Powering the Green Transition

The Indian government notified the draft Greenhouse Gas Emission Intensity Targets Rules for energy-intensive industries on April 16, 2025.
This is a foundational step towards operationalising the Carbon Credit Trading Scheme (CCTS), which is set to be launched in mid-2026.

India is the third largest emitter of greenhouse gases (GHG) in the world. An International Monetary Fund working paper estimates that India’s current economic growth trajectory will lead to a 41 per cent increase in GHG emissions by 2030. As such, decoupling emissions from economic growth will be a major goal – and challenge – for India in the coming years.

Globally, emissions trading systems (ETSs) are seen as a key mechanism for achieving emissions reduction without compromising economic growth. India began developing its ETS by establishing the regulatory framework for the Indian carbon market under the Energy Conservation Amendment Act, 2022. Based on this, in 2023, the Indian government notified the CCTS – a market-based mechanism to decarbonise the economy and spur investments in clean technologies by pricing GHG emissions and facilitating carbon trading.

Of the two mechanisms defined under the CCTS – compliance mechanism and offset mechanism – detailed regulations for the former were adopted by the government in July 2024. These cover emissions from nine energy-intensive industrial sectors, which together account for around 16 per cent of the country’s total emissions. However, thermal power plants (TPPs), which constitute almost 39.2 per cent of India’s total carbon emissions, have not been included in this initial phase of CCTS. Given that more than half of India’s fuel-related carbon dioxide (CO₂) emissions come from TPPs, their exclusion is a major miss. But it also cannot be denied that including them involves substantial challenges.

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