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Govt works to nudge industry off fossil fuel to green energy

Around 76% of the energy demand in MSMEs is met through electricity, followed by oil (11%), and coal (6%). (Mint)Premium
Around 76% of the energy demand in MSMEs is met through electricity, followed by oil (11%), and coal (6%). (Mint)

The government is working on a long-term strategy to make Indian industry eco-friendly, electrifying industries that use gas and fossil fuels and moving others to harness green hydrogen, two people with knowledge of the plans said

NEW DELHI: : The government is working on a long-term strategy to make Indian industry eco-friendly, electrifying industries that use gas and fossil fuels and moving others to harness green hydrogen, two people with knowledge of the plans said.

The plans have been devised keeping in mind India’s ambitious net zero commitments.

So far, the government’s focus has largely been on electrification of mobility by encouraging wider adoption of electric vehicles. It now wants to move away from the use of petroleum products to electricity across sectors, with the playbook being drawn up under the leadership of the power ministry.

The two people cited above said that as per the plan, in sectors where electricity cannot be used, green hydrogen will be encouraged. “A large section of industries still use petroleum products. The strategy aims at using electrification of overall sectors other than transportation, in which EVs are rapidly taking over. The plan is that wherever electricity may not be used, green hydrogen will come into the play," said one of the two officials mentioned above.

The plan is to use green energy to achieve net zero carbon emission by 2070. Queries sent to the ministry of power remained unanswered at press time.

Switching to electricity in industrial companies that use diesel and other fossil fuels is thought to have several benefits, including lower maintenance costs. A report by McKinsey & Co. said that in the case of industrial boilers, for instance, the investment cost of the electrical equipment is lower. And, if zero-carbon electricity or renewable power is consumed, the greenhouse-gas (GHG) emissions of the industrial site would be significantly lower.

The energy-intensive industrial sector is largely made up of iron and steel, cement, paper, textile, fertilizers and chemicals, sponge iron, bricks and a diverse array of MSMEs.

According to data from the ministry of statistics and programme implementation, among the energy-intensive industries, iron and steel have the highest consumption of electricity at 24%, followed by chemical and petrochemical (17%), non-metallic minerals (9%) and other industries (48%).

However, the penetration of electrification is high among MSMEs. Around 76% of the energy demand in MSMEs is met through electricity, followed by oil (11%), and coal (6%).

Consumption of electricity by the industry has more than doubled in the past decade—from 2,72,589 GWh in 2010-11 to 5,51,362 GWh in 2019-20.

Data from the International Energy Agency shows that in 2020, Indian manufacturing was dependent on coal (29%), followed by oil (20%), electricity (22%), natural gas (19%), renewables (6%) and heat (4%).

A report by the Bureau of Energy Efficiency (BEE) said iron and steel industry, cement, fertilizers and chemicals, and paper are largely dependent on coal for firing up furnaces. It said that from 2009-10 to 2018-19, almost all industries except iron and steel have reduced their coal intake by 6-23%, which the report said can be attributed to technological advances, switching to natural gas and electricity, and government initiatives like the Perform, Achieve and Trade (PAT) scheme.

Fertilizers and chemicals, textile and leather industries are dependent on oil and petroleum products and the use of oil has increased in most of these industries by 5% during 2010-11 to 2019-2014, except in fertilizers, which switched from oil to natural gas.

BEE has suggested an assessment of non-electric and hard-to-electrify industrial processes to switch to use green hydrogen. After coming out with the green hydrogen policy, the government is formulating a comprehensive green hydrogen mission wherein it is expected to mandate the use of green hydrogen by fertilizer manufacturers and refineries.

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ABOUT THE AUTHOR

Rituraj Baruah

Rituraj Baruah is a senior correspondent at Mint, reporting on housing, urban affairs, small businesses and energy. He has reported on diverse sectors over the last six years including, commodities and stocks market, insolvency and real estate. He has previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.
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