Environment Ministry Revises Carbon Emission Targets For Refineries, Textile Units

New Delhi, Nov 4 (KNN) The Environment Ministry has revised greenhouse gas emission intensity (GEI) targets for petroleum refineries and textile units under India's carbon market framework, modifying baseline emission figures for several facilities and removing the 2025-26 compliance year.

The ministry amended the notification on September 22, replacing baseline emission figures for several refineries and revising the associated reduction targets compared with the original notification issued in January, reported The Indian Express.

The changes affect compliance requirements under the Carbon Credits Trading Scheme (CCTS), which uses emissions benchmarks to determine whether industrial units qualify for carbon credit certificates or face financial penalties.

GEI measures greenhouse gas emissions per unit of output and is expressed in tonnes of carbon dioxide equivalent, allowing emissions performance to be assessed against production levels.

Revised targets cover 21 refineries and 173 textile units

In the petroleum refining segment, the revised baseline figures affect at least seven Indian Oil Corporation refineries located in Digboi, Gujarat, Guwahati, Haldia, Mathura, Panipat and Paradeep.

The amended notification covers 21 refineries operated by companies including Reliance Industries, Indian Oil Corporation, Bharat Petroleum Corporation, Chennai Petroleum Corporation, Hindustan Petroleum Corporation, Mangalore Refinery and Petrochemicals, Nayara Energy and Numaligarh Refineries.

In the textile sector, the revised framework covers 173 units across three sub-sectors.

Another key change is the retention of only the 2026-27 compliance year, with the earlier 2025-26 targets removed. The report suggested that the omission could be linked to the conclusion of the earlier compliance period, although the notification did not provide a detailed explanation.

Carbon Credits Trading Scheme links targets to financial incentives

Launched in 2023, the Carbon Credits Trading Scheme seeks to establish a market-based mechanism to reduce industrial emissions and support India's climate objectives.

Under the framework, obligated industrial entities are assigned GEI targets based on their emissions per unit of production. Units that meet or outperform their benchmarks can earn carbon credit certificates, which may be traded with entities that fall short of their obligations.

Companies failing to meet their targets are liable to pay compensation equivalent to twice the average traded price of carbon credits, providing a financial incentive to improve emissions performance.

The framework currently covers aluminium, cement, chlor-alkali, pulp and paper, petroleum refineries and textiles. A revised draft for the iron and steel sector remains under consideration.

Industry flags need for policy predictability

The revisions have also raised questions about the need for stable compliance timelines and predictable emission benchmarks, particularly for energy-intensive industries that require significant capital investment and technological changes to reduce emissions.

Parth Kumar, Programme Manager in the Sustainable Industrialisation Unit at the Centre for Science and Environment, told The Indian Express that updating emission data was necessary to improve accuracy, but frequent changes could create uncertainty for companies and the carbon market.

He said predictable timelines and stable targets were important for businesses to plan investments and achieve the required emission reductions.

Changes in baselines and compliance schedules can also affect the assessment of carbon credit values and investment decisions, particularly where companies are considering long-term expenditure on cleaner technologies.

Balancing industrial growth with climate commitments

The latest amendment reflects the continuing evolution of India's domestic carbon market framework, which is being extended across industrial sectors with varying production processes and emissions profiles.

For policymakers, the challenge is to ensure that the system remains credible in driving emissions reductions while allowing adjustments based on updated data.

For industry, the predictability of targets and compliance timelines will be important in determining investment plans, technology adoption and the cost of meeting emissions obligations.

(KNN Bureau)