India notifies first emission intensity targets for industries

The Central Government has officially notified the Greenhouse Gases Emission Intensity Target Rules, 2025, marking the country’s first legally binding emission reduction framework for carbon-heavy industries. Issued by the Ministry of Environment, Forest and Climate Change, the rules require 282 industrial units across the aluminium, cement, pulp and paper, and chlor-alkali sectors to reduce their greenhouse gas (GHG) emissions per unit of output from 2023–24 baseline levels.

Each facility must lower its emission intensity—measured in tonnes of carbon dioxide equivalent per tonne of product—during the 2025–26 to 2026–27 compliance period. This move gives effect to the Energy Conservation (Amendment) Act, 2022, which authorizes the creation of a domestic carbon credit trading system. It also extends the government’s earlier Perform, Achieve and Trade (PAT) scheme that focused on energy efficiency rather than direct carbon limits.

Under the new regime, industries emitting less than their assigned target can earn tradable carbon credit certificates, while those exceeding targets must either buy 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 year, as determined by the Bureau of Energy Efficiency (BEE). The Central Pollution Control Board (CPCB) will enforce and recover penalties within 90 days.

Emission reduction targets vary by sector—ranging from 3.4% for cement, 5.8% for aluminium, 7.1% for pulp and paper, to 7.5% for chlor-alkali. Companies such as Vedanta, Hindalco, Nalco, UltraTech, Dalmia, Shree Cement, and others are included in the first compliance cycle.

The initiative is a key step toward meeting India’s Paris Agreement commitments, including reducing the emission intensity of GDP by 45% by 2030 (from 2005 levels) and achieving net zero by 2070. It will also help Indian exporters align with international measures like the EU’s Carbon Border Adjustment Mechanism (CBAM).