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India has notified its first legally binding emission intensity targets for 282 major industrial units across aluminium, cement, pulp and paper, and chlor-alkali sectors. The targets, based on 2023-24 emission levels, are effective for the 2025-26 to 2026-27 compliance period. Industries exceeding their targets must buy carbon credits or pay penalties, while those performing better can earn tradable credits. The targets range from 3.4% to 7.5% reduction depending on the sector. This initiative builds on the Perform, Achieve and Trade scheme and aligns with India's Paris Agreement goals and net-zero strategy.
India has implemented its first legally binding emission intensity targets for carbon-intensive industries, marking a key step in strengthening industrial climate regulations. The Ministry of Environment, Forest and Climate Change has notified the Greenhouse Gases Emission Intensity Target Rules, 2025, which require 282 major industrial units to cut greenhouse gas emissions per unit of output compared with 2023-24 levels. Advertisement
The compliance period spans the 2025-26 to 2026-27 period. Units that achieve emissions below their assigned targets can earn tradable carbon credit certificates, which can be sold or banked for future use. Conversely, units exceeding their targets must either purchase equivalent carbon credits from the domestic carbon market or pay an environmental compensation penalty, set at twice the average trading price of carbon credits during the compliance year. The Bureau of Energy Efficiency calculates the average price, and the Central Pollution Control Board ensures penalties are imposed and recovered within 90 days.
This framework operationalizes provisions under the Energy Conservation (Amendment) Act, 2022, enabling a formal domestic carbon market. It builds on India's Perform, Achieve and Trade (PAT) energy efficiency scheme, which previously focused on energy savings but did not set direct carbon emission limits.
The emission reduction targets differ by sector. The cement sector is expected to reduce emissions by 3.4% over two years, aluminium by 5.8%, chlor-alkali by 7.5%, and pulp and paper by 7.1%, all measured against the 2023-24 baseline. Companies included in the first compliance cycle include Vedanta, Hindalco, Nalco, and Balco in aluminium, and UltraTech, Dalmia, JK Cement, Shree Cement, and ACC in cement.
This initiative also aligns with India's climate commitments under the Paris Agreement, targeting a 45% reduction in GDP emission intensity by 2030 from 2005 levels, and achieving net-zero emissions by 2070. Additionally, the framework prepares Indian industries for international environmental standards, including the European Union's Carbon Border Adjustment Mechanism, which taxes imports of carbon-intensive goods like steel, cement, and aluminium.
Source PTI
5th Jun, 2025
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