The Environment Ministry exempts certain Thermal Power Plants from installation of Flue Gas De-sulfurization system

INTRODUCTION

The Ministry of Environment, Forest & Climate Change, Government of India (“the Environment Ministry”) through its Notification dated 11^th July 2025 (“FGD Exemption Notification”) has exempted certain Thermal Power Plants (“TPPs”) from installing Flue Gas De-sulfurization (“FGD”) systems, which are designed to cut SO₂ emissions. There is no change in the Environmental Compensation levied on per unit generated beyond the dates specified. The dates in comparison to the pervious deadline is as follows: 

* Subject to ensuring certain compliance. Please refer to Table III hereinbelow.

BACKGROUND

The Environment Ministry introduced stringent emission standards for TPPs through its Notification dated 7^th December 2015 (“2015 Notification”). These revised norms established permissible thresholds for the emission of particulate matter (“PM”), sulphur dioxide (“SO₂”), oxides of nitrogen (“NO_x”) and mercury, thereby mandating a significant overhaul of emission control mechanisms for the TPPs. The stipulated standards were differentiated based on the year of commissioning of each TPP, thereby applying a graded compliance framework. The year of commissioning were as follows:

• TPPs installed before 31.12.2003;
• TPPs installed after 01.01.2004 upto 31.12.20216; and
• TPPs installed after 01.01.2017.

According to the 2015 Notification, all existing TPPs were required to achieve full compliance within two years from the date of publication of the 2015 Notification i.e., by 6^th December 2017, however the same was later extended by various Notifications as mentioned below. In order to adhere with the parameters introduced by 2015 Notification, TPPs were expected to undertake substantial capital investments in the installation of advanced emission reduction technologies, such as the electrostatic precipitator for meeting PM emission norms, FGD systems for SO₂ emission norms and combustion modification for NO_x emission norms.

Subsequently, through a Notification dated 28^th June 2018, the Environment Ministry introduced further revisions to the Environment (Protection) Rules, 1986 (“Rules”) through the Environment (Protection) Amendment Rules, 2018. The Environment Ministry, again, through its Notification dated 31^st March 2021 (“1^st Extension Notification”) categorised all the TPPs in three categories (i.e. Category A, B and C as provided hereinbelow at Table I) specifying timelines for compliance up to December 2022, December 2023 and December 2024 for Category A, B, and C respectively for SO₂ emissions and other than SO₂ emissions (PM, NO_x, Hg). It also included provision for penalty i.e. Environmental Compensation on the non-compliant units.

Thereafter vide Notification dated 5^th September 2022 (“2^nd Extension Notification”), the Environment Ministry further extended the compliance timelines only for SO₂ emissions up to December 2024, December 2025 and December 2026 for Category A, B, and C TPPs respectively. It also enhanced the Environment Compensation for non‑compliant units of TPPs. Thereafter, the Environment Ministry through Notification dated 30^th December 2024 (“3^rd Extension Notification”) further extended the compliance timelines for SO₂ emission up to December 2027, December 2028 and December 2029 for Category A, B and C TPPs respectively.

Table I: Categorisation of TPPs by the Environment Ministry

Table II: Timelines for compliance by TPPs (3^rd Extension Notification)

ENVIRONMENT MINISTRY'S NOTIFICATION DATED 11^th JULY 2025

In the latest amendment to the Rules, the Environment Ministry through the FGD Exemption Notification has exempted certain TPPs from installing FGD systems. There is no change in the Environmental Compensation levied on per unit generated beyond the dates specified.

 * Sulphur dioxide emission standards shall not be applicable to all Category C thermal power plants subject to ensuring compliance of stack height criteria notified vide notification number GSR 742 (E), dated the 30^th August, 1990 and the timeline for ensuring compliance by the existing Category C Thermal Power Plants of stack height criteria by the 31^st December, 2029.

As per the FGD Exemption Notification, the applicability of emission standards for SO₂ in TPPs shall be as follows:

For Retiring TPPs

The TPPs declared to retire before 31^st December 2030 are not required to meet the specified standards for SO₂ emissions and the TPP is only required to submit an undertaking to Central Pollution Control Board (“CPCB”) and Central Electricity Authority (“CEA”) for exemption on ground of retirement of such plant. However, such TPP shall be levied with the environment compensation from 31^st December 2030, at the rate of ₹ 0.40 per unit electricity generated, in case their operation is continued beyond the date as specified in the undertaking without meeting the specified standards.

For Category A TPPs

The existing Category A TPPs shall comply with the SO₂ emission standards by 31^st December 2027 and the Category A TPPs under commissioning shall also comply with the standards before 31^st December 2027. Other category A plants to be commissioned after 31^st December 2027 will operate only after ensuring compliance of the stated standards.

For Category B TPPs

All Category B TPPs, whether existing or upcoming, the applicability of SO₂ emission standards, will be decided on a case-to-case basis by the Central Government based upon the recommendations of the Expert Appraisal Committee in charge of TPPs constituted under Environment Impact Assessment notification 2006 (“EIA Notification”) based on the appropriate scientific studies as per the following procedure:

1. in case environmental clearance (“EC”) has already been granted, such TPPs or units may opt for review of the applicability of SO₂ standards provided that concerned project proponent applies for such review on the PARIVESH portal within six months of the date of issue of the FGD Exemption Notification, in case SO₂ standards are decided as applicable, the same shall be effective from 31^st December 2028 and in all other cases, the TPPs shall comply with the stack height criteria notified vide notification number GSR 742 (E) dated the 30^th August 1990 (“Notification dated 30^th August 1990”) by 31^st December 2028.
2. in cases of upcoming plants where EC has not been granted, the applicability of SO₂ standards and the date of its coming into force or otherwise will be as specified in the EC granted to each such projects following the procedure as laid down in EIA Notification as amended from time to time and in cases, where the SO₂ standards are not made applicable, the TPPs shall comply with the Notification dated 30^th August 1990.
3. These standards for SO₂ emissions shall be applicable with effect from the 31^st December 2028 in respect of all those plants or units which have not opted for review within the given timeframe as specified at paragraph (a) above.

For Category C TPPs

The SO₂ emission standards shall not be applicable to all Category C TPPs subject to ensuring compliance of Notification dated 30^th August 1990 and the timeline for ensuring compliance by the existing Category C TPPs of stack height criteria by the 31^st December 2029.

OUR OBSERVATIONS

Given the latest amendment to the Rules by the Environment Ministry, though the change may appear to be minor, i.e. only Category C has been exempted from complying with the norms required to be followed for SO₂ emissions, we understand that Category C comprises of about 78% of the TPPs in India[3]. This amendment will therefore bring a huge respite for the Category C TPPs who have been seeking change in law compensation for the huge costs incurred by them for the installation of the equipment required for the compliance with the SO₂ emission norms.

We may also point out that the Environmental Compensation, continued through the latest amendment to the Rules, is in the nature of a penalty and, in case of delays beyond the dates specified, it will be difficult for the TPPs to seek a pass through of such Environmental Compensation either through their Aggregate Revenue Requirement or under change in law, as the case may be.

[1]     As per the 2011 Census of India.

^[2]     As defined by Central Pollution Control Board. The link can be accessed here: https://cpcb.nic.in/uploads/Non-Attainment_Cities.pdf

^[3]     Jacob Kushy (2025, July 12). The link can be accessed here: https://www.thehindu.com/sci-tech/energy-and-environment/environment-ministry-exempts-78-of-coal-plants-from-installing-key-anti-polluting-systems/article69804518.ece