All that gas: Emissions reduction performance of top cement companies is a mixed bag in FY24

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As India pushes forward with its ambitious climate goals, the cement industry, a significant contributor of carbon emissions, is under increasing pressure to decarbonise. The latest emissions data for FY24 from leading cement companies  UltraTech, Ambuja, ACC, Shree Cement and Dalmia Bharat presents a jumbled picture of progress, highlighting both achievements and setbacks in their efforts to manage combined Scope 1 and Scope 2 emissions.

In the sector, Scope 1 emissions are from the cement production process and fuel combustion within the company's facilities while Scope 2 relates to emissions involved in producing the electricity the company buys and uses. Cement production relies heavily on fossil fuels like coal and natural gas. The industry contributes about 8 percent of global CO2 emissions, with fossil fuels being a major source of these emissions.
Clinker, the main raw material in cement, is responsible for nearly 90 percent of total CO2 emissions (Scope 1 and 2). Of these, about 40 percent come from burning fossil fuels, 50 percent are process-related, and the remaining 10 percent from electricity use.

Emissions performance in FY24

Data from annual sustainability reports put out by the companies during this month and last showed varying degrees of success in reducing carbon intensity. ACC emerged as a frontrunner, reducing its emissions intensity to 534 kg CO2e/tonne of cementitious material in FY24 from 548 kg CO2e/tonne in FY23, reflecting its focus on improving operational efficiency and integrating alternative fuels. Ambuja Cement also reported a decline, with emissions intensity falling from 594 kg CO2e/tonne to 581 kg CO2e/tonne over the same period.

Carbon dioxide equivalent per tonne or CO2e/tonne is a standard measure of greenhouse gas (GHG) emissions.

In contrast, Shree Cement experienced an increase in emissions intensity, rising to 552 kg CO2e/tonne in FY24 from 535 kg CO2e/tonne in the previous year, signalling potential challenges in maintaining carbon efficiency. Similarly, Dalmia Bharat, known for its sustainability leadership, reported a slight uptick to 537 kg CO2e/tonne from 533 kg CO2e/tonne. UltraTech, India’s largest cement producer, saw little change, with its emissions intensity inching up to 618.17 kg CO2e/tonne from 618.00 kg CO2e/tonne, raising concerns about its ability to further decarbonise at scale.

These companies sourced between 6 percent and 19 percent of their total energy from renewable sources in the last financial year. They are committed to achieving net zero emissions by 2050, which is 20 years ahead of India’s national target.

The ambitious goals of cement companies come amid ongoing consolidation in the industry driven by the need to raise output and safeguard market share as new entrants crowd the market. Major players like UltraTech, ACC and Shree Cement are rapidly expanding their capacity, with a collective increase of over 42 million tonnes per annum (mta) expected in FY25.

Renewable energy integration and targets

A key aspect of reducing carbon intensity is the integration of renewable energy (RE) into operations. The cement industry has been steadily increasing its reliance on RE sources such as solar and wind power to mitigate emissions from electricity consumption (Scope 2). At present, kiln electrification offers a promising pathway for reducing GHG  emissions for the cement sector, provided the power is generated from renewable and is available round the clock.

UltraTech, despite its emission intensity stagnation, has made significant investments in RE, raising capacity by 77percent and waste heat recovery systems (WHRS) capacity by 32 percent in FY24 compared to FY23. The industry leader is aiming for a carbon intensity reduction of 27 percent by 2032. Meanwhile, rival ACC-Ambuja group targets 60 percent of  overall energy consumption to come from renewable sources by FY28.

Industrywide impact and the road ahead
The cement industry’s contribution to global CO2 emissions is significant, accounting for 7-8 percent of the world’s total emissions. The mixed results in FY24 underscore the complexities and challenges of decarbonising this sector. While renewable energy integration is crucial, a reduction in Scope 1 emissions, which involve direct emissions from cement production processes, remains a critical hurdle.

To address this, companies are exploring various strategies, including the use of alternative raw materials, carbon CCS or capture and storage technologies and the development of low-carbon cement products. Shree Cement, for instance, is investing in WHRS to reduce its reliance on fossil fuels, while ACC and Ambuja are focusing on increasing the use of fly ash and slag in their cement blends.

Going forward, emission reduction remains crucial, as the government is expected to roll out a policy for industries such as iron and steel, cement, chemicals, aluminium, and oil and gas, which have a higher carbon footprint, to nudge them to lower emissions.

The government will focus on moving the “hard to abate” industries from “energy efficiency” targets to “emission targets”, Finance Minister Nirmala Sitharaman said in her budget speech on July 23. Sitharaman flagged that appropriate regulations for transition of these industries from the current “Perform, Achieve and Trade” mode to “Indian Carbon Market” mode would be put in place.