The Indian government has for the first time proposed greenhouse gas (GHG) emission reduction targets for petroleum refineries, petrochemical units and the textile sector, as a step toward the Nationally Determined Contributions (NDCs) that it has committed to under the Paris Agreement, 2015, Moneycontrol has learnt.
NDCs are climate action plans submitted by nations under the Paris Agreement, wherein India has pledged to a 45 percent reduction in GHG emission intensity by 2030 compared to 2005 levels.
The Ministry of Environment, Forest and Climate Change (MoEFCC) has prepared a draft notification in which all refineries – both PSU and private ones - have been given specific trajectories for reducing their carbon footprint. Units that reduce emissions below the targetted GHG emission intensity shall be eligible for issuance of carbon credit certificates, while those who are not able to achieve the target will be required to surrender or purchase equivalent number of certificates, based on the shortfall.
All refineries and petrochemical units of Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL), Reliance Industries, Nayara Energy, ONGC and GAIL have been given such emission reduction mandates, as per the draft notification seen by Moneycontrol.
From a longer term perspective, imposing emission intensity reduction targets on refineries implies they will have to gradually transition to cleaner fuels such as green hydrogen and invest in renewables.
The calculation for each unit is done in tonnes of carbon dioxide (tCO2) per tonne of production. For example, IOC’s Guwahati Refinery in Assam has been mandated to reduce its GHG emissions from a baseline of 7.78 tonnes of carbon dioxide in FY24 to 7.03 tonnes of CO2 per tonne of its production by FY27. Similarly, BPCL’s Mumbai Refinery has been mandated a GHG emission reduction to 3.80 tCO2 per tonne of production against a baseline of 3.97 tCO2.
The MoEFCC had issued a draft notification on GHG emission reduction targets in April this year, but that list included only aluminium, cement, chlor-alkali, and the pulp and paper sectors. The April mandates were for 130 industrial entities across four sectors including major players such as Vedanta, Hindalco, Nalco, UltraTech, ACC, Ambuja, Dalmia and JSW Cement.
In cement, the targets range from 4.7 per cent to 7.6 per cent for ordinary Portland cement (OPC) and pozzolana Portland cement (PPC) units; aluminium, from 2.8 per cent to 7.06 per cent; pulp & paper targets reach up to 15 per cent over two years; and chlor-alkali ranges from 3.3 per cent to 11 per cent.
The revised draft has put GHG emission reduction mandates on refineries and the textile sector for the first time.
The document states that in case an obligated entity fails to comply with GHG emission intensity target, or fails to submit the carbon credit certificates equivalent to the shortfall for compliance, the Central Pollution Control Board (CPCB) will then impose an ‘environmental compensation’ on the entity for the shortfall in the respective compliance year. The environmental compensation will be equal to twice of the average price at which carbon credit certificate is traded during the trading cycle of that compliance year. The average price shall be determined by the Bureau of Energy Efficiency (BEE), the nodal agency for carbon trading.
The MoEFCC is currently seeking comments from stakeholders and the public regarding the draft published on June 24, and a final notification is expected in the next 3-4 months, according to officials in the ministry.
India has pledged to achieve net-zero emissions by 2070, as announced at COP26. This commitment is part of India's NDC to the UNFCCC, which outlines the country's climate action targets.
The Centre is also likely to launch the much-awaited Indian Carbon Market in 2026, allowing for carbon certificate trading.
Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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