India’s Greenhouse Gas Emission Intensity Targets

April 23, 2025

Recently, the Ministry of Environment, Forest and Climate Change in India released a draft notification under the Energy Conservation Act, 2001. This notification introduces the “Greenhouse Gas Emission Intensity Target Rules, 2025”. It is component of India’s Carbon Credit Trading Scheme, 2023. The primary aim is to establish a national framework for reducing greenhouse gas emissions through carbon credit trading.

Emission Intensity Targets

The new rules aim to set specific emission reduction targets for various industries. The Bureau of Energy Efficiency (BEE) will determine these targets based on tonnes of CO₂ equivalent emissions per tonne of production. The targets will be applicable from 2025-26 to 2026-27, using baseline data from 2023-24.

Compliance and Penalties

Entities that do not meet their emission intensity targets must purchase carbon credit certificates. Failure to comply will lead to penalties imposed by the Central Pollution Control Board (CPCB). The penalty can be twice the average market price of carbon credits during the compliance period. Funds from these penalties will support the Carbon Credit Trading Scheme.

Sector-Specific Targets

The draft outlines emission targets for multiple sectors, notably aluminium and cement industries. Major companies like Vedanta and Hindalco are required to reduce their greenhouse gas emissions. For example, Vedanta’s Smelter II must cut its emission intensity from 13.4927 in 2023-24 to 13.2260 in 2025-26.

National Climate Commitments

These emission intensity rules support India’s broader climate strategy, which aims for net zero emissions by 2070. The initiative reflects the government’s commitment to aligning industrial growth with environmental sustainability. The rules are designed to enforce measurable climate action across key sectors.

Future of Carbon Trading in India

The introduction of these rules is expected to encourage a functional carbon trading market in India. Companies will have the opportunity to bank excess carbon credits for future compliance. This flexibility can incentivise industries to adopt more efficient production methods.

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