Key Points

The move, aimed at curbing industrial emissions and accelerating decarbonisation, will apply to sectors such as aluminium, iron and steel, petroleum refining, petrochemicals, and textiles.

Titled the Greenhouse Gas Emission Intensity Target Rules, 2025, the draft, dated June 23, forms part of the Carbon Credit Trading Scheme (CCTS), 2023.

The scheme requires designated industries--referred to as "obligated entities"--to reduce their GHG emissions per unit of output over time, or compensate by purchasing carbon credit certificates from the Indian Carbon Market.

According to the draft, "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."

If implemented, the targets will become legally enforceable from the date of final notification.

As per the draft, failure to comply will attract financial penalties and legal consequences under the Environment (Protection) Act, 1986.

The targets will be assigned for two compliance years--2025-26 and 2026-27--based on baseline emission intensity data from 2023-24.

The draft includes a list of 264 industrial units along with their baseline emission levels and reduction targets for the compliance years 2025-26 and 2026-27

The Bureau of Energy Efficiency (BEE) will determine these targets using sectoral benchmarks and past performance. Greenhouse gas emission intensity (GEI) is defined as tonnes of CO2 equivalent emitted per unit of output or product.

For example, Hindalco Industries' Taloja aluminium plant in Maharashtra, which had a baseline GEI of 1.3386 tCO2 per tonne in 2023-24, must reduce that figure to 1.2563 by 2026-27. In the steel sector, Arcelor Mittal Nippon Steel India's Hazira facility--India's largest obligated entity by production volume--must cut its emission intensity from 2.2701 to 2.1696 tCO2 per tonne during the same period.

The rules also cover the petroleum refining sector. BPCL's Bina Refinery in Madhya Pradesh, with a crude throughput of over 51 million barrels, has been assigned a GEI reduction trajectory from 5.2312 tCO2/MBBLS in 2023-24 to 4.8553 by 2026-27. BPCL's Kochi

Refinery, one of the largest in the country, must bring down its GEI from 4.5745 to 4.4230 tCO2/MBBLS in the same time frame.

Entities that emit less than their targets will receive carbon credit certificates, calculated as the difference between the GEI target and actual GEI, multiplied by the total production volume.

Conversely, those exceeding their targets must buy the difference in credits from the Indian Carbon Market. "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.

Unused credits can be banked for future use, allowing companies some flexibility across compliance years.

However, if an entity fails to meet its target and does not purchase the required credits, the Central Pollution Control Board (CPCB) will impose an Environmental Compensation

This amount will be "equal to twice the average price at which a carbon credit certificate is traded during the trading cycle," as per the notification. The penalty must be paid within 90 days.

Funds collected will be used to support carbon market operations, upon recommendation of the National Steering Committee and approval of the Centre.

The ministry has invited comments, objections, or suggestions from the public and industry stakeholders. Submissions must be made within 60 days of the draft's publication and can be emailed to ccts.hsm-moefcc@gov.in.

- ANI