Decoding Greenhouse Gas Emission Intensity Targets Across Identified Sectors Under the CCTS Framework

Introduction 

The Ministry of Environment, Forest and Climate Change (MoEFCC), India, has recently updated  the greenhouse gas (GHG) emission intensity (GEI) targets under the Carbon Credit Trading  Scheme (CCTS), further strengthening the operational framework of the Indian Carbon Market  (ICM). The earlier targets, submitted in April 2025, covered 4 sectors including Aluminuim,  Cement, Chlor-Alkali and Pulp & Paper, providing an initial view of baseline emissions and  reduction requirements. Whereas the latest notification, issued in January 2026, expands this scope  by adding three new sectors along with one additional sub-sector under the existing Aluminium  sector, significantly widening the coverage of the compliance mechanism. 

There are a total of 490 obligated entities covered under the two notifications. Obligated entities  are industrial units notified under the compliance mechanism of the Carbon Credit Trading Scheme  (CCTS) that are required to meet government-assigned GHG emission intensity targets. These entities included in the notifications are those that have submitted their baseline GHG emission  intensity and production data to the Bureau of Energy Efficiency (BEE), based on which targets  have been notified. These entities are further classified across multiple sectors and sub-sectors,  reflecting the diversity of industrial processes covered under the scheme.  

The largest concentration of entities is in the cement sector (186 entities), spanning sub-sectors  such as Portland Pozzolana Cement, Ordinary Portland Cement, grinding, clinkerization, and white  cement. This is followed by the textile sector (173 entities) across spinning, processing, fibre, and  composite units, and the pulp and paper sector (53 entities) covering integrated, RCF-based, agro 

based, and specialty paper plants. Other sectors include chlor-alkali (30 entities), petroleum  refineries (21), aluminium (16), including smelters, refineries, and the newly added secondary  aluminium sub-sector and petrochemical units (11). This sector- and sub-sector-level breakdown  highlights a data-driven and progressively expanding compliance framework under the Indian  Carbon Market. 

The blog explores emission reduction potential across key industries and explains how emission  intensity targets drive carbon credit demand. It highlights why investing in high-quality carbon  removal solutions, such as afforestation and reforestation, can be a cost-effective way for industries  to meet compliance obligations while supporting long-term climate action.

Figure 1 % of entities by sector (left) and distribution of entities across sub-sectors within each sector (right)

How is GEI targets related with Indian Carbon Market? 

The GEI targets sit at the core of Indias compliance carbon market. The Carbon Credit Trading  Scheme (CCTS) provides the legal basis by setting emission targets for industries and allowing  carbon credits to be traded when these targets are not met. The Bureau of Energy Efficiencys  compliance procedure is then responsible for setting out how baselines are verified, targets  notified, and Carbon Credit Certificates (CCC) issued, banked and traded on the ICM registry,  making the GEI targets the operational for CCC supply and demand. 

Figure 2 Working of compliance mechanism 

These targets convert intensity benchmarks into measurable CCC demand (for entities who miss  targets) or supply (for outperformers), creating market that can be met partly by investing in  high-quality removals such as ARR projects or by internal abatement. 

What the Emission Intensity Targets Tell Us? 

Under the Carbon Credit Trading Scheme (CCTS), emission intensity targets are determined using  a reference year or baseline year in which industries report their ghg emissions per unit of output.  The assessment covers emissions arising directly from industrial operations, emissions linked to  purchased energy, and process-related emissions occurring within the defined gate-to-gate  boundary of the facility. As per the Detailed Procedure for Compliance Mechanism under CCTS by BEE, for calculating ghg emission, certain emission sources, such as those from biomass use,  renewable energy, approved waste co-processing, carbon capture and utilisation, and non 

operational activities are excluded, as they either do not contribute to net greenhouse gas emissions  or fall outside the scope of production-related performance. Only entities that have submitted  verified baseline emission and production data are assigned emission intensity targets, and the  notification reflects this list of reporting industries.

Figure 3 Sector-wise share of baseline GHG emissions (202324) 

The GEI targets submitted by the obligated entities across 7 industrial sectors provide a clear  picture of the baseline ghg emissions for the year 202324. This shows that the baseline emissions  are highly concentrated in a few energy and process-intensive sectors, with cement accounting for  the largest share, followed by petroleum refining and aluminium. Although sectors such as textiles  and pulp & paper include a larger number of entities, their contribution to total baseline emissions  is relatively smaller. This highlights where emission reduction efforts can deliver the greatest  impact and explains why these high-emitting sectors are central to compliance requirements. 

Figure 4 Total emission reduction targets for 2026 and 2027 across identified sectors and sub-sectors 

The above figure compares the sum of emission reduction targets for 2026 (blue graph) and 2027  (green graph) across key sectors and their sub-sectors. It shows that emission reduction  requirements vary significantly by sector and change from one year to the next. Sub-sectors such  as Portland Pozzolana Cement, petroleum refining, and parts of the textile and aluminium value  chains carry larger reduction targets, indicating higher compliance pressure.

Figure 5 Sector specific contribution towards emission savings for year 2026 and 2027 

The figure shows how different sectors contribute to the total emission reduction targets in 2026  and 2027. In 2026, cement and aluminium account for a larger share of the reduction effort, while  petroleum refining, petrochemicals, and chlor-alkali contribute less. In 2027, this shifts sharply,  with aluminium and petroleum refining taking on a much larger share, while cement, textiles, and  pulp & paper contribute less than in the previous year. This implies that sectors with a higher share  of the emission reduction target are likely to face greater compliance pressure and may need to  purchase more carbon credits if they cannot reduce emissions internally.  

To understand this more clearly, the figures below show how different sub-sectors within each  sector contribute to emission reductions. This highlights which specific sub-sectors are driving the  overall reduction targets and where the compliance pressure is concentrated within each sector. It  is calculated based on the difference in GEI targets between the years, while keeping production  constant. 

Aluminum Sub-Sectors % contribution 2026 (left) and 2027 (right)

Cement Sub-Sectors % contribution 2026 (left) and 2027 (right) 

Pulp and Paper Sub-Sectors % contribution 2026 (left) and 2027 (right) 

Textile Sub-Sectors % contribution 2026 (left) and 2027 (right) 

In aluminium, smelters account for most of the emission reductions in both years, with their role  increasing in 2027, while refineries and secondary aluminium contribute much less. In cement,  Portland Pozzolana Cement leads the reduction effort, especially in 2027, while other cement sub sectors play a smaller role. In pulp and paper, RCF-based plants drive most of the reductions in  2027, whereas integrated plants contribute less than in 2026. In textiles, emission reductions are  more evenly shared, with fibre and composite units contributing the most in both years. Some sub sectors show very small or offsetting percentage contributions in 2027. This does not mean  emissions are increasing. It simply indicates that these sub-sectors are expected to reduce less  compared to others, as the overall reduction effort is concentrated in a few key sub-sectors.

Additionally, it can be noted that some sub-sectors show zero or very small GEI targets, likely  because baseline data is still being finalised or they are in an early or preparatory phase of  compliance while MRV systems are being aligned. 

Way Forward 

As Indias compliance carbon market takes shape, industries will need a balanced strategy that  combines internal emission reductions with credible external solutions to meet tightening GEI  targets. Improving energy efficiency, adopting cleaner technologies, and strengthening  monitoring and reporting systems will be essential first steps. However, for many hard-to-abate  sectors, meeting targets solely through operational changes may be challenging, making high quality carbon credits an important part of the compliance pathway. So, in order to comply all the  listed entities should monitor and report GHG emissions annually, submit verified performance  reports, and either receive or surrender carbon credit certificates based on their compliance with  emission intensity targets. 

This compliance structure under the CCTS strengthens transparency and accountability within  Indias carbon market. The analysis of emission savings across industrial sub-sectors shows clear  differences in preparedness and ambition, reflecting how industries are responding to the new  framework.  

At Grow-Trees.com, we help industries manage residual emissions by enabling investments in  credible afforestation, reforestation, and restoration (ARR) projects, offering a practical and  climate-positive pathway to support compliance and long-term sustainability goals.