India's First Compliance-Based Carbon Market Set to Take Shape
Wednesday, 23 April 2025, 14:31 IST
In a pivotal step towards reducing emissions in high-polluting industries, The Ministry of Environment, Forest and Climate Change (MoEFCC) has released a draft notification to create India’s inaugural compliance-based domestic carbon market. This initiative, part of the Carbon Credit Trading Scheme (CCTS) of 2023, aims to promote the adoption of low-carbon technologies within industries and align with the nation’s broader climate objectives.
The draft outlines Greenhouse Gas Emission Intensity (GEI) Targets for 2025, which will apply to sectors including aluminium, cement, chlor-alkali, and pulp and paper. These targets set specific reduction goals for the financial years 2025-26 and 2026-27, facilitating a year-by-year approach to sectoral decarbonisation.
The CCTS was introduced in June 2023 to create a regulatory framework for carbon credit trading and to support emission reductions in accordance with India’s commitments under international climate agreements. The draft encompasses over 290 entities in traditionally high-emission sectors, proposing a standardized formula for calculating and verifying emissions, along with sector-specific benchmarks for both integrated operations and standalone units.
In the Aluminium sector, companies such as Vedanta, Hindalco, and NALCO are included, covering sub-sectors like smelters and refineries. The cement industry features major players like UltraTech, ACC, Ambuja, Dalmia, and JSW Cement, which produce ordinary Portland and white cement. The pulp and paper sector is also addressed, focusing on agro-based, integrated, and recycled fibre-based plants. Additionally, the chlor-alkali industry, which produces chlorine and sodium hydroxide through the electrolysis of saltwater, is part of the draft.
Industry associations have welcomed this initiative, viewing it as a long-awaited advancement towards establishing a formal carbon market in India. Manish Dabkara, President of the Carbon Markets Association of India of India and Chairman at EKI Energy Services, remarked, “For the first time, India will have a domestic framework that quantifies emissions across critical sectors. This notification not only facilitates credit trading but also empowers companies to lower their in-house emissions, allowing for strategic planning that goes beyond mere compliance.”
The MoEFCC is currently seeking public feedback on the draft during a two-month consultation period.
The draft outlines Greenhouse Gas Emission Intensity (GEI) Targets for 2025, which will apply to sectors including aluminium, cement, chlor-alkali, and pulp and paper. These targets set specific reduction goals for the financial years 2025-26 and 2026-27, facilitating a year-by-year approach to sectoral decarbonisation.
The CCTS was introduced in June 2023 to create a regulatory framework for carbon credit trading and to support emission reductions in accordance with India’s commitments under international climate agreements. The draft encompasses over 290 entities in traditionally high-emission sectors, proposing a standardized formula for calculating and verifying emissions, along with sector-specific benchmarks for both integrated operations and standalone units.
In the Aluminium sector, companies such as Vedanta, Hindalco, and NALCO are included, covering sub-sectors like smelters and refineries. The cement industry features major players like UltraTech, ACC, Ambuja, Dalmia, and JSW Cement, which produce ordinary Portland and white cement. The pulp and paper sector is also addressed, focusing on agro-based, integrated, and recycled fibre-based plants. Additionally, the chlor-alkali industry, which produces chlorine and sodium hydroxide through the electrolysis of saltwater, is part of the draft.
Industry associations have welcomed this initiative, viewing it as a long-awaited advancement towards establishing a formal carbon market in India. Manish Dabkara, President of the Carbon Markets Association of India of India and Chairman at EKI Energy Services, remarked, “For the first time, India will have a domestic framework that quantifies emissions across critical sectors. This notification not only facilitates credit trading but also empowers companies to lower their in-house emissions, allowing for strategic planning that goes beyond mere compliance.”
The MoEFCC is currently seeking public feedback on the draft during a two-month consultation period.
