Indian state energy firms rush to declare net zero goals

India’s state-owned energy companies have been rushing to announce net zero emissions targets to align themselves with Prime Minister Narendra Modi’s aim of making the world’s third largest greenhouse gas emitter net carbon neutral by 2070. However, most of the companies lack a clear realistic path to achieve that target, leading to doubts on the credibility of the targets.

The net zero commitments appear remarkable considering the world’s second largest coal, third largest oil and fourth largest liquified natural gas consumer is seen as a driver of global energy demand growth, which means it is on an upward slope of emissions compared with developed Western countries that are witnessing demand contraction.

“Net zero targets set by energy sector public sector undertakings is an appropriate thinking,” Anil Razdan, former federal power secretary told Gas Outlook. “We need a collective approach to reach there.”

Last month, India’s largest refiner Indian Oil Corp announced it will slash net emissions of greenhouse gases to nothing by 2046, while its smaller peers Bharat Petroleum Corp and Hindustan Petroleum Corp are planning to reach there by 2040. State-owned gas pipeline utility Gail India too last month announced net zero plans 2040. Engineers India, which provides project consultancy to energy majors, has declared 2035 as the year to achieve net zero. Other majors like explorer Oil and Natural Gas Corp (ONGC), which accounts for 65% of India’s oil and 62% of gas production, and largest power producer NTPC, whose 87% capacity is coal-based, are still working to finalize their emission reduction timeline.

In fact, there is a stampede among government and privately held companies to declare net zero goals with firms like privately-held India’s information technology bellwether Infosys having already become carbon neutral.

“Setting net zero goals may be to address the requirements of different stakeholders such as young workforce, lenders, regulators and so on,” Debasish Mishra, partner at the professional services firm Deloitte, told Gas Outlook.

Devil in the details

Apart from Indian Oil, none of the other companies have however so far given any details on how they will reach net-zero. HPCL and BPCL have said that they have appointed consultants to help them frame their path for achieving the goal.

Indian Oil’s declaration throws light on the trajectory that others too may follow. Indian Oil has said it will invest 2 trillion rupees ($25 billion) to reach net-zero from operations by 2046. Indian Oil accounts for 32% of India’s refining and 42% of its retail fuel marketing network.

Scope 1 and Scope 2 emissions, which account for about a tenth of its total emissions, averaged around 21.5 million tons of carbon dioxide equivalent (MMTCDE) in the financial year ended March 31. Including its subsidiary Chennai Petroleum Corp Ltd, Indian Oil’s emissions averaged 24.4 MMTCDE which are set to rise to over 40 MMTCDE as the refiner is in the process of expanding refining base by 33% to reach 107 million tons by March 2025.

Chairman Shrikant Madhav Vaidya said that the refiner will invest in biofuels, renewables, hydrogen and use technologies to suck carbon dioxide out of the air and bury it as part of its emissions reduction strategy. Indian Oil is in the process of setting up a carbon capture plant at its Gujarat refinery and plans to transport the polluting gas for injecting into ONGC’s nearby oilfields for boosting oil recovery. It is working to enter into similar carbon capture and use in oilfields of ONGC’s smaller state-owned peer Oil India. “This net-zero declaration is a defining moment in the history of Indian Oil and will shape the future of India’s energy landscape,” Vaidya noted.

Unwieldy road

Indian Oil’s privately-held peer Reliance Industries too has set net-zero goals for 2035 but unlike the state refiner, Reliance is drastically overhauling its business and seeks to revamp its refineries to make only jet fuel and petrochemicals as it expects diesel and gasoline demand to be eroded by alternate mobility options like electric vehicles. Reliance is also investing billions in setting up gigafactories to make new energy gear like solar panels, electrolyzers for green hydrogen production, fuel cells, batteries for storage and power electronics.

Since neither the goals of state, nor private energy firms have been so far validated by agencies like Science Based Targets Initiative, a voluntary organization of environmental and international groups, it is not clear whether those deadlines are achievable.

Analysts are skeptical that net zero goals could just be greenwashing. For one, it may not substantially clean India’s air as the companies are focused on just Scope 1 and Scope 2 emissions, which refer to emissions from operations and fuel use, but not Scope 3 emissions due to products and supply chains that are a major source of pollution. Also, the commitments are for several years ahead which means the current board of directors will not be held to account in case goals are missed.

Another major challenge is that the companies are factoring in gas as a transition fuel but gas use in India is under stress as LNG imports have been falling with the prices having skyrocketed as Europe competes with Asia for cargoes. With gas markets expected to be tight for next few years, the expansion of gas markets in India could take a permanent hit.