India Proposes GEI Targets Under Carbon Credit Trading Scheme

India

India’s environment ministry has launched consultations on new emission rules tied to its carbon credit trading scheme. The draft, titled Greenhouse Gases Emission Intensity Target Rules, 2025, sets GEI targets for 282 companies across four sectors. The move is aimed at helping India meet its nationally determined contribution (NDC) under the Paris Agreement.

The India carbon credit trading scheme allows companies to meet targets by reducing emissions or purchasing carbon credit certificates. Companies that outperform can bank or sell excess credits, while underperformers must buy credits at double the average traded carbon price. The Bureau of Energy Efficiency, under the power ministry, will calculate pricing based on trading activity.

Cement and Aluminium Sectors Face Highest Compliance Pressure

The draft rules impact companies from the cement, aluminium, chlor-alkali, and pulp and paper sectors. Cement dominates the list, with 186 of the 282 entities covered. The aluminium industry also features prominently, with 13 firms required to report emissions under the proposed rules. These targets apply for two compliance periods—2025–26 and 2026–27.

Companies have until mid-June 2025 to comment on the proposed GEI framework. They must either cut emissions or offset them through credits within India’s regulated carbon market. Failure to comply will result in financial penalties tied to average carbon credit prices. This mechanism could drive new investment in low-carbon technology and sustainable manufacturing practices.

India’s Domestic Carbon Market Gains Policy Momentum

The India carbon credit trading scheme has evolved rapidly since its introduction in the Energy Conservation Bill of 2022. In 2023, the government rolled out a formal Carbon Credits Trading Scheme (CCTS), followed by the Detailed Procedure for Compliance Mechanism in 2024. The new GEI targets represent a significant step toward operationalizing India’s voluntary-to-compliance carbon market transition.

By linking emission reduction to a monetized credit system, India aims to create financial incentives for industrial decarbonization. This initiative positions India as a leader among emerging markets developing domestic carbon pricing frameworks.

The Metalnomist Commentary

India’s carbon market now enters a pivotal stage with enforceable GEI targets and structured credit penalties. For energy-intensive sectors like aluminium and cement, this could reshape investment flows and ESG compliance strategies. Market participants should monitor evolving credit pricing mechanisms and sector-specific caps.