The Ministry of Environment, Forest and Climate Change, or MoEFCC, has issued the draft Greenhouse Gas (GHG) Emission Intensity Target Rules, 2025.
The draft is a significant step forward for India’s Carbon Credit Trading Scheme (CCTS). The draft rules propose legally binding emission targets for over 400 industrial units across key sectors such as aluminum, iron and steel, petroleum refining, petrochemicals, and textiles.
The new rules define greenhouse gas emission intensity (GEI) as tons of CO₂ equivalent emitted per unit of output or product. The Bureau of Energy Efficiency (BEE) will be responsible for determining the emission targets. The Central Electricity Regulatory Commission (CERC) will regulate carbon trading. Non-compliance with the set targets will lead to financial penalties as stipulated under the Environment (Protection) Act, 1986 (EPA 1986).
The CCTS, legally backed by the Energy Conservation Amendment Act (ECA), 2022, aims to lower GHG emissions by promoting carbon pricing. It features two main components: a Compliance Mechanism for obligated entities, where those emitting less than their target receive Carbon Credit Certificates, and a Voluntary Offset Mechanism, allowing other sectors to register projects for GHG emission reduction in exchange for certificates.
The initiative is seen as a crucial foundation for the nascent Indian Carbon Market, aligning with India’s commitments under the UNFCCC and the Paris Agreement. The World Bank’s “State and Trends of Carbon Pricing 2025” report has already recognized India’s increasing influence in shaping global climate finance and carbon pricing frameworks.
