State-run companies set green energy ambitions with net-zero target in mind

The cover page of power utility NTPC Ltd’s report showcases windmills and solar panels, while Bharat Petroleum Corporation has a robotic hand reaching out to a green hand for “unlocking possibilities.”

“Energy transition is real and leading fossil fuel companies are realising that they need to change. All stakeholders, whether lenders or investors, regulators, employees, and suppliers now look to do business with a company that is ESG (environmental, social, and governance)-aware and has plans to do better,” Debasish Mishra, partner and leader (energy) at Deloitte India, told Moneycontrol. “Many leading global financial institutions have stopped investing in fossil fuel companies.”

Net-zero targets

Big global oil companies including Exxon Mobil, Shell, BP and Total are pivoting to low-carbon businesses as pressure mounts on them to respond to the climate crisis.

At last year’s United Nations Climate Change Conference in Glasgow, referred to as COP26, Prime Minister Narendra Modi committed that India would reduce carbon dioxide emissions to net-zero by 2070. India’s target may have missed the key goal of COP26 for countries to reach net-zero by 2050, but it is still an ambitious target for a country that derives 70 percent of its energy requirements from fossil fuels.

Net-zero emissions, or becoming carbon neutral, refers to maintaining a balance between emissions generated and those absorbed from the atmosphere so that there is no increase in greenhouse gas levels in the atmosphere. The ultimate objective is to limit global warming to 1.5℃ above levels during the Industrial Revolution.

Given India’s ambitions, state energy companies are working on plans to achieve net-zero emissions, in line with India’s goals. But is it just optics or do they have a plan? Moneycontrol scanned their annual reports to bring out some key takeaways.

The three state-owned oil refining and marketing companies – Indian Oil, Bharat Petroleum and Hindustan Petroleum – have been instrumental in achieving 10 percent ethanol blending in petrol across the country five months ahead of target in June. Blending will significantly reduce emissions from auto fuels and the government has set an ethanol blending target of 20 percent in petrol by 2025-26.

The oil refining companies are also working on alternative ways to reduce carbon emissions that they generate directly and those that they may indirectly produce through associated vendors and suppliers by 2040.

IOCL said on August 25 that the company has committed itself to achieve net zero operational emissions by 2046 and plans to invest Rs 2 lakh crore towards it. "This will be a landmark year with India completing 99 years of independence and the celebration of its 100th Independence Day. Our decarbonization plan aims to mitigate both Scope 1 and 2 emissions," said Chairman Shrikant Madhav Vaidya.

‘Scope 1’ refers to direct emissions from a company’s own sources, while ‘Scope 2’ refers to the indirect emission that a company may be responsible for to run its operations like buying electricity.

Indian Oil

Indian Oil has been investing in green energy technology by collaborating with Indian and global partners and promoting startups in the space. The company said in its report it is “confident to become a major green energy supplier in India.”

In fuel retailing, the company runs 1,166 outlets with solar energy. It has an installed renewable energy capacity of about 240 megawatts (MW). It formed a JV with engineering company Larsen & Toubro and with ReNew Power for green hydrogen.

Bharat Petroleum

BPCL has set up a renewable energy business and aims to set up a capacity of 1 gigawatt (GW) by 2025 and 10 GW by 2040.

The company has collaborated with Bhabha Atomic Research Centre to work on alkaline electrolyser technology to eventually scale up production of green hydrogen for commercial use.

Hindustan Petroleum

The company had 100.9 MW of wind power capacity and 54 MW of solar energy as of March 31, and aims to scale up this capacity to reduce dependence on fossil fuel-based power.

The company is setting up a 370 tonne per annum green hydrogen plant at its Visakh refinery to partially meet its refining process requirements.

GAIL (India)

The company is developing a net-zero strategy roadmap by incorporating science-based targets. It is exploring business opportunities in cleaner energy domains like renewables, compressed biogas and hydrogen technology.

GAIL has a renewable energy portfolio of 130 MW and the company said in its annual report that it is scouting for opportunities through organic and inorganic routes to scale it up.

NTPC

NTPC’s chairman Gurdeep Singh said in the annual report of the company, “As part of your company’s energy transition programme, along with renewable energy sources, we have started working on storage technologies and discussions are under way for adding nuclear capacity as well. We are also working with NITI Aayog and have signed a statement of intent for preparing our ‘net zero’ plan in line with the country’s commitment.”

NTPC was criticised earlier for not keeping up with private companies in entering the renewable energy sector. The state-run electricity utility has since upped its game. It plans to achieve 60 GW of renewable energy capacity by 2032. Apart from the 2 GW capacity already commissioned, over 4 GW of capacity is being constructed and 5 GW capacity is in the tendering stage.