substitute fossil fuels with waste-derived biomass and other sources. Available feedstocks include MSW (5.3 MTPA), biomass (23.9 MTPA), fly ash (16.2 MTPA), and slag (8.1 MTPA). This lever offers significant abatement potential but requires infrastructure investment and supply chain development. (Source: CEEW, How Can India Decarbonise for Net-Zero: Sustainable Cement Production)
• • Clinker Factor Reduction: SCM blending (fly ash, slag, limestone, LC3 cements) is already widespread, but there are limits. Beyond ~35–70% blending in premium products, cement strength and durability specifications create practical constraints. The industry is approaching these practical ceilings.
• • Carbon Capture & Storage (CCUS): At USD 90/tCO₂e base cost, CCUS can theoretically capture 62 MTPA of CO₂ from India's cement sector. However, the capital requirement is enormous: ~INR 22 lakh crore for full deployment. This is the only pathway to zero-emission cement, but it requires breakthrough economics and policy support.

The critical insight from CEEW's analysis: 32% emission reduction is achievable without any cost increase—these are the efficiency and AFRM levers already in deployment. Beyond that, reaching net-zero requires CCUS at prohibitive cost. This means that cement's structural surplus under CCTS benchmarks reflects realistic abatement achievable without breakthrough technologies. The sector has room to generate credits through the 2020s, but that room is finite. (Source: CEEW, How Can India Decarbonise for Net-Zero: Sustainable Cement Production)

Understanding cement's surplus position is necessary but not sufficient. The real revenue opportunity emerges from Carbon Credit Certificate (CCC) pricing and timing. CCC prices are market-determined and will fluctuate based on sector supply-demand dynamics and policy evolution. For cement producers planning credit monetisation strategy, modelling multiple CCC price scenarios is essential.

Climate Decode's market outlook projects CCC prices in the range of INR 1,035–1,980 per tCO₂e in FY 2025-26, rising to INR 3,900–4,000 per tCO₂e by 2030. For cement specifically, the trajectory across 186 obligated facilities reveals a compelling opportunity: the base case shows cement generating a surplus rising from ~27 lakh tCO₂e in FY 2025-26 to ~33 lakh tCO₂e by FY 2029-30, creating a cumulative revenue opportunity of ~INR 1,287–1,320 crore. Under the supply-heavy scenario, surpluses expand dramatically to ~31–68 lakh CCCs, while the supply-constrained scenario shows surpluses eroding to ~22–27 lakh CCCs, tightening toward ~5 lakh CCCs by end-period. With a weighted average annual GEI reduction of just 1.57%, the sector maintains a structural credit-generation position across all scenarios. (Source: Climate Decode, India CCTS Market Outlook, Annex B)

Climate Decode's modelling of cement-specific credit supply incorporates:

• • Facility-level emissions intensity benchmarks across all 186 cement facilities (final GEI notification: October 2025)
• • Historical and projected abatement pathways (SCM blending, WHR, kiln efficiency, AFRM deployment)
• • Cement production volume scenarios and demand growth trajectories
• • CCC price discovery trajectories from early-market pricing (INR 1,035–1,980) to equilibrium levels (INR 3,900–4,000 by 2030)

Across all three scenarios, the cement sector follows the same directional pattern: structural credit surplus throughout the forecast period. This contrasts sharply with energy-intensive sectors moving into deficit. The base case shows surpluses rising from ~27 lakh CCCs in FY 2025-26 to ~33 lakh by FY 2029-30. Under supply-heavy conditions, surpluses can exceed 60 lakh CCCs—providing substantial revenue upside if CCC prices track toward the upper end of equilibrium pricing. Even under supply-constrained scenarios where surpluses erode, cement remains in surplus through FY 2029-30, with exposure capped at ~5 lakh CCCs.

The critical implication: cement's revenue opportunity is not a one-year event. It is a multi-year cash generation stream that compounds as benchmarks tighten at 1.57% annually and CCC prices move from discovery levels (INR 1,035–1,980) toward equilibrium (INR 3,900–4,000 by 2030). Under the base case, the sector's cumulative opportunity reaches ~INR 1,287–1,320 crore through FY 2029-30. For individual producers, timing credit monetisation—deciding when to bank surpluses vs. when to sell—becomes a strategic variable with material financial impact.

For cement producers, CCTS is not a compliance burden—it is a strategic variable that should be integrated into capital allocation, production planning, and commercial strategy:

• •Abatement Investment Prioritization: Not all efficiency capex has equal return in a CCTS environment. Projects that generate surplus credits have an implicit revenue value. Energy efficiency projects (WHR, grinding upgrades) now have dual economics: operational cost savings plus credit generation upside. This fundamentally improves project IRR and should accelerate capex deployment.
• •Credit Banking & Monetisation Timing: With CCC prices projected to rise from INR 1,035–1,980 in FY 2025-26 to INR 3,900–4,000 by 2030, producers face a critical strategic decision: bank credits for later monetisation at higher prices, or sell early when liquidity is limited? This is not just a working capital decision; it is a financial policy choice with multi-year implications.
• •Production Flexibility & Blending Strategy: Clinker substitution through SCM blending is a primary abatement pathway. Production strategy decisions—what product mix to produce, how aggressively to pursue low-clinker cement—directly affect credit generation. This should be embedded in production planning and commercial strategy.
• •Market Positioning & Next-Generation Decarbonisation: As easy efficiency levers saturate, cement producers will face choices between CCUS investment and market positioning in export markets with carbon border adjustment mechanisms (e.g., EU CBAM). Early movers in credit monetisation can fund innovation investments in the next generation of cement decarbonisation—alternative fuels, clinker alternatives, carbon capture.

The takeaway: CCTS is an opportunity for cement, not a constraint. Producers should embed credit supply strategy into capital allocation, production planning, and commercial decision-making. The multi-year revenue opportunity—~INR 1,287–1,320 crore base case through FY 2029-30—is substantial enough to warrant dedicated strategic focus and optimal execution.

Ready to Monetise Your Cement Credit Surplus?

Climate Decode develops facility-specific credit surplus models, CCC price scenario analysis, and capital allocation frameworks tailored to cement sector dynamics. We help you quantify credit generation potential, optimize monetisation timing, and align CCTS strategy with your business objectives.

About the Author

Abhishek Das Co-founder, Climate Decode Co-founder of Climate Decode, with 8+ years of experience across carbon markets, pricing analytics, and policy interpretation spanning compliance and voluntary systems. His work sits at the intersection of regulated carbon markets and long-term decarbonisation strategy, translating complex market and policy signals into decision-grade insight. He has worked extensively across the global Voluntary Carbon Market and key compliance systems including the EU ETS, UK ETS, and WCI, covering carbon pricing and valuation, supply–demand analysis, offset project assessment, and financial modelling. At Climate Decode, Abhishek leads the analytics layer underpinning TerraNova and Canopy, developing India-specific carbon price scenarios, CCTS compliance pathways, and forward-looking decarbonisation roadmaps that integrate regulatory trajectory, market risk, and long-term capital planning. Speak to Abhishek → LinkedIn →

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