Centre Proposes Legally Binding Emission Targets For 460 Industries Under New Carbon Market Rules
The Ministry of Environment has proposed legally binding greenhouse gas (GHG) emission targets for over 460 industrial units as part of India's first compliance-based carbon market. The draft rules, titled Greenhouse Gas Emission Intensity Target Rules, 2025, were issued by the ministry last Monday, June 23.
The rules form a key part of the Carbon Credit Trading Scheme, 2023, designed to speed up decarbonisation in industry. Under this, large industries in sectors such as aluminium, steel, petrochemicals, petroleum refining and textiles, some of India's largest polluters, will need to reduce their Greenhouse Gas Emissions Intensity (GEI).
GHG emissions is the amount of carbon dioxide equivalent released per unit of production. So, the industries will either have to reduce their emissions or buy carbon credits to make up the difference.
"The obligated entity shall achieve the GEI targets in the respective compliance year... or meet its GEI target by purchasing carbon credit certificates from the Indian carbon market," the draft notification states, making it clear that participation in the market is mandatory for high-emitting industries.
Companies that exceed their reduction targets will earn carbon credit certificates that can be sold in the Indian Carbon Market. Those that fall short will be required to purchase credits to cover the gap.
"The number of carbon credit certificates to be issued...shall be determined as per the following formula: (GEI Target - GEI Achieved) x unit of equivalent product produced," the draft states.
Failure to comply could bring financial penalties and legal action under the Environment (Protection) Act, 1986. If passed, the Central Pollution Control Board can levy an Environmental Compensation on non-compliant companies. This is an amount equal to twice the average market price of a carbon credit. Industries will have 90 days to pay the fine. The funds will be used to support carbon market operations, with final approval from the Centre.
The draft rules list 264 industrial units with their current emissions and reduction targets for 2025-26 and 2026-27.
The Bureau of Energy Efficiency will set targets for two compliance years, 2025-26 and 2026-27, based on 2023-24 as baseline data. Sectoral benchmarks and each company's past performance will guide these targets. Unused credits can be banked for future years, offering some flexibility to industries.
The draft mentions specific reduction targets. For instance, refinery such as BPCL's Bina refinery in Madhya Pradesh will need to cut its emission intensity from 5.2312 to 4.8553 tonnes of carbon dioxide equivalent per million barrels between 2023-24 and 2026-27. Its Kochi refinery has a similar target, from 4.5745 to 4.4230 tonnes of carbon dioxide equivalent per million barrels.
Similarly, Arcelor Mittal Nippon Steel's Hazira plant, which is the country's largest steel unit by production, must bring down its emission intensity from 2.2701 tonnes of carbon dioxide equivalent (tCO2) per tonne in 2023-24 to 2.1696 by 2026-27. Hindalco's Taloja aluminium plant will have to lower its emission intensity from 1.3386 to 1.2563 tCO2 per tonne.
The government has invited comments, suggestions, and objections from the public and industry players. Feedback can be submitted within 60 days of the draft notification's publication. Submissions can be emailed to ccts.hsm-moefcc@gov.in.
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