India notifies GHG emission intensity targets for four sectors: Delay derails ambition further

India’s long-awaited greenhouse gas (GHG) emission intensity targets for key industrial sectors were finally notified on October 8, 2025. But months of bureaucratic delay have forced a downward revision in ambition, weakening the country’s carbon market before it has even begun operating in full.

Earlier this year, the country launched its Carbon Credit and Trading Scheme (CCTS), which aims to cover nine energy-intensive industrial sectors under the Energy Conservation (Amendment) Act 2022. In July 2024, the Bureau of Energy Efficiency (BEE) published detailed regulations for the planned compliance market. 

On April 16, 2025, the Union Ministry of Environment, Forest and Climate Change (MoEF&CC) issued a draft of the GHG emission intensity targets under the CCTS for four industrial sectors — aluminium, cement, chlor-alkali, and pulp and paper — covering a total of 282 entities. A two-month period was given to submit comments. In June 2025, draft targets for the remaining sectors were also released. The draft GHG emission intensity targets applied to the years 2025-26 and 2026-27.

It is worth noting that the compliance year had already begun in April 2025. Beyond the comment period, unknown bureaucratic processes caused a further three-month gap in notifying the targets. The government has now notified the targets for the first four sectors in October 2025 — almost mid-year. 

As a result of this delay, the final GHG emission intensity targets have been reduced on a pro-rata basis (accounting for the months lost from the compliance period). As the CCTS is a yearly compliance mechanism, further delays could derail the process. Similar delays were observed in Perform, Achieve and Trade (PAT) cycles earlier. These after-shocks will impact overall reductions in GHG emissions.

Delhi-based think tank Centre for Science and Environment (CSE) had analysed the draft targets in a Down To Earth article in May 2025, comparing the level of ambition across the four sectors and with the earlier PAT scheme. It found that smaller sectors such as pulp and paper and chlor-alkali had been given more ambitious targets than cement and aluminium, which are much larger and have a greater impact on the country’s GHG emissions. 

Overall, the draft targets appeared modestly ambitious compared with those under the PAT scheme. It was clear, however, that the proposed targets would not drive transformational change within the sectors, but could lead to improvements in energy and resource efficiency, including greater use of renewable energy where possible. The hope for a transformational shift, therefore, remains pinned on targets for future cycles.

The concern is that without ambitious targets, there is a strong likelihood of over-achievement and consequently an oversupply of carbon credits, as happened under the PAT scheme. The need for transformational change in industrial sectors is immense, particularly at a time when Indian industry is expanding its capacity at an unprecedented rate. India’s steel sector, for instance, is working towards doubling capacity by 2030 and continues to invest heavily in blast furnaces, locking in emissions for decades to come.

With the newly reduced targets, introduced to ensure fairness for obligated entities, even the modest ambition of the draft targets has been weakened further. The draft targets for the first four sectors indicated a potential emission reduction of around 14.5 million tonnes of GHG emissions compared to the 2023-24 baseline (assuming constant production). With the revised targets, this potential has fallen to around 12 million tonnes, a lost opportunity of over 2 million tonnes. 

According to CSE’s analysis, the notified targets reduce the sectoral emission reduction potential by around 16 per cent in aluminium, 17 per cent in cement, 11 per cent in chlor-alkali, and 16 per cent in pulp and paper compared with the draft targets, a gap that would widen further if production grows.

It also raises the question of whether industries, even under business-as-usual scenarios, would have reduced emissions over the two years regardless. With targets now further diluted, many could find their assigned reductions very close to — or even below — business-as-usual levels. 

In the notified targets, some listed entities in the cement, chlor-alkali and pulp and paper sectors (mostly benchmark performers) have targets that remain the same as their baseline over both years, implying no reduction. In the draft targets, there were just two such entities; in the notified version, this number has risen to eight due to the downward revision. Some degree of ambition should have been maintained even for benchmark performers.

Another setback to emission reduction under the CCTS could come once targets for the remaining sectors are notified. Given that this notification may take even longer, those sectors are likely to receive even lower targets, reducing the overall emission reduction potential further. With these delays and diminished ambition, the market risks an oversupply of carbon credits. 

On the other hand, a healthy supply of credits is also expected from the offset market under the CCTS. The key question is whether there will be sufficient demand to absorb them. Even if targets are made more stringent in later cycles, it may prove difficult to create demand for excess credits generated in the initial years. With this reduction in targets driven by systemic delays, industries may have been treated fairly, but the cost will likely be borne by the market and by climate action itself.