India's iron and steel sector enters CCTS compliance: what the new emission targets mean for decarbonization

India has notified draft emission intensity targets for 255 iron and steel units under its Carbon Credit Trading Scheme (CCTS), bringing the world's second largest steel producer into the carbon market starting FY 2026-27. The required reduction in emission intensity ranges from 2.1% to 9.3% across different plants, with a median target around 5.5%. These targets apply to units with a combined baseline of 358.6 million tonnes of CO2 equivalent, making steel the largest sector covered under India's ETS. The notification revises earlier draft targets from June 2025, updating baselines for nearly half the units and adjusting compliance levels. While the initial targets may drive efficiency improvements, the article highlights a deeper concern: India's steel capacity pipeline remains heavily tilted toward coal based production routes, with over two thirds of proposed new capacity using blast furnaces. This risks locking the sector into fossil fuel dependence for decades. The real test for the CCTS will be whether future compliance cycles shift long term investment decisions toward low carbon technologies. Without structural changes in the production mix, the scheme's impact on India's steel sector emissions may remain limited to incremental efficiency gains.