Carbon Markets and Emission Targets: ESG BROADCAST shares key takeaways.
The Ministry of Environment, Forest and Climate Change (MoEFCC) has formally notified the Greenhouse Gas Emission Intensity Targets (Amendment) Rules, 2025. This notification, dated January 13, 2026, marks a pivotal expansion of India’s domestic Carbon Credit Trading Scheme. Issued under the powers conferred by the Energy Conservation Act, 2001, these rules build upon the initial framework established in June 2023. The new amendment specifically integrates additional high-impact industrial sectors into the national compliance registry. This systematic inclusion aims to accelerate industrial decarbonization across the country.
The amendment introduces the “Second Schedule” to the existing rules, effectively broadening the scope of the Carbon Credit Trading Scheme to four new sectors. These sectors include secondary aluminium, petroleum refineries, petrochemicals, and the textile industry. This move follows the previous notification in October 2025, which set targets for primary aluminium, cement, chlor-alkali, and pulp and paper. By adding these energy-intensive industries, the government ensures a comprehensive coverage of the nation’s industrial carbon footprint. Each sector now has specific baseline intensities derived from the 2023-24 financial year.
Under the updated rules, obligated entities must adhere to specific greenhouse gas emission intensity targets for two distinct compliance periods. The first target period covers the 2025-26 financial year, while the second extends to 2026-27. Crucially, the notification clarifies that the targets for the 2025-26 cycle are calculated on a pro-rata basis. This pro-rata adjustment applies to the remaining three months of the fiscal year, specifically from January 2026 to March 2026. This phased implementation allows industries to align their operations with the Carbon Credit Trading Scheme requirements.
The notification lists numerous major industrial players as obligated entities under the new schedule. In the petroleum refinery sector, entities like Bharat Petroleum, Indian Oil Corporation, and Reliance Industries must meet stringent intensity targets based on their crude throughput. Similarly, the petrochemical segment includes units operated by GAIL and ONGC Petro additions. The textile sector focus is primarily on spinning units across states like Tamil Nadu, Rajasthan, and Punjab. These entities are now legally required to track and report their emissions against set benchmarks.
For the 2026-27 compliance year, targets are calculated based on the revised 2025-26 benchmarks. This ensures a continuous and progressive reduction in emission intensity over time. The rule change also substitutes “Note 2” and inserts a new “Note 3” to clarify the calculation methodology for different schedules. These technical refinements provide the legal clarity necessary for the effective functioning of the Carbon Credit Trading Scheme. It establishes a clear trajectory for industries to earn carbon credits by exceeding their reduction obligations.
Strategic significance lies in the creation of a structured financial incentive for heavy industries to adopt cleaner technologies and energy-efficient processes. By setting clear, sector-specific benchmarks, India is fostering a transparent carbon market that can eventually link with global trading systems. For businesses, compliance transitions from a regulatory burden to a strategic opportunity for generating tradeable environmental assets. This framework significantly strengthens India’s path toward its Nationally Determined Contributions and the ultimate goal of achieving net-zero emissions by 2070.
Image Credit: Green Story
