Introduction

In a landmark move toward achieving India’s climate goals, the Ministry of Environment, Forest and Climate Change (MoEFCC) has notified the first legally binding Greenhouse Gas Emission Intensity (GEI) Target Rules, 2025.

• Background

These rules represent a significant policy milestone in India’s transition toward a low-carbon economy and directly align with the country’s commitment to the Paris Climate Agreement (2015) and its Nationally Determined Contributions (NDCs) under the United Nations Framework Convention on Climate Change (UNFCCC).

• The GEI Target Rules, 2025 establish mandatory emission reduction limits for major energy-intensive industries, creating a regulatory framework that combines environmental responsibility with market-based economic mechanisms.

Key Features of GEI Target Rules, 2025

1. Legally Binding Targets: For the first time, India has made greenhouse gas emission intensity reduction legally enforceable. The rules set explicit limits on the amount of GHGs that can be emitted per unit of product output — for example, tonnes of CO₂ equivalent per tonne of aluminium, cement, or paper.

2. Industry Coverage: A total of 282 industrial units from four major sectors — aluminium, cement, chlor-alkali, and pulp & paper — have been mandated to comply with the targets for the financial years 2025–26 and 2026–27.

These industries are among the highest contributors to industrial emissions and thus form the initial focus of the GEI framework.

3. Measurement Standard – tCO₂e

The GEI Rules adopt tCO₂e (tonnes of carbon dioxide equivalent) as the measurement unit, which incorporates not only CO₂ but also other greenhouse gases such as methane (CH₄) and nitrous oxide (N₂O), based on their global warming potential (GWP).

4. Link to Carbon Credit Trading Scheme (CCTS), 2023

The rules operationalize the Carbon Credit Trading Scheme (CCTS), 2023, creating a unified mechanism for emission reduction and trading. This integrates industry performance with India’s evolving carbon market ecosystem, allowing businesses to monetize efficiency improvements.

5. Market-Driven Incentive System

Industries that successfully reduce emissions below their prescribed targets will earn carbon credit certificates, issued by the Bureau of Energy Efficiency (BEE) under the Ministry of Power.

These credits can then be sold in the domestic carbon market to other entities struggling to meet their emission caps, creating an economic reward system for climate-friendly practices.

Penalty and Enforcement Mechanism

For Non-Compliance:

Industries failing to achieve their emission reduction targets will face two options:

1. Buy carbon credits from compliant entities in the domestic carbon market to cover their shortfall.
2. Pay environmental compensation penalties as determined by the Central Pollution Control Board (CPCB).

This dual structure ensures both flexibility and accountability, balancing industry needs with environmental imperatives.

Significance of GEI Target Rules

1. Aligns with India’s Global Commitments:

The rules strengthen India’s path toward achieving its 2030 targets — reducing emission intensity of GDP by 45% from 2005 levels, and reaching Net Zero by 2070.

2. Encourages Industrial Innovation:

By linking emissions to economic performance, industries are incentivized to invest in cleaner technologies, energy-efficient equipment, and green manufacturing practices.

3. Boosts Domestic Carbon Market:

The framework lays the foundation for a robust carbon trading market in India — a major step toward building a sustainable, low-carbon industrial economy.

4. Supports Sustainable Development Goals (SDGs):

Particularly aligned with SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action), the rules promote sustainable industrial growth.

5. Promotes Transparency and Monitoring:

With real-time data monitoring and centralized reporting, the GEI Rules improve transparency, accountability, and traceability of industrial emissions.

With real-time data monitoring and centralized reporting, the GEI Rules improve transparency, accountability, and traceability of industrial emissions.

Challenges and the Way Forward

• Compliance Burden: Smaller industrial units may struggle with the financial and technical requirements for compliance.
• Need for Capacity Building: Adequate training, monitoring infrastructure, and awareness programs are essential to support industries in the transition.
• Market Stabilization: The success of the carbon credit mechanism will depend on the stability and liquidity of the domestic carbon market.

Despite these challenges, the GEI Rules mark a transformative step toward integrating environmental sustainability into India’s industrial and economic policy framework.

Conclusion

The Greenhouse Gas Emission Intensity (GEI) Target Rules, 2025 reflect India’s proactive approach to balancing industrial growth with ecological responsibility. By linking emissions with production efficiency and embedding a market-driven incentive system, the government has set a precedent for sustainable industrial regulation.

This move not only strengthens India’s environmental governance but also positions it as a global leader in climate-conscious economic development.