New rules mandate greenhouse gas reduction for major Indian industrial sectors
New Delhi: The government has notified the Greenhouse Gas Emission Intensity Target Rules, 2025, marking India’s first legally binding emission reduction targets for carbon-intensive industries.
The notification, issued by the Ministry of Environment on October 8, comes after considering feedback on the draft rules published on April 16. Under the new rules, 282 industrial units across the aluminium, cement, pulp and paper, and chlor-alkali sectors must cut their greenhouse gas emissions per unit of output, known as emission intensity, relative to 2023-24 baseline levels.
The compliance period begins in 2025-26 and runs through 2026-27. Each facility is required to reduce the amount of greenhouse gases emitted per tonne of product compared to the baseline.
The move operationalises the Energy Conservation (Amendment) Act, 2022, which gave the government the authority to establish a domestic carbon market. It also builds on India’s Perform, Achieve and Trade (PAT) energy efficiency scheme, which previously set energy-saving targets for industries but did not impose direct carbon limits.
Under the rules, facilities that emit less than their assigned target can earn tradable carbon credit certificates, while those exceeding the target must purchase equivalent credits from the Indian carbon market or pay a penalty. The penalty, termed environmental compensation, will be twice the average trading price of carbon credits during the compliance year, determined by the Bureau of Energy Efficiency (BEE). The Central Pollution Control Board (CPCB) will enforce penalty collection, which must be paid within 90 days.
The rules include detailed company-wise and plant-wise targets. Major aluminium smelters operated by Vedanta, Hindalco, Nalco, and Balco, as well as large cement plants owned by UltraTech, Dalmia, JK Cement, Shree Cement, and ACC, are part of the first compliance cycle.
Emission intensity reduction targets vary by sector: 3.4 per cent over two years for cement, 5.8 per cent for aluminium, 7.5 per cent for chlor-alkali, and 7.1 per cent for pulp and paper, measured against the baseline year.
India’s carbon credit trading framework is seen as crucial for achieving its nationally determined contribution (NDC) targets under the Paris Agreement, including a 45 per cent reduction in GDP emission intensity by 2030 (from 2005 levels) and net zero by 2070.
The rules also prepare Indian exporters to meet international standards, such as the European Union’s Carbon Border Adjustment Mechanism (CBAM), which levies taxes on carbon-intensive imports like cement, steel, and aluminium.
PTI inputs