Binding Emission-Reduction Rules in Four Key Sectors

Context

Recently, India notified the Greenhouse Gas Emission Intensity (GEI) Target Rules, 2025, taking a significant step towards fulfilling its commitments to the Paris Agreement. These rules are the country's first legally binding emission reduction orders for industrial sectors.

Sectors Subject to Regulation

• These rules apply to four high-emission industries: aluminum, cement, chlor-alkali, and pulp and paper.
• At least 282 industrial units will be required to comply with emission intensity targets for 2025-26 and 2026-27, focusing on reducing emissions per unit of production.

Operation of India's Carbon Market

• The GEI target rules are designed to govern the Carbon Credit Trading Scheme (CCTS), 2023, which is the cornerstone of India's domestic carbon market. Industrial units that achieve or exceed the targets will earn carbon credits.
• Non-compliant units will be required to purchase credits to offset their emission target reductions. This mechanism encourages reductions in overall emission intensity in the relevant sectors while ensuring flexibility.

Policy Integration and Administration

• These rules fall under the Energy Conservation Act, 2001 (amended in 2022), under which the Bureau of Energy Efficiency (BEE) is mandated to monitor and enforce compliance.
• According to the Ministry of Environment, Forest and Climate Change (MoEFCC), this aligns with India's Nationally Determined Contribution (NDC), specifically its commitment to reduce GDP emissions intensity by 45% by 2030 compared to 2005 levels.

Sectoral Implications

• Cement and aluminum: Both sectors are part of the Perform, Achieve and Trade (PAT) program under the BEE. These new rules build on this program's experience in tracking and benchmarking industrial efficiency.
• Pulp and paper, chlor-alkali: These sectors face challenges in energy efficiency and process optimization, and emission limits will accelerate technological changes towards low-carbon manufacturing.

Global Context

This notification was issued ahead of COP-30 in Brazil, where India presented it as part of its robust domestic climate policy to “bridge the gap between voluntary pledges and enforceable emissions accountability.”

Approach

• Strengthening market-based climate governance
• Encouraging investment in green technologies
• Supporting India’s vision of achieving net-zero emissions by 2070
• However, industry groups have called for clear monitoring guidelines and capacity building to ensure smooth compliance.