The Ministry Of Environment Forest And Climate Change issued a draft notification on April 16, 2025, under the Energy Conservation Act, 2001, and Environment (Protection) Act, 1986. The notification introduces the “Greenhouse Gas Emission Intensity Target Rules, 2025” as part of India’s Carbon Credit Trading Scheme, 2023. This step aims to create a national framework to reduce greenhouse gas (GHG) emissions through carbon credit trading and enforce specific emission reduction targets across industries.
Under this framework, the Bureau of Energy Efficiency (BEE) will determine Emission Intensity Targets (EIT) for designated sectors. These targets are defined in terms of tonnes of CO₂ equivalent emissions per tonne of equivalent production. The targets will be applicable from 2025-26 to 2026-27, with baseline data taken from the 2023-24 period. Entities that fail to meet these targets must either purchase carbon credit certificates or face environmental compensation penalties.
The primary objectives of the rules are to reduce the intensity of GHG emissions across high-emission industries and promote sustainable and advanced technologies. These rules also aim to support India’s national commitments on climate change by encouraging efficient production methods.
Entities covered under the schedule must comply with their EITs for the relevant compliance periods. If they fail, they have the option to purchase certificates from the Indian Carbon Market (ICM) portal. These certificates can be banked and used in future compliance periods if there is an excess. All relevant data and documents must be submitted through the ICM portal within the defined timelines.
If companies fail to comply, the Central Pollution Control Board (CPCB) may impose an environmental compensation equal to twice the average market price of the carbon credits during that period. The funds collected through penalties will be maintained in a separate account and utilized for promoting the Carbon Credit Trading Scheme.
The draft also provides a detailed list of emission targets for various sectors, including aluminium and cement industries. Companies like Vedanta, Hindalco, NALCO, and Ultratech Cement are listed with specific baseline and target emission intensity levels for the next two years. For example, Vedanta Limited’s Smelter II in Odisha has to reduce its emission intensity from 13.4927 in 2023-24 to 13.2260 in 2025-26 and further to 12.8259 in 2026-27.
These emission reductions are part of India’s broader climate strategy to decarbonize its industrial sectors and establish a functional carbon trading market. The government has provided 60 days from the date of publication for stakeholders to offer comments or suggestions. Inputs can be sent to the Ministry of Environment, Forest and Climate Change by post or email.
This initiative marks a significant policy push by India to align its industrial growth with environmental sustainability by enforcing measurable and enforceable climate action across key sectors.
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