India has made a significant change to its climate strategy by proposing legally mandated greenhouse gas (GHG) emission targets for more than 460 industrial units. This program supports India’s larger decarbonisation objectives and adherence to global climate obligations as part of the country’s first compliance-based carbon market. India introduces GHG emission targets for over 460 industries under a new draft notification released by the Ministry of Environment.

What’s New: India Introduces GHG Emission Targets For Over 460 Industries

The Ministry of Environment, Forest and Climate Change released a draft notification on June 23, introducing the Greenhouse Gas Emission Intensity Target Rules, 2025. This framework builds on India’s earlier mechanisms, such as the PAT (Perform, Achieve, Trade) scheme and Renewable Energy Certificates, and shifts the country toward a more compliance-oriented carbon trading platform. The move is part of the Carbon Credit Trading Scheme (CCTS), 2023, aimed at accelerating reductions in industrial emissions.

The regulations focus on high-emission sectors, including textiles, petrochemicals, iron and steel, aluminum, and petroleum refining. A total of 264 industrial units have been listed, with assigned baseline emission levels and reduction targets for two compliance years: 2025–26 and 2026–27. These targets are based on emission intensity data for the 2023–24 period.

Obligated Entities and GEI

Industries under the scheme are referred to as “obligated entities.” They must meet Greenhouse Gas Emissions Intensity (GEI) targets each year or purchase carbon credit certificates from the Indian Carbon Market to compensate.

GEI refers to tonnes of CO₂ equivalent emitted per unit of output. For instance, in 2023–24, the Hindalco Industries aluminium plant in Taloja, Maharashtra, had a GEI of 1.3386 tCO₂ per tonne. This must be reduced to 1.2563 by 2026–27. The Hazira plant of Arcelor Mittal Nippon Steel India, the largest obligated entity by production volume in the steel industry, must cut its GEI from 2.2701 to 2.1696 tCO₂ per tonne.

BPCL’s Bina Refinery in Madhya Pradesh, with over 51 million barrels processed, must lower its GEI from 5.2312 to 4.8553 tCO₂/MBBLS. BPCL’s Kochi Refinery must reduce its GEI from 4.5745 to 4.4230 tCO₂/MBBLS.

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How the Carbon Market Will Work

Carbon credit certificates will be awarded to entities that emit less than their targets. These will be calculated as: (GEI Target – GEI Achieved) × Production Volume. The credits can be traded on the Indian Carbon Market or banked for future use.

Entities exceeding their GEI targets must purchase the required number of credits. If they fail to do so, the Central Pollution Control Board (CPCB) will impose an Environmental Compensation. This penalty equals twice the average price of a carbon credit certificate during the trading cycle and must be paid within 90 days of the event.

The funds collected will be used to support carbon market operations, as recommended by the National Steering Committee and approved by the central government. As India introduces GHG emission targets for over 460 industries, these enforcement measures are meant to ensure integrity and accountability across the system.

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Industry Response and Implementation Challenges

Smaller organizations may face compliance challenges, while larger organizations may already have systems and processes in place to track and monitor their emission intensity as part of their normal business processes. Many rules, regulations, and requirements create complexity in measuring, reporting, and verifying emissions. Still, they also provide the flexibility to trade and bank carbon credits, offering operational flexibility and strategic options.

The Bureau of Energy Efficiency (BEE), as it assigns sectoral targets based on emissions, will consider past performance as well as industry benchmarks and assign equity for the differences across sectoral capacities and processes.

Potential Impact on India’s Climate Goals and Economy

The implementation of GEI targets for more than 460 units could aid India dramatically in achieving its national emissions reduction goals. The targets were intended to serve as a legal mechanism. Still, with the targets first outlined in law and detail, they also compel industries to adopt cleaner processes and reduce energy consumption.

By establishing a domestic carbon market, India can attract green investments and improve alignment with Environmental, Social, and Governance (ESG) standards, which are increasingly important in global trade and finance. India introduces GHG emission targets for over 460 industries to create a robust market mechanism that rewards low-carbon innovation and penalises non-compliance.

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Global Significance and Comparative Outlook

India is among the few developing countries pursuing such an ambitious, compliance-based carbon market. While the EU Emissions Trading System and China’s domestic market are more mature, India’s plan is designed to eventually connect with international markets, enhancing its global standing and relevance.

Key Takeaway

The proposed Greenhouse Gas Emission Intensity Target Rules, 2025, represent more than a regulatory reform. They mark India’s strategic move toward a cleaner, market-oriented economy that balances industrial growth with environmental responsibility. India introduces GHG emission targets for over 460 industries not only to comply with climate goals but also to position itself as a leader among emerging economies. The success of this initiative will depend on strict enforcement, accurate emissions tracking, and collaboration between the public and private sectors.

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