Why in the News?

• The Government of India has notified the Greenhouse Gas Emission Intensity (GEI) Target Rules, 2025, setting legally binding emission reduction targets for four key industrial sectors.

What’s in Today’s Article?

• About GEI Rules (Introduction, Coverage & Scope, CCM, Targets & Impact, Importance, Challenges, etc.)

About the Greenhouse Gas Emission Intensity Target Rules, 2025

• In a landmark move toward enforcing India’s climate commitments, the Ministry of Environment, Forest and Climate Change (MoEFCC) has notified the Greenhouse Gas Emission Intensity (GEI) Target Rules, 2025.
• This sets the country’s first legally binding emission reduction targets for four major industries: cement, aluminium, pulp & paper, and chlor-alkali.
• These Rules are a critical step toward operationalising the Carbon Credit Trading Scheme (CCTS), 2023, which established India’s domestic carbon market.
• The initiative supports India’s larger pledge to reduce the emissions intensity of its GDP by 45% by 2030, compared to 2005 levels, under the Paris Climate Agreement (2015).

Coverage and Scope of the GEI Rules

• The notified Rules apply to 282 high-emission industrial units across the country, broken down as follows:

• 186 cement units
• 13 aluminium units
• 30 chlor-alkali units
• 53 pulp and paper units

• Each unit is assigned specific emission reduction targets for two compliance periods, 2025-26 and 2026-27.
• The emission intensity, or GEI, measures the amount of greenhouse gases emitted per unit of production output, expressed in tonnes of CO₂ equivalent (tCO₂e) per tonne of product (for example, per tonne of cement or aluminium).
• Implementing Agency: Bureau of Energy Efficiency (BEE)

Linking GEI Targets with the Carbon Credit Market

• The GEI Rules create a direct link between industrial emission performance and carbon market participation.

• Compliant Units: Industries that meet or exceed their emission intensity targets will earn carbon credits, which they can trade in the domestic carbon market for monetary value.
• Non-Compliant Units: Those that fail to meet their targets must either purchase credits from the market to offset their shortfall or pay environmental compensation, enforced by the Central Pollution Control Board.

• This mechanism encourages companies to invest in cleaner technologies and energy-efficient production systems, transforming emission reduction into an economic opportunity rather than a regulatory burden.

Targets and Sectoral Impact

• The GEI targets require industries to progressively reduce emissions intensity as follows:

• 2025-26: 2-3% average reduction
• 2026-27: Up to 7.5% reduction compared to baseline levels

• Sector-specific goals include:

• Cement: Reduction between 4.7% and 7.6% depending on the type of cement (e.g., Ordinary Portland Cement).
• Pulp and Paper: Reduction targets as high as 15% over two years.
• Aluminium and Chlor-Alkali: Moderate but steady reduction requirements to ensure process efficiency.

Transition from PAT to CCTS Framework

• Before the Carbon Credit Trading Scheme (CCTS), India implemented the Perform, Achieve, Trade (PAT) scheme under the National Mission on Enhanced Energy Efficiency (NMEEE) since 2012.
• The PAT mechanism allowed energy-intensive industries to improve efficiency and trade “energy saving certificates.”
• However, the PAT scheme lacked a carbon market component, focusing solely on energy savings.
• The CCTS, by contrast, incorporates a market-based carbon trading system, aligning India’s domestic framework with global carbon markets.

Importance of the GEI Rules for India’s Climate Commitments

• Operationalising the Domestic Carbon Market
  • The GEI Rules are the first practical step in establishing India’s carbon trading system.
• Supporting Net-Zero Transition
  • India’s target of achieving net-zero emissions by 2070 relies heavily on emission reductions from industrial sectors.
• Encouraging Technological Innovation
  • By monetising efficiency improvements, the framework incentivises the adoption of green manufacturing technologies, renewable energy integration, and carbon capture solutions.
• Aligning with Global Best Practices
  • The model mirrors frameworks in the EU Emissions Trading System (ETS) and China’s national carbon market, positioning India as a future leader in Asia’s carbon economy.
• Driving Accountability and Enforcement
  • For the first time, emission intensity reduction targets are legally binding. Non-compliance will trigger penalties and compensation, introducing stronger environmental governance in India’s industrial ecosystem.

Challenges in Implementation

• Accurate Measurement and Reporting: Industrial units will need robust systems to monitor and verify emissions data.
• Capacity Gaps: Smaller industries may lack the technical or financial capacity to comply immediately.
• Market Liquidity: The success of the carbon credit trading mechanism depends on sufficient market participation.
• Regulatory Coordination: Effective collaboration between BEE, CPCB, and MoEFCC is essential for smooth enforcement.

• To address these concerns, the government plans to expand the CCTS to include more sectors, strengthen monitoring, reporting, and verification (MRV) protocols, and promote digital carbon registries for transparent trading.