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India Expands Carbon Credit Trading Scheme: Draft Notification Brings Iron and Steel Sector Under Greenhouse Gas Emission Targets
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....ndia Expands Carbon Credit Trading Scheme: Draft Notification Brings Iron and Steel Sector Under Greenhouse Gas Emission Targets<br>By: - YAGAY and SUN<br>Environmental Law<br>Dated:- 11-8-2026<br>The Ministry of Environment, Forest and Climate Change (MoEFCC) has issued a draft notification dated 26 June 2026 proposing a significant expansion of India's Carbon Credit Trading Scheme (CCTS). Published as G.S.R. 517(E), the notification seeks to include the Iron and Steel sector under the Greenhouse Gases (GHG) Emission Intensity Target framework by inserting a new Third Schedule into the Greenhouse Gases Emission Intensity Target Rules, 2025. The move marks another important milestone in India's transition toward a market-based mecha....
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....nism for reducing industrial greenhouse gas emissions while supporting the country's climate commitments. Background India notified the Carbon Credit Trading Scheme, 2023 under the Energy Conservation Act, 2001, establishing the framework for a domestic carbon market. The scheme aims to incentivize industries to improve energy efficiency and reduce greenhouse gas emissions by assigning emission intensity targets and allowing entities that outperform their targets to generate carbon credits. To operationalize the compliance mechanism, the government issued the Greenhouse Gases Emission Intensity Target Rules, 2025 in October 2025. These rules initially covered four energy-intensive sectors Aluminium, Cement, Chlor-Alkali, and Pu....
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....lp & Paper. Subsequently, the Greenhouse Gases Emission Intensity Target (Amendment) Rules, 2025, notified in January 2026, expanded the coverage to four additional sectors: Second Aluminium, Petroleum Refinery, Petrochemical, and Textile. The latest draft notification proposes to further widen the scope by bringing the Iron and Steel sector, one of India's largest industrial emitters, into the compliance framework. Key Features of the Draft Notification The proposed amendment has been issued under Sections 3, 6, and 25 of the Environment (Protection) Act, 1986. Before finalization, the draft has been placed in the public domain for comments and objections. Stakeholders have been given 60 days from the date of publication in....
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.... the Official Gazette to submit their views to the Ministry of Environment, Forest and Climate Change.The amendment proposes the insertion of a Third Schedule in the principal rules. This schedule specifies emission intensity targets for obligated entities operating in the Iron and Steel sector. Each entity has been assigned: • A baseline production for FY 2023-24. • A baseline greenhouse gas emission intensity expressed in tonnes of CO2 equivalent per tonne of equivalent product. • A compliance target for FY 2026-27. (The compliance year 2025-26 has not been assigned a target for these entities in the draft.) The targets are designed to encourage gradual improvements in production efficiency while ....
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....reducing emissions per unit of output rather than imposing absolute emission caps. Major Steel Producers Covered The Third Schedule includes several of India's largest integrated steel producers. Among them are: • Arcelor Mittal Nippon Steel India Limited, Hazira (Gujarat), with a baseline emission intensity of 2.2701 tCO2e per tonne, is assigned a compliance target of 2.1695 tCO2e per tonne for FY 2026-27. • Rashtriya Ispat Nigam Limited (Visakhapatnam Steel Plant) has a baseline emission intensity of 2.9781, with a target of 2.8050. • SAIL's Rourkela Steel Plant has been assigned a reduction target from 2.9509 to 2.7809. • SAIL's Bokaro Steel Plant is expected to reduce....
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.... its emission intensity from 3.2056 to 3.0050. • Bhilai Steel Plant, another major SAIL facility, has been assigned a target to reduce emission intensity from 3.1487 to 2.9551. The notification also lists numerous other steel manufacturers across different states, each with individually determined baselines and compliance targets based on their production characteristics and historical emission intensity. Significance for the Steel Industry The Iron and Steel sector is among India's most energy-intensive industries and contributes substantially to national greenhouse gas emissions. Integrating it into the Carbon Credit Trading Scheme is expected to improve operational efficiency, encourage adoption of cleaner techn....
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....ologies, and stimulate investments in low-carbon steel production. Unlike absolute emission limits, the framework focuses on emission intensity, meaning companies are required to reduce emissions relative to their production output. This approach allows industrial growth while promoting more efficient use of energy and raw materials. Companies that achieve emission intensities below their prescribed targets are expected to become eligible for carbon credits under the compliance mechanism, while entities failing to meet their targets may need to purchase credits or comply with other regulatory requirements under the scheme. Public Consultation Process As this is a draft notification, it is not yet legally enforceable. The government ha....
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....s invited comments, objections, and suggestions from industry, experts, and the public within 60 days of its publication in the Official Gazette. Representations may be submitted to the Chief Controller of Accounts, Ministry of Environment, Forest and Climate Change, New Delhi, or through the designated official email address mentioned in the notification. Following consideration of stakeholder feedback, the Ministry may revise the draft before issuing the final notification. Objections or suggestions, if any, may be addressed to the Chief Controller of Accounts, Ministry of Environment, Forest and Climate Change, Indira Paryavaran Bhawan, Jor Bagh Road, New Delhi - 110003, and may be sent to e-mail id: [email protected] Looking Ahe....
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....ad The inclusion of the Iron and Steel sector represents another major step in the phased expansion of India's domestic carbon market. Since the launch of the Carbon Credit Trading Scheme in 2023, the government has progressively expanded compliance obligations across multiple energy-intensive sectors, creating a broader regulatory framework for industrial decarbonization. As India's industrial base continues to grow, emission intensity targets are expected to play an increasingly important role in balancing economic development with climate objectives. For steel manufacturers, the proposed rules underscore the importance of improving energy efficiency, adopting cleaner production technologies, and preparing for participation in ....
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....an evolving carbon market. *** Note - The Greenhouse Gases Emission Intensity Target Rules, 2025 were published in the Gazette of India, Extraordinary, Part ll, Section 3, Subsection (i) vide number GSR 739(E), dated the 8th October 2025. Subsequently, the Greenhouse Gases Intensity Target (Amendment) Rules, 2025 were notified vide number GSR 25(E), dated the 13th January 2026. *** =============<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....