Carbon Accounting for Manufacturing Companies in India

Manufacturing is the backbone of India's economy, but it's also a significant source of greenhouse gas emissions. With regulations like BRSR (Business Responsibility and Sustainability Reporting) and CCTS (Carbon Credit Trading Scheme) reshaping the compliance landscape, Indian manufacturers must now understand their carbon footprint with precision and transparency.

This guide walks you through the emissions landscape, regulatory requirements, and practical steps to implement robust carbon accounting in your manufacturing operations.

Manufacturing Emissions Landscape in India

India's manufacturing sector is heavily reliant on fossil fuels, making Scope 1 emissions (direct emissions from owned or controlled sources) the dominant emissions category for most facilities.

Why Scope 1 Dominates in Indian Manufacturing

Scope 1 emissions typically account for 60-80% of a manufacturer's total carbon footprint. This reflects India's energy infrastructure, where coal and diesel remain primary fuel sources for industrial operations. Process heat generation, boiler combustion, and on-site power generation through diesel gensets are the primary culprits.

Most Indian manufacturing facilities operate their own power generation infrastructure rather than relying solely on the grid. This adds significant Scope 1 emissions that manufacturers in developed nations often avoid by purchasing grid electricity.

The Role of On-Site Power Generation

Diesel gensets are ubiquitous in Indian manufacturing facilities due to frequent grid outages and unreliable power supply. A typical medium-sized manufacturing plant may operate gensets for 4-8 hours daily, generating substantial direct emissions. Understanding genset fuel consumption and operating hours is critical for accurate Scope 1 accounting.

Key Emission Sources for Indian Manufacturers

Coal and Biomass Combustion

Coal combustion in boilers and furnaces is the largest single source of emissions for many Indian manufacturers. Whether for steam generation, thermal processing, or space heating, coal remains cheaper than cleaner alternatives, driving continued reliance.

Biomass combustion (wood, agricultural waste, bagasse) is also common in certain sectors like sugar, pulp and paper, and food processing. While biomass is renewable, the combustion process still generates CO2 emissions that must be reported and tracked.

Industrial Process Emissions

Beyond fuel combustion, manufacturing processes themselves release emissions. These include:

• Cement production (clinker calcination)
• Steel manufacturing (blast furnace operations)
• Chemical processing (solvent use, chemical reactions)
• Fertilizer production

These process emissions are often overlooked but can represent 20-40% of total Scope 1 emissions in heavy industries.

Refrigerants and Fugitive Emissions

Leakage from air conditioning systems, refrigeration units, and industrial cooling equipment releases high-GWP (Global Warming Potential) gases. A single kilogram of some refrigerants can have the warming potential of several tons of CO2 equivalent. Regular maintenance audits are essential to detect and plug leaks.

BRSR Requirements for Indian Manufacturers

BRSR (Business Responsibility and Sustainability Reporting) mandates carbon accounting for listed companies and large corporates in India. From 2026 onwards, stricter disclosure requirements are in force.

What You Must Disclose

BRSR requires manufacturers to report:

• Scope 1 emissions: Direct emissions from owned or controlled sources
• Scope 2 emissions: Indirect emissions from purchased electricity
• Scope 3 emissions: Upstream and downstream value chain emissions (for large entities)
• Energy consumption: Total fuel use by type, electricity purchased
• Emission reduction targets: Science-based or company-defined targets with timelines
• Verification status: Third-party assurance of emissions data

Your BRSR report must follow the GHG Protocol Corporate Standard and report data in metric tons of CO2 equivalent (tCO2e).

Verification and Assurance

BRSR disclosures are increasingly subject to third-party verification. This requires your carbon accounting methodology to be documented, auditable, and compliant with international standards. Greenio helps manufacturers establish this audit trail and ensure data quality for regulatory submission.

Learn more in our guide on What is BRSR Reporting?

CCTS Eligibility for Manufacturing - Which Sectors Qualify

The Carbon Credit Trading Scheme (CCTS) introduced in India creates financial incentives for emissions reductions. Not all manufacturers are eligible, but many large industrial emitters qualify.

Eligible Sectors Under CCTS

CCTS covers designated consumers (DCs) across:

• Thermal power plants: Coal-fired power generation
• Cement: Large cement producers
• Steel: Iron and steel manufacturing
• Aluminum: Primary aluminum production
• Fertilizer: Ammonia and urea production
• Refining: Petroleum refineries
• Pulp and paper: Large integrated mills
• Chemicals: Select chemical manufacturers

Your facility qualifies as a designated consumer if it emits over a specific threshold (typically 25,000+ tCO2e annually) and operates within a covered sector.

How CCTS Works for Manufacturers

Under CCTS, large emitters receive a baseline emissions allocation. If you reduce emissions below the baseline, you can sell surplus carbon credits. If you exceed the baseline, you must purchase credits or pay a penalty.

For a detailed walkthrough of how this scheme operates, read How CCTS Works in India.

FAQ

What is Scope 1 and why does it matter for Indian manufacturers?

Scope 1 emissions are direct emissions from sources your company owns or controls. For Indian manufacturers, this includes fuel combustion in boilers, gensets, and furnaces. Scope 1 typically dominates your carbon footprint (60-80%) and is the focus of BRSR and CCTS regulations.

How do I calculate emissions from diesel gensets?

Multiply fuel consumed (liters) by the genset's emission factor (typically 2.67 kg CO2/liter for diesel). Track fuel consumption through purchase records and cross-validate against maintenance logs. Most manufacturers should audit genset usage monthly to catch anomalies.

Is my manufacturing facility eligible for CCTS?

You're eligible if your facility is in a designated sector (cement, steel, aluminum, fertilizer, refining, pulp and paper, chemicals, or thermal power) and emits over the threshold (usually 25,000 tCO2e annually). Check your latest emissions inventory to determine eligibility.

When should I start preparing carbon accounting systems?

Now. BRSR disclosures for 2025-26 are already due, and CCTS regulations are active. Setting up robust carbon accounting takes 4-6 months, including staff training, data systems, and verification protocols. Early preparation gives you a compliance buffer.

How accurate must my emissions data be?

BRSR-compliant data should have uncertainty margins of ±5-10% for Scope 1 and ±10-15% for Scope 2. Designated consumers under CCTS face stricter requirements with third-party verification. Third-party assurance typically requires ISO 14064-2 or equivalent methodology.

Conclusion

Carbon accounting isn't optional anymore for Indian manufacturers. BRSR and CCTS have embedded emissions reporting into compliance frameworks and created financial stakes around emissions performance.

Start by mapping your current emissions across all three scopes, with special attention to Scope 1 sources like boilers, gensets, and process heat. Invest in data systems that enable monthly tracking and annual verification. If you're eligible for CCTS, understand your baseline and plan reduction strategies to generate credits.

The transition to low-carbon manufacturing takes time, but clear, accurate carbon accounting is the first step. Learn more in our guide on Carbon Accounting in India to build your compliance roadmap.