In a significant step toward decarbonising one of the country’s most energy-intensive industries, the Ministry of Environment, Forest and Climate Change has released a draft notification under the Carbon Credit Trading Scheme. This proposal outlines legally binding greenhouse gas (GHG) emission reduction targets for over 460 industrial units across the country, including key players in the iron and steel sector.
The draft, published on June 30, is part of India’s broader efforts to meet its climate commitments under the Paris Agreement and move towards a low-carbon economy. The notification introduces Specific Energy Consumption (SEC) targets for designated industrial sectors, particularly those responsible for high emissions, such as steel, cement, aluminium, power, and textiles. Steel alone contributes to nearly 12 per cent of India’s total industrial emissions, making this move particularly impactful.
According to the proposed framework, industries will have to gradually reduce their energy intensity and emissions over time. Those failing to meet targets would be required to purchase carbon credits, while those surpassing their goals would earn credits they can sell, thereby creating an incentivised emissions trading market.
Industry experts believe this step will accelerate green transformation and push manufacturers to adopt cleaner technologies such as hydrogen-based steelmaking, electric arc furnaces, and increased use of renewable energy. However, there are concerns regarding the readiness of small and medium-sized enterprises (SMEs) in the sector to comply, given potential cost and technology barriers.
The notification is currently open for public comments for a period of 60 days before being finalised. If implemented effectively, it will place India among a growing group of nations using market-based mechanisms to curb industrial emissions.
