The Ministry of Environment, Forest and Climate Change (MoEFCC) has issued the Greenhouse Gases Emission Intensity Target Rules, 2025, effective from 8th October 2025, under the Environment (Protection) Act, 1986.

These Rules operationalize the compliance mechanism of the Carbon Credit Trading Scheme, 2023 (CCTS) notified by the Ministry of Power, setting greenhouse gas (GHG) emission intensity targets for obligated entities and specifying the methodology for issuance, purchase, and surrender of carbon credit certificates within the Indian Carbon Market (ICM) framework.

Key Highlights of the rules:

1. Applicability

• Applicable to obligated entities identified under the Carbon Credit Trading Scheme, 2023.
• Sector-specific GHG emission intensity targets (tCO₂e per unit of output) for Aluminium, Cement, Chlor-Alkali, and Pulp & Paper sectors are specified in the Schedule appended to the Rules for obligated entity.

2. Responsibilities of the obligated entities

Each obligated entity shall:

• Achieve the GHG emission intensity target for the respective compliance year as per the Schedule.
• Register on the Indian Carbon Market (ICM) Portal.
• Submit documents as per the detailed procedure under the Scheme.
• Surrender banked or purchased carbon credit certificates equivalent to the shortfall for compliance with GHG intensity targets.
• If documents are not submitted, the shortfall shall be calculated as the number of Carbon Credit Certificates to be purchased, using the formula prescribed.

3. Issuance and Purchase of Carbon Credit Certificates

The Bureau of Energy Efficiency (BEE) shall issue or determine the number of carbon credit certificates as per the following:

• Issuance of Credits:

(Target GHG Intensity – Achieved GHG Intensity) × Total Output

• Purchase of Credits (Shortfall):

(Achieved GHG Intensity – Target GHG Intensity) × Total Output

• Credits issued or purchased may be carried forward (banked) for use in subsequent compliance years.

4. Environmental Compensation

• In case of non-compliance, the Central Pollution Control Board (CPCB) shall impose Environmental Compensation (EC) on the obligated entity.
• The EC shall equal twice the average price of carbon credit certificates traded during the compliance year.
• The average trading price will be determined by BEE.
• No Order for imposition of the EC shall be made unless the obligated entities have been given reasonable opportunity of being heard.
• EC must be paid within 90 days of order issuance; failure to pay will attract penalties under the Environment (Protection) Act, 1986.