Abstract
This white paper analyses the carbon emissions baseline for 80 major industrial units across 18 Indian states for the fiscal year 2023-24. We examine total output (103.43 million tonnes) and greenhouse gas (GHG) emission intensities across key sectors transitioning to the Carbon Credit Trading Scheme (CCTS). The analysis reveals that Rajasthan dominates production volume, while Odisha exhibits the highest carbon intensity due to its heavy industrial base. Sector-wise, the Aluminium sector shows significantly higher emission intensity compared to the Cement and Paper sectors, highlighting critical priorities for decarbonization and policy intervention.
1. Introduction and Policy Context
Related Reading:
India’s Carbon Market Policy Framework — provides policy background to the emissions analysis presented in this report.
https://leap-insights.org/2025/05/05/indias-carbon-market-policy-framework/
India’s commitment to achieving net-zero emissions by 2070 has accelerated the implementation of market-based mechanisms for carbon reduction. This report analyses baseline data within the context of two critical regulatory frameworks:
1.1 Perform, Achieve and Trade (PAT) Scheme
The PAT scheme, a flagship programme of the Bureau of Energy Efficiency (BEE), mandates specific energy-consumption reductions for “Designated Consumers” in energy-intensive industries. The firms analysed in this report—spanning Aluminium, Cement, Chlor-Alkali, and Pulp & Paper—have historically been regulated under PAT cycles to enhance energy efficiency.
1.2 Transition to the Carbon Credit Trading Scheme (CCTS)
The Energy Conservation (Amendment) Act, 2022, paved the way for the Indian Carbon Market (ICM). This report aligns its analysis with the Greenhouse Gas Emission Intensity Target Rules, 2025, notified on 8 October 2025 (G.S.R. 739(E)).
Under the CCTS, designated consumers transition from energy-savings targets to GHG emission-intensity targets (tCO₂e per unit of output). A critical regulatory detail from the circular is the methodology for the first compliance year:
- Pro-rata targets (2025-26): Targets for FY 2025-26 are calculated on a pro-rata basis for the seven months from September 2025 to March 2026.
- Banked Certificates: Obligated entities may “bank” surplus carbon-credit certificates for future compliance or trade them within the ICM.
This analysis utilises official government baseline data (2023-24) to assess sectoral and regional preparedness for the transition.
2. Sectoral Analysis
The dataset identifies four primary sectors based on registration prefixes: Aluminium (ALM), Cement (CMT), Chlor-Alkali (CNA), and Pulp & Paper (PNP).
2.1 Production Scale by Sector
The Cement sector is the largest contributor to total output volume, driven by nationwide infrastructure demand.
2.2 Emission Intensity Benchmarks
Emission intensity varies substantially by industrial process. Aluminium smelting is an electrolytic process requiring immense energy, resulting in the highest carbon footprint per unit of output.
Key Insight: The Aluminium sector has an average intensity of 10.80 tCO₂e/tonne—over four times higher than the Chlor-Alkali sector (1.50) and significantly higher than Cement (0.51). This disparity underscores the need for sector-specific benchmarks under the CCTS.
3. Geographic Distribution Analysis
3.1 Industrial Density
Gujarat leads with 14 industrial units, placing it at the centre of industrial monitoring and carbon-market activity.
3.2 Total Output Concentration
Total output correlates with the presence of large integrated plants. Rajasthan accounts for 23.89 million tonnes of production, representing a significant portion of the national baseline.
3.3 Emission Intensity Heatmap
Variation in emission intensity across regions is driven primarily by the sectoral composition of each state.
3.4 Regional Intensity Variations
The intensity mapping shows that while states such as Rajasthan have high production, their average intensity is moderated by the dominance of the Cement sector (which has relatively low per-unit emissions). Conversely, Odisha has the highest state-wide average intensity (8.75), driven by the concentration of energy-intensive Aluminium smelters in the region.
4. Conclusion
The transition to the CCTS represents a paradigm shift for the Indian industry. Key findings include:
Pro-rata Compliance Urgency: For FY 2025-26, the seven-month compliance period (September–March) necessitates timely data verification and internal alignment by obligated entities.
Sectoral differentiation is crucial: As confirmed by the official circular, a uniform carbon target is untenable. The large disparity between Aluminium (10.80) and Cement (0.51) intensities validates the need for sector-specific benchmarks established in the 2025 Rules.
Regulatory Precision: The transition from draft rules (April 2025) to final notification (October 2025) involved notable baseline revisions for major integrated plants. These revised baselines should underpin all corporate compliance planning.
References
1. Ministry of Environment, Forest and Climate Change (2025). Greenhouse Gas Emission Intensity Target Rules, 2025. Gazette Notification G.S.R. 739(E), New Delhi, 8th October 2025.
2. Bureau of Energy Efficiency, Ministry of Power. Carbon Credit Trading Scheme (CCTS) Framework.
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