New Delhi: The Ministry of Environment, Forest and Climate Change (MoEFCC) has issued the Greenhouse Gas Emission Intensity (GEI) Target Rules, 2025, marking a significant step towards legally binding emission reduction targets for four major high-emitting sectors – aluminium, cement, chlor-alkali, and paper and pulp.
Under the new rules, industries will have legally binding targets to reduce the amount of greenhouse gases emitted per unit of output. Facilities that perform better than the prescribed targets can earn carbon credit certificates issued by the Bureau of Energy Efficiency (BEE). Conversely, units that fail to meet their targets will be required to compensate either by purchasing carbon credits from the carbon market or by paying a penalty, termed “environmental compensation.” The penalty will be twice the average trading price of carbon credits during that year, determined by BEE, and monitored by the Central Pollution Control Board (CPCB).
The rules cover 282 high-emission industrial facilities, including 186 cement units, 53 paper and pulp units, 30 chlor-alkali units, and 13 aluminium units. Targets have been set for two years, 2025-26 and 2026-27, using 2023-24 as the baseline. The reduction targets vary across sectors: cement – 3.4%, aluminium – 5.8%, chlor-alkali – 7.5%, and paper and pulp – 7.1%. Targets are measured in tonnes of carbon dioxide equivalent (tCO2e) per unit of product. Detailed company-wise and plant-wise targets include major corporations such as Vedanta, Hindalco, Bharat Aluminium, JSW Cement, and JK Cement.
The GEI rules operationalise the Energy Conservation (Amendment) Act, 2022, which mandates the establishment of domestic carbon markets. They also promote the Carbon Credit Trading Scheme (CCTS) 2023, which provides a framework for trading carbon credits and incentivising CO2 emission reductions. This scheme is seen as critical to India’s commitment under the Paris Agreement, aiming for a 45% reduction in emissions intensity of GDP by 2030 (compared to 2005 levels) and achieving net-zero emissions by 2070.
Before the market-based carbon trading framework, India had implemented the Perform, Achieve, Trade (PAT) scheme in 2012 to encourage energy-efficient transitions in industries. However, PAT did not provide a market for trading credits to meet emission targets, a gap now addressed by the GEI rules.
The MoEFCC notification represents a major step towards market-driven carbon reduction strategies, aiming to make India’s high-emission industries more accountable while promoting a green transition.
