India Tightens Industrial Emission Targets, Accelerating its Green Transition

India Tightens Industrial Emission Targets, Accelerating its Green Transition

General Studies Paper III: Government Policies, Environmental Pollution & Degradation

Why in News?

Recently, the Ministry of Environment, Forest and Climate Change (MoEFCC) has amended greenhouse gas (GHG) emission intensity targets, revising baselines for petroleum and textile industries.

Highlights of Revised Industrial Emission Reduction Targets

• Announcement: The MoEFCC amended the greenhouse-gas Emission Intensity Target framework on 22 September 2026 for petroleum refineries and textile units. 
• Modification: The amendment modifies the baseline emission intensities and corresponding targets.
  • A major change is the removal of the 2025–26 compliance-year targets, while the 2026–27 targets are retained. 
• Coverage: 
  • The amendment revises baseline figures for seven Indian Oil Corporation refineries—Digboi, Gujarat, Guwahati, Haldia, Mathura, Panipat and Paradeep. 
  • The petroleum-refinery component covers 21 refineries belonging to IndianOil, BPCL, HPCL, CPCL, MRPL, Reliance Industries, Nayara Energy and Numaligarh Refinery.
    • Their targets are expressed through GHG emissions per unit of output, allowing comparison across different production scales. 
  • The textile framework covers 173 obligated units across three textile sub-sectors. 
• Policy Mechanism: The framework uses Greenhouse Gas Emission Intensity (GEI), measured in tonnes of CO₂ equivalent per unit of output/product.
  • These targets operate under India’s Carbon Credit Trading Scheme (CCTS) and consequently connect industrial compliance with the emerging Indian Carbon Market (ICM). 

India’s Carbon Emissions Status

• India’s Fourth Biennial Update Report (BUR-4), submitted to the UNFCCC on 30 December 2024, provides the latest nationally reported detailed GHG inventory used in this context. Its inventory reference year is 2020.
• In 2020, India’s GHG emissions excluding Land Use, Land-Use Change and Forestry (LULUCF) were 2,959 million tonnes CO₂ equivalent.
  • Including LULUCF, India’s net emissions were 2,437 million tonnes CO₂e. 
• India’s total GHG emissions in 2020 declined by 7.93% compared with 2019. The decline occurred during a year substantially affected by the COVID-19 pandemic.
• The energy sector accounted for 75.66% of India’s GHG emissions in 2020, making energy transition central to India’s mitigation strategy.
  • Agriculture contributed 13.72%, industrial processes and product use 8.06%, and waste 2.56%.
• India’s forests, tree cover and other land-use systems sequestered approximately 522 million tonnes of CO₂ in 2020.
  • This represented an important natural sink.
• India has reported a substantial decline in GDP emission intensity. According to government data, emission intensity declined by 37.38% in 2022 from the 2005 level, against the earlier 2030 target of 45% reduction.
• India crossed 50% of cumulative installed electricity capacity from non-fossil sources in June 2025, achieving the corresponding 2030 NDC milestone more than five years ahead of schedule.
  • By 30 June 2026, the non-fossil share stood at 54.18% of installed electricity capacity. 
• Between 2005 and 2022, India created an additional carbon sink of approximately 2.44 billion tonnes CO₂ equivalent through forest and tree cover. The earlier 2030 target is 2.5–3.0 billion tonnes CO₂e.
  • The 0.7% rise in 2025 marks a sharp slowdown compared to the 4% to 11% annual growth seen in preceding years.
  • Power-sector emissions dropped 3.8% in 2025 due to record clean-energy additions and weaker electricity demand.
• India’s per capita emissions stand at roughly 2.2 tonnes per year, which is less than half the global average.
• Challenges: India’s development requires expanding energy, manufacturing, transport and infrastructure, while the energy system remains emissions-intensive. 

Carbon Credit Trading Scheme and Compliance Framework

• Legal Foundation: India’s carbon-market architecture is rooted in the Energy Conservation Act, 2001, as amended in 2022.
  • The amendment empowered the Central Government to establish a carbon-credit trading framework. 
  • The Carbon Credit Trading Scheme, 2023 was notified on 28 June 2023. 
• Market Mechanism: CCTS contains two principal mechanisms: the Compliance Mechanism and the Offset Mechanism.
  • Compliance applies to designated high-emission entities, whereas the offset mechanism enables eligible non-obligated entities to register emission-reduction, removal or avoidance projects. 
  • Under the offset mechanism, non-obligated entities can register eligible projects involving GHG reduction, removal or avoidance.
• Targets: Under the compliance mechanism, obligated entities receive GHG Emission Intensity (GEI) targets, generally expressed as tCO₂e per unit of equivalent output.
  • Its objective is to reduce the carbon intensity of industrial production rather than simply imposing identical absolute-emission limits on different facilities.
• Credit Generation: An obligated entity that performs better than its notified GEI target can become eligible for Carbon Credit Certificates (CCCs).
  • Entities unable to meet their targets must address the resulting shortfall through the prescribed compliance mechanism, including acquisition/surrender of required certificates where applicable.
• Institutional Architecture: The Indian Carbon Market has a National Steering Committee, co-chaired by the Secretaries of the Ministry of Power and MoEFCC.
  • Bureau of Energy Efficiency (BEE) acts as the Administrator, while Grid Controller of India/GRID-INDIA functions as the registry under the established framework. 
• Verification: Credible carbon markets require Measurement, Reporting and Verification (MRV).
  • India has established procedures for monitoring, reporting and verification and has created an accreditation framework for Accredited Carbon Verification (ACV) agencies. 
• Sectors Coverage: The compliance architecture initially covered aluminium, cement, chlor-alkali and pulp & paper with 282 obligated entities.
  • January 2026 expansion added petroleum refineries, petrochemicals, textiles and secondary aluminium, taking coverage to 490 entities. 
• Transition: The CCTS framework is designed to gradually transition relevant energy-intensive sectors from the Perform, Achieve and Trade (PAT) mechanism.
  • The sectors identified for transition include aluminium, cement, chlor-alkali, petrochemicals, petroleum refineries, pulp and paper, and textiles. 

India’s Climate Commitments and Regulatory Initiatives

• Commitments: 
  • Under the Paris Agreement (COP21), India committed to initial Intended Nationally Determined Contributions (INDCs) targeting a 33% to 35% reduction in GDP emissions intensity from 2005 levels by 2030, 40% non-fossil electric capacity, and an additional carbon sink of 2.5 to 3.0 billion tonnes of CO₂ equivalent. Guided by CBDR-RC, India surpassed these goals early.
  • In March 2026, the Union Cabinet approved India’s NDC for 2031–2035. India committed to reducing GDP emission intensity by 47% from the 2005 level by 2035.
    • The government raised the cumulative installed electricity-capacity share from non-fossil sources to 60%, and created an additional 3.5–4.0 billion tonnes CO₂-equivalent carbon sink through forest and tree cover.
      • Implemented via mechanisms like the National Afforestation Programme and CAMPA funding, this goal balances ecological restoration with rural livelihoods.
  • India’s long-term climate pathway remains anchored to Net-Zero emissions by 2070.
    • It is framed around development priorities and the principle of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC).
      • Through global platforms like the International Solar Alliance (ISA) and the LiFE (Lifestyle for Environment) movement, India defends its domestic clean-energy transformation.
• Initiatives:
  • The Perform, Achieve and Trade scheme establishes energy-consumption reduction obligations for designated consumers and uses tradable
    • Energy Saving Certificates. Relevant sectors are being progressively transitioned towards the CCTS architecture. 
  • The Renewable Consumption Obligation (RCO) framework promotes increased renewable-energy consumption by obligated electricity consumers. It complements supply-side renewable expansion by creating demand for renewable electricity and supporting broader power-sector decarbonisation. 
  • The National Green Hydrogen Mission targets India becoming a global hub for green hydrogen production, use and exports.
    • It includes support for electrolyser manufacturing, green-hydrogen production and sectoral applications, including refineries.
  • The Green Credit Rules, 2023, notified under the Environment (Protection) Act, established a voluntary mechanism rewarding specified environmentally positive actions. It seeks to expand green cover, carbon sequestration, ecological restoration and sustainable practices. 
  • The Environment Audit Rules, 2025, notified on 29 August 2025, established a formal framework for environmental auditing, including a two-tier auditor structure. 
  • National Action Plan on Climate Change (NAPCC) guided by core domestic missions spanning solar power, energy efficiency, sustainable habitats, and strategic knowledge.
  • India is also developing mechanisms for international carbon-market cooperation. In June 2026, India and Japan adopted implementation rules for their Joint Crediting Mechanism under Article 6.2.

Impact of Revised Industrial Emission Reduction Targets

• The revised framework deepens India’s transition from energy-saving compliance to carbon-productivity management. Under CCTS, targets are determined after considering available technologies and implementation costs, linking environmental ambition with technological feasibility.
• Petroleum refineries are energy-intensive because crude processing requires substantial heat, steam, hydrogen and electricity.
  • GEI targets therefore create incentives for refineries to reduce energy consumption per unit of throughput and progressively adopt lower-carbon energy and process technologies.
  • Under the National Green Hydrogen Mission, two companies have been awarded a combined 20,000 tonnes-per-year capacity under the incentive scheme.
• Lower emission intensity can reduce the carbon footprint of industrial output, accelerate energy efficiency and support India’s wider transition towards a lower-carbon production system. 
• Stable targets can help companies plan investments in renewable power, efficient equipment, electrification, hydrogen and other decarbonisation technologies. 
• Decarbonisation can initially raise capital expenditure, but energy-efficiency improvements can reduce operating costs over time. 
• For textiles, the significance extends beyond factory fuel use because obligated units must disclose Scope-1 and Scope-2 emissions.
  • This creates a more structured carbon-accounting culture and can eventually support product-level environmental traceability.
• The Ministry of Textiles is implementing a pilot for SMEs, brands and manufacturers covering Lifecycle Assessment and Product Environmental Footprint.
  • Thus, revised targets can gradually connect factory-level emissions with the environmental performance of the entire textile product lifecycle.
  • Textile decarbonisation now operates alongside established chemical safeguards: India restricted benzidine-based dyes in 1990, prohibited handling of 70 azo dyes in 1997, and requires ETPs/CETPs for prescribed industrial effluent standards. 
• The Eco-Mark Scheme, 2024 includes textiles and promotes environmentally preferable raw materials, resource efficiency, wastewater management and emissions management.
  • Carbon-performance regulation can increasingly interact with green product differentiation and consumer-facing environmental information. 
• India’s energy-efficiency governance is moving towards digital monitoring and compliance systems. Government data show electricity generation increased from 1,739.09 BU in 2023–24 to 1,829.69 BU in 2024–25, while digital energy-governance tools increasingly support measurement and transparency—important foundations for credible carbon-market enforcement. 

Frequently Asked Questions (FAQs):

1. What are the new emission reduction targets for refineries in India?

The 2026 amendment revises baseline emission intensities and corresponding GEI targets for seven IndianOil refineries, retaining 2026–27 compliance targets.

2. Why did Centre revise emission targets for petroleum refineries?

The Centre revised baseline emission data and corresponding targets, updating facility-level benchmarks under the Carbon Credit Trading Scheme (CCTS).

3. What changed in India’s refinery emission rules 2026?

The amendment removed 2025–26 targets and retained 2026–27 targets, while revising baseline intensities for seven IndianOil refineries. 

4. How do new textile emission targets work under CCTS?

173 textile units receive facility-specific GEI targets based on emissions per output; outperformers can earn Carbon Credit Certificates under CCTS.

5. What is GEI target under Carbon Credits Trading Scheme?

GEI target specifies allowable greenhouse-gas emissions per unit of equivalent output, measured in tonnes CO₂-equivalent, for obligated entities.

Disclaimer: Information in this article is based on official announcements and public records. Details may evolve over time.

Also Read: India’s Carbon Market Trading