A new analysis reveals a massive gap between companies’ renewable energy commitments and actions, showing that only around 5% of the annual electricity consumption of the assessed companies is sourced from renewables (solar and wind)
Top Indian corporations are lagging to meet the country’s ambitious targets for decarbonisation and renewable energy, a new report by Climate Risk Horizons— looking at the role played by seven key industries in driving India’s energy transition—has found. While some industries and companies have started to make progress, for the most part, companies’ rhetoric and targets are yet to be matched by concrete investments and changes in power sourcing practices.
The report looked into 33 companies across seven industries, five of which are large energy consumers (cement, steel, aluminium, textiles, and fertilisers), the other two being information technology (IT) and Fast-Moving Consumer Goods (FMCG).
India’s growing industrial sector accounts for over 52% of the country’s total energy demand. Around 11% of the energy consumption of heavy industry is derived from electricity, and even less from pure RE (wind/solar PV).
Need for speed
Renewable energy offers major economic and business planning advantages over traditional fossil fuel reliance. Despite this, the biggest firms in India have been slow to increase their purchases of renewable energy (RE) through Power Purchase Agreements (PPAs) or captive solar/wind projects.
All except one of the examined companies—ArcelorMittal/Nippon Steel—have disclosed their energy usage through a variety of sources. As members of international renewable energy alliances, a number have made bold promises, but very few are genuinely on pace to meet their objectives.
Steel companies such as JSW, Jindal, Tata Steel and ArcelorMittal/Nippon Steel are currently meeting a tiny fraction (less than 0.05% on average) of their energy from renewable sources. Textile companies such as Trident, Welspun, Arvind and Shahi have set targets in line with the Paris Agreement, but, on average, less than 3% of their energy consumption comes from renewable electricity. Cement companies including majors such as Ultratech, ACC and Ambuja have all set targets to reduce emissions in line with the Paris Agreement, yet the share of renewable energy in their overall energy consumption was only 2.5%. In the FMCG sector, Godrej, ITC and Britannia stand out for their low RE utilisation, in contrast to Nestle and Hindustan Unilever, which fare the best in terms of translating renewable energy commitments into actions.
The industry that scores the lowest is the fertiliser sector, while the information technology sector emerges as the overall top performance.
The analysis evaluated the decarbonisation activities of the corporations as of FY 2023 using publicly available data gathered from their annual and sustainability reports.
Policy recommendations
The companies analysed have an annual electricity consumption of over 169 BU (Billion Units), which is more than double the electricity consumption of a state like Andhra Pradesh or West Bengal. However, less than 5% of this consumption currently comes from renewable sources, the report said.
The report pointed out that technological changes necessary are still, for the most part, not cost competitive as most energy consumption is in the form of heat processes, not electricity. To add to that, there are almost no major pilot projects running for the decarbonisation of heavy industry in India.
The report recommended strengthening and enforcing renewable purchase obligations, which will support the development of RE capacity and energy storage technologies, lowering costs and increasing energy security for industries and the economy as a whole.
“India Inc needs to step up and start investing for an energy secure future. The country’s RE and decarbonisation targets will not be met without active support from large corporate players. With green energy open access regulations now in place, companies should be signing Power Purchase Agreements to ensure that 100% of their electricity comes from renewable energy by 2030,” said Ashish Fernandes, CEO of Climate Risk Horizons and co-author of the report.
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