Major polluting industries in four sectors — aluminium, cement, pulp and paper and chlor-alkali — will have to comply with the government’s greenhouse gas reduction targets for FY26 and FY27. Failing to do so, they will have to purchase carbon credits or pay environmental compensation.

The Union Ministry of Environment, Forest and Climate Change has issued a draft notification on this under the compliance mechanism of the Carbon Credit Trading Scheme, 2023. This means that industry operating in these sectors will have to comply with the ministry’s greenhouse gas emission intensity (GEI) targets.

The move also operationalises the domestic carbon market and carbon credit trading system for the four highly polluting sectors. The ministry has specified the GEI targets for 13 aluminium plants of Vedanta, Nalco, Hindalco and Bharat Aluminium among others; 186 cement plants of UltraTech, ACC, Ambuja and JSW Cement among others.

“The industry will meet its GEI target for the respective compliance year by purchasing carbon credits certificates from the Indian carbon market, in case of not achieving the prescribed GEI target. Failing, they will be liable to pay penalty, in case of non-compliance, against the shortfall in the respective compliance year,” said the notification released on April 24.

The industries under the ambit will now have to take pro-active measures to reduce their emissions or buy carbon credit to balance the shortfall under the target. It is the first time that the government has come out with quantified emission reduction targets for each industry player in these sectors.  

The Carbon Credit Trading Scheme, 2023 under the Energy Conservation Act, 2001 defines the Indian carbon market framework where a market framework is established for trading of the carbon credit certificates to reduce or remove or avoid the greenhouse gases emissions.