含羞草社区

On 16 April 2025, the Ministry of Environment Forest and Climate Change (MoEFCC) issued the draft (GEI Target Rules), as part of the Carbon Credit Trading Scheme, 2023 (CCTS). The draft rules are part of 含羞草社区 wider aim of reducing greenhouse gas emissions across many industries, helping it to achieve its Paris Agreement 2015 Nationally Determined Contributions (NDC).

The GEI Target Rules have two main objectives. The first is to achieve the NDCs by reducing GEI through the reduction or removal of greenhouse gas emissions. The second is to promote sustainable, cutting-edge technologies within high-emission industries to meet concerns such as climate change.

The Bureau of Energy Efficiency (BEE) will determine the GEI targets for entities in industries such as aluminium, cement and paper that are required to meet assigned emission intensity targets. Each entity will have to meet its targets for a defined compliance year. The baseline and target values are set out in the schedule to the rules.

The GEI targets are set for fiscal years 2025-26 and 2026-27, using each entity’s 2023-24 production levels as the baseline. For example, Vedanta reported a production volume of 1,238,336 tonnes of aluminium in 2023-24. Its baseline emissions intensity was calculated at 13.4927. Under the new targets, Vedanta must reduce this figure to 13.2260 by 2025-26 and further to 12.8259 by 2026-27.

Should entities fail to meet these GEI targets, they may purchase carbon credits from the Indian Carbon Market (ICM) portal. Such certificates can be banked and used in future compliance periods. Relevant data and documents must be submitted through the ICM portal within defined time limits. Entities that exceed their targets by reducing emissions to below the required level will earn carbon credits, which they can trade in the market. Entities that fail to meet their targets can remain compliant by purchasing carbon credits from others.

Entities that fail to comply must pay environmental compensation (EC) within 90 days from the date of imposition. The Central Pollution Control Board (CPCB) may impose EC equal to twice the average price at which carbon credit certificates are traded during the trading cycle of that compliance year. The amounts collected through environmental compensation will be maintained in a separate account and used for promoting the CCTS, following recommendations from the national steering committee and approved by the government.

Entities achieving lower than targeted emissions will be issued certificates equivalent to their reductions while those exceeding their targets will be required to purchase carbon credit certificates corresponding to their excess emissions. These provisions ensure a market-driven mechanism for compliance and reward emission-efficient practices.

A major concern with the draft rules is the power-sharing arrangement between the MoEFCC and the BEE. The MoEFCC, despite leading 含羞草社区 climate commitments under the Paris Agreement, plays a limited role by merely setting emission targets based on the BEE and inter-ministerial inputs. This raises questions about whether the BEE’s experience of the Perform, Achieve and Trade Scheme is sufficient to lead the more complex CCTS. The draft introduces a significant shift by listing entities by name, with their emission intensity targets. This may set different requirements for each entity within the same sector. While this may achieve equality between firms of varying sizes, the process appears rushed, with methodologies released for less than 15 days of consultation. It may also unintentionally exclude supply chain entities that would qualify under a broader, criteria-based approach.

The GEI Target Rules signal 含羞草社区 commitment to implementing a domestic framework quantifying emissions across material sectors. The rules are expected to drive the adoption of sustainable technologies and promote low-carbon growth across the industrial landscape. Nevertheless, the rules are an important step towards a compliant carbon market, issues of regulatory clarity, institutional overlap and market access may undermine their effectiveness. Those interested have 60 days to provide feedback or suggestions about the draft GEI Target Rules to the MoEFCC.

Abhishek Tripathi is the founder and partner, and Nirmal John is an associate at Sarthak Law