Govt. Unveils Draft GEI Target Rules to Strengthen Carbon Market, Boost Climate Action

In a significant step toward realising its climate goals, the Ministry of Environment, Forest and Climate Change (MoEFCC) has issued a draft notification proposing Greenhouse Gases Emission Intensity (GEI) Target Rules under the Carbon Credit Trading Scheme, 2023.

This initiative aligns with the broader aim of reducing greenhouse gas emissions intensity across industries and supporting India’s Nationally Determined Contributions (NDCs) under the Paris Agreement.

The notification comes under the Environment (Protection) Act, 1986, and invites public comments within 60 days of its publication. It follows the formalisation of the Carbon Credit Trading Scheme notified in June 2023 under the Energy Conservation Act, 2001. The scheme sets up a structured Indian carbon market, enabling the trading of carbon credit certificates to incentivise emission reductions or avoidances by obligated entities.

Under this framework, the GEI targets are to be assigned to obligated entities, which include high-emission industrial sectors. These targets are to be computed as per methodologies outlined in a detailed procedure published by the Bureau of Energy Efficiency (BEE). Each entity will be required to meet its specific emission intensity reduction targets for a defined compliance year. The baseline and target values will be listed in an accompanying schedule.

Entities unable to meet their targets directly can comply by purchasing carbon credit certificates from the Indian Carbon Market (ICM). Alternatively, surplus certificates, earned by exceeding targets, can be banked for future use. Obligated entities must also register on the ICM Portal and follow the procedures laid out by the Bureau, including submission of documentation within prescribed timelines.

For non-compliance, the rules empower the Central Pollution Control Board (CPCB) to impose environmental compensation. This penalty will amount to twice the average market price of carbon credit certificates traded during the compliance year in question. These funds will be deposited in a separate account and used to support the functioning of the carbon market, based on recommendations from the National Steering Committee and approval by the Central Government.

Issuance and purchase of carbon credit certificates will follow specific formulas. Entities achieving lower-than-targeted emissions will be issued certificates equivalent to their reductions, while those exceeding their targets will be required to purchase certificates corresponding to their excess emissions. These provisions ensure a market-driven mechanism for compliance and reward emission-efficient practices.

The GEI Target Rules are expected to drive the adoption of sustainable technologies and promote low-carbon growth across India’s industrial landscape. They represent a key pillar in India’s climate action strategy as it seeks to balance economic growth with environmental responsibility. The notification reinforces India’s position as a leader in climate innovation and carbon market development on the global stage.