Centre Proposes Mandatory Carbon Emission Targets for Iron and Steel Sector

The Central Government has proposed to expand India's compliance-based carbon market by bringing the iron and steel sector under mandatory greenhouse gas (GHG) emission intensity targets, marking another major step in the implementation of the Carbon Credit Trading Scheme (CCTS), 2023.

The Ministry of Environment, Forest and Climate Change (MoEFCC) has issued a draft notification proposing amendments to the Greenhouse Gases Emission Intensity Target Rules, 2025. The draft, published on June 26, 2026, introduces a new Third Schedule that sets plant-wise GHG emission intensity targets for iron and steel manufacturers for the compliance years 2025-26 and 2026-27.

The proposed amendment has been issued under Sections 3, 6 and 25 of the Environment (Protection) Act, 1986. The ministry has invited objections and suggestions from stakeholders within 60 days of the notification's publication in the Official Gazette before finalising the rules.

The move builds on the Carbon Credit Trading Scheme, 2023, which provides a framework for India's domestic carbon market. Under the scheme, emission intensity targets had already been notified for eight sectors, including aluminium, cement, chlor-alkali, pulp and paper, petroleum refinery, petrochemicals and textiles. The latest proposal expands the compliance mechanism to the country's energy-intensive iron and steel sector.

Under the draft rules, more than 200 iron and steel manufacturing units across the country have been assigned baseline emission intensity values for 2023-24 along with mandatory reduction targets for the compliance years 2025-26 and 2026-27. The targets are expressed as tonnes of carbon dioxide equivalent (tCO₂e) per tonne of equivalent product and are intended to improve energy efficiency while reducing greenhouse gas emissions.

Major integrated steel producers covered under the proposal include ArcelorMittal Nippon Steel India, Tata Steel, JSW Steel, Steel Authority of India Ltd. (SAIL), Rashtriya Ispat Nigam Ltd. (RINL), Jindal Steel & Power, Shyam Metalics, Godawari Power & Ispat and several other public and private sector manufacturers. Numerous sponge iron, alloy steel and secondary steel producers across states such as Odisha, Chhattisgarh, Karnataka, Jharkhand, West Bengal, Andhra Pradesh, Gujarat, Maharashtra, Tamil Nadu and Telangana have also been included.

Each obligated entity has been assigned a baseline emission intensity based on its 2023-24 performance and corresponding emission intensity targets that must be achieved during the compliance years. Companies that outperform their targets will be eligible to generate carbon credit certificates, while entities failing to meet their prescribed limits may be required to purchase carbon credits under the compliance mechanism.

The ministry said that the proposal forms part of India's broader strategy to decarbonise hard-to-abate industrial sectors while strengthening the country's carbon market framework. The compliance-based mechanism is expected to encourage investments in cleaner technologies, improve industrial energy efficiency and support India's long-term climate commitments.