Syllabus: GS3/Environment, Conservation, Climate Change, Energy
In News
- The Centre has notified the first legally binding Greenhouse Gas Emission Intensity (GEI) Target Rules, 2025, for four high-emission sectors—aluminium, cement, chlor-alkali, and pulp and paper.
- These Rules form a key part of the Carbon Credit Trading Scheme (CCTS), 2023, which operationalises India’s domestic carbon market.
About
- These rules fix sector-specific targets for cutting greenhouse gas (GHG) emissions per unit of product, operationalising India’s domestic carbon market under the Carbon Credit Trading Scheme (CCTS), 2023.
- This move supports India’s Paris Agreement commitment to reduce emissions intensity of GDP by 45% by 2030 compared to 2005 levels.
Key Features of GEI Target Rules, 2025
- Applicability to 282 industrial units across aluminium, cement, chlor-alkali, and pulp & paper sectors.
- Targets for emissions intensity (tCO₂e per unit output) for years 2025–26 and 2026–27.
- Carbon credits issued for meeting/exceeding targets, tradable within the domestic carbon market.
- Penalties and environmental compensation enforced by the Central Pollution Control Board for non-compliance.
Linkage with Carbon Credit Trading Scheme (CCTS), 2023
- CCTS framework enables issuance, verification, and trading of carbon credits earned from emissions reduction.
- Shift from earlier PAT scheme which lacked a market mechanism to incentivize emission trading.
- Market-based approach to incentivize industrial decarbonisation and cost-effective compliance.
Potential Benefits for India
- Drives industrial sectors towards greater energy efficiency and lower carbon footprint.
- Supports India’s commitment to reduce emissions intensity of GDP by 45% by 2030 compared to 2005 baselines.
- Facilitates technology transfer and promotes innovation in low-carbon technologies.
- Generates economic value through carbon credit trading opportunities.
- Strengthens environmental governance through mandatory compliance and penalties.
Challenges Ahead
- Ensuring robust Measurement, Reporting, and Verification (MRV) systems to maintain credit integrity.
- Managing price volatility and market speculation in carbon credits.
- Equipping industries, especially smaller units, to bear transition costs and technological adaptation.
- Need for capacity building and institutional framing to govern the carbon market effectively.
Comparison with International Carbon Markets
| Aspect | GEI Rules & CCTS, India | EU Emissions Trading System (EU ETS) | China’s National ETS |
| Market Start | 2025 (legally binding pilot in select sectors) | 2005 (world’s first major ETS) | 2021 (national launch, phased sector inclusion) |
| Sectors Covered | Aluminium, cement, chlor-alkali, pulp & paper | Power, industrial sectors, aviation | Power plants initially, planning to expand sectors |
| Compliance Mechanism | Emission intensity targets per product unit; tradable carbon credits | Cap-and-trade with fixed emission caps per year | Cap-and-trade focused on absolute emissions |
| Regulatory Authority | Bureau of Energy Efficiency, CPCB | European Commission, national regulators | China’s Ministry of Ecology and Environment |
| Carbon Credit Trading | Domestic market trading credits | Robust EU-wide carbon market with price signals | Emerging market, evolving in sophistication |
| Integration | Currently domestic market only | Linked with global carbon markets; evolving | Focused on domestic market but exploring expansion |
Way Forward
- Phased Expansion: Gradually include more sectors beyond the initial four.
- Capacity Building: Support industries with knowledge and financial mechanisms to meet targets.
- Strong MRV System: Deploy digital monitoring, sensors, and blockchain for credit authenticity.
Source: IE
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