India Inc's green push gets a fillip with amended Energy Conservation Bill

Share of thermal energy for manufacturing companies almost 95%

The Energy Conservation (Amendment) Bill, 2022 — tabled in Parliament on Wednesday — may push manufacturing companies to step up the use of green energy for their captive needs. The Bill proposes to mandate the use of non-fossil sources for industrial activity, penalising those who don’t do so.

Currently, most companies — from cement and metal to petrochemical — depend largely on thermal power for their energy requirements.

The share of thermal energy for manufacturing companies, according to industry executives, is almost 90-95 per cent, with a small share of about 5-10 per cent coming from renewable energy sources.

But this split could change in the years to come, as the government seeks to mandate the use of green energy.

Sector leaders such as UltraTech, Vedanta, Hindustan Zinc (HZL), and JSW Steel, for instance, have clear plans in place to make the transition to green energy, reveal conversations with these companies.

Industry estimates suggest that by 2030, large manufacturing companies could have around 20-25 per cent of their captive power needs coming from non-fossil energy sources, as energy transition gathers pace.

“To achieve India’s net-zero pledge, ultimately all industrial energy use will need to go low-carbon. The question is of timing. The phased development of the green energy market will ensure sufficient time for a comfortable transition,” said Vaibhav Chaturvedi, Fellow, Council on Energy, Environment and Water — a New Delhi-based insights and research company.

In its latest annual report, JSW Steel Chairman Sajjan Jindal said that the company had set aside an investment of Rs 10,000 crore to increase the use of renewable energy to replace thermal power at its manufacturing units in the next few years.

“We have earmarked Rs 10,000 crore to reduce our carbon emissions through various initiatives, including increasing the use of renewable energy, reducing the fuel rate through improved raw material quality, and deployment of best available technologies in clean energy,” said Jindal.

According to a Ministry of Steel document, India contributes 12 per cent to total carbon dioxide emissions annually, ahead of the global average of around 8 per cent. The government had recently directed steel companies to develop a time-bound action plan to reduce carbon emissions.

The same goes for metal and mining companies that are significant industry polluters.

Arun Misra, chief executive officer (CEO), HZL, said in conversation with Business Standard, that the company had received board approval to undertake a captive renewable power development plan, up to a capacity of 200 megawatt (Mw), in furtherance of its net-zero goal.

The move, he said, was in keeping with the company’s overall strategy of reducing dependence on thermal power by scaling up its renewable energy source to cover 50 per cent of its energy requirement over the next three years.

At a broader level, HZL will invest $1 billion (or nearly Rs 8,000 crore) in the next five years to make its mining operations environment-friendly.

Parent Vedanta, which has a 64.9 per cent stake in HZL, on other hand, will source 580 Mw of green energy for its operations across India, it said in a recent statement.

For this, a power delivery agreement had been signed with Sterlite Power Technology — a special purpose vehicle set up by Vedanta Group for the supply of solar and wind energy.

In a media call, Vedanta CEO Sunil Duggal said the company had begun reporting Scope 3 emissions, starting with its 2021-22 sustainability report, which was three years ahead of schedule.

While Scope 1 and 2 emissions cover direct and indirect emissions from sources related to the company, Scope 3 emissions are tough to track since they cover emissions from sources not owned or controlled by the company.

UltraTech, meanwhile, has set a target to source 100 per cent of its electricity requirement through renewable energy by 2050. The company said recently that it had scaled up its renewable energy capacity by two and a half times.

GOING GREEN 

• Sector leaders such as Ultratech, Vedanta, Hindustan Zinc and JSW Steel have clear plans in place to make the transition to green energy sources
• Estimates suggest that by 2030 large manufacturing companies could have 20-25% of their captive power needs coming from non-fossil energy sources
• According to industry estimates, thermal to renewable energy mix is at 95:5 
• Energy Conservation Bill proposes to mandate use of green energy in industrial activity
• Share of renewable energy as a result likely to more than double in next few years
• India contributes 12% to total carbon dioxide (CO2) emissions annually