SDG 7: Affordable and Clean Energy | SDG 9: Industry, Innovation and Infrastructure | SDG 13: Climate Action
Ministry of Environment, Forest and Climate Change (MoEFCC) | Bureau of Energy Efficiency (BEE) | Central Pollution Control Board (CPCB)
The Government of India has officially notified Greenhouse Gas Emission Intensity (GEI) targets for an additional 208 carbon-intensive industrial units under the Carbon Credit Trading Scheme (CCTS). This second round of notifications brings the sectors of Petroleum Refineries, Petrochemicals, Textiles, and Secondary Aluminium into the mandatory compliance mechanism of the ICM. With this expansion, the compliance market now covers a total of 490 obligated entities across India’s most emission-heavy industries, building on the initial coverage of 282 units in the primary aluminium, cement, chlor-alkali, and pulp & paper sectors established in October 2025.
Legal Framework and Mandatory Reduction
The targets are enforced through the Greenhouse Gases Emission Intensity Target (Amendment) Rules, 2025, which transition industries from the voluntary PAT (Perform, Achieve and Trade) scheme to a legally binding carbon reduction framework.
Baseline and Compliance: The baseline year is set as 2023–24, with specific reduction targets established for the compliance years 2025–26 and 2026–27.
Sectoral Ambition: The newly added units are expected to achieve an overall emission intensity reduction of 3% to 7% by 2026–27.
Included Entities: Major Public Sector Undertakings (PSUs) such as IOCL, BPCL, HPCL, and ONGC, alongside private giants like Reliance Industries, are now officially obligated to meet these GEI targets.
Compliance Mechanism and Penalties
The CCTS operates on an intensity-based baseline-and-credit system.
Incentives: Entities that outperform their assigned targets will earn Carbon Credit Certificates (CCCs), which can be traded on domestic power exchanges or banked for future use.
Enforcement: The CPCB is responsible for enforcement. Units that fail to meet their targets must purchase CCCs from the market or face environmental compensation penalties equal to twice the average carbon credit price of that trading cycle.
What is “GEI” and how does it differ from absolute emission targets? Greenhouse Gas Emission Intensity (GEI) measures the amount of CO2-equivalent emitted per unit of industrial output (e.g., tCO2e per tonne of cement). Unlike absolute emission caps, GEI allows for industrial and economic growth; a company can increase its total production as long as it becomes more efficient and reduces the “carbon footprint” per individual unit produced.
Policy Relevance
The notification of GEI targets for these 208 additional units is a cornerstone of India’s strategy to decouple economic growth from greenhouse gas emissions.
NDC Alignment: This move is critical for achieving India’s Nationally Determined Contribution (NDC) target of reducing the emission intensity of its GDP by 45% by 2030 relative to 2005 levels.
CBAM Resilience: Establishing a domestic carbon price through the ICM provides Indian exporters (especially in textiles and aluminium) a safeguard against the EU’s Carbon Border Adjustment Mechanism (CBAM), potentially avoiding double taxation.
Market-Driven Innovation: By attaching a financial value to carbon, the government is incentivizing industries to shift from coal to green energy and invest in high-efficiency technologies like Carbon Capture.
Relevant Question for Policy Stakeholders: How will the government ensure the “price discovery” of carbon credits remains stable as nearly 500 obligated entities begin high-volume trading in October 2026?
Follow the full news here: Government notifies Greenhouse Gas Emission Intensity Targets for 208 more Carbon-intensive Industries