India notifies first carbon limits for industry; Vedanta, UltraTech, Shree Cement, Nalco on compliance list

India has notified its first legally binding greenhouse gas emission intensity targets for carbon-heavy industries.

The Greenhouse Gases Emission Intensity Target Rules, 2025, issued by the Environment Ministry on October 8, require 282 industrial units across the aluminium, cement, pulp and paper, and chlor-alkali sectors to cut greenhouse gas emissions per unit of output from 2023-24 baseline levels.

The compliance period will run from 2025-26 through 2026-27. The notification follows public consultations on a draft released on April 16 this year.

The rules operationalise provisions of the Energy Conservation (Amendment) Act, 2022, which empowered the government to establish a domestic carbon market.

They build on the Perform, Achieve and Trade (PAT) energy efficiency scheme, which earlier set energy-saving targets but did not impose direct carbon limits.

According to the notification, facilities that emit less than their assigned targets can earn tradable carbon credit certificates, while those exceeding the targets must buy equivalent credits from the Indian carbon market or pay a penalty.

The penalty, described as “environmental compensation”, will be twice the average trading price of carbon credits during the compliance year.

The average price will be determined by the Bureau of Energy Efficiency (BEE), while the Central Pollution Control Board (CPCB) will impose and oversee recovery of penalties, which must be paid within 90 days.

The notified schedule specifies company- and plant-wise targets.

Aluminium smelters operated by Vedanta, Hindalco, Nalco and Balco, and major cement plants owned by UltraTech, Dalmia, JK Cement, Shree Cement and ACC, are among those included in the first compliance cycle.

Emission intensity reduction requirements range from about 3.4% over two years in the cement sector to 5.8% in aluminium, 7.5% in chlor-alkali, and 7.1% in pulp and paper, compared to baseline levels.

The rules are part of India’s effort to meet its nationally determined contribution (NDC) targets under the Paris Agreement, including reducing the emission intensity of GDP by 45% by 2030 from 2005 levels and achieving net zero by 2070.

They are also expected to help Indian exporters adapt to international mechanisms such as the European Union’s Carbon Border Adjustment Mechanism (CBAM), which taxes carbon-intensive imports like cement, steel and aluminium.