India's First Binding Emission Targets: An Intensity Market Built for Exporters as Much as for the Climate
On 8 October 2025 India's Ministry of Environment, Forest and Climate Change notified the Greenhouse Gases Emission Intensity Target Rules, 2025. The rules set the country's first legally binding emission reduction targets for industry. They apply to 282 units in four sectors: 186 cement plants, 13 aluminium smelters, 30 chlor-alkali plants and 53 pulp and paper mills. Each unit must reduce its greenhouse gas emissions per tonne of product from a 2023-24 baseline over a compliance period covering 2025-26 and 2026-27.
Units that beat their targets earn tradable carbon credit certificates. Those that miss must buy certificates or pay an environmental compensation of twice the average trading price. The targets are expressed in tonnes of CO2 equivalent per tonne of product, plant by plant. The Hindu, reporting the notification, gives sector-wide reductions over the two years of roughly 3.4 per cent for cement, 5.8 per cent for aluminium, 7.5 per cent for chlor-alkali and 7.1 per cent for pulp and paper.
The Central Pollution Control Board will impose and recover penalties, payable within 90 days. An intensity target allows absolute emissions to rise if output rises, provided emissions per tonne fall. For a country whose cement and aluminium demand will grow for decades as infrastructure and housing expand, an absolute cap would either be set so loosely as to be meaningless or so tightly as to constrain growth. They reward efficiency rather than absolute cuts, and they can be gamed through product definitions and baselines.
A 3.4 per cent intensity reduction over two years in cement is modest. The likely outcome in the first cycle is a market with more supply of certificates than demand from the efficient leaders, and a relatively low clearing price. The Hindu notes that the rules prepare Indian exporters for mechanisms such as the European Union's Carbon Border Adjustment Mechanism, which applies to carbon-intensive imports including cement, steel and aluminium.