Expansion of GHG Emission Control Under India’s Carbon Credit Trading Regime

Regulatory Expansion Framework

Expansion of GHG Emission Control Under India’s Carbon Credit Trading Regime: The Union Ministry of Environment, Forest and Climate Change has notified the Greenhouse Gases Emission Intensity Target (Amendment) Rules, 2025 under the Environment (Protection) Act, 1986. This marks a major structural expansion of India’s GHG emission reduction compliance regime.

The amendment legally integrates new industrial sectors into the mandatory carbon reduction framework. This transforms the scheme from a limited sector model into a broader economy-linked emissions governance system.

Newly Obligated Industrial Sectors

Four additional sectors are now brought under compulsory emission control obligations. These are Petroleum Refinery, Petrochemicals, Textiles, and Secondary Aluminium.

Earlier obligated sectors included Aluminium, Cement, Chlor-alkali, and Pulp and Paper. The expansion significantly increases the carbon coverage base of India’s industrial economy.

Static GK fact: India is the world’s second-largest producer of cement and a major aluminium producer, making these sectors structurally critical for emission control.

Targets and Compliance Timeline

The amendment mandates 208 specific industrial units to reduce their GHG emission intensity. Emission intensity is measured as emissions per unit of output, not total emissions. The compliance cycle begins from 2025–26. The baseline year for measurement is 2023–24.

The reduction targets range between 3% and 7% by 2026–27. This design ensures gradual transition instead of abrupt production shocks.

Carbon Credit Compliance Mechanism

Units failing to meet prescribed targets must purchase Carbon Credit Certificates (CCCs). Each 1 CCC equals 1 tonne of CO₂ equivalent. Non-compliance attracts an environmental compensation penalty.
The penalty is set at twice the average trading price of CCCs.

This pricing structure creates a market-driven deterrence mechanism instead of only regulatory punishment. It incentivises internal emission reduction rather than external credit dependence.

Alignment With India’s Climate Commitments

The expansion directly supports India’s Nationally Determined Contribution (NDC) commitment. India has pledged a 45% reduction in emissions intensity of GDP by 2030. It also aligns with the national climate goal of achieving Net Zero by 2070.
This links industrial policy directly with climate diplomacy strategy.

Static GK Tip: India’s NDC commitments are part of its obligations under the Paris Climate Agreement.

Carbon Credit Trading Scheme Architecture

The Carbon Credit Trading Scheme (CCTS) was notified in 2023 under the Energy Conservation Act, 2001. It forms the foundation of the Indian Carbon Market (ICM). The Bureau of Energy Efficiency acts as the administrator. It sets targets and issues CCCs.

The Central Electricity Regulatory Commission regulates carbon trading. The Grid Controller of India Limited manages the carbon registry.

Operational Structure of the Market

The system functions through two parallel mechanisms. The Compliance Mechanism applies to obligated industries. The Offset Mechanism allows voluntary participation by non-obligated entities. They can register emission reduction projects and earn tradable credits.

The entire system operates on a Cap and Trade model. Overachievers earn tradable credits, underperformers buy credits.

Static GK fact: Cap-and-trade systems were first globally formalised under the Kyoto Protocol mechanisms.

Static Usthadian Current Affairs Table

Expansion of GHG Emission Control Under India’s Carbon Credit Trading Regime: