Opportunities to accelerate actions to fulfil India’s long term climate ambition
Background and Session Context
India’s updated NDCs reflect the announcements made by the country at COP26 and translate them into concrete targets by committing to - reduce emissions intensity by 45% from 2005 levels, and achieve 500 GW of electric power from renewable sources by 2030. The achievement of these crucial near-term targets will require all stakeholders to assess the climate actions taken till now, and strategize and develop a framework on how the 2030 targets can best be further implemented.
Building on many years of collaboration in the work related to the Indian energy sector and its transition, The Energy and Resources Institute (TERI) and Shell had partnered to present a ‘Scenario Sketch for India’ outlining the options and choices towards developing a technically possible though challenging net-zero energy system for India. This modelling report jointly undertaken by TERI and Shell mapped out an illustrative technological pathway for India's domestic energy system to move towards net-zero emissions by 2050, while delivering sustainable economic growth.
Given announcements made by India and other countries at COP26 about their net-zero emission targets, the TERI-Shell modelling study assumes significance as it is one of the first assessments of the challenges that India would face to move towards such a pathway. This study has been referred by various policy forums. ‘India: Transforming to a Net-Zero Emissions Energy System’ indicated the transformations needed over the next thirty years for India, in pursuit of this goal by mid-century.
The modelling study acknowledged that non-state actors, particularly businesses, play a vital role by understanding the opportunities of low-carbon economy and challenges on one hand, and by mobilizing resources and offering know-how and solutions on the other. Leading market players from Indian industry have come together to sign an ‘Industry Charter for Near Zero Emissions Ambition by 2050’ instituted by TERI. Since its inception, the Industry Charter has emerged as an important step for the Indian industry to voluntarily commit to decarbonisation measures. The existing Charter Signatories unanimously expressed their intent to make their companies exemplars of low or zero carbon technology solutions within their sectors, and gradually bring more heavy industry sectors into the fold of the Charter.
On the COP27 ‘Science Day’, TERI and BCG jointly organized the High-Level Convening themed “Opportunities to Accelerate Actions to Fulfil India’s Long Term Climate Ambition” and provided a platform for industry leaders to take a deep dive into energy sub-sectors that would benefit charting out India’s sustainable energy transition and deliberate on possible pathways in the short-term and mid-term.
Summary of Discussions
The High-level convening opined that if India gets onto the global frontier in the large-scale use of green hydrogen and full decarbonization of electricity in the 2030s, then it could achieve net-zero in the next decade. The group observed that it is now timely to look at the 2030 commitments and analyze critical challenges for achieving them. With Indian industries increasingly committing to becoming net-zero over a period of time, setting evidence based-targets can help increase the scale and speed of climate actions. Global and Indian companies including those in the hard-to-abate sectors are aligning their reduction emission strategies to science-based targets. Alignment of these strategies to SBTi (Science Based Target initiative) will require companies to-
a. Improve data collection, and enhance their modelling frameworks
b. Invest in proven technologies which are effective in reducing emissions and,
c. Engage with policymakers to create an enabling ecosystem of piloting new research and technologies
In his opening remarks, Nitin Prasad, Chairman - Shell Group of Companies, India, remarked that COP26 emerged as a platform where an expectation was expressed, accompanied with the government’s pull that the industry must pave the way forward for decarbonization. The industry charter constituted is a clear reflection of the intent of the industry leaders to help forge a journey towards a low carbon pathway. On Shell becoming a part of the charter, and leading decarbonization efforts, Mr. Prasad, stated that Shell has committed to becoming net-zero by 2050 across Scope 1, 2 and 3 emissions. Further, remarking on the need for collaborations, “considering that 88% of Shell emissions are Scope 3 emissions, it is necessary for the company to collaborate across their supply chain and work with their suppliers, customers and partners to take the low carbon pathway forward.”
As a supporter of the NDCs, Mr. Prasad listed three solutions that will help fulfil these goals. First, as a leading player in the renewable energy, green hydrogen and biofuels, developing low carbon products and solutions will require the organization to collaborate with varied sectors such as cement, steel and aluminum. Second, setting near term targets is essential to achieving the decarbonization, and will require concrete action in this decade. Third, near-term targets need to be leveraged to create long term targets over a period of 2050, and will require showcasing pilot demonstrations in CCUS, hydrogen and methanol alternatives.
Given that India has set 2030 targets as part of its NDCs, it is necessary for the industry to take ownership and play its role. As part of his conclusory remarks, Mr. Prasad suggested the creation of a new report by TERI that can specifically detail the journey of the next decade of India’s 2030 decarbonization targets.
Following Mr. Prasad’s opening remarks, Mahendra Singhi, CEO - Dalmia Cement (Bharat) Limited, suggested key messages regarding industrial decarbonization. First, each company could set its own NDC targets to achieve. Second, for moving beyond near emission targets to net-zero by 2050, he suggested that industry leaders could form small groups with each committee working on, and providing the way forward in finance and issues relating to carbon markets. Such groupings can accelerate ideas, and by working together can generate actions.
A multimedia clip was formally launched capturing the voices of leading Indian business leaders supporting the ‘Industry Charter for Near Zero Emissions Ambition by 2050’ instituted by TERI. Anirban Mukherjee, Managing Director and Partner, BCG India made a presentation on ‘Accelerating Actions’ on achieving net-zero, and how each sector from buildings to transportation to electricity and industry will need to achieve milestones in pursuing that pathway.
Carrying forward the opening remarks and presentations, RR Rashmi, Distinguished Fellow at TERI stated that it is necessary to gauge every sector’s perspective on how to best leverage their capabilities for net-zero achievements.
Beginning with the energy sector, Mr. Rashmi invited Deepak Agarwala, Senior Executive Vice President, Avaada Group of Companies to share his company’s perspective on the broad goal of net-zero. Mr. Agarwala shared that over the last decade a competitive renewables landscape has developed in India. As an organization, Avaada Energy, has engaged in renewable purchase obligation (RPO) contracts and is planning to move beyond RPOs towards hydrogen production obligation. Moreover, moving beyond renewables towards alternative fuels is equally important to reduce carbon intensity of the industries.
Deepak Gupta, Senior Vice President (Carbon Market)- ReNew Power, reiterated Mr. Agarwala’s views and pointed at two major factors that companies need to incorporate to achieve net-zero targets. One, is the need to undertake inhouse changes such as retrofitting new technologies and incorporating energy efficiency into industrial processes. Second, achieving net-zero will require offsetting via nature-based solutions, and it is necessary that right quality standards are adopted while initiating nature-based solutions. Additionally, Mr. Gupta remarked that beyond renewables, green molecules and derivatives such as green ammonia will play a key role in decarbonization efforts. Further, given the new technological and R&D requirements for green derivates will require skilling the new workforce and TERI can play a key role in helping corporates with this.
Moving towards the cement sector, Mr. Rashmi invited E R Raj Narayan, Business Head and Chief Manufacturing Officer – UltraTech Cement Limited, for his perspectives on the cement industry in its net-zero and decarbonization pathway. Mr. Narayan spoke about the importance of collaboration and digitalization efforts.
At present, industry has low levels of alternate fuels. There is a need for collaboration between industries to shift to alternate fuels and systems from 5% to 50%. These efforts are also very crucial for investors, industry and the academia. Waste to heat recovery would play a major role for the cement industry. He reiterated the significance of evolving carbon markets that would aid the industry in moving towards emission reductions. There is a need to create energy storage provisions. “We require round the clock power with grid scale battery storage technologies including pumped storage plants (PSPs) and others”. There is a need to move towards a cost-effective solution which lies at the intersection of various factors.
Manoj Rustagi, Executive VP (Sustainability, R&D, Business Strategy & CAPEX) - JSW Cement, spoke that process emissions contribute to 75% of total emissions in the cement industry. Usage of alternate fuels in cement kilns offers a starting point to reduce emissions in the cement industry. The cement industry has the opportunity to solve the problems of many other industry sub-sectors. He reiterated that supply chain emissions also need to be accounted for in the cement industry.
Rinika Grover, Head, Sustainability and Corporate Social Responsibility – Apollo Tyres, spoke about the importance of reducing Scope 3 emissions that continue to remain high in the industrial sector. She stated that “moving to a green economy is critical and must be fair and equitable.” Further, large scale adoption of renewable energy will require sorting issues around the lack of energy storage systems. She stressed the significance of carrying out life cycle assessments in industrial processes, and diversifying fuel mix within industrial processes. The European Green Deal is introducing new targets for usage of sustainable raw materials. She also highlighted the importance of legislation in creating an enabling ecosystem of bio circularity/ bio materials in the economy. Apollo Tyres is working with the Government of India for mangrove restoration and conservation.
Ritu Mathur, Senior Energy Economist - Niti Aayog spoke on the need to develop multiple solutions across multiple sectors, “given that much of the challenge lies in reducing Scope 3 emissions.” To this extent, industries and companies will need to work across their value chains with multiple partners and innovate to create solutions. This will require diversification of plans beyond corporate perimeters, and the ability to manage and incorporate multiple solutions simultaneously.
From the government side, the incentive schemes are helping tie in several initiatives that are required for the transition. Industries will need to pick up the baton and run with the government. Electrification across multiple sectors indicate that technologies will need to evolve, and the industry must play a key role in enabling technologies wherever required. Decarbonization of hard-to-abate sectors will require the industry to leverage the opportunity of becoming pioneers in the adoption of green hydrogen.
In terms of financial needs, private investments combined with sovereign and pension funds need to leveraged. While public finance can help derisk private investments, all players will need to come together, and hence blended finance can play a crucial role in achieving decarbonization efforts.
Michael Zimonyi, Director of Public Affairs - IFRS, highlighted that there are too many approaches to accounting standards, and there is a need to adopt a uniform global baseline standards for investors. A single global baseline has the potential to provide transparency and ensure that comparable and consistent data is communicated to stakeholders. At the same time there is a need for capacity building that can inform governments and economies about the global standards being developed. With India’s G20 presidency, he believed that India would surely be a leader in adopting the global baseline standard. He mentioned the early efforts already made by the Nigerian government in this space.
Key Actions and Recommendations
- 1. Considering that carbon offsets will play a crucial role in industries transition to net-zero, leaders highlighted the need to establish a well-functioning carbon market.
- 2. Much of the emissions of the heavy industries is across their Scope 3 emissions, and hence, managing and mitigating these emissions will require the corporates to work with their value chains.
- 3. Release of India’s Long Term – Low Emission Development Strategy (LT – LEDS) has laid focus on increasing the adoption of alternate fuels such as biofuels, electric vehicles and green hydrogen to help decarbonize the transportation sector.
a. Further, the strategy lays focus on enhancing industrial decarbonization by improving energy efficiency, electrification of industrial processes and improving material efficiency via circularity of resources.