The Iron and Steel CCTS Draft Notification – What 255 Steel Plants Must Know
Introduction: A New Era for India's Steel Sector
India's steel sector is at a crossroads. On June 26, 2026, the Ministry of Environment, Forest and Climate Change (MoEFCC) issued a draft notification proposing to bring the iron and steel sector under mandatory greenhouse gas (GHG) emission intensity targets under the Carbon Credit Trading Scheme (CCTS).
This is not a minor update. It is a fundamental expansion of India's carbon market. The iron and steel sector accounts for an estimated 10-12% of India's total greenhouse gas emissions and is the country's largest industrial emitter. Bringing this sector under the CCTS transforms the scheme from a policy framework into a working compliance market for hard-to-abate industries.
The draft notification dated June 26, 2026, refers to plant-specific GHG emission intensity targets under the Environment (Protection) Act, 1986 and has been issued for 255 major plants for public comments for 60 days before the rules are finalised. This marks the first time the world's second-largest steel producer has been formally brought into a carbon market.
This guide provides a comprehensive analysis of the CCTS expansion to iron and steel, explaining what the draft notification means, who is affected, what the targets are, and what steel producers must do to prepare.
India's Steel Sector: The Scale of the Challenge
The Numbers
India is the world's second-largest steel producer, with an approximate crude steel production of 151 million tonnes in FY 2024-25. The country is looking to expand its steel capacity, driven by infrastructure and development needs.
| Metric | Value |
|---|---|
| Global Ranking | Second-largest steel producer |
| Crude Steel Production (FY 2024-25) | 151 million tonnes |
| Share of India's CO₂ Emissions | 10-12% |
| Combined Baseline Emissions (255 units) | 358.6 million tonnes CO₂e |
The Challenge of Decarbonisation
As the world's second-largest steel producer, the choices made today will shape the sector's emissions trajectory for decades to come. The sector faces significant challenges in reducing emissions while maintaining production growth.
The steel sector is among the country's largest industrial emitters, making its inclusion a significant step in operationalising the domestic carbon market.
The Global Context
India's steel sector is not alone in facing carbon constraints. The European Union's Carbon Border Adjustment Mechanism (CBAM) is already affecting Indian steel exports, and global buyers are increasingly demanding lower-carbon steel.
The Draft Notification: Key Provisions and Timeline
The Legal Basis
The draft notification has been issued under Sections 3, 6 and 25 of the Environment (Protection) Act, 1986. It proposes amendments to the Greenhouse Gases Emission Intensity Target Rules, 2025, introducing a new schedule that sets plant-wise GHG emission intensity targets for iron and steel manufacturers.
Key Provisions
| Provision | Details |
|---|---|
| Number of Units | 255 iron and steel units |
| Combined Baseline Emissions | 358.6 million tonnes of CO₂ equivalent (MtCO₂e) |
| Baseline Year | 2023-24 |
| Compliance Year | 2026-27 |
| Unit of Measurement | Tonnes of carbon dioxide equivalent (tCO₂e) per tonne of equivalent product |
| Public Comment Period | 60 days from publication in the Official Gazette |
| Issuance | The draft notification dated 26 June 2026 |
The Timeline
| Date | Event |
|---|---|
| June 23, 2025 | First draft targets for iron and steel released |
| January 2026 | Final targets for other sectors notified (excluding iron and steel) |
| June 26, 2026 | Revised draft notification issued |
| July 2, 2026 | Draft made publicly available |
| 60 days from publication | Public comment period |
| 2026-27 | Compliance year |
The Significance of the Delay
The June 2026 notification is the second attempt at issuing compliance targets for the sector. The delay has resulted in skipping the first compliance year of FY 2025-26 in its entirety, although the targets for FY 2026-27 see limited change from the previous draft.
Parth Kumar of the Centre for Science and Environment's Sustainable Industrialisation Unit noted that "the revised draft targets are slightly delayed but an important step in operationalising CCTS for the steel sector."
The 255 Units Covered: Who Is Affected?
Major Integrated Steel Producers
The draft notification covers some of India's largest producers:
| Company | Location |
|---|---|
| Tata Steel | Jharkhand |
| JSW Steel | Karnataka |
| Steel Authority of India Ltd. (SAIL) | Multiple locations |
| ArcelorMittal Nippon Steel India | Multiple locations |
| Jindal Steel and Power | Chhattisgarh |
| Rashtriya Ispat Nigam Ltd. (RINL) | Andhra Pradesh |
Diverse Production Routes
The notification also covers 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.
What This Means
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 receive Carbon Credit Certificates, while those failing to meet their prescribed limits may be required to purchase carbon credits from the domestic market.
Emission Intensity Targets: The Numbers You Need
The Target Range
The required reduction in emission intensity ranges from 2.1% to 9.3% across various types of steel entities, with a median target of around 5.5%.
The Benchmarking Approach
Consistent with the benchmarking approach, plants with higher baseline emission intensities (above 3 tCO₂e per tonne of equivalent product) have been assigned steeper percentage reductions than relatively efficient plants.
| Production Type | Target Reduction |
|---|---|
| High-emission plants (>3 tCO₂e/t) | Steeper reductions |
| Efficient plants (<3 tCO₂e/t) | Moderate reductions |
| Overall range | 2.1% – 9.3% |
| Median target | ~5.5% |
The 75 Plants with 2.2 tCO₂e or Lower
Among the obligated entities, 75 sites have been assigned emission intensity targets of 2.2 tCO₂e or lower per tonne of equivalent product. Together, these sites produced 39.97 Mt in FY 2023-24, accounting for 26.88 per cent of the total production covered under the mechanism.
While this is numerically comparable to the threshold under India's Green Steel Taxonomy, direct comparison needs detailed assessment of each unit's operational nature.
The Steel Sector's Emissions Intensity Problem
India's Emissions Intensity Gap
As of 2023-24, the average emission intensity per tonne of crude steel produced in India was 2.54 tonnes of CO₂, while the global average emission intensity per tonne of crude steel stands at 1.9 tonnes of CO₂.
| Metric | India | Global Average |
|---|---|---|
| Emission Intensity (tCO₂/t crude steel) | 2.54 | 1.91 |
This gap represents both a challenge and an opportunity for improvement.
The National Target
India has set a national goal of 2.2 tonnes of CO₂ per tonne of crude steel by 2030. The CCTS targets for the steel sector are designed to contribute to this larger goal.
The CBAM Exposure
Vinod Gupta, Senior Member of FICCI's Steel Committee and Executive Director (Commercial) at SAIL, highlighted the sector's predicament: "CBAM could add a 20 to 35% tax burden on Indian steel exports to the EU."
Why Steel? The Sector's Emissions Profile
The Scale of the Challenge
The steel sector is among the country's largest industrial emitters, making its inclusion a significant step in operationalising the domestic carbon market.
Why the Sector Was Prioritized
| Reason | Explanation |
|---|---|
| High Emissions Intensity | Steel is one of the most carbon-intensive industrial products |
| Scale of Production | India is the world's second-largest steel producer |
| Export Exposure | Steel exports to Europe face increasing CBAM pressure |
| Abatement Potential | While hard-to-abate, there are proven technologies to reduce emissions |
| National Steel Policy | Supports India's goal of 2.2 tCO₂ per tonne of crude steel by 2030 |
The Hard-to-Abate Reality
Steel is considered a "hard-to-abate" sector because:
- The chemistry of ironmaking (reduction of iron ore using carbon) inherently produces CO₂
- High-temperature processes require significant energy
- Capital-intensive nature makes technology transitions slow
The Revisions: What Changed from the Previous Draft?
The First Draft (June 2025)
The first draft targets for the iron and steel sector were released on June 23, 2025, alongside draft targets for secondary aluminium, petroleum refinery, petrochemicals, and textile sectors. Targets for these industries were notified in January 2026, excluding the iron and steel sector from final notification then.
The Revised Draft (June 2026)
The June 2026 notification introduces both structural and numerical revisions in the emission intensity targets.
| Change | Details |
|---|---|
| Recalibration | Nearly half of the covered steel units have revised baseline emissions |
| Compliance Year | First compliance year (2025-26) skipped |
| 2026-27 Targets | Limited change from previous draft |
The Missing Explanation
The ministry has issued the revised draft without detailed explanation for the fresh draft. This lack of transparency has been noted by industry observers and stakeholders.
The Structural Issue
In contrast to the cement and other sectors, where facilities are categorised based on their production processes, the steel notification does not classify sites by sub-sector or process type.
The Public Consultation Period
The 60-Day Window
The draft notification has been issued for 60 days of public comments before the rules are finalised. The notification states that "it is hereby notified that the said notification shall be taken into consideration after the expiry of a period of sixty days from the date on which copies of the Official Gazette containing this draft notification are made available to the public."
How to Participate
Stakeholders can submit their comments and suggestions to the Ministry of Environment, Forest and Climate Change during the 60-day consultation period.
What This Means for Steel Producers
The consultation period is an opportunity for steel producers to:
- Understand the proposed targets
- Assess their compliance position
- Submit feedback on the targets
- Prepare for final notification
Compliance Pathways for Steel Producers
Pathway 1: In-House Reduction
Steel producers have several levers to reduce emission intensity:
| Lever | Description | Potential Impact |
|---|---|---|
| Energy efficiency | Optimising furnace operations | Moderate |
| Waste heat recovery | Capturing and reusing waste heat | Moderate |
| Scrap ratio | Increasing scrap usage | Significant |
| Fuel switching | Moving from coal to natural gas or biomass | Moderate |
| Digital MRV | Enhanced monitoring and optimisation | Moderate |
| DRI process optimization | Efficiency improvements | Moderate |
Parth Kumar of CSE noted that "the initial targets are likely to drive improvements through energy efficiency and other relatively low-cost operational measures. The real test will be whether future compliance cycles begin to influence long-term investment decisions and accelerate the adoption of low-carbon technologies that bring about a deeper, structural shift in the sector's emissions trajectory."
Pathway 2: Credit Procurement
Entities that fall short of their targets may be required to purchase Carbon Credit Certificates from the domestic market. This creates a financial incentive to reduce emissions while providing a compliance pathway for those that cannot achieve the required reductions in the short term.
The Economic Logic
If the target is tighter than the 2023-24 baseline, a steel producer may need to buy credits or invest in efficiency. If it beats the target, it can generate Carbon Credit Certificates with monetary value. That is the direct link between compliance and operating margin.
The CBAM Connection: Export Competitiveness at Stake
The CBAM Reality
The Carbon Border Adjustment Mechanism (CBAM) is the European Union's carbon tariff on imports. It came into effect on January 1, 2026, placing a carbon price on emissions from carbon-intensive products including steel.
The Numbers Are Stark
India's steel and aluminium exports to the European Union fell 24.4% in FY 2025, with steel alone down 35.1% — before any CBAM financial obligation had taken effect.
| Metric | Value |
|---|---|
| Combined steel and aluminium exports decline | 24.4% |
| Steel exports decline | 35.1% |
| Combined export value (FY2024) | $7.71 billion |
| Combined export value (FY2025) | $5.82 billion |
The CBAM Tax Burden
Vinod Gupta of SAIL highlighted that "CBAM could add a 20 to 35% tax burden on Indian steel exports to the EU."
The CBAM Cost Projection
The agency projects CBAM-related costs could erode Indian steel exporters' profits by USD 60–160 per tonne between 2026 and 2034, depending on carbon price trajectories and the pace of free allowance withdrawal under the EU-ETS.
Why This Matters
The decline, which suggests European buyers are already reorienting toward lower-emission producers, underscores what is at stake as India's CCTS enters its operational phase.
The Lack of Sub-Classification: A Critical Gap
The Problem
In contrast to the cement and other sectors, where facilities are categorised based on their production processes (such as integrated plants, grinding units and blending units), the steel notification does not classify sites by sub-sector or process type, making it difficult to understand the operational characteristics of the obligated sites.
The Diversity of Steel Production
The steel sector has a diverse value chain ranging from upstream ironmaking and sponge iron production to downstream steelmaking, rolling and finishing operations. Different production routes have vastly different emission profiles:
| Production Route | Description | Emission Intensity |
|---|---|---|
| Blast Furnace (BF) | Traditional coal-based route | High |
| Direct Reduced Iron (DRI) | Gas-based or coal-based | Medium-High |
| Electric Arc Furnace (EAF) | Scrap-based | Lower |
| Induction Furnace (IF) | Scrap-based, coal-dependent | Variable |
The Call for Classification
In a sector with such diversity, sub-classification of units becomes essential. Without it, it is difficult to assess whether the targets are appropriate for different production routes.
The Shifting Technology Mix
Since 2019-20, the share of the more emission-intensive IF route (dependent on coal-based DRI) has increased, while the EAF route has declined. At the same time, over 90% of planned steelmaking capacity in India is relying on coal. This trend has significant implications for the sector's future emissions trajectory.
The Future of Steel Decarbonisation in India
The Initial Phase
The initial targets are likely to drive improvements through energy efficiency and other relatively low-cost operational measures.
The Long-Term Challenge
The real test will be whether future compliance cycles begin to influence long-term investment decisions and accelerate the adoption of low-carbon technologies that bring about a deeper, structural shift in the sector's emissions trajectory.
The Technology Pathways
| Technology | Description | Status |
|---|---|---|
| Hydrogen-based DRI | Using green hydrogen instead of coal | Emerging |
| Carbon Capture, Utilisation and Storage (CCUS) | Capturing CO₂ emissions | Pilot stage |
| Scrap-based EAF | Using recycled scrap | Mature |
| Blast furnace efficiency | Optimising existing BF-BOF route | Mature |
The Global Context
India is not alone in facing the challenge of steel decarbonisation. Steel producers worldwide are under pressure to reduce emissions. The choices made today will shape the sector's emissions trajectory for decades to come.
How Carboned.in Can Help
At Carboned.in, we help steel producers navigate the CCTS expansion with clarity and confidence.
Our Services
| Service | What We Do |
|---|---|
| Compliance Assessment | Understand your obligations and assess your position |
| Gap Analysis | Calculate your shortfall and develop a mitigation strategy |
| Emission Reduction Planning | Identify cost-effective reduction opportunities |
| Credit Procurement | Help you buy CCCs at the best price |
| CBAM Readiness | Assess your exposure and develop a mitigation strategy |
| Legal Documentation | Draft watertight agreements and handle regulatory filings |
| Public Consultation Support | Help you prepare and submit comments during the 60-day consultation period |
Why Choose Carboned.in?
| Reason | Why It Matters |
|---|---|
| Legal Expertise | Led by Siddharth Gupta, Advocate, Calcutta High Court |
| Regulatory Knowledge | Deep understanding of CCTS, MoEFCC, and CBAM |
| Sector Experience | Knowledge of the steel sector's unique challenges |
| End-to-End Support | From assessment to compliance |
Your first consultation is completely free. No obligation. Just honest advice.
Conclusion
The CCTS expansion to iron and steel is a significant milestone in India's carbon market development. With 255 units covered and combined baseline emissions of 358.6 MtCO₂e, this is the largest sectoral expansion to date.
Key Takeaways
| Aspect | What You Need to Know |
|---|---|
| Coverage | 255 iron and steel units |
| Baseline | FY 2023-24 |
| Compliance Year | 2026-27 |
| Target Range | 2.1% – 9.3% (median ~5.5%) |
| Combined Emissions | 358.6 MtCO₂e |
| CBAM Context | Steel exports to EU down 35.1% in FY 2025 |
| Public Comment | 60 days from publication |
| India's Emission Intensity | 2.54 tCO₂/t (global: 1.91 tCO₂/t) |
The Choice Is Yours
| Option | Outcome |
|---|---|
| Act now | Assess your position, reduce emissions, earn credits, maintain export competitiveness |
| Wait and see | Face penalties, higher costs, lost market access, reputational damage |
How Carboned.in Can Help
At Carboned.in, we help steel producers navigate the CCTS expansion with clarity and confidence.
- Compliance Assessment: Understand your obligations
- Gap Analysis: Calculate your shortfall
- Emission Reduction Planning: Identify cost-effective opportunities
- Credit Procurement: Buy CCCs at the best price
- CBAM Readiness: Protect your export competitiveness
Your first consultation is completely free. No obligation. Just honest advice.
How Carboned.in can help
Our team covers every dimension of India's carbon market — pick the service that matches where you are.
Frequently Asked Questions
When was the draft notification for iron and steel issued?+
June 26, 2026.
How many iron and steel units are covered?+
255 units.
What is the baseline year?+
2023-24.
What is the compliance year?+
2026-27.
What is the required reduction range?+
2.1% to 9.3%, with a median target of around 5.5%.
What is the combined baseline emissions of the covered units?+
358.6 million tonnes of CO₂ equivalent (MtCO₂e).
Who are the major companies covered?+
Tata Steel, JSW Steel, SAIL, ArcelorMittal Nippon Steel India, Jindal Steel and Power.
What is the CBAM connection?+
Steel exports to the EU fell 35.1% in FY 2025 before CBAM even imposed financial obligations.
How can steel producers avoid penalties?+
Meet targets through in-house reduction or purchase CCCs.
What is India's steel emission intensity?+
2.54 tonnes of CO₂ per tonne of crude steel, compared to the global average of 1.91 tonnes.
How can Carboned.in help?+
We provide compliance assessment, gap analysis, credit procurement, and CBAM readiness support.
Siddharth Gupta is the founder of Carboned.in and specialist counsel for India's carbon compliance framework — advising obligated entities, project developers, and buyers on CCTS, CR-I registration, and credit transactions.
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