Government Notifies Greenhouse Gases Emission Intensity Target Rules, 2025

The Government of India has officially notified the Greenhouse Gases Emission Intensity Target Rules, 2025, establishing India’s first-ever legally binding emission reduction targets for carbon-intensive industries.

The notification, issued by the Ministry of Environment, Forest and Climate Change (MoEFCC) on October 8, 2025, comes after extensive consultations on the draft rules released in April. It mandates 282 industrial units across aluminium, cement, pulp and paper, and chlor-alkali sectors to reduce their greenhouse gas (GHG) emission intensity, that is, emissions per unit of output, relative to 2023–24 baseline levels.

Operationalising India’s Domestic Carbon Market

The new rules operationalise provisions of the Energy Conservation (Amendment) Act, 2022, which enabled the creation of a domestic carbon credit trading system. Under this framework, industrial facilities that reduce emissions beyond their targets will be able to generate tradable carbon credit certificates, while those that fail to meet their assigned targets must either purchase credits or pay penalties.

This mechanism builds upon India’s earlier Perform, Achieve and Trade (PAT) energy efficiency scheme, which rewarded industries for improving energy performance but did not impose direct limits on carbon emissions.

Penalties, Oversight, and Compliance Mechanism

The framework includes a robust penalty and monitoring structure to ensure compliance. Facilities that exceed their emission caps must purchase equivalent carbon credits or face “environmental compensation”, set at twice the average carbon credit trading price for that compliance year.

The Bureau of Energy Efficiency (BEE) will determine the average trading price of carbon credits, while the Central Pollution Control Board (CPCB) will oversee the imposition and recovery of penalties, which must be paid within 90 days of notification.

Sector-Wise Emission Reduction Targets

The notified rules define emission intensity reduction goals based on sector-specific baselines:

• Cement sector:4% reduction over two years
• Aluminium sector:8% reduction
• Chlor-alkali sector:5% reduction
• Pulp and paper sector:1% reduction

These targets are designed to reflect both the sectoral potential for decarbonisation and the differing energy intensities of industrial operations.

Read More: Carbon Tax to Drive Green Steel Exports in India

Conclusion

The Greenhouse Gases Emission Intensity Target Rules, 2025 represent a landmark step in India’s climate policy architecture, transforming voluntary energy efficiency efforts into a legally enforceable carbon market framework. By tying emission performance to market incentives and penalties, the rules are expected to drive industrial innovation, support cleaner technologies, and prepare Indian industries for a global low-carbon future.

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