The Indian government has introduced the Greenhouse Gases Emission Intensity Target Rules, 2025, which sets legally binding emission reduction targets for carbon-heavy industries. The rules, notified by the environment ministry on October 8, require 282 industrial units across the aluminium, cement, pulp and paper, and chlor-alkali sectors to reduce their greenhouse gas emissions per unit of output. The reduction targets are based on 2023-24 baseline levels, and the compliance period begins in 2025-26 and continues through 2026-27.
The rules operationalize the Energy Conservation (Amendment) Act, 2022, which empowered the government to establish a domestic carbon market. The move builds on India’s Perform, Achieve and Trade (PAT) energy efficiency scheme, which had earlier set energy-saving targets for industries but not direct carbon limits. 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 that compliance year. The average price will be determined by the Bureau of Energy Efficiency (BEE), and the Central Pollution Control Board (CPCB) will impose and oversee recovery of penalties. The notified schedule details company-wise and plant-wise targets, with emission intensity reduction targets ranging from 3.4% in the cement sector to 7.5% in the chlor-alkali sector.
India’s carbon credit trading framework is seen as critical to meeting its nationally determined contribution (NDC) targets under the Paris Agreement, including reducing the emission intensity of GDP by 45% by 2030 from 2005 levels and achieving net zero by 2070. The rules also prepare Indian exporters to adapt to international mechanisms such as the European Union’s Carbon Border Adjustment Mechanism (CBAM), which taxes carbon-intensive imports like cement, steel, and aluminium. Overall, the introduction of the Greenhouse Gases Emission Intensity Target Rules, 2025, marks a significant step towards reducing India’s carbon footprint and promoting sustainable development.