India Issues Emission-Intensity Targets Under the Carbon Credit Trading Scheme

On October 8, 2025, the government released the final Greenhouse-Gas Emission-Intensity (GEI) targets for the first set of industrial sectors under the Carbon Credit Trading Scheme (CCTS), marking a key step toward launching India’s domestic carbon market. These GEI targets will require industries to limit emissions per unit of production and form the basis for earning or purchasing carbon credits. The objective is to push high-emitting sectors toward cleaner operations and support India’s climate commitments.

1. Background and Purpose

The Ministry of Environment, Forest and Climate Change announced two phases of GEI targets in 2025. The first notification released on April 16, announced the draft regulations on aluminium, cement, chlor-alkali, and pulp and paper, which covered 282 plants. Further, on June 23, a second notification included iron and steel, fertilizers, petroleum refining, petrochemicals, and textiles, making the total approximately 740 industrial units. The CCTS aims to create a market-based system where companies that perform better than their targets earn tradable Carbon Credit Certificates (CCCs), while those that fall short must buy credits to comply.

2. Key Features of the Final Targets

On October 8, 2025, final GEI targets for the first four sectors were issued. The required reductions range from:

• • Aluminium:8% – 7.06%
  • Cement:7% – 7.6%
  • Chlor-alkali:3% – 11%
  • Pulp & Paper: up to 15%

These GEI targets are applicable for the financial years of 2025- 26 and 2026- 27, using fiscal year 2023-24 as the baseline.

3. Market Framework and Implementation

The CCTS uses an intensity-based baseline-and-credit system that accounts for direct emissions and electricity-related emissions. CCCs will be traded exclusively on regulated power exchanges, under the oversight of Central Electricity Regulatory Commission. The Grid Controller of India will maintain the registry.

In March 2025, Bureau of Energy Efficiency introduced procedures and eight approved methodologies for projects such as renewable energy, green hydrogen, methane recovery, and afforestation.

 Conclusion

The notification marks a major shift from energy-efficiency programs toward direct carbon-emission regulation. By placing legally binding limits on emission intensity across nine major sectors accounting for about 16% of national emissions, India is preparing a large-scale, market-driven climate policy.