Green Shift Report

THE
GREEN
SHIFT
The low carbon transition of
India’s Oil & Gas sector
Final Report
Energy Transition Advisory Comittee
Ministry of Petroleum & Natural Gas
Government of India
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This report has been compiled by the Energy Transition Advisory Committee (ETAC), formed under the direction
of the Ministry of Petroleum & Natural Gas (MoP&NG) to draw an energy transition pathway for Oil & Gas Public
Sector Undertakings in the country. The report is focuses on increasing adoption of clean energy solutions such as
hydrogen, biofuel, nuclear, geothermal, tidal in the energy mix of the country.
About the Committee
The Committee was constituted under the leadership of Sh. Tarun Kapoor, ex-Secretary, MoP&NG, who has been
instrumental in bringing together the industry knowledge, net zero understanding of various consultancy groups
and the national priorities, along with his own guidance in developing this report. With Sh. Tarun Kapoor taking
charge as an Advisor to the Hon’ble Prime Minister, the onus of concluding the report was shouldered by Sh.
Subhash Kumar, ex-Chairman, ONGC. The committee constituted of the following members:
Committee Member Designation Company / Organisation
Mr. Tarun Kapoor Chairman, Energy Transition Advisory Committee MoP&NG
Mr. Subhash Kumar Ex-Chairman ONGC
Mr Sunil Kumar JS (R) MoP&NG
Mr. Shantanu Gupta ED (AE&SD) and Member Secretary IOCL
Mr. P. S. Ravi ED (Retail) BPCL
Mr. S. Bharathan ED (R&D) HPCL
Mr. Rajarshi Gupta ED (Chief Corporate Strategy & Planning) ONGC
Mr. R. K. Singhal ED (BD and E&P) GAIL
Mr. Rajiv Aggarwal ED (Tech.) EIL
Mr. B. Lakhar ED (BD) OIL
Subject Matter Experts
The report would not be possible without the subject matter expertise provided by leading consultancies & recognized
organisations like Bp, ACME, ICRA, AT Keraney, Ernst & Young, Pricewaterhouse Coopers, KPMG, Accenture, Praj
Industries, Technimont, RIL, SIAM, SNAM, Greenko, IEA and BEE. The Committee would like to specially thank the
Boston Consultancy Group and McKinsey & Company for their support and immense contribution in developing this
report. The content of presented in this report draws inputs from the presentations made by these subject matter
experts on various aspects of decarbonisation and energy transition.
Lead Authors and Contributors
Mr. Aashish Mathur, IOCL

Mr. R. P. Gupta, IOCL
Mr. Bibhudatta Rout, IOCL
Mr. Mukul Bhatnagar, ONGC
Mr. Shyam Gupta, BPCL
Mr. Anshul Gupta, GAIL
Mr. Satyabrata Biswas, EIL
Mr. Sunil Kumar Roy, IOCL
Mr. Sreejit Basu, IOCL
Mr. Safalya Mishra, IOCL
Ms. Divya Gupta, IOCL
Mr. Ayush Trivedi, IOCL
Ms. Sunita, IOCL
THE
GREEN
SHIFT
Copyright @ MoP&NG, 2023

Ministry of Petroleum & Natural Gas,
Government of India,
Shastri Bhavan, New Delhi - 110001, India
February 2023
i Final Report: Energy Transition Advisory Committee, MoP&NG
Tarun Kapoor
Chairman,
Energy Transition Advisory Committee (ETAC),
Government of India
New Delhi, India
India made the historic announcement of reaching Net Zero by the year 2070. As the third largest
aggregate emitter in the world, this announcement can prove to have a significant impact on
the global fight against climate change. India's commitment marks a significant boost for low-
carbon energy and is a directional shift in the fossil fuel business. As India moves at pace on its
growth trajectory, the country is resolute on putting across a unique approach to energy usage
for bridging the past and the future.
India has been at the forefront of global growth over the past two decades and will remain a key
driver of global growth in the coming decades. Fossil fuels have been the bedrock of fuelling
India's growth story. With significantly low per capita energy use and issues still persisting in
ensuring reliable coverage and availability across the country, the nation's focus has always
MESSAGE BY CHAIRMAN
been towards ensuring an energy paradigm of safe, secure, sustainable and affordable round-
the-clock access and availability. Increased energy usage globally, as in India's case, has led to
an increase in emissions; however, India’s per capita emissions are near the bottom of global
emitters. If one accounts for historical emissions, Indian per capita contributions also remain
significantly low. With projected growth in population and demand, India’s energy needs
are bound to grow over the coming decades. As the country moves towards securing a Net
Zero future, besides focusing on energy conservation and reduction in energy intensity of the
economy, most of India's growth in energy demand would have to be met by harnessing the
potential of low-carbon energy sources. The scale of transformation required is massive.
The important factors which will define India's energy transition roadmap are as follows:
■ India cannot continue to depend on large-scale energy imports and must develop its own
resources.
■ India has to move towards cleaner energy sources progressively and cannot afford high
pollution levels.
■ The affordability of energy will always remain an important issue.
■ India's primary energy sources are coal, oil, natural gas, renewable and nuclear. Untreated
biomass is another source of energy, but its usage is declining. Coal is the primary energy
source for producing grid electricity and is used by heavy industries like steel & cement. While
coal is available in India, oil & gas reserves of similar magnitude are yet to be discovered in
the country.
■ India has huge potential for solar energy, and the cost of solar power has come down. There
is a limit to which solar can be pushed into the grid, considering the fact that the cost of
storage remains high.
THE GREEN SHIFT ii
■ Grid power contributes only 18% of the total energy consumed, which will have to go up.
■ The world is waiting for breakthroughs in specific areas like storage, reduction in the cost
of producing and storing hydrogen and biological pathways for energy production from
various types of waste.
The wheels of decarbonisation are already set in motion. India has set ambitious targets for
renewable energy, emphasizing energy efficiency, promoting electric vehicles, setting up a
national carbon market, building a waste-to-fuel economy, and pursuing innovations through
schemes like 'Atmanirbhar Bharat', amongst many others. Many aspects regarding the
availability, reliability, cost and utility of low-carbon fuels would need to be addressed to achieve
the net-zero targets.
This report mainly deals with energy transition issues connected with the oil and gas sector, and
energy transition will also significantly impact other sectors like industry, transport, cooking etc.
In India, we have large Public Sector Undertakings and some private companies which control
most of the energy sector, be it power, coal or oil and gas. These large companies, primarily
PSUs, need to transition to cleaner energy sources. The existing oil and gas majors have a
good network all over the country, with suitable infrastructural might and financial strength.
Therefore, if these companies take the lead in India's energy transition, the task would be much
easier. Most companies have already taken steps in the right direction.
I am thankful to the Ministry of Petroleum and Natural Gas, particularly Minister Shri Hardeep
Singh Puri, for setting up the Energy Transition Task Force to look at the important issue of
the energy transition. The Task Force invited experts from India and abroad for their input and
had several meetings to understand the subject. I am also grateful to Indian Oil Corporation for
providing secretarial assistance and support. The Taskforce was fully supported by McKinsey and
BCG in putting together the present report, for which the Task Force is thankful. We hope that
this report will help shape the Indian Energy Transition Roadmap.
(Tarun Kapoor)
Chairman, Energy Transition Advisory Committee
iii Final Report: Energy Transition Advisory Committee, MoP&NG
Subhash Kumar
MemberandNodalOzcer,
Energy Transition Advisory Committee
Ministry of Petroleum and Natural Gas
Government of India
New Delhi, India
The energy transition is the hot topic of the day. Daily, multiple studies and reports are being
churned out on the subject. The positive side of incessant coverage is that the issue is getting the
focus and attention it deserves. The world does need to transition to cleaner ways of doing things
through an orderly and affordable transition. Definite standard templates for the inflow of huge
investments required for a smooth and orderly transition and access to technologies needed to
achieve the end state do not exist today. Additionally, as the world transitions towards an energy
system characterised by the inherent intermittency of renewables, there is a need to have a
layered energy supply with conventional energy sources, with fossil fuel-based energy still as the
backbone of energy systems. The world will also need to master harnessing the full potential of
bio-based endowments. The multiplicity of energy supply lines will require redundancies which
will involve huge costs. The issue will get addressed over time till renewables and bio-based
energy become the mainstream source.
Reducing investments in the fossil fuels value chain (both upstream-downstream) in the
aftermath of the bloodbath that the sector faced during COVID and, more recently, due
to ongoing geopolitical crises, have disrupted fossil fuel supplies at affordable prices. It is
counterintuitive that near-record investible surpluses generated by the fossil fuel companies
are not flowing back into the sector – possibly due to the lack of belief in long-term sustainable
business models. Assuming the current trend builds up, it could mean that the world would
have enough oil and gas reserves to be produced, and there will be enough demand. Yet, given
the perception of the ever-shortening time horizon over which these investments need to be
in money, further investment in the fossil fuel value chain may dry up globally. All this does not
bode well for an orderly, smooth, painless transition.
India needs to have a unique armoury of solutions, referring to global best practices, building
FOREWARD
on local peculiarities to deal with the enormous challenges that will be faced for a turbulence-
free orderly transition. The Indian approach to use this challenge to convert it into opportunity
through targeted policies, like Production Linked Incentives, emphasis on reducing energy
dependence, employment generation and thus strengthening the economy, building on its
young aspiring technology-savvy population, robust institutional framework and Govt willing
to lead from the front, have potential to enable India to play a leading role in helping the world
traverse this challenging journey.
Several entities and individuals, some of whom have been identified in the report, made
presentations to the committee. ETAC was ably supported by BCG and Mckinsey. These
interactions provided critical inputs and supported ETAC over the last several months. Various
organisations, specifically Oil PSU teams, have worked hard to finalise the report and have
provided vital inputs. The report also draws on information from various other sources. These
THE GREEN SHIFT iv
inputs have helped the team to paraphrase the report, and its recommendations, and as such,
the contribution of all named and unnamed sources, is acknowledged.
It was a matter of pride for me to have the opportunity to work as part of the ETAC. Over the past
few months, ETAC, under the leadership of Mr Tarun Kapoor, Ex-Secretary to Govt of India and
now Advisor to Hon Prime Minister. ETAC had extensive deliberations on the issues concerning
energy transition with many stakeholders, including Ministries, PSUs, private sector players,
banks, technology providers etc. I believe the resultant report deals with broad areas, segments,
and the roles key stakeholders need to play for an orderly energy transition. Any exercise of this
nature cannot answer problems that may arise along this journey. Hopefully, the report will serve
as a reference to build on and probe individual subjects and issues related thereto in greater
detail, to come up with what could serve as a good way forward when planning for specifics.
Indian track record on its commitments and delivery against the same has been impressive.
Deliberations during the recently held CoP 27 and World Economic Forum raise hope of globally
coordinated efforts towards a smooth transition. It is anticipated that the global narrative on
transition will undergo a transformative change during the Indian presidency of G20. Recent
energy witnessed at Indian Auto Expo was the testimony of the Govt., industry and other
stakeholders all working together to raise hope that the transition to green can be less turbulent
if all stakeholders work in unison. But as is normal, in a case where we have an idea of the desired
end state but no clue as to how exactly it will happen, there will be situations of occasional
hurras and setbacks involving regretted moves. India is uniquely positioned to lead the world
through this challenge, and it is hoped that the deliberations at the forthcoming India Energy
Week will pave the way for working on specific agendas and plans across main sectors to usher
into a green world.
Mr Tarun Kapoor, Chairman of the Committee, has been a constant source of guidance with his
thorough understanding of complicated issues, capacity to see through the green lights, spot
solutions and amazing time management, for which the team remains deeply indebted. I feel
privileged to have got the opportunity to have been part of all this. My special appreciation to
the MOPNG, IOCL & ONGC management for their excellent support. I express my gratitude to
Indian Oil’s Alternate Energy and Sustainable Development Group (under Planning & Business
Development) for their whole-hearted support and work in organising the committee meetings
and development of the report.
(Subhash Kumar)
Energy Transition Advisory Committee
v Final Report: Energy Transition Advisory Committee, MoP&NG
India is the front-runner in mitigating

climate change globally and is progressing
fast on its energy transition agenda. The
country is willing to innovate to keep its
pledge of protecting the environment while
simultaneously addressing the growing
demand for energy.
Shri Hardeep Singh Puri,

Hon'ble Minister,
Ministry of Petroleum & Natural Gas
Photo Credit: Adobe Stock

THE GREEN SHIFT vi
CONTENT
Message by the Chairman i
Foreward iii
Preface xv
Chapter 1: The Global Energy Transition Scenario 1
Chapter 2: The Indian Energy Transition 15
Chapter 3: Energy Transition Plans of Domestic Public Sector Oil & Gas Majors 31
Chapter 4: Biofuel Opportunities in India 59
Chapter 5: The Indian Cooking Fuel Scenario 89
Chapter 6: Hydrogen 109
Chapter 7: Energy Options and Roadmap for Surface Transport 133
Chapter 8: Zero Carbon Shipping 163
Chapter 9: Sustainable Aviation Fuel 171
Chapter 10: Natural Gas and LNG 187
Chapter 11: Diesel- Future Possibilities & Blending 205
Chapter 12: Technology, Innovation and Policy Support 223
Chapter 13: Green Financing 239
Chapter 14: Carbon Market & Pricing 259
Chapter 15: Institutional Setup to Manage Energy transition 275
Chapter 16: Summary of Recommendations 285

vii Final Report: Energy Transition Advisory Committee, MoP&NG
LIST OF EXHIBITS & TABLES

C H AP T E R-WIS E L IS T OF E XHIBIT S
CHAPTER-1: THE GLOBAL ENERGY TRANSITION SCENARIO Page No.
Exhibit-1.1 Annual GHG emissions and expected global warming 3
Exhibit-1.2 Global CO2 emissions in an orderly 1.5ºC transition 4
Exhibit-1.3 CO2 emissions per capita in 2017 4
Exhibit-1.4 Countries that have committed to net zero by 2050 6
Exhibit-1.5 Current policy warming scenarios 6
Exhibit-1.6 Scope 1 & 2 CO2 emissions in 2020 8
Exhibit-1.7 Decarbonization targets set by various Oil & Gas Companies 9
Exhibit-1.8 Companies with net-zero targets in their respective sectors out of the top 20 9
Exhibit-1.9 Final energy consumption by fuel 10
Exhibit-1.10 Global fossil fuel demand 11
Exhibit-1.11 Global power generation 12
CHAPTER-2: THE INDIAN ENERGY TRANSITION Page No.
Exhibit-2.1 India's 2030 commitment, progress, and drivers 19
Exhibit-2.2 India's current emissions 20
Exhibit-2.3 Cumulative CO2 Emissions for countries 1751 to 2017 20
Exhibit-2.4 Global climate risk index, 2000–19 21
Exhibit-2.5 Climate event hotspots in India 21
Exhibit-2.6 Some aspects of Climate Risk in India 22
Exhibit-2.7 Emissions per sector in India by source and consumption 23
Exhibit-2.8 India's Climate Commitments 24
Exhibit-2.9 Societal and economic changes for supporting decarbonization 25
CHAPTER-3: ENERGY TRANSITION PLANS OF DOMESTIC PUBLIC SECTOR OIL & GAS MAJORS Page No.
Exhibit-3.1 City Gas Distribution (CGD) projects of OIL in India 38
Exhibit-3.2 Phased Implementation Roadmap to Net Zero for IOCL 40
Exhibit-3.3 IOCL CBG projects - Implementation Timeline 42
Exhibit-3.4 Phased Implementation Roadmap to Net Zero for BPCL 43
Exhibit-3.5 Solar Power portfolio for BPCL 44
Exhibit-3.6 Key elements of roadmap to Net Zero by HPCL 46
Exhibit-3.7 Inventions planned by EIL to achieve Net Zero Target 54
Exhibit-3.8 EIL's experience in energy studies 56
Exhibit-3.9 Main areas to expand Organizational capabilities 57

THE GREEN SHIFT viii
CHAPTER-4: BIOFUEL OPPORTUNITIES IN INDIA Page No.
Exhibit-4.1 The Biofuel Value Chain 63
Exhibit-4.2 BiodieselOtake 74
Exhibit-4.3 Non-UCO Biodiesel Base Price 76
Exhibit-4.4 UCO Biodiesel Base Price 77
Exhibit-4.5 Keyvariableshavinganeectonproduction&availabilityofBiodiesel 77
Exhibit-4.6 The biodiesel value chain considerations 78
Exhibit-4.7 Biogas consumption under STEPS 80
Exhibit-4.8 Biogas consumption under SDS 80
Exhibit-4.9 Compressed Biogas (CBG) Production Process 81
Exhibit-4.10 Financial issues faced by CBG project developers 85
CHAPTER-5: THE INDIAN COOKING FUEL SCENARIO Page No.
Exhibit-5.1 Region-wise breakup of people needing access to clean cooking fuel 91
Exhibit-5.2 Population without access to clean cooking fuel 92
Exhibit-5.3 Abatement cost 92
Exhibit-5.4 Types of cooking fuel 93
Exhibit-5.5 Regional distribution of populations cooking with solid fuels 95
Exhibit-5.6 Share of households using LPG as a primary cooking fuel 100
Exhibit-5.7 Spread of cooking fuels across households 100
Exhibit-5.8 LPGre4llsperyear 101
Exhibit-5.9 Reasons for not having an LPG connection 103
CHAPTER-6: HYDROGEN Page No.
Exhibit-6.1 Use of hydrogen across various sectors 111
Exhibit-6.2 A comparison of the Government of India’s green hydrogen policies and the United Nations 112
Framework Convention on Climate Change (UNFCCC)
Exhibit-6.3 Production cost of green hydrogen worldwide by country in 2020 114
Exhibit-6.4 Producing hydrogen from coal 115
Exhibit-6.5 Pathway for hydrogen production from biomass 116
Exhibit-6.6 Regulatory Blend walls for hydrogen 120
Exhibit-6.7 Tolerance of existing components for hydrogen blending in natural gas 120
Exhibit-6.8 Build-upofhydrogenusageforre4ning,Ammoniamakingandotherpureuses 121
Exhibit-6.9 Trends in the Indian hydrogen demand 121
Exhibit-6.10 Global Ammonia Market 123
Exhibit-6.11 Indian Ammonia Market 123
Exhibit-6.12 Methanol Demand - domestic production & import, 2020-2050 124
Exhibit-6.13 Hydrogenproductioninndianre4neries(hydrogengenerationunits) 129

ix Final Report: Energy Transition Advisory Committee, MoP&NG
CHAPTER-7: ENERGY OPTIONS & ROADMAP FOR SURFACE TRANSPORT Page No.
Exhibit-7.1 Growing focus on Net Zero 135
Exhibit-7.2 Scope of emissions considered by sector (2020) 136
Exhibit-7.3 The Avoid-Shift-Improve Principle in action 139
Exhibit-7.4 Status and Evoloution of electric vehicle model availability,2015-2021 140
Exhibit-7.5 Number of available EV models relative to EV sales share in selected countries, 2016 and 2021 141
Exhibit-7.6 Power demand for a EV-centric transport sector 141
Exhibit-7.7 EzciencytoreduceoildemandandCO2emissions 146
Exhibit-7.8 EV Growth in India 151
Exhibit-7.9 EV Penetration in India 152
Exhibit-7.10 Estimated number of public charging 152
CHAPTER-8: ZERO CARBON SHIPPING Page No.
Exhibit-8.1 Global emissions, 2018 165
Exhibit-8.2 The shipping industry's GHG emissions trajectory, as foreseen by the Initial IMO Strategy 166
Exhibit-8.3 Ports in India 167
Exhibit-8.4 Maritime energy demand and projected fuel mix up to 2050 168
CHAPTER-9: SUSTAINABLE AVIATION FUEL Page No.
Exhibit-9.1 Phased implementation of CORSIA 174
Exhibit-9.2 Global progress in SAF (by Nov 2022) 175
Exhibit-9.3 Sustainability Criteria of ICAO before & after January 2024 176
Exhibit-9.4 Global SAF production facilities (operational) 177
Exhibit-9.5 Global SAF Policy Highlights 177
Exhibit-9.6 SAF Production Pathways 178
Exhibit-9.7 Comparison of SAF production pathways in an Indian context 179
Exhibit-9.8 Impact of increasing sales quantity on cost of production & SAF price 180
Exhibit-9.9 The book and claim model explained 181
Exhibit-9.10 RSB’s book and claim system 181
CHAPTER-10: NATURAL GAS AND LNG Page No.
Exhibit-10.1 Role of Natural Gas in India's Energy Transition 189
Exhibit-10.2 Speci4cCarbondioxideemissionfromvariousfuels 190
Exhibit-10.3 Share of Gas in India's primary energy mix and power generation mix 190
Exhibit-10.4 Noti4edAPM/NAPMandDeepwater+HTPTprices 192
Exhibit-10.5 Year-wise details of GA authorized in India 193
Exhibit-10.6 Year-wise CNG station and PNG connection across India 194
Exhibit-10.7 Natural Gas production by Company Ownership 197

THE GREEN SHIFT x
CHAPTER-10: NATURAL GAS AND LNG Page No.
Exhibit-10.8 India Gas Consumption split by domestic & imported gas, 2011-22 197
Exhibit-10.9 ndia'sgasdemandforecastwithprojectedgrowthindependencyonLNG/imports 198
Exhibit-10.10 MajorNaturalgas(Pipeline+LNG)trademovementin201 199
CHAPTER-11: DIESEL- FUTURE POSSIBILITIES & BLENDING Page No.
Exhibit-11.1 Diesel Consumption in India 207
Exhibit-11.2 Diesel consumption across various sectors 208
Exhibit-11.3 Production of passenger vehicles by fuel tyoe 209
Exhibit-11.4 Sales of SUV in India 210
Exhibit-11.5 Sales of 3-Wheeler in India 211
Exhibit-11.6 Sales of Commercial Trucks 212
Exhibit-11.7 CNG stations across India as of May 2021 214
Exhibit-11.8 Tractor sales in India 216
Exhibit-11.9 Production Capacity vs volume of biodiesel in India 218
Exhibit-11.10 Global production of renewable diesel 219
CHAPTER-12: TECHNOLOGY, INNOVATION AND POLICY SUPPORT Page No.
Exhibit-12.1 Modelling for annual investment until 2050 207
Exhibit-12.2 Investment required towards energy transition 208
Exhibit-12.3 O&Gacquisition/investmentinnewenergy,greentechordigital 209
Exhibit-12.4 Digital Initaitives by Global O&G majors 210
Exhibit-12.5 Green Tech Market Split, by Technology 211
Exhibit-12.6 Digitizingassetscanhelprealizesigni4cantvalue 212
Exhibit-12.7 Align operations and management with consistent KPIs, linked to emission targets 214
Exhibit-12.8 TMESmodellingofenergysystemRowsprovidesholisticSoutheastAsiacountry-wideview 216
Exhibit-12.9 Climate Innovation Canvas unlocks business value while accelerating sustainability goal 218
Exhibit-12.10 Abatement & green growth technologies on the path to net zero 219
Exhibit-13.1 Evolution of cumulative CO2 emission by world region 241
Exhibit-13.2 ThendianGreenFinancingEcosystemisinearlystages,urgentscaling-upof4nancesneeded 243
Exhibit-13.3 Bankability of Climate Change opportunities vary 245
Exhibit-13.4 Indian Solar Installation 246
Exhibit-13.5 Climate Finance Strategy 248
Exhibit-13.6 Fivearchetypeinvestmentbarriersthatcatalyticpublic4nancecanaddress 256

xi Final Report: Energy Transition Advisory Committee, MoP&NG
Exhibit-14.1 Mitigation pathways compatible with 1.5°C targets as per IPCC 262
Exhibit-14.2 Explaining carbon credits 263
Exhibit-14.3 Contribution of measures for reducing aviation sector emissions 265
Exhibit-14.4 Basics of Carbon Credits - Generation & Use 267
Exhibit-14.5 Role of respective stakeholders in carbon market 270
Exhibit-14.6 End-to-end processes trading for respective stakeholders 272
Exhibit-15.1 Key aspects for an orderly energy transition 277

THE GREEN SHIFT xii
L IS T OF T ABL E S
NO. TITLE Page No.
CHAPTER-3
Table-3.1 Decadal reduction in carbon footprint 37
CHAPTER-4
Table-4.1 Biofuel Production Share Ranking & Major Feedstock 62
Table-4.2 Trend in ethanol blending in India 64
Table-4.3 Ethanol demand projection 65
Table-4.4 Feedstock for Production 65
Table-4.5 Ethanol Capacity Augmentation (20% blending by ESY 2025-26 69
Table-4.6 Biodiesel Production in India (2018-19) 75
Table-4.7 Status of UCO EOI Initiative 76
Table-4.8 CBGSpeci4cationasperS16087:2Standard 79
Table-4.9 Feedstock wise potential for production of CBG 82
Table-4.10 Procurement price of CBG 84
CHAPTER-6
Table-6.1 Comparison of three electrolyzer technologies 113
Table-6.2 Hydrogen Storage 117
Table-6.3 Hydrogen Transport 118
Table-6.4 Indian O&G sector Green Hydrogen Plans 129
Table-6.5 Electrolyser Technology Providers 130
CHAPTER-7
Table-7.1 India's policy landscape supporting EV propagation 148
Table-7.2 Fuel-wise cost estimates for setting up new refuelling stations 152
CHAPTER-8
Table-8.1 Transportsectorspeci4cemissions,2018 165
CHAPTER-10
Table-10.1 LPG Import Quantity & Cost 191
Table-10.2 Existing LNG Terminals 201
Table-10.3 Proposed/UpcomingLNGTerminals 201
Table-10.4 Global Strategic Gas Storages 202
CHAPTER-15
Table-15.1 Examples of Transition roadmaps of some countries 278
Table-15.2 Examples of implementaion stragies adopted by some countries 280
Table-15.3 Examples of how countries have developed platforms for reporting of accurate data 282
xiii Final Report: Energy Transition Advisory Committee, MoP&NG
ABBREVIATIONS USED
A&N Andaman & Nicobar E&P Exploration & Production
AEM Anion Exchange Membrane EBP Ethanol Blended Petrol
AFID Alternative Fuel Infrastructure Directive EIL Engineers India Limited
AFIR Alternative Fuels Infrastructure Regulation EOI Expression of Interest
APM Administrative Price Mechanism EOR Enhanced Oil Recovery
ATF Aviation Turbine Fuel ESG Environmental Social and Governance
ATJ Alcohol To Jet ETS Emissions Trading System
BAU Business As Usual EU European Union
BEV Battery Electric Vehicle EV Electric Vehicle
BPCL Bharat Petroleum Corporation Limited EVSE Electric Vehicle Supply Equipment
CAGR Compound Annual Growth Rate FAME Faster Adoption and Manufacturing of
Electric and Hybrid Vehicles scheme
CBG Compressed BioGas
FCI Food Corporation of India
CCEA CabinetCommitteeonEconomicAairs
FCV Fuel Cell Vehicle
CCS Carbon Capture and Storage
FOM Fermented Organic Manure
CCUS Carbon Capture Utilization and
Sequestration FPO Farmer Producer Organizations
CDU Crude Distillation Unit FSSAI Food Safety & Standards Authority of India
CEF CORSIA Eligible Fuel GA Geographical Area

CEMILAC Centre for Military Airworthiness and GAIL Gas Authority of India Limited
Certi4cation
GDP Gross Domestic Product
CGD City Gas Distribution
GHG Green House Gas
CHC Custom Hiring Centre
GtCO2e Gigatonnes of CO2equivalent
CIS Commonwealth Independent States
HCV Heavy Commercial Vehicle
CMP Comprehensive Mobility Plan
HDV Heavy Duty Vehicle
CNG Compressed Natural Gas
HEFA Hydro-processed Esters and Fatty Acids
COP Conference of the Parties
HPCL Hindustan Petroleum Corporation Limited
CORSIA CarbonOsettingandReductionScheme
for International Aviation HSD High Speed Diesel
CPSU Central Public Sector Undertaking ICAO International Civil Aviation Organization
CSIR-IIP CouncilofScienti4candndustrial ICE Internal Combustion Engine
ResearchndiannstituteofPetroleum
ICM Indian Carbon Market
CSP Concentrated Solar Power
ICP Internal Carbon Pricing
CVs Commercial Vehicles
IEA International Energy Agency
DFC Dedicated Freight Corridor
IIoT Industrial Internet of Things
DFPD Department of Food and Public
Distribution IMF International Monetary Fund
DFS Department of Financial Services IMO International Maritime Organization
DGCA Directorate General of Civil Aviation IOCL Indian Oil Corporation Limited
DME DiMethyl Ether IOCs International Oil Companies

THE GREEN SHIFT xiv
IPCC Intergovernmental Panel on Climate Change PEM Proton Exchange Membrane
IR Indian Railways PESO Petroleum and Explosives Safety

Organization
ISMA Indian Sugar Mills Association
PLI Production-Linked Incentive
KLPD Kilo Litre Per Day
PMUY Pradhan Mantri Ujjwala Yojana
KPI Key Performance Indicator
PNG PipedNatural Gas
kWhr Kilowatt Hour
PNGRB Petroleum and Natural Gas Regulatory
LCFS Low Carbon Fuel Standards Board
LCV Light Commercial Vehicle PROM Phosphate Rich Organic Manure
LDV Light Duty Vehicle PtL Power to liquids
LFOM Liquid Fermented Organic Manure REC RenewableEnergyCerti4cates
LNG Lique4ednaturalgas RED Renewable Energy Directive
LOHC Liquid Organic Hydrogen Carriers REDD+ Reducing Emissions from Deforestation
and forest Degradation
LOI Letter of Intent
RRT Regional Rapid Transport
LPG Lique4edPetroleumGas
RSB Roundtable on Sustainable Biomaterials
MCX Multi Commodity Exchange
RUCO Repurpose Used Cooking Oil
MEPC Marine Environment Protection Committee
SAF Sustainable Aviation Fuel
MMSCMD Million Metric Standard Cubic Meters per Day
SATAT SustainableAlternativeTowardsAordable
MNRE MinistryofNewandRenewableEnergy Transportation
MoEFCC Ministry of Environment, Forest and SDG Sustainable Development Goal
Climate Change
SDS Sustainable Development Scenario
MoPNG Ministry of Petroleum and Natural Gas
SIAM Society of Indian Automobile Manufacturers
MS Motor Spirit
SMBA Simulated Moving Bed Absorption
MSME Micro, Small and Medium Enterprise
SMR Steam Methane Reforming
MSW Municipal Solid Waste
SOEC Solid Oxides Electrolyzer Cell
MWP Minimum Work Program
SPV Special Purpose Vehicles
NDC Nationally Determined Contribution
STCH Solar ThermoCHemical
NG Natural Gas
STEPS Stated Policies Scenario
NOCs National Oil Companies
TBO Tree Borne Oil
O&G Oil and Gas
TCO Total Cost of Ownership
OECD Organization for Economic Co-operation
and Development UCO Used Cooking Oil
OEM Original Equipment Manufacturers UGS Underground Storage Reserves
OGMC Oil and Gas Marketing Company UN United Nations
OIL Oil India Limited VC Venture Capital
OMC Oil Marketing Company VCM Voluntary Carbon Markets
ONGC Oil & Natural Gas Corporation VDU Vacuum Distillation Unit
PAT PerformAchieveandTrade scheme WEF World Economic Forum
PE Private Equity ZEV Zero Emission Vehicle

xv Final Report: Energy Transition Advisory Committee, MoP&NG
Chapter
i
PREFACE
THE GREEN SHIFT xvi
PREFACE
THE CLIMATE CONTEXT 1
Based on the current policy pathway defined by thereafter due to the electrification of vehicles.
countries worldwide, the earth is expected to be LPG demand is expected to decline after 2030,
2.7-3.5°C warmer than pre-industrial temperature ceding ground to PNG for which massive CGD grid
levels by the end of this century. The European expansion is underway, and then electrification
Union, United States, and China, contributing of cooking and reduce to zero by 2070. Aviation
more than 50 percent of global CO2 emissions, fuel demand is expected to continue to grow
have set their aspirations to become climate at 3.5% CAGR but will be gradually substituted
neutral by 2050 to 2060. However, these policies by SAF (50% blending by 2070) due to CORSIA
would still lead to a temperature increase of more mandates. Naphtha demand is expected to
than 2°C & 4°C, respectively, which is not in line rise at 4.5% CAGR (2030-50) and 2.3% CAGR
with the CoP 21 target of keeping temperature (2050-70) because of increasing demand for
well below 2°C compared to pre-industrial levels petrochemicals. However, effective demand may
and preferably to 1.5°C pathway. be lower because of increased recycling activity.
However, the consumption and demand growth
To successfully meet this target for limiting global
trends for fossil fuel-based energy products in
warming, it is crucial to reduce GHG emissions
India will differ from global trends for at least
in the next eight years by around 50 percent,
another 15 to 20 years. The transition journey is
in addition to other actions, such as expanding
the function of the low level of current per capita
renewable energy, decarbonizing the transport
energy consumption, which is about one-third
and industrial sectors, rapidly phasing out coal,
of global per capita energy intake, and need for
and investing in carbon removal.
more energy intake as Indian economy clocks
Over 2,200 companies have committed to high growth rates over coming decades to sustain
science-based targets, and twice as many have improving standards of living in the country.
taken decarbonization action. In addition, climate
Globally as well as for India, the rate of transition
commitments made by a majority of the top 20
in fossil fuel consumption primarily depends on
companies in steel, aviation, vehicle OEMs, oil &
the shift in the auto sector to EVs. As of date, India
gas, and chemicals sectors address over 85% of
has a crude refining capacity of About 260 MMT.
their combined production, thus accelerating the
During the year 2021-22, India imported 42 MMT
energy transition.
of Petroleum products and at the same time
The role of electricity in the final consumption exported about 63 MMT of products. For a country
mix is expected to grow from approximately like India which is about 85% import-dependent
20 percent today to more than double by 2050. for crude, having 100% coverage with a sufficient
As most projections suggest, total fossil fuel safety factor is critical in respect of refinery
demand is projected to peak before 2030 and is capacity for India, as surplus refining capacity is a
expected to drop by 40 percent by 2050 when hedge against the situation of product shortages.
it will make up only 43 percent of global energy
Having achieved the target of 10% EBP in May
demand. Globally, renewables are projected to
2022, India has preponed target of achieving 20%
dominate the power generation mix, reaching
ethanol blending and 5% biodiesel blending, by
up to 80 - 90 percent in 2050. However, given
the year 2025 and 2030, respectively. Consistent
the different starting points from which various
with global trends, India is also witnessing early
nations are commencing their transition journey,
signs of transition towards EVs on the back of
the trends around energy usage and the role to
policy mandates. However, as the issues related
be played by different energy sources could see
to battery technology and range anxiety of EVs
diverging trends.
are expected to get addressed over the next
In India, MS and HSD demand are expected two to three years, the off-take of diesel and
to peak in 2040 and are projected to decline petrol may not sustain its growth trajectory.
xvii Final Report: Energy Transition Advisory Committee, MoP&NG
Additionally, railways being a safer and greener be critical suppliers of incremental energy and
mode of transport, will garner a higher share in economic development. Through well-targeted
passenger and freight traffic over time. India's PLI schemes, introduced by the government
strategic refinery expansions could see a change, recently, the domestic capacity in technology
especially with the rise in petrochemical demand. and related equipment & hardware has increased.
This has helped in building leadership positions.
Due to declining costs, most of the growth in
As the world speeds along its transition journey,
renewables is expected to come from solar and
the intermittency issue is likely to get addressed
onshore wind. This trend of lowering costs is
with renewables through round-the-clock power
expected to continue, resulting in faster adoption
on the back of advancements in battery storage
of renewables and an accelerated transition from
technology, pumped hydro and upgraded
conventional fossil fuels. As renewable sources
intelligent electricity grids. Some of these areas
deliver green energy at significantly lower prices
will serve as high-investment and innovation
than fossil-fuel-based energy, the Government's
areas requiring sustained focus & support.
policy support for the sector has exhibited
significant success. These supply sources will
The Oil & Gas Value Chain
OIL & GAS EXPLORAT ION

& PRODUCT ION
The Oil &

Gas Value T RANSPORT & ST ORAGE
Chain
PRODUCT GENERAT ION

& USAGE
1
IEA 2021 India Energy Outlook
THE GREEN SHIFT xviii
THE INDIAN OIL & GAS INDUSTRY LANDSCAPE2
The oil and gas sector is a key prime mover for the three of which are private. Refineries in the public
Indian economy, influencing the country's energy sector processed 138.08 MMT of crude oil in FY 22,
transition-related decision-making process. India up 1.65% from 108.03 MMT in FY 17. On the other
has become a $3 trillion economy and is likely hand, the throughput of crude oil in private-
to become a $5 trillion by 2026-27. This growth sector refineries increased at a CAGR of 6.27%
is essentially fuelled by increased consumption from 33.43 MMT to 83.18 MMT at the same time.
of energy. Unfortunately, this also entails an
In 2017, the government mandated the refineries
increase in hydrocarbon emissions. Hence, India
to deliver Bharat Stage VI (equivalent to Euro
has to increase its energy supply in a sustainable
Stage VI) automotive fuels from April 2020, a jump
manner that does not result in huge increase in
from Bharat Stage IV standard fuels prevalent
the emissions.
at that time. The refineries have upgraded their
On the energy supply side, India has 23 refineries, facilities to comply and have been able to ensure
18 of which are public, two of which are joint, and BS-VI standard fuels across all states.
Off-shore oil & gas platform Onshore pump jack

UP S TRE A M
Upstream refers to the exploration & production of crude oil /
natural gas from underground reservoirs, aspects like covering
searching, discovering, recovering and manufacturing.
Process & Storage Transport

M I D S TREA M
In the midstream segment, the crude oil and natural gasses are
processed, stored, and then transported.
Distribution, Sales,
D O WN S TRE A M Refining
Marketing & Retail
Downstream is the final stage in the oil and gas industry. This
comprises everything that is done to turn crude oil and natural
gas into various finish products that we need on a daily basis.
2
IBEF, September 2022
xix Final Report: Energy Transition Advisory Committee, MoP&NG
INDIA'S OIL & GAS INDUSTRY:

A SNAPSHOT
~30 MMT
Domestic crude oil
production
~200 MMT
Domestic consumption of
petroleum products
~250 MMT
Domestic petroleum
product production
~34k M M S C M
Gross Natural Gas
production
Source: Snapshot of India's Oil & Gas data - Oct, 2022, Petroleum Planning and Analysis Cell (PPAC), Ministry of Petroleum & Natural Gas, GoI
THE GREEN SHIFT xx
~64k MMSCM
Annual Natural Gas
consumption
~115 BI LLI O N $
Net import of Oil & Gas
products
86 PERCENT
Crude oil import
dependency*
* on POL consumption basis
~24 P E R C E N T
Petroleum product import
to India's gross imports**
** in value terms
xxi Final Report: Energy Transition Advisory Committee, MoP&NG
THE LOW CARBON OIL & GAS TRANSITION
The oil & gas sector is likely to be significantly oil & gas companies to minimize emerging risks
disrupted by climate change and changing associated with the fossil fuel business.
stakeholder expectations. The industry must
Energy transition has been taking place over
reorient its business model to develop capability
the years. From a world overwhelmingly
and capitalize on emerging opportunities
dependent on bio-based energy, the Industrial
around energy transition and net zero. The
revolution was fuelled by a coal-driven energy
sector needs to adapt and pursue businesses in
supply. During the 20th century, oil and gas
new areas like CCUS, Biofuels, Hydrogen, Energy
upstaged coal as a dominant source of energy
Efficiency etc. The companies will be better
supply. Humanity's growth and prosperity have
placed to capitalize on the emerging business
been directly dependent on the improved
opportunities within the overall energy domain
energy supply value chain. Unfortunately, in the
based on adjacency criteria to continue growing
process, humanity has already exhausted nearly
their businesses as the country transitions for
75% of the carbon budget, and now it faces the
the benefit of all the stakeholders.
spectre of self-inflicted disasters. In this context,
The oil & gas sector entities in the public new found urgency and seriousness augur well
and private sectors are aware of the global to bring the issue of climate to centre stage,
developments around energy transition and net and it is critical that from now on, the policies
zero. Many Indian companies are developing and businesses are driven by factoring in the
ESG & energy transition targets and starting to centrality of the need to transition to net zero
pursue opportunities around low-carbon energy at the earliest possible. With its demonstrated
opportunities. Also, ESG has become a critical credentials to back the talk with actions, India is
statutory requirement with SEBI's introduction poised to play a critical role in the global energy
of Business Responsibility Sustainability transition. From this perspective, in the year
Reporting. As companies' core competencies of India's G-20 Presidency, it is expected that
are strengthened around energy transition and the reports like this will help trigger follow-up
ESG, the sector's efforts on energy transition actions to meet the country's goals for a smooth,
would gain traction in the country and enable orderly and just energy transition.
THE GREEN SHIFT xxii
Chapter
1
THE GLOBAL
ENERGY
TRANSITION
SCENARIO
In this section
1. Global action on climate change 3
2. Climate response of select countries/ regions 5
3. Current response is insufficient to limit Global 6

Warming
4. Minimal long-term impact of COVID-19 on 7
emissions
5. Role of Private sector 8
6. Change in global energy mix 10
7. Projections for fossil fuel and renewables 11
9. Conclusion 13
3 Final Report: Energy Transition Advisory Committee, MoP&NG
THE GLOBAL ENERGY

TRANSITION SCENARIO
GLOBAL ACTION ON CLIMATE CHANGE
Since 1995, when the very first Conference of at the UN Climate Change Conference in 2021 in
the Parties (COP) took place in Berlin to forge Glasgow (COP 26), there was commitment and
international cooperation to combat climate momentum toward attaining this goal, but those
change, the issue of climate change has pledges will only limit global warming to 2.4°C. At
transformed from a fringe topic to a global priority. this point, a 1.5°C pathway seems like a mirage in
197 countries signed the Paris Agreement at the the rapidly warming world around us. The build-
2015 conference, committing to limit the global up has continued through COP 27.
temperature increase to below 2°C. Six years later,
Exhibit-1.1: Annual GHG emissions and expected global warming, GtCO2 equivalent
180
160 Absence of
Climate Policies
140 Scenario
120 (4.1 - 4.80C)
100
1 Action Taken
80
60
Current Policies
Scenario
40 ~50 ~50 - 60
(2.7 - 3.50C)
2 Gap
20
Paris Agreement
0
(1.5 - 2.00C)
-20
1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
Source: Paris Agreement; Climate Action Tracker; Intergovernmental Panel on Climate Change
The Emissions Gap Report 2021, an annual report Alongside the current policies set out by various
that shows the gap between actual greenhouse governments, reaching the targets set by the Paris
gas (GHG) emission levels and the levels required Agreement will require additional action, such as
to combat climate change, points out that all of expanding renewable energy, decarbonizing the
the current national climate pledges and other transport and industrial sectors, rapidly phasing
mitigation efforts will still set the world on the out coal, and investing in carbon removal.
path to a global temperature rise of 2.7°C by the
end of this century. The only way to keep the
world on the 1.5°C pathway is by halving GHG
emissions in the next eight years.1
1
See the report here: https://www.unep.org/resources/emissions-gap-report-2021
THE GREEN SHIFT 4
Exhibit-1.2: Global CO2 emissions in an orderly 1.5ºC transition
Positive emission 1.50C pathway
2 Negative emission (CCSU) 1.50C pathway
50-55%
3
drop by 2030
Net Zero
emissions by 2050
2010 2018 2030 2050
570 GtCO2 cumulative carbon budget from 2018 onwards
Source: McKinsey Energy Insights Global Energy Perspective 2021, December 2020; McKinsey 1.5ºC Pathway
Developed regions are big contributors to CO2 Kazakhstan, are among the highest contributors
emissions on a per capita basis, in particular, in their regions and worldwide. Africa and
North America, Europe, Northeast Asia, and Latin America contribute relatively little to CO2
Australia. However, countries that are active emissions; however, this is expected to change
in oil production, such as Saudi Arabia and with increasing growth in GDP.
Exhibit-1.3: CO2 emissions per capita in 2017, metric tons of CO2
0-5t
6 - 10 t
11 - 15 t
16 - 20 t
> 21 t
Source: Carbon Dioxide Information Analysis Center; Global Carbon Project; Gapminder; United Nations
POLICIES IN SELECT
COUNTRIES & REGIONS
The European Union, United States, and China nationally determined contributions (NDCs) under
contribute more than 50 percent of global CO2 the Paris Agreement:
emissions. They have put forth the following
THE EUROPEAN UNION (EU)
By 2050, the EU aims to be climate neutral. The world’s first major carbon market. The European
target is expected to be reached through systems Union submitted its NDCs with the following
such as the EU Emissions Trading System, the targets:
EU NDC TARGETS
Cut GHG emissions by at Increase renewable energy Improve energy efficiency

1 2 3
least 55 percent from 1990 share to at least 32 percent by at least 32.5 percent
levels by 2030
THE UNITED STATES OF AMERICA (USA)
The Biden administration brought the United country has set the following goals for fighting
States back into the Paris Agreement. The climate change:
USA NDC TARGETS
Reduce GHG emissions by Be climate neutral by 2050

1 2
at least 50 to 52 percent
from 2005 levels by 2030.
CHINA
China became the world's largest emitter of In 2020, China's President Xi Jinping said his
carbon dioxide in 2006 and is now responsible country would aim for its emissions to reach
for more than a quarter of the world's overall their highest point before 2030 and for carbon
greenhouse gas emissions. neutrality before 2060.
CHINA NDC TARGETS
Reduce GHG emission The share of non-fossil share Be climate neutral by 2060
1 2 3
intensity by at least 65 in primary energy mix to be
percent from 2005 levels by around 25 percent by 2030
2030.
THE GREEN SHIFT 6
CURRENT RESPONSE IS INSUFFICIENT

TO LIMIT GLOBAL WARMING
As of November 2022, 139 nations have committed committed to be net zero by 2070, with current
to achieving net zero. Only three countries (Bhutan, policies consistent with 20C temperature rise
Suriname and Panama) have already achieved net However, the current policy pathway is expected
zero, 18 countries have all the necessary legislation to lead to warming of 2.7°C to 3.5°C by 2100.
in place, and another 38 have proposed suitable Government policies have very limited scope;
legislations. Currently, 18 countries are working on carbon markets set up by governments only cover
a policy document and more than 60 countries 20% of global emissions, and policies of two of the
are working on arriving at a target. The countries top CO2 contributors, the European Union & United
that have established net-zero targets represent States, would lead to a temperature rise of more
83 percent of all fossil fuel emissions.2 India has than 2°C and 4°C, respectively.
Exhibit-1.4: Countries that have committed to net zero by 2050
x change since 2019

3 Achieved net zero emissions
18 Legislation in place +16
38 Proposed Legislation +34

“
“
In policy
18 document +13 Countries with net zero targets represent
83% of global fossil fuel emissions
60+
Target under
+~50 83% 62%
discussion
2019 natural 2019 oil
gas emissions emissions
Source: Energy & Climate Intelligence Unit- Net Zero Tracker
Exhibit-1.5: Current policy warming scenarios
+4.00C Critically Insufficient

• Argentina
• Russian Federation
• Saudi Arabia
• USA
3.1-4.00C Highly Insufficient

• China
• Japan
• Singapore
• South Africa
• South Korea
2.1-3.00C Insufficient
• Australia
• Canada
• EU
• Mexico
• New Zealand
1.5-2.00C 20C Compatible

• Costa Rica
• Ethiopia
• India
• Kenya
• Philippines
<1.50C 1.50C Paris Agreement

Compatible
Source: • Morocco
Climate Action Tracker • The Gambia
2
Net Zero Tracker, Energy & Climate Intelligence Unit
MINIMAL LONG-TERM IMPACT OF THE

COVID-19 PANDEMIC ON EMISSIONS
As economies recovered, emissions in 2021 the emissions peak) or growing. Unlike other
rebounded by 4 percent after declining 5 percent countries, China’s emissions grew in 2020, driven
in 2020. Global emissions in 2021 remained one by rapid recovery and growth in coal consumption
percent below 2019 levels. Both coal and gas during the second half of 2020. High GDP growth
emissions were higher than 2019 levels, and oil in 2021 accelerated the increase in emissions past
emissions only partially rebounded in 2021, mainly China’s historical trajectory.
due to the slow recovery in aviation.
Overall, the majority of the emissions reduction
In most countries, emissions in 2021 remained impact of the COVID-19 pandemic was temporary,
below historical trajectories, regardless of whether as economies began to recover in 2021.
their emissions are structurally declining (i.e., past
During pandemic, greenhouse gas

emissions plummeted by a record
amount. But, in the grand scheme
of climate change, this historic
reduction was but a blip with little
impact on atmospheric carbon
dioxide levels ...
... Austerity cannot lead to a net
zero economy. Green transition
needs a new mode of production
and consumption. Post-crisis
investments must accelerate
economic transformation to ensure
that we recover better together".
- UN.org
THE GREEN SHIFT 8
ROLE OF THE PRIVATE SECTOR

Across the world, the onus for halving emissions by Energy use alone accounts for 83 percent of the
2030 to move toward the 1.5°C target falls heavily CO2 emitted worldwide. Power and industry are
on the power sector, industry, and mobility, which major consumers of energy and generate around
together contribute over 80 percent of the entire 60 percent of all CO2 emissions.
CO2 emissions.
Exhibit-1.6: Scope 1 & 2 CO2 emissions in 2020, Mt CO2 per sector
Scope 1 & 2 Oil and Gas Key industries as Scope 3 Oil and Gas
5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
800 400 100 100 ~42,000

900
2,200 1,300
2,300
2,600
2,900
3,100
5,600
8,800
900 700
2,900
3,900
1,600
0
Chemicals
Coal Power
Passenger Cars
Gas Power
Aviation
Oil Power
Deforestation
Building
Other Industries
Other Road
O&G
Iron & Steel
Cement
TOTAL
Agriculture
Marine
Mining
Rail
Waste
Share of CO2
per sector
4% 10% 7% 2% 2% 21% 14% 8% 7% 6% 6% 5% 3% 2% 2% 1% 0% 0%
Source: Global Energy Perspective – Reference Case 2019; McKinsey 1.50C Scenario Analysis
The decarbonization of oil and gas is an increasing the solution and contribute towards lowering its
priority, given the industry’s scale and carbon carbon footprint and elongating legacy assets’
intensity. In oil and gas, scope 1 and 2 emissions usage life through better energy efficiency, focused
account for about 4 percent (approximately control of its operations and improvements in its
1,600 million tonnes of CO2 per year) of global supply chain besides technological enhancements
CO2 emissions, whereas scope 3 emissions for oil in core operations as the world treads on its journey
and gas are larger than scope 1 and 2 combined, towards net zero.
at about 8,400 million tonnes of CO2 per year
As countries have announced net zero
(approximately 20 percent of the global total) if
commitments, so have many corporations.
combustion of products is included. Within the
Already, nearly 3,000 corporations and financial
industry globally, upstream operations contribute
institutions are working with the Science-based
about 40 to 50 percent of emissions in oil and
Targets Initiative (SBTi) to reduce their emissions
gas, while refining operations contribute 30 to 40
in line with climate science. The Indian oil and gas
percent of emissions. The world is likely to continue
companies, being aware of the task at hand, are
using fossil fuels to secure energy for a long time.
gearing towards their net zero targets.
Therefore, the fossil fuels industry can be part of
Exhibit-1.7: Decarbonisation targets set by various Oil & Gas Companies
International Oil Companies (IOCs) National Oil Companies (NOCs) Downstream Players
Scope 1+2 +3 1+2 3 1+2 3 1+2 3 1+2+3 1+2 3 1+2 1+2 1+2 1+2 1+2 1+2
2020 N/A N/A
2025 -40% oil, Cap GHG

-15% to
-25% gas emissions to
-20%
upstream -15% 49.5 MMtCO2e
-20% upstream -35% -15% -29% to -20% to
2030 intensity intensity
intensity
intensity
product
intensity
at Malaysian
-41% -27%
-26%
(2023) intensity operations
-30%
2035 intensity
Net Zero
-35% Carbon
2040 intensity Neutral
2045
Net Zero Net Zero in

(100% -65% -50% EU, -60%
2050 reduction in
intensity
Net Zero
intensity intensity
Net Zero Net Zero
net carbon
footprint) worldwide
Source: Company Reports
Even in hard-to-abate sectors, some of the In all these sectors, the top 20 largest companies
world’s largest companies are setting ambitious represent at least 30 percent of their entire sector,
decarbonization targets. Climate commitments with the top 20 vehicle OEMs representing 85
made by majority of top 20 companies in the steel, percent of the total sector production. Between
aviation, vehicle original equipment manufacturers six to 13 of the top 20 companies in each sector
(OEM), oil and gas, and chemicals sectors address have taken their ambitions a level further and
over 85 percent of their combined production. committed to net zero or climate neutrality.
Exbibit-1.8: Companies with net-zero targets in their respective sectors, out of the top 20
No climate commitments Other climate commitments Net Zero or climate neutral
Of the 20 largest..
Steel Vehicle Oil & Gas Chemical

Producers1 Airlines2 OEMs3 Producers4 Producers4
13 have committed to
net zero by 2050 13 have committed to
net zero by 2050 6 have committed to net
zero by 2050
Share based on combined production
10% 10% 10% 10% 15%

8% 11%
22%
36%
44%
81% 79%
68%
54%
41%
1
20 largest steel producers represent ~38% of global production; 4
20 largest oil & gas producers represent ~54% of global production;
2
20 largest airlines represent ~20% of global air traffic; 5
20 largest chemical producers represent ~50% of global production
3
20 largest vehicle OEMs represent ~85% of global car sales;
Source: Company reports; Science Based Targets

THE GREEN SHIFT 10
CHANGE IN GLOBAL ENERGY MIX

Despite the rapid growth of the global economy The share of electricity in the final consumption mix
and population increase by two billion people, is expected to grow from approximately 20 percent
energy consumption is projected to grow by only today to 40 percent by 2050. The corresponding
15 percent until 2050. doubling of electricity consumption, combined
with the uptake of hydrogen, is expected to
Continued reduction in the energy intensity of
offset fossil fuel consumption (excluding primary
GDP is going to be a key driver, triggered by a
demand for coal and gas for power generation),
rise in end-use efficiency of buildings, transport,
which is expected to be about 40 percent lower in
and industry, as well as electrification, as a shift
2050 compared to 2020.
to electrical solutions tends to come with a large
increase in efficiency in many segments, such as
space heating and passenger cars.
Exhibit-1.9: Final energy consumption by fuel, Million Tera-joules
CAGR 2019-50
500
Other1 2.3%
14%
400
32%
Electricity 2.8%
50%
300
Hydrogen 6.5%
200
Bio-energy 0.7%
Natural Gas -1.6%

100
Oil -1.9%
Coal -1.5%
0
1990 2000 2010 2020 2030 2040 2050
7
6
5 5 4
3
Energy intensity of
GDP, MJ/$
48 50 53 55 53 50
Energy
consumption per
capita, GJ/capita
1999-2000 2000-2010 2010-2020 2020-2030 2030-2040 2040-2050

1
Includes heat and synthetic fuels
Source: McKinsey Global Energy Perspective 2022

PROJECTIONS FOR FOSSIL FUEL

& RENEWABLES
Total global fossil fuel demand is projected to peak of countries, they will cede part role to renewables
before 2030 and is expected to drop by 40 percent which will see their share rise over the years. It is
by 2050 when it will make up only 43 percent of also expected that gas being an ideal bridge source
global energy demand. Natural gas is projected to of energy, could witness its share go up within
continue to increase its share of the global energy ever reducing contribution by fossil fuels in some
demand in the next 10 to 15 years, the only fossil particular country / set of countries.
fuel to do so, and demand is expected to peak in
Renewables are projected to dominate the power
the late 2030s. Oil demand growth is expected
generation mix, reaching up to 80 to 90 percent in
to slow substantially, with a projected peak in
2050. Due to declining costs, most of the growth
the early 2020s, followed by a 51 percent decline
is expected to come from solar and onshore wind,
in demand by 2050, mainly driven by declining
which are predicted to make up 43 percent and
car-parc growth, enhanced engine efficiency in
26 percent of generation, respectively, in 2050.
road transport, and electrification. Coal demand
Offshore wind is projected to make up less than
is projected to decrease by almost 65 percent
7 percent of global generation due to permitting
between 2019 and 2050, driven mainly by phaseout
constraints and policy hurdles, with the potential
of coal plants in the power sector across regions.
to grow further if constraints arise for onshore
While fossil fuels are expected to see a significant
wind, such as land use. Thermal generation is still
reduction in their role in the energy mix, the trends
expected to play an important role as a flexibility
are expected to be divergent in different parts of
provider, with gas providing a substantial share
the world. In general, while fossil fuels will cede
of baseload generation up to 2040 in regions
their supremacy to renewables in the developed
with favorable fuel costs. Nuclear generation is
world, their usage in absolute terms is likely to
still expected to require economic support from
continue increasing. So there will be a time when
policies, which is not yet present in many regions as
fossil fuel usage will show divergent trends in
public acceptance continues to prove challenging.
different parts of the world, but even within this set
Exhibit-1.10: Global fossil fuel demand, Million Tera-joules
Historical 2024 Fossil Fuels

500 Projection
2035
400 2025
300
200 2013
100
0
1990 2000 2010 2020 2030 2040 2050
Demand Peak Coal Oil Natural Gas

THE GREEN SHIFT 12
Exhibit-1.11: Global power generation, Thousand Tera-Watt Hours
Other Coal Nuclear Solar Wind Onshore 83
Hydro Gas Hydrogen Fossil with CCUS WindOshore

70
58
48
39
32
27
24
22
18
15
13
1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Share of
20% 29% 60% 86%
Renewables
LONG-TERM TRENDS DRIVING TRANSITION
In the past five years, technological For an electric 2W vs. a petrol 2W, operating
improvements, economies of scale, and supply- costs considering fuel, maintenance, insurance,
chain optimization have lowered the cost of and financing is ~30% and the same are ~50-
solar photovoltaics (in dollars per kilowatt) by 60% for an electric car vs. a gasoline car, leading
50 percent and the cost of wind by 29 percent, to a TCO break-even for most vehicle types over
resulting in their fast adoption. This has resulted the next 10-15 years, led by 2Ws, followed by cars
in energy from 61 percent of new renewable and then CVs.
capacity installations being cheaper than from
Additionally, the missing piece for renewable
the plants using fossil fuel alternatives.
energy is the long duration energy storage
Continued research and expanding production technologies which will impact prices with the
capacity are driving down battery costs for declining costs of batteries.
electric vehicles and grid balancing, which
Emissions trading system schemes are
declined by 42 percent from 2017 to 2021.
increasing the price of emissions in Europe, with
Battery technology is in the transformative average CO2 prices in the EU increasing ninefold
phase on almost all relevant KPIs, for example, over the last five years.
energy density, thermal stability, charging life
Overall, these technology trends are expected
cycle and cost per kWhr. These factors have
to keep driving the adoption of renewable
lowered the overall upfront cost of acquisition
sources of energy and accelerate the transition
as the total cost of ownership has gone down,
away from crude oil-based sources.
and performance has improved.
CONCLUSION
Based on the current policy pathway defined by CAGR but will be gradually substituted by SAF
countries across the world, it is expected that the (50% blending by 2070) due to CORSIA mandates.
planet will be 2.7°C to 3.5°C warmer than the pre- Naphtha demand is expected to rise at 4.5% CAGR
industrial temperature levels by the end of this (2030-50) and 2.3% CAGR (2050-70) because of
century. The EU, United States, and China, which increasing demand for petrochemicals. However,
contribute to more than 50 percent of global CO2 effective demand will be lower because of the
emissions, have set their aspirations to become increase in recycling activities.
climate neutral by 2050 to 2060. However, these
The rate of transition in fossil fuel consumption
policies would lead to a temperature increase of
is primarily dependent on the shift in the auto
more than 2°C and 4°C, respectively, which is not in
sector to EVs. With an aggressive transition to EVs
line with the 1.5°C pathway.
due to policy mandates, there will be accelerated
To successfully meet the 1.5°C target for limiting repurposing / closure of refineries for renewable
global warming, it is important to reduce GHG energy / biofuel production and reduction of overall
emissions in the next eight years by around 50 carbon footprint.
percent, in addition to other actions, such as
Due to declining costs, most of the growth in
expanding renewable energy, decarbonizing the
renewables is expected to come from solar and
transport and industrial sectors, rapidly phasing
onshore wind. It is expected that this trend of
out coal, and investing in carbon removal.
lowering costs will continue, resulting in faster
Nearly 1,200 companies have established science- adoption of renewables and an accelerated
based targets, and twice as many have taken transition from conventional fossil fuels.
decarbonization action. Climate commitments
The world hopes and seems to be committed
made by the majority of the top 20 companies
to an orderly, painless and systematic transition.
in the steel, aviation, vehicle OEM, oil and gas,
However, it is quite likely that the world will witness
and chemicals sectors address over 85 percent of
turbulence of varying magnitude as it traverses its
their combined production, thus accelerating the
net zero journey. A world where all stakeholders
energy transition.
contribute and collaborate in achieving this
The role of electricity in the final consumption mix common objective could eliminate the pain.
is expected to grow from approximately 20 percent However, any transition intending to move away
today to 40 percent by 2050. As most projections from 80% of current energy sources and their
suggest, total fossil fuel demand is projected to replacement by renewables will face turbulence.
peak before 2030 and is expected to drop by 40 At times the transition is going to be messy. A
percent by 2050 when it will make up only 43 case in point is the recent problems being faced
percent of global energy demand. Renewables are, the world over due to the trinity of rising inflation,
thus, projected to dominate the power generation falling energy supplies and challenges to the
mix, reaching up to 80 to 90 percent in 2050. In global political order and heightened tensions.
view of differing ground conditions, the trends and Definition of what is sustainable and what is not
the role to be played by different sources could see will also keep getting upgraded over time as the
divergent trends. world becomes aware of the effects of the new
energy order. Sometimes the ground realities
In India, MS and HSD demand are expected to
(like increased usage of coal in many parts of the
peak in 2040 and are projected to decline post
world during the past few months and the recent
that due to the electrification of vehicles. LPG
discussions around gas and nuclear being green)
demand is expected to decline after 2030 due to
will dictate the choices, but hopefully, the world
the electrification of cooking and reduce to zero
will figure out a way to make it happen and help in
with 100% electrification by 2070. The demand
leading towards a 1.5-degree world.
for Aviation Fuel will continue to grow at 3.5%
THE GREEN SHIFT
14

Chapter
2
THE INDIAN
ENERGY
TRANSITION
In this section
1. The story in India 17
2. The risk of Climate Change 21
3. India's current state 23
4. Changes needed to support decarbonisation 25
5 Conclusion 29
THE STORY IN INDIA

Events over the last two years have brought the be ensured that the grid power supply reliability is
issue of energy security to the forefront all over consistently improved. Currently, only about 18%
the World. The monopoly of some countries of India’s energy needs are met through power
over the production and supply of energy, flowing from the grid. This has to increase fast to
particularly oil and gas, and the dependence of >40% by 2035. India must also look for technologies
certain nations on imports to meet even the basic to use coal without causing much environmental
energy requirements together have brought to damage in the medium term, for which R&D efforts
the fore global vulnerability, where the sustained need to be continued.
supply of energy was so far taken for granted.
An increased share of renewables will also
The world operated on the assumption of a free,
throw up challenges for balancing the grid
interdependent and transparent energy market
due to ever-increasing electricity consumption
where the demand and supply get balanced
and intermittency of electron supply through
through the interplay of market forces. Disrupted
renewables. The grid's transition from largely
supply chain and record high energy prices in the
coal-based fuel generation to renewable sources
wake of recent geopolitical events all raise the
has to happen fast. India has set a target of
need to move away from these assumptions and
500 GWs of non-fossil fuel installed capacity by
portend a painful and messy transition. Thus India
2030. The government has already developed
would need to tread a transition path based on
a trajectory for renewable purchase obligations
two pillars, viz. increasing its share of electricity in
to achieve this. This involves an increasing share
final energy consumption and harnessing the full
of Solar and Wind as the primary sources, with
potential of domestic renewable resources, which
Solar playing the lead. India also needs to explore
will result in reduced dependence on imports and
the possibility of increasing the share of Hydro.
provide the much-needed push to the rural / agri-
However, to balance the grid, a healthy ratio must
based economy. During the transition, it needs to
be maintained with a good combination of Wind,
THE GREEN SHIFT 18
Solar and Hydro. The changed energy mix would as more and more buildings becomes air-
also require investments in energy storage. In conditioned. This could be a large growth area as
view of the same being costly at this stage, the far as energy requirement in India is concerned.
National Load Dispatch Centre has to play a more Energy-efficient building designs with provision
active role. A thorough study of the load curve in for rooftop solar for new buildings have to be made
various parts of the country and regional variation mandatory. There is a requirement for an updated
in energy consumption patterns needs to be national-level building rating system that should
carefully carried out to ensure that all these major include renewable energy usage. This will generate
seasonal variations are taken care of at the national a requirement for many rating agencies and rating
level. Therefore, creating a national supply pool domain professionals to cover the entire country.
controlled by National Load Dispatch Centre could We already have an ECBC mechanism administered
be a good idea. Older coal-based thermal power by the Bureau of Energy Efficiency. This has to
plants may also not be retired but could be used include renewable energy and setup mechanism
for grid balancing. with the involvement of State Governments to
cover the entire country. As the grid becomes
Industry, a large energy consumer, is shifting
progressively green, the energy consumed in the
slowly to electricity or natural gas. However, some
buildings which is primarily electricity through the
hard-to-abate sectors like Steel and Cement still
grid would also become cleaner overtime.
use a large quantity of coal due to their peculiar
requirement. These industries should shift to India is among the few countries on track to
electricity as feasible. Natural gas can be the achieve its 2030 climate commitments as part of
transition fuel for the next 15-20 years. the Paris Agreement. Over 35 percent of its power
generation capacity comes from renewables
Buildings are another category consuming a
(approaching its promise of 40 percent by 2030).
considerable quantity of energy. The requirement
India has achieved a 21 percent reduction in
for energy for buildings will continue to grow

emissions intensity from its 2005 level (against a progress have been its ambitious solar and wind
commitment of 33 to 35 percent). It has a current targets, the renewables status of large hydro
run rate of 1.9 to 2.0 GtCO2e in additional carbon plants, lower specific energy consumption targets,
sink by 2030 (against a commitment of 2.5 to 3.0 and a strategy for the 3.0 GtCO2e sink approved by
GtCO2e). The primary drivers of achieving this the Indian government.
Exhibit-2.1: India’s 2030 commitment, progress, and drivers
India’s commitment in Paris India’s progress till 2030 Drivers to achieve

Agreement for 2030 India's 2030 goals
Ambitious solar & wind RE

40% 5 36% targets
450 GW RE (i.e. 60% of
RE in power generation RE mix (including large hydro) capacity by 2030)
capacity mix by 2030 achieved
Renewables status for large
hydro
50 GW of hydropower re-
33-35% 5 21% classified as RE
Lower specific energy

Lower emission intensity of Reduction in emission intensity consumption targets under
GDP in 2030 from 2005 levels achieved (tCO2e per million $ GDP PAT scheme
PPP) - ~2% reduction per year Cumulative 27 Mtoe saved
through higher energy
efficiency
2.5 - 3.0 5 1.9 - 2.0 Strategy for 3 GtCO2e

sink approved by Indian
GtCO2e additional carbon Current rate of GtCO2e additional Government
sink by 2030 carbon sink by 2030 Focus on enhanced soil
quality to store more
carbon
India is set to over-deliver on two

of its three NDC pledges by 2030
Source: Mercom India; Climate Action Tracker; press search
More needs to be done, however, as India ranks portfolio could involve developing a set of industries
among the third highest CO2 emitters in the world. comprising component manufacturing for
It has committed to attaining net zero by 2070, battery electric vehicles, offshore wind, solar panel
which lags behind the COP26 goal of getting to net manufacturing, development of storage solutions,
zero by 2050. industrial-scale production of electric heat pumps,
electrified agriculture equipment manufacturing,
There are multiple economic benefits to moving
& R&D and deployment of (bioenergy) carbon
towards net zero. Our analysis indicates that a
capture, utilization and storage technology.
portfolio of five low-carbon economic activities can
bring economic benefits to the country. Such a
THE GREEN SHIFT 20
Exhibit-2.2: India’s current emissions
Evolution of India's CO2 emissions Total CO2 emissions by country in 2019

(Gton / year) (Gton)
34.2 India has the 3 rd
highest total CO
10.6 2
emisions globaly
+6% p.a. 4.7
2.7 2.7 Emisions are
2.0
0.9
expected to
2000 2015 2019 China USA India World grow by 5x to
India's per capita CO2 emissions Per capita CO2 emissions by country in
~13.6 Gton per
(ton / year) 2019 (ton / capita) year if emisions
continue to grow
at historical rate
.
+4% p.a of 5% .
1.5 1.9
0.8
2000 2015 2019 China USA India World

Source: IEA 2017; press search
Exhibit-2.3: Cumulative CO2 Emissions (in billion ton), for countries, 1751 to 2017
Cumulative carbon dioxide (CO2 ) emissions represent the total sum of CO2 emissions produced from fossil fuels and cement since 1751 and are
measured in tonnes. These CO2 emissions include contribution from fossil fuels and cement production only and does not include the impact of
changes in land use. As can be seen in the exhibit, India’s contribution to cumulative CO2 emissions is barely 3% of the world’s total emissions.
Europe North America Asia
China, 200 (12.7%)
Saudi
Arabia, Ind...,
(1%)
14 (1%) 12
Iran, 17
EU-28, 353 (22%) South T... M..

Korea, K..., 8 5
India, 48 (3%) 16 (1%) 12 V.. P..
Ukraine, 19 Africa Eg... South America Ocenia

USA, 399 (25%)
South A... N... A... V...
B... S.. C.. Africa, 7
T... 4 3 Br... 8 Aust...
19.8 17.4
Russia, 101 (6%) 9.6 N.. S.. Canada, 32 (2%) Mexico, 19 (2%) T.. (1%) L... M... 14.2 C... C...
* Percentage indicates share of the country in global cumulative CO2 emissions

Source: Our World in Data
1
Matt McGrath, “COP26: India PM Narendra Modi pledges net zero by 2070,” BBC, November 2, 2021.
THE RISKS OF CLIMATE CHANGE

Over the last four decades, droughts and floods 98 million Indians affected every year. The effects
have become increasingly frequent across India. In of climate change are already being felt around
just the last 15 years, the annual average number the globe, and India is one of the countries at the
of drought-affected districts in India has increased highest risk. This risk is likely to be aggravated if
13-fold, affecting 140 million people annually. At the timely measures are not taken.
same time, flood events have risen fourfold, with
Exhibit-2.4: Global Climate Risk Index, 2000–19
Global Climate Risk assessed on the basis of loss to economy and life due to extreme climate events India ranked 7th in the world's
most affected countries

by climate change in the year 2019
In 2019, overall 11.8 Mn

people were affected by
intense rainfall and floods with
estimated damage of US
Climate Risk Index:
Ranking 2000-19 $10 bn.
1 - 10
11 - 20
21 - 50
India faced 8 tropical
51 - 100
cyclones in 2019 with 6 being
> 100
No data categorized 'very severe'.
Source: David Eckstein, Vera Künzel, and Laura Schäfer, “Global Climate Risk Index 2021: Who suffers most from extreme weather events? Weather-related loss events in 2019 and 2000 to 2019,” Germanwatch, January 2021
India ranks seventh on the list of countries expected “very severe.” The total damage was estimated at
to be the most affected by global warming. It faced $10 billion, with intense rainfall and floods affecting
eight tropical cyclones in 2019, with six classified as around 11.8 million people.
Exhibit-2.5: Climate event hotspots in India
>75% of Indian districts (home to 638 Mn people) are

extreme climate event hotspots
Since 2005, 55+ districtswitnessedextremeRoodevents

year-on-year, exposing 97.51 million people annually
After 2005, 24 districts witnessed extreme cyclone

events yearly, exposing 42.50 million people
258 districts hit by cyclone in the last decade
In the last 15 years, 70 districts recorded extreme

drought events year-on-year, exposing 140.06 million
people annually - yearly average of drought affected
districts increased 13 times
Source: Abinash Mohanty, Preparing India for extreme climate events: Mapping hotspots and response mechanisms. New Delhi: Council on Energy, Environment and Water, December 2020.
THE GREEN SHIFT 22
More than 75 percent of India’s districts—home shortest possible time. The states of Rajasthan,
to 638 million people, or 1.4 times the population Punjab, Haryana, and Uttar Pradesh, which
of the European Union (EU) are categorized as account for 27 percent of the Indian population,
hotspots for extreme climate events. In the last should be prioritized for immediate interventions,
15 years, 79 districts recorded extreme drought as they face the highest risk of global warming in
events, exposing over 140 million people annually. India . This would occur as northern parts of India
Since 2005, more than 55 districts have witnessed face a significant probability of lethal heat waves.
extreme flooding events year after year, exposing As per the source, this would lead to lost working
almost 98 million people annually. hours because heat and humidity are likely to
increase significantly across India due to a rise in
All these weather events establish the fact that the
temperatures by 3 to 5°C by 2050. These changes in
risk for India is real and imminent. The nation needs
conditions may have a hugely detrimental effect on
to act quickly to not only meet its commitments
the GDP as the risk of heat and humidity increases
but to exceed them and set an example for the
with the rise of global warming. Additionally,
global community in terms of climate change
these would lead to shortages in water supply,
management and energy transition. The need of
aggravating the problem further.
the hour may be to identify areas for action that
hold the potential for maximum impact in the
Exhibit-2.6: Some aspects of Climate Risk in India
Climate Risk: Heat & Humidity Trend in 2020 Ground water stress, 20172
Delhi
Lucknow
Ahmedabad
Kolkata
Surat
Mumbai Hyderabad
Pune
Bangalore
Chennai
< 5% 6 - 10%
16 - 20% Safe: <70%

11 - 15%
26 - 35% Semi-critical: >70% & <90%
21 - 25%
Critical: >90% & <100%
>36%
Over-exploited: >100%
1
Annual share of effective outdoor working hours affected by extreme heat and 2
Annual ground water withdrawal / Annual groundwater recharge (%)
humidity in climate exposed regions, %
2
Source: Woods Hole Research Center, McKinsey Global Institute analysis
INDIA’ S CURRENT STATE

Industrial and power sectors account for most of If we look specifically at greenhouse gas (GHG)
India’s emissions of 2.7 GtCO2e. Around one-third emissions, power (almost entirely due to coal) and
of emissions come from steel and cement sectors, iron and steel manufacturing contribute around 75
followed by one-third from the power sector, and percent.
the rest from transportation and other sectors.
Exhibit-2.7: Emissions per sector in India, by source and consumption
Sector 2019 CO2e Emissions 2019 CO2e emissions CAGR

(By source, Bt CO2) (By consumption, Bt CO2) (Past 20 years)
Power 1.2 0.3 4.6%
Iron and Steel 0.3 0.4 9.2%
Cement 0.2 0.3 5.6%
Road 0.3 0.3 6.6%
Buildings 0.1 0.4 6.1%
Agri and Waste 0.6 0.8 1.6%
Others 0.3 0.6 4.0%
Carbon Sink -0.3 -0.3 4.0%
TOTAL 2.7 2.7
Source: GEP India Baseline 2016, projected to 2019
Decarbonizing the power, industrial, and outlay of Rs. 45 billion to promote the domestic
transportation sectors is thus crucial for emissions manufacturing of high efficiency solar modules
abatement in India, as they constitute a significant with full backward integration. The government is
portion of emissions. Shifting to renewable power also augmenting the outlay to Rs. 240 billion .
generation, electrification of heating in industries,
“Go Electric” Campaign - A Pan India initiative
clean fuels (such as hydrogen), better energy
targeted to spread awareness of the benefits of
efficiency, and circularity in plastics can contribute
e-mobility and EV charging infrastructure and
to significant emissions reductions.
boost the confidence of EV manufacturers. The
Net zero by 2070 asks for a focused roadmap and Government’s PLI Scheme has a planned outlay of
timely intervention by the Government, apart from Rs 1,400 – 1,600 billion, which includes Rs 180-190
large capex requirements in GHG emitting sectors billion for batteries.
like power, industry, and transport. The roadmap
The government initiated Expressions of Interest
will benefit India with new technologies, hence
(EOI) for “Procurement of Bio-diesel produced
there would be new business opportunities in the
from Used Cooking Oil” in August 2019. It also
area of energy efficiency, carbon reduction, green
notified the National Policy on Biofuels to promote
fuels etc.
the use of ethanol, biodiesel, hydrogen etc. In the
The government has notified the Production- transportation sector, emissions are likely to peak
Linked Incentive (PLI) scheme with a financial by 2025, with cars, trucks, light commercial vehicles,
THE GREEN SHIFT 24
and buses emitting high levels of CO2. Trucks could which carries approximately 63% of freight and
change the game if their emissions levels drop 50% of passenger traffic . IR has aggressive plans
from the current 26 percent share of all mobility for electrification of its fleet. An electrified rail
emissions. Decarbonization in the transportation network can more easily transition to clean energy
sector could happen through changes across three alternatives such as solar and wind power, whereas
dimensions: economics and market variables, there is limited availability of clean fuel alternatives.
changes to the regulatory environment and Selective initiatives that take road mobility towards
vehicle parc, and the technology timeline. By far, electrified rail mobility, e.g., DFCs, RRTs, etc., would
the biggest GHG producer in the mobility system is need to be fast-tracked.
road transportation. Tailpipe emissions from cars,
It is expected that IR will be able to complete
trucks and other vehicles make up ~75 percent
electrification across all segments, whether short,
of all emissions from transportation activities
medium or long haul, soon. This will help address
compared with ~13 percent from aviation, ~11
even the remaining emissions from rail movement.
percent from maritime transport, and one percent
Given the significant advantages of IR as a means
from rail transport.
of mobility for passengers and goods, there is a
A major lever for decarbonizing the transportation need to promote railways as a means of mobility
sector could be a higher focus and utilization of across both the goods as well as passenger
Indian Railways (IR) to transition to an electrified segments. Besides having positive implications
rail network. This would also need IR to move away from an emissions perspective, this could become
from a diesel-powered rail network. As of 2015, IR a safer and cost effective mode of transportation
used predominantly coal-based power and diesel and help create greater economic, social and
fuel. It has electrified 38% of its track (in route kms), cultural integration within the country.
Exhibit-2.8: India's Climate Commitments
Reduce total projected carbon

emissions by one billion tonnes
from now onwards till 2030
By 2030, India will Carbon intensity of

meet 50% of energy the economy would
requirement from be reduced to less
renewable energy than 45% by 2030
FIVE-FOLD
'PANCHAMRIT '
Non-fossil energy STRATEGY By 2070, India will
capacity will reach COMMIT TED BY achieve the target of
500 GW by 2030 INDIA IN COP 26 Net Zero
These ‘Panchamrit’ will be an unprecedented contribution of India to climate action.
A latest happening has been India dropping the target on reduction of cumulative emissions by 1 billion tonnes by 2030. Also, the two targets on % and capacity of renewables have been merged into a single clear target for
renewable power. These targets were approved by the cabinet in August 2022. The Net Zero Emissions Bill, 2022 was introduced in Rajya Sabha on December 09, 2022. The bill to provide a framework for achieving net zero
emissions by the year 2070 as per India's nationally determined contributions under the United Nations Framework Convention on Climate Change.
3
Source: https://www.icraresearch.in/Research/ViewResearchReport/4117
4
https://www.climatepolicyinitiative.org/wp-content/uploads/2016/07/Decarbonization-of-Indian-Railways_full-report.pdf
THE CHANGES NEEDED TO

SUPPORT DECARBONIZATION
To effectively support the decarbonization efforts, three social & economic changes must happen in India:
Catalyzing effective capital Managing demand shifts Establishing compensating

1 2 3
reallocation and new and near-term unit cost mechanisms to address
financing structures increases socio-economic impact
Exhibit-2.9: Societal and economic changes for supporting decarbonization
Capital Reallocation Demand shift Management Compensation Mechanism
Scaling up climate finance: Building transparency around Supporting economic

» $3.5trillionincreaseinspendingclimate risks and opportunities: development and diversification:
on low-emissions assets vs today » Climate stress test for factoring » Expeditingthetimelinefor$10
risks in investment Bn climate support fund
Develop new financial
instruments: Identifying measures to manage Reskilling and redeployment of
» SPVs for setting up low emission cost increases: workers:
assets » Distribute the impact of cost » Retaining workers for right skills
» Long-term purchase agreements increase across value chain needed in a low-carbon economy
Pricing externalities to rebalance Incentives for making low Instituting support for displaced
incentives: emission tech cost competitive: workers:
» Policies to encourage capital » Lift demand for loss emission » Options for aiding displaced
spending in emission reduction tech to achieve economies of workers e.g., income-support
projects scale measures and subsidies
» Funding the repurposing or

decommissioning of reduntant
assets
Source: McKinsey Report, May 2022
CATALYZING EFFECTIVE CAPITAL REALLOCATION AND NEW FINANCING STRUCTURES
As discussed, the net-zero transition will require of capital from high-emissions assets to low-
both an increase in capital spending on low- emissions assets. Several measures could help
emissions assets, as well as the reallocation accelerate capital allocation, as follows:
Scaling-up climate financing
Many public and private financial institutions as discussed in the next point. Partnerships
have committed to net zero emissions and between financial institutions and real-economy
funding activities integral to the net zero stakeholders can help marshal financing as well.
transition. Significantly more financing will be There is a need to step up efforts to secure the
needed for India to achieve its decarbonization funding of Indian transition, building on the
targets. Requisite funding could come from positive move of creation of a "Loss & Damage"
both traditional financial instruments and more fund during COP-27.
specialized instruments, such as green bonds,
THE GREEN SHIFT 26
Developing new financial instruments & products
New financial products and structures can help financing structures such as long term purchase
companies wind down legacy assets and scale agreements from low emissions plants, which
up new low emissions assets. Among the possible have lower total lifecycle costs, to replace coal-
solutions are special purpose vehicles (SPVs) that generation assets. New financial instruments
enable companies to ring fence legacy assets could also become an option for promoting
with high emissions and retire them in line with negative emissions or nature-based solutions.
a net zero pathway. They could also develop
Nurturing & scaling the voluntary carbon markets
Developing and scaling voluntary carbon carbon markets that are large, transparent,
markets in the near term and compliance verifiable, and environmentally robust. Given its
markets in the longer term could play a role in track record, India is well positioned to create
financing the transition. Carbon credits could conditions for such a movement through its
become an important vehicle for financing the demonstrated leadership credentials on many
net zero transition to complement company global issues. The Taskforce on Scaling Voluntary
efforts to decarbonize their operations. They Carbon Markets has estimated that demand for
could, for example, help channel capital to carbon credits could increase by a factor of 15 or
forest rich developing countries where there is more by 2030 and by a factor of up to 100 by 2050,
potential to prevent deforestation or plant new and the market for carbon credits could be worth
forests. Voluntary carbon markets would include upward of $50 billion in 2030. Assumption of
markets for both avoidance credits (for example, G20 presidency by India creates an opportunity
to prevent forests from being cut down) and to take lead towards creating a new narrative for
removal credits (for example, from afforestation balancing the growth and climate concern with
or direct air capture). For this to happen at equity at the core of the agreed framework.
scale, the world will need to build voluntary
Pricing externalities to re-balance incentives
The government might consider how various emissions reduction projects. Carbon pricing
policies where organizations pay for their could also generate revenue that governments
emissions could encourage capital spending in might use to support the transition.
Backstopping low-carbon investment & scaling-up public financing
Public authorities or private companies could key infrastructure investment that has a positive
consider assuming some of the risks of investing impact but may be more difficult to finance
in low carbon projects through public guarantees through markets (for example, electric vehicle
or other risk hedges so that investors will be more charging stations, hydrogen fuelling stations,
likely to finance them. This can help support and carbon sequestration). India may have to
capital flows to sectors and geographies with consider setting up of a new Developmental
large financing gaps. Public financing on a Financial Institution (DFI) to support transition.
national and global scale could be used to fund
Purpose driven creation, or decommissioning of redundant assets
India is well positioned to chart its transition the owners invest the proceeds in low emissions
journey such that asset creation and investments energy projects. Multilateral or government funds
are channelized as a policy, keeping in mind could be used to manage the ramping down of
the carbon footprint and medium to long term emitting assets and minimize the value at risk
imperatives of transition. This will not only help from stranded assets.
expedite the achievement of goals ahead of
Investments are needed in energy efficiency and
time, it will also reduce ‘regretted investments’
carbon mitigation in sectors / industries currently
needing to be retired ahead of technical life
with a high carbon footprint which need to
expiry, decommissioning & retirements. Further,
operate for an orderly transition, along with
various options are available to organizations
continuous greening through annual energy
that wish to hasten the retirement of redundant
efficiency / carbon reduction targets. These
assets. One proposed mechanism to accelerate
targets could be enforced using carbon pricing
the decommissioning of coal fired power plants
and allocation of emission ceilings across sectors
would involve purchasing plants so that they can
to incentivize decarbonization.
be retired ahead of schedule and then having
MANAGING DEMAND SHIFTS AND NEAR-TERM UNIT COST INCREASES
The analysis suggests that demand for certain of companies. Interventions on both the supply
goods will change during the energy transition side and the demand side could help mitigate
along with the capital and operating expenditures these effects:
Building awareness and transparency around climate risks and opportunities
As organizations navigate the net zero transition, things, financial regulators, including the Bank
they stand to benefit from identifying the risks and of England and the European Central Bank, are
opportunities associated with physical climate mandating climate-risk stress tests for financial
hazards and transition impact. Formal efforts to institutions7.
gauge climate risks are expanding. Among other
Anticipating future competitive dynamics and making adjustments
As the basis of competition is altered, companies of transition, all businesses, especially those that
may need to overhaul their portfolios and business are more vulnerable with a higher carbon footprint
models and identify new areas of opportunity in a across the value chain, need to carefully calibrate
net zero economy. Governments would similarly their future strategies to ensure compliance with
need to consider exposing their economies to the emerging transition requirements, as well as the
transition and seize opportunities to benefit from sustenance of their businesses.
it. In a fast-changing world, given the imperatives
Lowering technology costs with R&D
Some existing technologies that will be needed help bring down technology costs, and various
to achieve a net zero economy by 2050 are support models exist. In the United States, for
not yet cost competitive when compared to example, the Department of Energy’s National
the entrenched high-carbon technologies. Laboratories partner with private companies to
Technology gaps remain. R&D investments can drive R&D4.
THE GREEN SHIFT 28
Nurturing industrial ecosystems
To produce low-carbon technologies at a cost that new business ecosystems. Governments need
permits their broad uptake, companies may need to consider the role they might play in creating
to develop capabilities through partnerships that policy environments that are conducive to the
are not part of existing value chains or through formation and functioning of such ecosystems.
Identifying measures to manage cost increases
Organizations can identify a range of distribute the impact of cost increases along the
compensating mechanisms in cases where value chain, partnering with suppliers to lower
decarbonization actions increase costs and can costs, and, where feasible, charging consumers a
understand which measures work best under “green premium” or otherwise including this as
different sets of circumstances and constraints. part of the value proposition.
Examples include identifying opportunities to
Sending demand signals and creating incentives
Markets for emerging and still-expensive low can lessen market risk and create long term
emissions technologies are often too small and certainty that encourages manufacturers to add
unpredictable for manufacturers to achieve production capacity.
economies of scale. Interventions to lift demand
ESTABLISHING COMPENSATING MECHANISMS TO ADDRESS SOCIO-ECONOMIC IMPACT
The uneven impact of the net zero transition to pursue cleaner opportunities. The public
could be substantial and prove to be a major and private sectors could consider taking the
stumbling block if stakeholders feel that they following measures to help the adjustment to
are not protected from risk or given support uneven impact:
Supporting economic development and diversification
Individual regions could develop new low reforestation to sequester carbon, create jobs,
emissions industries as demand wanes for fossil and secure financial inflows. Others will want to
fuels and carbon intensive industries. Some consider options for developing the technological,
countries possess the natural capital to do so, human, and physical capital to create these new
such as forest rich countries that can promote sectors.
Enabling reskilling and redeployment of workers
Retraining workers for new tasks and ensuring skills for the jobs needed in a low carbon economy
that new entrants in the workforce have the right can help promote an inclusive transition.
Instituting support programs (including insurance) for workers and consumers
Options for aiding displaced workers include and other programs could also help consumers,
income support measures like unemployment especially from low income households, if
protection and cash transfers, which can support the transition brings higher upfront capital
workers in retraining and finding jobs. Subsidies expenditures or increases energy prices.
CONCLUSION
India is among the few countries on track to achieve sectors. Decarbonizing these sectors and shifting
its 2030 climate commitments as part of the Paris to renewable power generation, electrification
Agreement. More needs to be done, however, as of heating in industries, clean fuels (such as
India still ranks as third highest CO2 emitter in the hydrogen), better energy efficiency, and circularity
world. The effects of climate change are being felt in plastics will be the way forward for India.
in India and around the globe, and the risk is likely
For India to effectively support overall
to be aggravated if timely measures are not taken.
decarbonization efforts, change must happen
India currently emits ~3.7 GtCO2e per annum, most along capital reallocation, demand shift
of which comes from the industrial and power management and compensation mechanism.
THE GREEN SHIFT
30
Picture Credit: Adobe Stock

Chapter
3
ENERGY TRANSITION
PLANS OF DOMESTIC
PUBLIC SECTOR OIL
& GAS MAJORS
In this section
1. Upstream Oil Majors 33
2. Downstream Oil Majors 39
3. Gas Majors 49
4. Ecosystem Enablers 53
UPSTREAM OIL MA JORS

THE GREEN SHIFT 34
OIL & NATURAL GAS CORPORATION (ONGC)
9.41 0.0
BASELINE
TARGET
MMTCO 2E MMTCO2E
NET OPERATIONAL NET OPERATIONAL
EMISSION (FY 2021-22) EMISSION (2050)* * aspirational target
The Company has a dedicated Carbon use of RE, Energy Efficiency Measures,
Management & Sustainability Group which promoting Green Buildings and paperless
is the nodal point for all activities pertaining office, ONGC is also taking proactive
to Energy Transition and Emission measure to sensitize its workforce of the
Reduction. The Group has a specialized Cell need to combat climate change and
which is guiding the company’s Net Zero facilitate energy transition by organizing
Strategy. regular Trainings, Workshops, seminars
and webinars in association with reputed
While GHG accounting (Scope-1 & 2) is
bodies like IIT, Mumbai, CII, IEA, UNGC etc.
carried out every year through in-house
experts, these are being verified through a As the country's premier National Oil
third party agency since 2019-20. Company, ONGC is cognizant of its role in
driving energy transition and promoting
ONGC is aspiring to achieve Net Zero
innovative solutions like CCUS in EOR, Geo
Emissions by 2050. With this overall vision,
ROADMAP TO NET ZERO
thermal energy and offshore wind.

it is in the process of conducting a scientific
study for setting total Emissions Targets Considering the role of CCUS / CCS
and strategies for achieving Net Zero by technologies in decarbonisation and
2050. climate change mitigation, most
international bodies like IPCC, IEA, etc.
The study will cover scope-1, scope-2 and
expect E&P companies to play a pivotal
scope-3 emissions of the company by
role in using these technologies. IEA
taking into account all the seven types of
considers CCUS as one of the four pillars of
Greenhouse Gases followed by projection
global energy transformation, the others
of anticipated emissions of the company
being RE based electrification, bio-energy
at the end of the target year and emission
& Hydrogen. Using CO2 for Enhanced Oil
reduction pathways.
Recovery is a proven technology and leads
The study is broadly split into two phases to increase in oil recovery, however the
comprising of accounting of emissions high cost of capital has been a significant
in Phase -1 and the GHG Abatement and barrier in its widespread application.
Offset Strategy and net zero emission
ONGC has also recently signed an MoU with
targets in phase-2.
Equinor which includes activities in areas
It is also envisaged that emission of low carbon and renewables like Carbon
measurements shall be integrated with Capture Utilization and Sequestration
GHG Accounting in SAP to provide real (CCUS) opportunities, Offshore Wind and
time measurements. / or solar & solar-hybrid projects in India,
In addition to various efforts under way to green and blue hydrogen and Ammonia.
reduce emissions by reducing Gas flaring,

Renewable Energy
ONGC's total energy generation capacity with a 10 GW target by 2040 of renewable

was 922 MW, of which renewable energy energy capacity being set. ONGC has
accounted for 184 MW and gas turbine entered into an MoU with NTPC for
power generation at various locations setting up a joint venture company for
accounted for 738 MW. the renewable power business. ONGC has
also signed an MoU with Solar Energy
Different groups within ONGC undertake
Corporation of India (SECI) for renewable
renewable energy related activities as per
energy projects. The feasibility to generate
requirement. These include the RE cell
renewable energy more than 1.5 times of
(Technical Services), Business Development
its Scope-2 energy consumption is being
STRATEGIC TRANSITION INITIATIVES
& Joint Venture (BD & JV), ONGC Energy

examined. A pilot geo-thermal project at
Centre (OEC) for solar (PV & Thermal), On-
Puga Valley, Ladakh with a capacity of 1
shore wind, Off-shore wind, Hydrogen,
MW and tentative investment of Rs 38 Cr
Biofuel, Geothermal, Helium etc.
has been taken up and is expected to be
ONGC plans to shift completely to completed by FY23.
renewable energy for Scope 1 consumption
Green Hydrogen
ONGC Energy Centre (OEC) is taking up The project is expected to be completed

a pilot scale metallic system project to by 2025 with an anticipated investment of
produce 90 MTPA of Hydrogen at MRPL. around Rs. 180 Cr.
Carbon Capture, Utilization & Storage
The Company is fully cognizant of its role in compressed and transported through
leading the energy transition in the country pipelines to Gandhar oil field of ONGC. The
as the premier national oil company (NOC) CO2 would be injected into the depleted
and promoting innovative solutions like oil field and would ensure utilization and
CCUS in EOR, Geo thermal energy and permanent storage of CO2 besides an
offshore wind. increase in oil production. The project
has the potential for oil gain of 10% and
ONGC in association with IOC is working
the estimated cumulative sequestrated
on India’s first industrial-scale carbon
quantity is 5 to 6 million tons of CO2 by the
capture project at Koyali refinery where the
year 2040.
CO2 captured at Koyali would be treated,
THE GREEN SHIFT 36
Other Major Efforts

STRATEG I C TR AN S ITION IN ITIATIVES
ONGC has signed MoU with Equinor for ONGC is planning to leverage the carbon
jointly working in the areas of low carbon markets by adopting Kyoto Protocol for
solutions in India like CCUS, off-shore sustainable development and generating
wind, solar, wind-solar hybrid, green & blue carbon credits through the CDM projects.
hydrogen and ammonia. ONGC also plans to generate Emission
Reduction Certificates for revenue
ONGC and NTPC have carried out pre-
generation / offsetting.
feasibility study for a demonstration off-
shore wind power project in India with The company would be accounting
possibility to produce green hydrogen. material Scope 3 emissions, and develop
Pursuant to this, further discussions would strategies for aggressive reduction in value
be undertaken with MNRE for obtaining chain emissions.
necessary concessions for development of
ONGC has 5 EVs each for OVL & its Delhi HQ
offshore wind plants.
with suitable charging infrastructure.
OIL INDIA LIMITED (OIL)
0.21
BASELINE
MMTCO 2E
TARGET
TO BE FIRMED UP
NET OPERATIONAL
EMISSION (FY 2021-22)
The total emssions are projected to be The company uses fossil fuel (HSD) vehicles
reduced by 15% before FY40 including of different types. These vehicles are a major
various project and capacity expansions. contributor to the emission of carbon to the
OIL also sees CO2 reduction of 0.27 atmosphere. These vehicles may be initially
MMTCO2e through renewable energy converted to CNG as a transition fuel and
generation, making them carbon positive. then gradually to more cleaner fuels like
green hydrogen Fuel Cell or EV.
OIL deals with exploration and production
of crude oil and natural gas. Most of the Hence, it is suggested that transition
exploration activities like survey, drilling strategy may be short-term, covering the
etc. are conducted in remote locations next 10 to 20 years and long-term, covering
for a very short duration of 3 to 4 months. the next 30 to 50 years.
Generally portable Generating units of 1
As a part of short-term transition strategy,
ROADMAP TO NET ZERO
MW (approx) capacity each are used. But

the company shall try to replace the smaller
the activities related to production and
engines, vehicles etc. running on HSD with
transportation are generally conducted in
natural gas or CNG to alternative green
a fixed location for a long term.
fuels like green hydrogen, batteries, etc.
It is observed that till now large-scale
In the long term, OIL may plan to replace the
portable green energy systems have not
equipment in different static installations
been deployed, although, considering the
running on fossil fuels with new equipment
R&D activities going on presently, there
running on alternative fuels depending on
is a possibility that such systems shall be
emergence of new technologies.
available in future.
Table-3.1: Decadal reduction in carbon footprint
Decade % Carbon Activities Planned

Reduction
2020-30 5% Replacement of vehicles with CNG, EV & Hydrogen fuel cell
2030-40 15% Replacement of vehicles, small engines with CNG, Biogas, EV &
Hydrogen fuel cell
2040-50 20% Use of blended natural gas as per recommendation
2050-60 20% Use of blended natural gas as per recommendation
2060-70 40% Use of green energy in all activities

THE GREEN SHIFT 38
OIL INDIA LIMITED (OIL)
Renewable Energy incl. Biofuels
OIL forayed into the renewables in FY12. 14.0 MW in solar power in Rajasthan (92.5
The total capacity established includes Cr investment). OIL intends to develop
174.1 MW of wind power in Rajasthan, renewable energy projects in future based
MP & Gujarat (1,138 Cr investment) and on market conditions and policy support.
Green Hydrogen
OIL is setting up a green hydrogen pilot indigenous start-ups for the development
plant at Assam to study the possibility of of green hydrogen technology. OIL has
enhancing the calorific value of Natural Gas initiated collaborative research in bio-
through blending and to assess the impact hydrogen with the University of Petroleum
of blended gas on existing infrastructure. and Energy Studies (UPES), Dehradun.
OIL is looking for opportunities to promote
Carbon Capture, Utilization & Storage
OIL has signed an MoU with IOCL for generated at BCPL from the gas it receives
capturing CO2 from flue gas at the Digboi as feedstock from OIL. Further, OIL has
Refinery. The captured carbon will be tied up with the Centre of Excellence in
utilized for EOR activities. OIL also plans Carbon Capture and Storage (COE CCS),
to capture non-associated (pure) CO2 established in IIT Bombay, for an R&D effort.
Other Major Efforts
OIL has formed two joint venture companies with AGCL & GAIL) through which multiple
(HPOIL Gas Pvt Ltd in Nov 2018 with HOCL City gas distribution (CGD) operations are
and Purba Bharati Gas Pvt. Ltd in Nov 2019 active in India.
Exhibit-3.1: City Gas Distribution Projects of OIL in India
Kamrup CGD
S. Name of Gas Estimated OIL’s OIL’s Total Ambala & 26% PI
No. CAPEX (in commitment share of equity Kurukshetra CGD 321k PNG, 51 CNG
50% PI
Rs. Cr.) (in Rs. Cr.) equity (in share (in 20k PNG
Rs. Cr.) Rs. Cr.)
1 Ambala & Kurukshetra 333.50 166.75 50.03

96.10
2 Kolhapur 307.16 153.58 46.07 Cachar CGD
Kolhapur CGD
26% PI
3 Cachar 727.72 189.20 63.55 95k PNG, 21 CNG
50% PI
228.54 38k PNG
4 Kamrup 1,889.23 491.20 164.99
TOTAL 3,257.61 100.73 324.64 324.64

DOWNSTREAM OIL MA JORS

THE GREEN SHIFT 40
INDIAN OIL CORPORATION LIMITED (IOCL)
21.54 0.0
BASELINE
MMTCO 2E MMTCO2E
TARGET
EMISSION (FY 2021-22) EMISSION (2046)
IOCL (standalone) witnessed emission of digitalise its GHG accounting and net zero
21.54 MMTCO2e of total emissions in FY22 impact monitoring process.
primarily from its refinery & petrochemical
IOCL avoided 3.36 MMTCO2e emission in
business (~97%), of which Scope 1 emissions
FY22 by implementing measures such as
account for 96.5% and Scope 2 for 3.5%.
switch to natural gas, promoting pipeline
Including its subsidiary Chennai Petroleum
transport, energy efficiency, sourcing
Corporation Limited (CPCL) refinery at
renewable power and plantation of trees.
Chennai, IOCL's (Group) emissions exceed
24 MMTCO2e. With planned expansions, IOCL has identified a two-way strategy to
IOCL's emissions are projected to cross 40 achieve net zero footprint. The company has
MMTCO2e by FY30. estimated that more than half of its exisitng
emissions can be mitigated through
The Corporate emission accounting is done
process efficiency, fuel replacement and
by in-house team within the Alternate
ROADMAP TO NET ZERO
gridification efforts. The balance 40%+ of

Energy & Sustainable Development
its emissions would need to be mitigated
Group in IOCL. The company's refinery
through carbon negative technologies
& petrochemical plants have been
such as CCUS & tree plantation or through
independently undertaking ISO 14064
generation & purchase of carbon credits.
certification. At the corporate level, IOCL is
in the process of getting its GHG inventory A phased timeline has been outlined for
(Scope-1, 2 & 3 validated through third- the implementation of the recommended
party. IOCL is also undertaking efforts to measures (Exhibit 3.'2).
Exhibit-3.2: Phased implementation roadmap to net zero by IOCL
» ProcessEzciency
» GHG Inventory - Equity
Approach » Green Hydrogen
» Firming up Mitigation Targets, » Natural Gas to CBG
Plans & Phase Targets » Increasing Grid Imports
» EnergyEzciencyProjects » Renewable Energy Projects
» Renewable Energy Projects » Tree Plantation
» CCUS
SHORT TERM MEDIUM TERM LONG TERM NATURAL INVESTMENT CYCLE

1-2 Years 2-5 years 5-10 Years >10 years
» EnergyEzciencyProjects » ProcessEzciency
» Switch to Natural Gas » Green Hydrogen
» Increasing Grid Imports » NaturalGastoCBG/GreenHydrogen
» Renewable Energy Projects » Increasing Grid Imports
» Tree Plantation » Renewable Energy Projects
» CCUS » Tree Plantation
» CCUS
» Carbon Markets
Renewable Energy (Solar / Wind)
With an investment of 1,400 Cr, IOCL been completed for additional 19 MW at

generated 358 GWh of renewable power various locations. A high-level committee
in FY22 with 74% coming from wind has been setup to analyze various options
power and 26% from solar PVs. 19,502 retail for further expansion.
outlets have been solarized and 111.5 MW in
IOCL has formed a JV with NTPC to establish
cumulative capacity has been developed
a 650 MW hybrid renewable power plant
through solarization. The company
for sourcing round-the-clock RE power for
continues to expand its solar portfolio. 6.34
upcoming projects (by Oct ‘24). This would
MW capacity projects are currently under
include setting up of 2.1 GW solar, 0.6 GW
execution and feasibility assessment has
wind and 6 GWh pump hydro storage.
Green Hydrogen
IOCL’s current hydrogen generation stands and Renew Power for production of Green
at 556 KTPA, with planned expansion upto Hydrogen. L&T is also assisting IOCL in
825 KTPA. Efforts are being made to shift manufacturing of electrolyzers to be used
from Grey to Green Hydrogen in line with for production of Green Hydrogen.
GoI targets. IOCL is partnering with L&T
Carbon Capture Utlization & Storage
IOCL is undertaking multiple projects with transportation & carbon sequestration

the largest being a Rs. 4,500 Cr project would be carried out by ONGC. Additional
with ONGC where CO2 would be captured Rs. 600-1,000 Cr investment is expected for
fom the company’s Gujarat Refinery and CCUS projects at Panipat & Paradip.
Biofuels
IOCL is targeting 20% ethanol blending the nation by the Hon’ble Prime Minister of
in petrol by 2025 (10% at present) and 5% India on World Biofuel Day, 10th August 2022.
biodiesel blending in HSD by 2030. LOIs The plant is expected to result in carbon
have been issued to entrepreneurs for mitigation of 38 TMTCO2e per annum.
production of 23.84 Cr Litres of biodiesel IOCL is partnering with Praj & LanzaJet to
from used cooking oil (UCO). Production promote biofuels as Sustainable Aviation
has commenced from 3 plants. Fuel (SAF).
A 100 KLPD 2G ethanol plant with an

investment of Rs 909 Cr was dedicated to ...contd. on next page
THE GREEN SHIFT 42
Biofuels
2,247 LOIs (5.5 MMTPA capacity) have commenced from 30+ retail outlets, under
been issued to entrepreneurs for setting the brand name ‘IndiGreen’. A biofuels
up Compressed Biogas (CBG) plants. 18 complex is being set up at Gorakhpur, UP
plants have been set up so far. Sales have to produce CBG from paddy straw.
Exhibit-3.3: IOCL CBG projects - Implementation Timeline
SHORT-TERM OUTLOOK MEDIUM-TERM OUTLOOK

6 - 12 months 12 - 36 months
» 100 TPD cattle dung based CBG Plant at Jaipur » Commissioning of additional 100 CBG plants under SATAT
Commissioning: August 2022 » Setting up 10 large scale CBG plants through JVCs, with
» 200 TPD paddy straw based CBG Plant at Gorakhpur biomass, municipal waste, press mud etc as feedstock
Commissioning: August 2022 » CBG (6.5 TPD) to Green Hydrogen (2 TPD) plant at
Gorakhpur, Uttar Pradesh
» Formation of JVC with Verbio, Germany for 40 biomass

based CBG plants » Creating a business vertical for manure marketing in India
» Formation of JVCwith Poonawala Clean Energy and Noble » Manure to be enriched using additives developed by R&D
Exchange for 100 MSW based CBG plants (4eldtrialsongoing)
» Marketing of fermented organic manure through IndianOil » Manure marketing through IndianOil Channels, Fertilizer
RO/NAFEDchannels Marketing Company, Farmer Producer Companies, HURL
etc.
» Commissioning of additional 10 plants under SATAT
Other Major Efforts
■ IOCL has ventured into Aluminium-Air ■ Invested over Rs. 17,000 Cr to deliver
battery space through a joint venture cleaner BS-VI petrol / diesel in India.
with Israel based e-mobility company
■ Promoted sale of LPG which in turn
‘Phinergy Limited’. The company has
leads to reduced felling of trees & lower
installed 2,145 EV charging stations &
indoor pollution.
34 battery swapping units, with a target
to install 10,000 EV charging stations in ■ Launched premium variants for
the next 3-5 years. gasoline (XP95/XP100) with 44% lower
CO & 13% lower hydrocarbon emission.
■ Eco-friendly Waste Plastic to Fuel
Xtragreen diesel provides fuel economy
Technology ‘INDEcoP2F’ developed.
benefits of 5-6% and reduction in PM,
■ Development & demonstration of CO & NOX by 7%, 12% & 5% respectively.
commercially viable fuel cell buses
■ Differentiated LPG products, Indane
based on hydrogen produced from
Nanocut & XTRA TEJ developed for high
multiple pathways.
temperature industrial applications.
■ IOCL aims to be a significant contributor
■ Green Combo lubricants (combining
in the national goal of increasing Natural
engine, gear and axle oil) introduced
Gas’s share in energy mix to 15% by 2030.
for heavy duty segment - providing
Last year, IOCL sold 5.68 MMT of NG.
improved fuel economy (~4 to 5%) &
The company is undertaking various
significant emission reduction.
projects to increase infrastructure.
BHARAT PETROLEUM CORPORATION LIMITED (BPCL)
9.50 0.0
BASELINE
MMTCO 2E MMTCO2E
TARGET
EMISSION (FY 2020-21) EMISSION (FY 2039-40)
BPCL had a GHG inventory of 9.5 MMTCO2e BPCL aims to reduce target emissions by
primarily from DG sets, fire engines, FY30 from 12.4 to 9.8 and achieve net zero
company owned vehicles, process stacks, by FY40. To achieve the same, BPCL has
power purchase from third parties (SEB, outlined a multi-year roadmap combining
private etc) and emissions created during increased operational efficiency and
production processes involved in refineries, collaborations with investments in
petrochemicals, & marketing operations, of renewable power, biofuels, Carbon Capture,
which Scope 1 emissions account for 89.5% Utilization and Storage (CCUS) and green
and Scope 2 for 10.5%. This is projected to hydrogen generation (Exhibit 3.4).
reach 12.4 MMTCO2e by FY30 including
various project and capacity expansions in
the absence of mitigation measures.
ROADMAP TO NET ZERO
Exhibit-3.4: Phased implementation roadmap to net zero by BPCL
» 20 MW Green Hydrogen » 70 MW Gree H2 facility » 45 MW Gree H2 facility » Complete Green » Managing customers
facility at Bina - 0.03 at Bina - 0.1 MMT at KR Hydrogen equations and shareholders
MMT » 140 MW Solar at » 30 MW Green Hydrogen 550 TPD of Grey - 1.4
» Energy Initiatives: operating Marketing at MR GW (~2 MMT)
Replacing steam tracing locations » Total(MR+KR)- 75 MW
coils will help in steam » Conversion of FO to (~-0.11 MMT)
reduction of 5000 TPD electricity at lubes
with equivalent power
of 30 MW.
» Fuel & Loss reduction:
2G ethanol at Bargarh
FY 2023 FY 2026 FY 2030 FY 2035 FY 2040
FY 2025 FY 2027 FY 2032 FY 2039
» OperationalEzciency » Collaboration Invested » Partnership and Joint » Associating fuel

Green power for in new energy startups Ventures: Acquisition of consumption with
complete Scope-2 at and niche technology a majority stake in solar renewables:
ME, KR and BR - 0.6 4rms project/renewable ‒ CCUS
MMT » 478 MW for retail outlet projects
‒ 10 GW Renewables
» 1 GW Renewable EII » Marketing bus » Complete green power
to 70 at MR, KR and conversion to 100% EEL equating GT's 1.5 GW
BR (1.3 MMT CO2e
reduction)
» Solarisation of ROs
BPCL 2019-20 2024-25 2026-27 2029-30 2031-32 2034-35 2039-40
Total Scope (MMTCO2e) 9.8 7.5 11.5 9.8 7.5 5.5 0

THE GREEN SHIFT 44
Renewable Energy (Solar)
BPCL is building a portfolio of solar a subsidy to incentivize the solarization.

projects, expected to reach 1 GW capacity Vanadium Redox Flow battery with
by 2024 and 10 GW by 2040 (Exhibit 3.5). expected capacity of 1 MWh and 20-25
A total of 2,554 retail outlets have been years life is being evaluated to enable the
solarized, with target to reach 12,554 by availability of round the clock RE power,
FY25 and 100% retail outlet solarization with the demonstration plant to be setup
by FY30. Dealers have been provided with by Q2 of 2023.
Exhibit-3.5: Solar Power portfolio of BPCL
Land Parcels Area (Acres) Solar plant capacity (MW) Estimated Date of Completion
Bina, Madhya Pradesh 40 14 30.09.2022
Badnera, Maharashtra 20 7 15.12.2022

Tadali, Maharashtra 36 12 31.12.2022
Sanganer, Rajasthan 40 15 15.12.2022
Karoor, Tamil Nadu 100 35 31.12.2022
Kochi, Kerala 270 90 31.01.2023
Prayagraj, Uttar Pradesh 393 130 31.12.2023
Padariya, Madhya Pradesh 2,100 700 30.11.2024
TOTAL 2,999 1,003 (1 GW) By 2024
Future - 10 GW By 2040
Biofuels
BPCL has achieved over 10% ethanol Consultancy Engineers at an investment

blending and targeting to contribute of Rs. 1,607 Cr. The scheduled mechanical
significantly towards the national objective completion of the plant would be Mar-Jun
of 20% blending by FY26 with an estimated 2023. The feedstock for 1G ethanol is rice
reduction of 21.74 MMTCO2e of GHG. grain & for 2G ethanol is rice straw.
BPCL acts as the industry coordinator for EOIs for production of CBG and Bio-manure
ethanol. 131 long-term off-take agreements are being floated under the SATAT scheme.
(production capacity of 432 Cr L of ethanol 7 plants have started producing CBG. LOIs
per annum) have been signed between have been issued for 299 plants with an
OMCs and upcoming ethanol plant owners. installed capacity of 1,265 TPD. BPCL aims
EOIs are being floated to entrepreneurs for to produce 3 MMT of CBG by FY24 from
supply of biodiesel from Used Cooking Oil 1,000 CBG plants through the LOIs issued
(UCO) from existing and/or new plants. under SATAT. The possibility of setting up
model plants are being explored based on
A 100 KLD integrated 1G & 2G bio-ethanol
availability of feedstock, land, and potential
production plant is being developed by
off-take of CBG and by-products.
BPCL in collaboration with Praj & Tata
Green Hydrogen
BPCL is undertaking efforts to establish As a step towards “Atmanirbhar Bharat”,

a 20 MW Green Hydrogen Plant at Bina, BPCL’s R&D Centre has collaborated with
expected to be commissioned by Mar ‘24. Bhabha Atomic Research Centre (BARC),
The company has partnered with ACME, to establish an ecosystem for indigenous
Greenko and ReNew Power for exploring electrolyser technology development &
opportunities and setting up 1.9 TPD Green manufacturing with cost competitive
Hydrogen based H-CNG refueling station at electrolyser technology. The fabrication
Ahmednagar, Maharashtra. R&D on Green & demonstration of the modular unit is
Hydrogen production from agricultural expected to be completed by Dec ‘24.
/ organic waste is planned in Punjab /
Haryana for blending in CGD networks.
Carbon Capture, Utilization & Storage (CCUS)
BPCL aims to implement Simulated BPCL CRDC is working on Solid Oxides

Moving Bed Absorption (SMB) technology Electrolyzer Cell (SOEC) based co-
for CCUS, with lab level pilot trials planned electrolysis process for CO2/H2O
for Mar’24 and refinery implementation by conversion to syngas and subsequent
Mar’26. The SMB process has excellent heat conversion of syngas to produce green
integration with 10-25 times lesser energy methanol. Trials at lab scale are planned
requirements and 50-70% capture cost for Jun’24, and refinery implementation by
reduction compared to other technologies. Mar’26. Production of Sustainable Aviation
Fuel (SAF) from captured CO2 and using
BPCL is supporting scale-up of CO2
green hydrogen is also being explored as a
to methanol/DME technology being
promising alternative, with BPCL aiming to
developed by Breath Applied Science
set up a demonstration plant by Dec 2026.
Pvt Ltd, a start-up incubated at JNCSAR,
Bengaluru. Pilot plant trials conducted in
Apr ’21 saw CO2 conversion (29.5%) with
Methanol selectivity in range of 40-45%.
EV charging and swapping stations
BPCL aims to establish 200 fast charging Strategic partners like Ola Electric, Race
corridors by FY25 covering national & state Energy, Infinity & Hero have been brought
highways connecting major cities, tourist on board to establish fast charging &
locations and economic centers. BPCL is battery swapping pilots across India.
also aiming to set up 3,000 EV charging
and 200 battery swapping stations by FY25.
THE GREEN SHIFT 46
HINDUSTAN PETROLEUM CORPORATION LIMITED (HPCL)
4.61 0.0
BASELINE
MMTCO 2E MMTCO2E
TARGET
HPCL had a GHG inventory of 4.61 Usual Scenario with capacity expansions.
MMTCO2e (Scope 1 & 2) in FY20, primarily HPCL aims to achieve net zero Scope 1 &
from combustion of fuels in furnaces, Scope 2 emissions by tne year 2040. Boston
boilers, IC Engines, Hydrogen Generation, Consulting Group has been engaged for
flaring from refinery operations, purchased the development of environment strategy
electricity consumption etc. Scope 1 & roadmap including the net zero plan by
emissions account for 84.8% of total September 2022. The identified elements
emissions and Scope 2 accounted for the of the net zero strategy have been
balance 15.2%. This is projected to reach presented in Exhibit- 3.6.
10.1 MMTCO2e by FY40 under Business-as-
Exhibit-3.6: Key elements of roadmap to net-zero by HPCL

ROADMAP TO NET ZERO
ESG vision and

materiality assessment
GHG footprint
Institutional inventory and
Capacity Building projection
Best practices
Downstream Environment
& expectations
ezciencyand Strategy and
of external
optimization Roadmap
stakeholders
New low carbon Ambition/

business Target-setting
Decarbonization levers
and techno-commercial
assessment
Renewable Energy (Wind / Solar)
HPCL has a target of generating 2.4 GW by ~101 MW capacity & solar power ~54 MW
2025 and progressively increasing that to capacity. 100% solarization of retail outlets
10 GW by 2030. HPCL has total renewable is also targeted with 32% completed as of
capacity of 155 MW, where wind power March 2022.
Biofuels
HPCL achieved 9.03% of ethanol blending also planning to put up 1G ethanol plant at
in FY 2021-22 and targeting 20% ethanol multiple locations across India with total
blending by FY 26. HPCL also blended capacity of ~123 TMTPA.
2308 KL biodiesel in HSD in FY 2021-22.
HPCL is executing a compressed biogas
HPCL has a 100% owned subsidiary named plant with project cost of Rs. 133 Cr at
as “Hindustan Biofuels Ltd”(HBL). HBL Budaun(UP) which will be producing
was promoted as a backward integration CBG up to 14 tonnes per day. For further
initiative to enable HPCL’s foray in expansion in CBG capacities, additional
manufacturing of ethanol for blending CBG plant with capacity of over 6 TMTPA
in Petrol. HBL has two integrated Sugar has been planned.
-Ethanol-Cogeneration plants at Sugauli
EOIs for production of compressed biogas
and Lauriya districts in the state of Bihar.
are being floated under the SATAT scheme,
HPCL is foraying into bioethanol production with a target to setup 1,000 plants by FY24.
by setting up 2G technology based bio 413 LOIs have been released with a capacity
refinery at Bathinda. In addition, HPCL is of 2,261 TPD (825 TMTPA) as of Mar ‘22.
THE GREEN SHIFT 48
Green Hydrogen
HPCL has increased usage of hydrogen in Hydrogen is being used. HPCL is setting up
refineries for fuel quality improvements a green hydrogen project capacity of 370
to BS-VI and for residue hydrocracking for TPA (2.6 MW) at Visakh Refinery which is
conversion of fuel oil to distillate. At HP expected to be commissioned by Jan 2023.
Green R&D Centre, Bengaluru only Green
HPCL is planning to install a 24 KTPA CO2 unit will capture CO2 from HGU reformer
capture unit in Visakh at a cost of 17 Cr, off-gas and is expected to be completed by
based on inhouse R&D technology. The Dec 2023.
Other Major Efforts
Several energy efficiency improvement reduction of the CO2 footprint. As of Mar

measures such as flare gas recovery, 2022, 1011 EV charging stations have been
staged flare, parallel reformers, integration setup across the country by HPCL. HPCL
of VDUs, vacuum pumps in VDUs, helical / aims to have 5,000 EV charging stations
Packinox Heat Exchangers etc. have been and battery swapping stations over 3 years.
undertaken at the refineries leading to a
GAS MA JORS
THE GREEN SHIFT 50
GAS AUTHORITY OF INDIA LIMITED (GAIL)
3.72 0.0
BASELINE
MMTCO 2E MMTCO2E
TARGET
GAIL had a GHG footprint of 3.72 MMTCO2e ■ To ensure that the public has more
of total emissions in FY21 primarily from access to affordable, reliable, and
use of NG as fuel (contributing to 56% contemporary energy services with a
emission). In total, Scope 1 emissions low carbon footprint by accelerating
accounted for 89% of the emissions and the cost-effective provision of clean
Scope 2 accounted for 11% of the emissions. energy, renewable energy, and a
Emissions are projected to reach 5.47 Net-Zero business plan. Exploring
MMTCO2e by FY40 including various potential of decentralized renewable
project and capacity expansions. energy incorporation, alternative fuels
such as Compressed Biogas (CBG),
GAIL is further committed and has already
and innovative technology to reduce
embarked on its Net-Zero journey through
emission by applying scientific rationale
science based ambition and action plan
and testing.
ROADMAP TO NET ZERO
with Government of India’s vision and has

set a target to achieve Net-Zero (Scope 1 ■ Enable and promote cooperation
and Scope 2) status by 2040, while reducing and partnership towards the
our Scope 3 emission by 35% (from baseline implementation of Goal 7 by
year of 2020-2021) by 2040. transitioning to Net-Zero CO2 emissions
by mid-century so as to meet the goals
The company’s Net-Zero strategy is based
of the Paris Agreement including by
on 4 strategic pillars including Operational
introducing carbon pricing. A study
Decarbonization, Energy transition,
on Carbon Pricing is expected to be
Carbon Capture and Utilisation (CCUS) and
published in FY 23.
Offsetting backed by a robust Governance
structure. ■ Increase awareness, capacity, and
knowledge sharing, while also
GAIL is committed to install 1 GW of clean
strengthening the ability of the supply
energy (including solar, wind, compressed
chain of the company to take stronger
biogas, ethanol, and green hydrogen) by
action against climate change.
2025 and committed up-to INR 6000 crore.
Further GAIL is targeting to augment its Methane is one of the potent GHG gas.
capacity to 3 GW of clean energy by 2030. To reduce GAIL’s methane emissions, the
company has taken various initiatives like
GAIL employees from all divisions share
installing, Flare Gas Recovery units (FGRU),
the following vision for combating climate
increasing natural gas flaring rather
change, which aids us in working together
than direct venting where possible and
and strategically to achieve sustainability

implementation of leak detection systems.
and Net-Zero:
Renewable Energy (Wind / Solar)
GAIL has a total renewable energy portfolio MW) and 70+ locations (3.2 MW) currently
of 134 MW with wind plants in Gujarat under implementation.
(19 MW), Karnataka (38 MW) and Tamil
The future for GAIL involves establishing
Nadu (61 MW) accounting for 118 MW. The
renewable energy sources (including
remaining 16 MW comes from current
hybrid) for captive consumption, with
solar plants at Rajasthan (5MW) & UP (5.8
cooperation with state governments or
MW), and from new installations at MP (2
participating in Greenfield project tenders.
Biofuels
GAIL has plans to establish two 500 237 LOIs for production of compressed
KLPD capacity 1G ethanol production biogas have been issued, with a capacity
plants in partnership mode at Rajasthan. of 1184 TPD. CBG plant is being setup in
Additionally, a joint venture has been Ranchi with an investment of 25 Cr which
setup with Gujarat Alkalis and Chemicals has a capacity of 5 TPD, with feedstock of
Ltd (GACL) for the establishment of a 500 150 TPD of organic MSW and 15 TPD of cow-
KLPD plant in Gujarat based on corn. dung. Setting of CBG plant in other cities is
being explored.
GAIL have identified CCUS as one of the ■ CO2 to Polycarbonate Diol- in

strategic pillars for its Net-Zero journey and collaboration with IISER- Tirupati.
is in process of identifying implementable
■ CO2 to Syngas- in collaboration with IIP
CCUS technologies. GAIL has taken a
Dehradun
keen interest in low carbon technologies
& processes for valorization of CO2 to In addition to above technologies, GAIL has
valuable chemicals/ Fixing of CO2. For also implemented a pilot project for fixing
this purpose, GAIL’s R&D department has CO2 (1TPD) using Microalgae in an Open
collaborated with eminent institutions of Raceway Ponds at Pata petrochemical
India, for undertaking feasibility study and complex in association with Central
technology development of process like: Institute of Mining and Fuel Research
(CIMFER), Dhanbad. Trial runs have been
■ CO2 to Methanol & DME (Dimethyl
initiated with suitable microalgae strains in
ether)- in collaboration with IIT-Delhi.
the open ponds.
THE GREEN SHIFT 52
Green Hydrogen
A 10 MW (4.3 TPD capacity) green hydrogen network is under progress to determine

plant at Vijaipur is being planned with the maximum percentage of H2 blending
PEM electrolyzer technology. Hydrogen in the existing networks without any
blending has begun at Indore CGD modification or with minor modifications.
network, with PESO granted for blending It is also studying how to make future new
of hydrogen from 1.1%- 2.0% for a trial gas pipelines CGD networks ready for H2
period of 4 months. A study by EIL for transportation through blending in natural
blending of Green Hydrogen in CGD/ NG gas.
Other Major Efforts
In addition to the above initiatives, GAIL is also undertaking following strategic initiatives for
reducing its emissions:
■ Nature Based Offsetting: GAIL has green Start-ups and built a strong eco-
planted total 84,400 trees in FY 21-22 system for green energy.
out of which 75800 trees were planted
■ GAIL is looking to incorporate several
at their PATA plant. GAIL is in process
energy efficiency initiatives such as
of further augmenting this number,
installing Flare Gas Recovery Unit
with the target of planning 1,50,000
(FGRU), Converting existing building
more trees using “Miyawaki Forestry”
into GreenCo certified green buildings.
technique in FY 22-23
GAIL has also implemented energy
■ Investing in Green startup: GAIL has management system at all our O&M
also setup an INR 100 crore corpus fund locations with all our major installation
under its “Pankh” initiative majority of being ISO 5001 Energy Management
which has been utilized to invest in the System certifies.
ECOSYSTEM ENABLERS
THE GREEN SHIFT 54
ENGINEERS INDIA LIMITED (EIL)

EIL is a critical partner for technology, innovation and energy solutions in the journey of energy
transition for the energy industries. EIL specializes in design, development and implementation of
process technologies both in the conventional and non-conventional energy segments. EIL holds a track
record of achieving more than 60% indigenization of process technologies and 100% of engineering for
the process industries. EIL has developed the technologies both in house and in collaboration with
industries and academia alike such as IOCL, BPCL, CSIR (IIP, NCL, CSIO) and DBT-ICT. EIL has also
forayed into implementation of biorefinery and other Green Energy sectors.
~8.0 0.0
BASELINE
TMTCO 2E TARGET
MMTCO2E
EIL estimated ~8,000 TPA of CO2 emissions EIL has declared to become a Net Zero
from its business operations inclusive of corporate by the year 2035 and formed a
Scope 1, Scope 2, and Scope 3 emissions in team to assess and implement relevant
FY22, out of which Scope 2 emissions (due technological interventions in two phases
to grid electricity consumption) constitute to achieve this target (Exhibit 3.7).
around 85%.
Exhibit-3.7: Inventions planned by EIL to achieve net zero

ROADMAP TO NET ZERO
Energy optimization, adopting

smartezcientdevicesand
Green Grid availability
Miyawaki Forest Building Management

Plantation inside System (BMS)
ozcecomplexes
EIL Installation of
Phase-out of fossil Initiatives additional higher
fuel driven vehicles for ezciencysolar
ozcialtransportation power system
Compressed Biogas Ezcientenergy

(CBG) utilization storage system

Energy Efficient Infrastructure
EIL is implementing important projects rated campus where EIL has provided its
pertinent to energy efficient buildings. For services as PMC. EIL is also developing its
instance, Leh Airport project is being built capabilities in sensor based technological
as a carbon-neutral airport and the IIM solutions, with applications in Building
Nagpur campus, recently inaugurated by Energy Management, in collaboration with
Hon’ble President of India, is a GRIHA 5 Star CSIR-CSIO.
Biofuels
EIL’s expertise in this area can be gauged is one of the first that EIL has done so far
by India’s first 2G ethanol plant being set in its more than five & half decades’ long
up by ABRPL (a JV of NRL, Fortum and journey of providing services and building
Chempolis OY, Finland). The project is nation’s energy infrastructure. EIL has also
being implemented by EIL based on the collaborated with IIP for Bio-ATF project
technology supplied by Chempolis OY. This towards decarbonizing the aviation sector.
Green Hydrogen
EIL has recently been involved by ■ Hiring of PMC Services for setting up 4.3
its esteemed clients in the following TPD Electrolyser at GAIL, Vijaipur
assignments that are essential to take
■ Conceptual study for setting up Green
a leap forward towards fulfilling India’s
Hydrogen facility in Dholera Special
aspiration for Green Hydrogen:
Investment Region, Gujarat.
■ Providing services for LEPC selection,
■ Study of Hydrogen blending in NG
Feasibility study & Basic design of
pipeline and CGD network, GAIL
OSBL facilities for Green Hydrogen
Electrolyser and associated systems at ■ Feasibility study for hydrogen pipeline
BORL, Bina. from Khavda to Mundra, ADANI Group
EIL is involved in collaborative research is assisting industries in assessing CO2

with both academia and industry partners footprint from their business processes,
for effectively utilizing the carbon captured systems, and infrastructure facilities. In
from point sources and has patented a this regard, EIL shall provide its services to
solvent-based technology to capture the develop a web-based platform to estimate
CO2 generated from industry. The company the CO2 emission from industrial set ups.
THE GREEN SHIFT 56
Digital Interventions towards Industrial Automation

EIL has developed IIoT based software Management System and Earthquake
solutions for optimizing the existing Warning System for key infrastructure
assets, suggesting the operating strategies projects in India.
for the heat and power networks, and
EIL has assisted the industry in achieving
increasing the efficiency of the furnaces,
Energy Optimization through a systematic
thereby transforming plant operations into
approach and suggested short, medium,
interactive / real-time digital platforms. EIL
and long- term interventions to realize the
is also involved in the implementation of
potential energy savings (Exhibit-3.8).
sensor- based solutions for the Building
Exhibit-3.8: EIL's experience in Energy Studies

DOMESTIC
All PSU IOCL - CPCL - NRL HPCL - Vizag 15 PSU refinery

(1996) Gujarat Ref Manali (2005) (2011) (2017) (2017-18)
2.1 MM SRFT
INTERNATIONAL
KNCP, Saudi Aramco, Saudi Aramco, Saudi Aramco, Saudi Aramco, ADNOC ADNOC Ref.
Kuwait Jeddah (2004) Ras Tanura Berri Uthmaniya Refinery at Ruwais
(2005-06) (2006) (2015) (2018-19)
Moving towards cleaner energy forms to the industry. EIL has already forayed
for the mitigation of climate change into diverse areas such as energy efficient
is no more a choice but a mandate for infrastructure, alternative energy, green
humankind to secure a sustainable future. hydrogen etc. and building its capabilities
EIL understands that a systematic, holistic to assist the industry in its energy transition
approach by the stakeholders, including journey. In this regard, EIL is committed to
policymakers across the globe, is key to providing its services to develop a web-
addressing the challenges associated with based platform to estimate CO2 emissions
energy transition. This starts with uniform across the carbon intensive industrial
assessment and reporting of emission data sectors. This platform would enable
on a common platform, followed by the assessing emission data to bring uniformity
deployment of innovative technological such that the baseline and components
solutions. Technological solutions need to related carbon footprint can be compiled
be not only effective but also economically on a common platform. This would,
viable for wider scale deployment. thus, help industry leaders in judiciously
planning their futuristic investments and
Energy transition opens up immense
setting up targets for phase wise carbon
opportunities for EIL to innovate and
footprint reduction towards net zero.
expand to provide total energy solutions
KEY RECOMMENDATIONS
Based on the interactions with and presentations COP trends and their business impact over short,
made by different oil sector entities in the public medium, and long term. The following steps can
and private sectors, it was apparent that they were help improve preparedness and enable these
adequately aware of the developments around entities to face the emerging realities and benefit
energy transition, locally and globally – including from them:
■ Formalize organization setup to tackle ■ Register criticality of ESG goals & compliances
energy transition: Establish a standardized across the organization: Include ESG related
structure for a cross-functional group dealing issues, with a focus on energy transition, carbon
with the entire gamut of issues relating to footprint and ESG compliances, as a formal
ESG – carbon footprint measurement, carbon training module for all executives. To start with,
trading, environmental scanning, downside it could be made available to all manager in
risk mitigation, identification of new business mid-level and above. The organizations also
opportunities and fund-raising capabilities. need to recognize the fast evolving reporting
requirements and devise an effective &
■ Integrate ESG into corporate reviews:
comprehensive strategy to communicate /
Channelize learnings from accurately measured
comply with the requirements of Integrated
scope 1 & scope 2 emissions, using globally
Reporting.
accepted protocols like Science Based Targets,
to orient corporate strategy towards identifying ■ Expand Organizational capabilities: The sector
challenges and further mitigation opportunities entities could consider developing supporting
in a timely manner. The sectoral entities capabilities to manage emerging challenges &
deriving their revenue predominantly from requirements. The organizations could develop
fossil fuels need to also develop the capability to these capabilities in-house or avail the expertise
measure and manage scope 3 emissions, both of external entities, including EIL, which has a
upstream and downstream and participate history of extending consultancy services.
in local and global efforts to mitigate overall
carbon footprint across the value chain.
Exhibit-3.9: Main areas to expand Organizational capabilities
1. Accurate measurement & certification of carbon footprint along with its mitigation
2. Acting as or supporting the development of a Carbon Registry
3. Understanding and measurement of input and output side Scope 3 emissions
4. Development of carbon markets in India to enable funding through carbon trading
5. Enabling access to international financing for niche transition technology areas
6. Capitalizing on the knowledge and capabilities developed during the energy transition journey, identify
value accretive business opportunities and benefit from them
7. The companies need to have a pro-active approach and remain ahead of the curve to capitalize on huge
business opportunities that arise in the wake of global transition journey.
THE GREEN SHIFT
58

Chapter
4
BIOFUEL
OPPORTUNITIES
IN INDIA
In this section
1. Global Biofuels Perspective 61
2. Bio-ethanol 63
3. Bio-diesel 73
4. Compressed Biogas (CBG) 79

GLOBAL BIOFUELS PERSPECTIVE

INTRODUCTION
Biofuels involve the direct conversion of biomass generation biofuels (4G) are the amalgamation
into liquid fuels, which can be blended with of genomically prepared microorganisms and
existing automotive fuels. Ethanol and biodiesel genetically engineered feedstock. Cyanobacteria
are the two main transport biofuels. These fuels are engineered to increase the oil yield and are
can be produced from a variety of biomass. First used to efficiently produce bioenergy. These
generation (1G) biofuels are usually made from feedstocks can be grown in nonarable land.
edible feedstock like sugarcane, beets, food grains Bioengineering principles are implemented to
etc. 2G fuels are produced from lignocellulosic modify algal metabolism properties to enhance
biomass obtained from energy crops or waste the oil content in the cells.
biomass, such as agricultural and forest residue.
Moreover, the increased oil yield also helps in
Recently, biodiesel production from algal biomass
CO2 mitigation. Hence, the net effect of CO2 is
has also evolved as an option, sometimes referred
negligible on the environment. Research in this
to as third generation (3G) biofuel. Algae can be
field is emerging, and various methods have
used for the production of all types of biofuels,
been proposed to provide a sustainable solution
such as biodiesel, gasoline, butanol, propanol,
for biofuel production.
and ethanol, with a high yield, approximately
10 times higher than 2G biofuel. Fourth
GLOBAL OUTLOOK
The international biofuel sector is strongly situation. Biofuel demand in 2021 reached 155,400
influenced by national policies that have three Mn Liters, returning to near 2019 levels. Demand
primary goals: farmer support, reduced GHG rose by 8,700 Mn Liters year on year.
emissions, and increased energy independence.
The United States leads global biofuel growth,
In the global transport fuel demand, the share
with demand expected to increase by 6% in 2022
of biofuels remains minimal, accounting for
compared to 2021 despite a downward revision in
~3%. Looking at the huge potential of biofuels
January. The recovery in gasoline and diesel use
as an alternative energy source, many countries
to pre-Covid levels, California’s Low Carbon Fuel
have implemented dedicated biofuel plans with
Standards, implementation of Renewable Fuel
time bound blending mandates, incentivizing
Standards and the Federal Biodiesel Blenders’ Tax
the setting up of distilleries and encouraging
Credits, will all combine to drive this expansion.
the production of energy crops to improve the
THE GREEN SHIFT 62
In Brazil, a 1% growth in biofuel demand is In the Asia Pacific region, biofuel demand is
forecasted in 2022 relative to 2021. Ethanol use expected to grow at 9% in 2022 and 12% in
is expected to expand slightly, despite weaker 2023 due to robust gasoline and diesel growth,
gasoline demand over time. As per the current supportive government policies in India and
outlook, ethanol prices are expected to remain higher biodiesel blending requirements in
more attractive than gasoline, which should lead Indonesia. India continues to raise ethanol
to a higher blending share. blending mandate, reporting a 10% blending
rate for ethanol in gasoline in May 2022. China
Europe’s biofuel demand is expected to expand
contributes little to demand growth since there
by 6% or 1,600 Mn Liters in 2022 relative to 2021.
is no visibility on new support policies. China’s
Growth is supported by more robust state
14th Five-Year Plan provided little insight on its
level policies and rising gasoline and diesel
biofuel plans other than reiterating its intent to
demand recovering from Covid lows, albeit
“vigorously support advanced biofuels”. Table-4.1
slower than forecasted earlier in the year. The
highlights the production share ranking and
ongoing geopolitical situation has created an
major feedstock utilized for ethanol and biodiesel
unprecedented energy crisis for Europe, which
respectively of major producers.
may serve as a critical tailwind to prompt a
significantly higher build up in Europe’s bio-
energy solutions.
Table-4.1: Biofuel Production Share Ranking & Major Feedstock
Production Ranking Major Feedstock

Ethanol Biodiesel Ethanol Biodiesel
USA 1 (48.2%) 2 (18.1%) Maize Soybean oil, UCO
EU 4 (4.8%) 1 (32.3%) SugarBeet/Wheat/Maize RapeseedOil/PalmOil/UCO
Brazil 2 (26.7%) 4 (12.2%) Sugarcane/Maize Soybean oil
China 3 (8.3%) 9 (2.3%) Maize/Cassava UCO
India 5 (2.3%) 15 (0.5%) Molasses UCO
Source: OECD-FAO Agricultural Outlook 2021-2030
World prices for biofuels are closely linked to Expressed in real terms, biodiesel prices are
developments in feedstock prices (which are projected to decrease after 2024 and ethanol
mostly declining in inflation adjusted real terms), prices to resume a decreasing trend after 2026.
crude oil prices (which have remained constant Nominal ethanol prices will perform more
in real terms), distribution costs and biofuel strongly than biodiesel primarily because
policies. International biofuel prices may increase ethanol prices are currently at historic lows, and
in nominal terms but remain largely unchanged the recovery expected in the early years of the
in real terms. projection period 2021-2030 will start from this
low base. It should be noted that due to policies
Based on the analysis of the Organization for
that include fiscal benefits or support prices,
Economic Co-operation and Development
international and domestic biofuel prices often
(OECD), globally nominal biodiesel prices are
diverge, and the trend of divergence is expected
projected to increase at a slower pace (1.1% p.a.)
to continue going forward.
than ethanol prices (1.8% p.a.) influenced by
developments in the vegetable oil markets.
BIOETHANOL
INTRODUCTION
Ethanol production primarily involves distilling such as biodiesel, gasoline, butanol, propanol,
carbohydrates from sugarcane and beet or and ethanol with high yields, approximately 10
distilling starch from food grains such as times higher than the second-generation biofuel.
maize, paddy, wheat, and potatoes through Fourth-generation biofuels are the amalgamation
fermentation. Second generation fuels are of genomically prepared microorganisms and
produced from ligno-cellulosic biomass which genetically engineered feedstock. The research
is obtained from energy crops or waste biomass, into this field is emerging, and various methods
such as agricultural and forest residue. Algae have been proposed to provide a sustainable
can lead to the production of all types of biofuels solution for biofuels production.
Exhibit-4.1: The Biofuel Value Chain
OUTLOOK
Ethanol is likely to be consumed more and decrease during the outlook period. Brazilian
more in the country where it is produced. Global ethanol exports are projected to increase by
ethanol trade is projected to remain a low share 0.1% p.a. over the outlook period through 2030,
of global production, decreasing from 9% over given that Brazil’s ethanol industry will mostly fill
the base period of 2021 to 8% by 2030. Due to sustained domestic demand.
weak production, US ethanol exports could also
THE GREEN SHIFT 64
INDIAN BIO-ETHANOL MARKET
Regulatory History
To boost the agriculture sector, reduce sugarcane juice. Despite these measures, ethanol
dependence on energy imports and harness production remained low in the ensuing years.
the full potential of domestic sources, the Issues in the sugarcane supply chain prevented
Government of India launched pilot projects production, and oil marketing companies could
in 2001 wherein 5% ethanol blended petrol was not get bids for most of the quantity offered for
to be supplied to retail outlets. Apart from field purchase. This prompted a slew of measures
trials, R&D studies were also simultaneously in the next few years, including reintroducing
conducted. The success of these field trials and administered minimum support price (MSP) and
studies paved the way for Ethanol Blended Petrol opening up alternate ethanol production routes.
(EBP) in India. The Government of India, vide its
By 2018, blending rates reached around 4%,
resolution dated 3rd September 2002, decided to
followed by a faster uptake in the subsequent
launch the sale of 5% EBP in nine States and four
years. As of 2021, the Government of India
Union Territories (UTs) with effect from January
reported a blending rate of 8.1%. From Aug 2021 to
2003.
Jan 2022, Expression of Interest (EOI) for signing
Thus, the Ethanol Blending Program in 2003 Long Term Offtake Agreements (LTOA) with
was the first significant policy step related to Dedicated Ethanol Plants for ethanol supply saw
liquid biofuels. The Biofuel Policy, implemented OMCs sign 131 LTOAs. India achieved the targeted
in 2009, was more ambitious, mandating a 20% 10% ethanol blending in May 2022 (Table 4.2),
blending rate for ethanol and biodiesel by 2017. much ahead of the target date of Nov 2022 and
The 2009 policy also moved beyond molasses has gone on to prepone the timeline by 5 years
based ethanol production to the direct use of to 2025 for an ambitious blending target of 20%.
Table-4.2: Trend in ethanol blending in India
Ethanol Supply Year Quantity Supplied (Cr. Liters) Blending Percentage for PSUs (%)
2012-13 15.4 0.67

2013-14 38.0 1.53
2014-15 67.4 2.33
2015-16 111.4 3.51
2016-17 66.5 2.07
2017-18 150.5 4.22
2018-19 188.6 5.00
2019-20 173.0 5.00
2020-21 302.3 8.10
2021-22 433.6 10.02
Source: OMC data
Bio-ethanol Demand in India
As witnessed in the case of global ethanol widespread availability of fuel and compatible
demand, even in India, demand for ethanol as a vehicles up to limited blending percentages, and
fuel will be primarily driven by blending mandates, fulfilment of other infrastructural requirements.
As of July 11th, 2022, the vehicle population in the 1/3rd by volume. The growth rate of vehicles in this
country was estimated at around 22 Cr two and segment is pegged at around 8-10% per annum.
three wheelers and about 5.4 Cr four-wheelers
As indicated in the roadmap in the NITI Aayog
(Vahan data). Two and three wheelers account
report released in June 2021, the projected
for 74%, and passenger cars around 19% of the
requirement of ethanol based on petrol (gasoline)
total vehicle population on the road. Two and
consumption and estimated average ethanol
three wheelers consume 2/3rd of the gasoline by
blending targets for the period ESY 2020-21 to
volume, while four wheelers consume the balance
ESY 2025-26 are calculated below in Table-4.3.
Table-4.3: Ethanol demand projection
Ethanol Projected Petrol Projected Petrol Blending Ethanol required for blending
Supply Year Sale (MMT) Sale (Cr. liters) (in %) in Petrol (Cr. liters)
A B B1=B X 141.1 C D=B1 x C%
2019-20 24.1 (Actual) 3413 (Actual) 5 173
2020-21 27.7 3908 8.5 332
2021-22 31 4374 10 437
2022-23 32 4515 12 542
2023-24 33 4656 15 698
2024-25 35 4939 20 988
2025-26 36 5080 20 1016
Source: Niti Aayog Report - Roadmap for Ethanol Blending in India 2020-25
Feedstock for Production
The Department of Food and Public Distribution based raw materials, viz. C & B heavy molasses,
(DFPD) is the nodal department for promoting sugarcane juice and sugar / sugar syrup, surplus
fuel grade ethanol producing distilleries in the rice from Food Corporation of India (FCI) and
country. The Government has allowed ethanol maize. The conversion efficiency by raw materials
production and procurement of sugarcane is tabulated in Table-4.4 below:
Table-4.4: Feedstock for Production
Cost / MT of the Quantity of ethanol per Ex-mill Ethanol

Feedstock feedstock (Rs.) MT of feedstock Price (Rs./liter)
SugarcanejuiceSugar
/ / 2850 (Price of sugarcane 70 liter per ton of
62.65
Sugar syrup at 10% sugar recovery) sugarcane
B Molasses 13,500 300 liters 57.61
C Molasses 7,123 225 liters 45.69
Damaged Food Grains
16,000 400 liters 51.55
(Broken Rice)
Rice available with FCI 20,000 450 liters 56.87
Maize 15,000 380 liters 51.55
THE GREEN SHIFT 66
Sugarcane
Sugar based ethanol production uses molasses, Litres of ethanol from sugarcane will require an
a byproduct of the sugar-making process, additional 6.26 Mn hectares under sugarcane
almost exclusively. A lifecycle analysis done as by 2025. The other sugarcane pathway involves
part of a 2015 study by Soam et al. found that using sugarcane juice directly, possibly reducing
without allocation among co-products, lifecycle the need for land-use change. However,
emissions for molasses based ethanol were sugarcane cultivation is water intensive and
8,736 kg CO2 eq. / ton of ethanol, compared to depends heavily on consistent rainfall patterns.
512 kg CO2 eq. /ton of ethanol when energy- Meeting the ambitious goal of producing
use was apportioned. On the land use change ethanol from sugarcane necessarily needs
required for increased sugarcane production, an environmentally sustainable agriculture
taking a concept from Ju Young Lee et al., it is production system.
estimated that the goal of producing 6.78 Bn
Rice
To meet the 2025 ethanol production target of current rice stocks are much higher than the
the new roadmap, an estimated 17 Mn tons of average stocks in the last few years. The stock
food grains will be needed, a staggering increase also varies seasonally, with a significant uptick
from the 78,000 tons of Food Corporation of following the Rabi cropping season. Thus, a
India (FCI) rice allocated in FY 2020-21. Due to steady and sustained supply of surplus rice
excess procurement during the pandemic, the needs to be ensured in long run.
Maize
Since using rice for ethanol poses significant respectively. This is less than half the US average
risks to food security, rice can be seen as a yield of 10.4 tons/ha. and lower than that of most
temporary source. Thus, food grain based other maize producing countries. Considering
ethanol production will depend on maize in the an ethanol yield of 380Liters/ ton, meeting the
long run. In India, maize production in FY 2020- food grain requirement for ethanol production
21 stood at 24.51 tons, with stable production from maize will require an additional 4.82 Mn
over the last five years. Presently, most of the ha. of land, more than half of the present 9.42
maize is utilized for poultry feed (47%); the rest ha. under maize cultivation. Thus, a maize
is used for livestock feed (13%), starch (14%), dependent pathway will require significant
and exports (6%). As per estimates from the land use change, and dynamically calibrated
Indian Institute of Maize Research (IIMR), the marketing policies to avoid a shortage of
average yield for maize in India is 2.8 tons/ha. supply in the domestic market.
and 4.4 tons/ha. in the Kharif and Rabi seasons,
Summary
Thus, India’s present approach to biofuel production presents the following key challenges for
feedstocks from a lifecycle perspective which needs to be accordingly addressed:
■ The low yield for sugarcane and maize to unsustainable water use and fertilizers.
in India will require land use change, Thus it is necessary to explore less water
which necessitates the exploration of new intensive agriculture methodologies, more
production pathways. so for sugarcane cultivation and sustained
long term ESG compliances.
■ The agricultural sector receives subsidies for
inputs and power in addition to MSP, leading
■ Land revival programs are inhibited by the include supporting local communities,
lack of a robust mechanism for classifying providing jobs, ensuring human rights
wastelands and complicated land ownership protection, improving air and water quality,
patterns that need to be investigated. and avoiding deforestation.
■ Using competing agricultural feedstocks can ■ Rain and other weather related issues are
create conflict between different agrarian significant factors impacting agriculture
groups, which may need to be balanced. based feedstock availability and sustained
supply. In a year of insufficient rain or other
■ Promoting 1G biofuels may lead to technology
weather related disturbances, it is possible
lock ins and delay switching to 2G feedstocks.
that the feedstock supply could be hindered.
A reasonable level of uniformity in incentives
Therefore, measures such as calibrated
for sugarcane and maize production and
control on exports, good stock build up and
other feedstocks will be desirable for seamless
price assurance may be used as mitigatory
bioethanol expansion.
measures under such circumstances.
■ There is a need for sustainability standards
to safeguard rural development. This may
Second-Generation Biofuels: From promise to reality
The advancements in 2G bioethanol produced stover, bagasse, bamboo, woody biomass, etc.
from lignocellulosic biomass, such as crop Currently, three major commercial 2G plants are
residues, woody crops or energy grasses, are in the process of being commissioned, including
gaining momentum. Though they still represent BPCL Bargarh (30 Mn Liters), HPCL Bhatinda
less than 3% of total bioethanol production (30 Mn Liters) and Numaligarh Refinery Limited
globally, the GHG reduction potential is higher (60 Mn Liters). The IOCL Panipat plant of 30 Mn
than for 1G bioethanol. The environmental Liters was dedicated to the nation by the Hon’ble
impacts of bioethanol production are dependent Prime Minister of India on 10th August 2022,
on feedstock availability and conversion World Biofuels Day. The issue of pricing, market
technology. The biochemical conversion route creation of byproducts, availability and logistics of
must overcome technological and economic feedstocks are being addressed further.
challenges such as pre-treatment, fermentation,
The Technology Information, Forecasting
hydrolysis and separation.
and Assessment Council’s (TIFAC) 2018 report
India has four operational advanced biofuel plants, estimates India’s total dry biomass generation at
including a pilot and a demonstration plant, with approximately 683 MMT across 11 crops suitable for
a cumulative annual production capacity of 1.75 biofuel production. Based on the above study by
Mn Liters of cellulosic ethanol. Actual production TIFAC, it was found that sugarcane, rice, and wheat
is a mere fraction of this figure. There are several are the most grown crops in India, accounting for
advanced biofuel plants in development, but over 91% of the production of crops. Rice straw,
they are far from reaching commercialization as rice husk, wheat straw, sugarcane tops and
of now. bagasse are the main crop residues generated in
India. They account for almost 80% of the residue
Under the PM JIVAN scheme, 12 commercial
generated by the crops. Assessing the sustained
plants and 10 demonstration plants of 2G
availability of feedstock over time is critical,
biorefineries are planned to be set up in areas
considering that in certain situations, especially
with sufficient biomass availability so that ethanol
in periods of reduced supply, 1G feedstock
is available for blending throughout the country.
affect ethanol supply, resulting in variations in
Already Rs. 1,969.50 Cr has been earmarked for
price and availability of animal feedstock. TIFAC
this scheme. These plants can use feedstocks
has recently undertaken a study to assess the
such as rice and wheat straw, corn cobs and
THE GREEN SHIFT 68
projected availability of agricultural residue for modifications in the vehicle engine parts and
ethanol production. Based on a preliminary progressively lean towards “flex-fuel” engines.
assessment, it is estimated that through major The modified engine vehicles will enable the
crops by FY 2021-22, around 200-250 MMT of absorption of all the additional bioethanol, the
surplus agriculture residue may be available for availability of which is not foreseen to encounter
producing bioethanol. any problem. In ramping up the collection of
feedstocks from crop residues, establishing
Currently, the available commercial
the necessary infrastructure for collecting,
technologies can yield 250 Liters of ethanol
transporting, and handling large amounts
from one ton of agriculture residue. The overall
of biomass would be a crucial step toward
shortfall of 5.9 Bn Liters could be met effectively
boosting biofuel use in India. This would allow
if merely 12% of the surplus biomass (200
the country to enter 2G biofuel production,
MMT = ~ 50 Bn Liters) is utilized for producing
given the fact that technical and cost barriers
bioethanol. However, with plans to go for 20%
have been reduced to some extent.
ethanol blending, it will require necessary
Summary
■ Consistent availability of feedstock from crop forward and make it easier for investors to
residues, and the establishment of necessary acquire land, access geographical information
infrastructure for aggregation, logistics and of various producing areas, avail single
handling of large amounts of biomass, all window clearance for obtaining licenses,
with the least carbon footprint, will be a step financing options, reasonable pricing with off-
toward 2G ethanol production. The technical take guarantee etc.
and cost barriers also need to be overcome.
■ To ensure the sustained availability of feedstock
■ A framework would be required to assess for bio-energy projects, it is necessary that a
the projected biomass residue and identify mechanism for the preferential availability of
the potential of biofuel production and crop residues for usages like CBG, bio-ethanol
the associated number of prospective etc. is mandated.
bio-refineries in a region/ state based on
■ Technology for ethanol production from non-
the current and projected availability of
food feedstock should be promoted to tap
agricultural / biomass residues.
this abundantly available resource without
■ There is a need to establish synergy among all causing any trade-off.
the concerned Ministries to take the mission
Supply situation in India
To enhance ethanol production capacity in the Cr Liters with a loan amount of about Rs 16,000 Cr
country, the Government, in July 2018 and March have been approved by the DFPD.
2019, notified two interest subvention schemes for
The Cabinet Committee on Economic Affairs
molasses based distilleries. Under the aforesaid
(CCEA), in its meeting dated 30th December
scheme of the Department of Food and Public
2020, approved extending financial assistance
Distribution (DFPD), interest subvention at the
for producing 1G ethanol from feedstocks such
rate of 6% per annum or 50% of the rate of interest
as cereals (rice, wheat, barley, corn & sorghum),
charged, whichever is lower on loan sanctioned,
sugarcane, sugar beet etc. The DFPD notified
was borne by the Central Government for a period
a modified interest subvention scheme on 14th
of 5 years. The DFPD approved 368 projects for
January 2021 for setting up new and existing grain
setting up new distilleries and expansion of
based distilleries to produce ethanol & production
existing distilleries under the scheme. Thus far,
of ethanol from other 1G feedstocks. About 418
238 projects for a capacity enhancement of 583
applications received for capacity addition of 1,670 portal viz. http://sugarethanol.nic.in to review the
Cr Liters have been recommended for approval progress of upcoming ethanol projects in real
in principle. It is expected that the capacity of time. In the portal, project proponents can share
molasses based distilleries will increase from the the bottlenecks faced by them so that related
current levels of 426 Cr Liters to 730 and 760 Cr ministries like DFS, MoEFCC, DFPD, MoPNG and
Liters by FY 2024-25 and FY 2025-26, respectively. state governments can sort out their problems by
expediting requisite clearances and sanctioning
The Department of Financial Services (DFS) has
and disbursal of loans.
impressed upon banks to expedite sanctioning
and disbursal of loans. The concept of a Tripartite About 988 Cr Litres would be required to achieve
Agreement between mills/distilleries, banks, the 20% blending target by FY 2024-25, and the
and OMCs has been introduced to help mills/ total requirement of alcohol, including other
distilleries avail loans for ethanol projects. State sectors, would be 1,288 Cr Litres. For FY 2025-26,
Bank of India has also issued Standard Operating ethanol requirements would be 1,016 Cr Litres to
Procedures (SOP) to sanction and disburse loans achieve 20% blending and the total requirement
to molasses based distilleries. Similar SOPs are of alcohol, including other sectors, would be 1,350
also being issued for grain based distilleries by Cr Litres.
other banks. The DFPD has developed a web
Table-4.5: Ethanol Capacity Augmentation (20% blending by ESY 2025-26)
Ethanol Supply (in Cr. Lt.) Molasses based Grain based Total
(A) From sugar sector 550 134 684

(B)Fromgrain/maizeetc. 466 200 666
Total Supply 1016 334 1350
Ethanol Capacity Augmentation (in Cr. Lt.) Molasses based Grain based Total
426 258
Existingethanol/alcoholcapacity 684
(231 distilleries) (113 distilleries)
Capacity addition from sanctioned projects 93 0 93
New capacity to be added (already added for

241 482 723
370 Cr. litres by May ’22)
Total Capacity required by Nov 2026 to

760 740 1500
reach 1350 Cr litres supply
Technology for Higher Ethanol Blend (>20%)
A project to study the suitability of using 20% no issues with E20. Elastomers (NBR/PVC blend
ethanol gasoline blend (E20) for powering and Epichlorohydrin) had an inferior performance
vehicles was undertaken by the Automotive with E20 compared to neat gasoline. Plastic PA66
Research Association of India (ARAI), Indian had a drop in tensile strength after use with E20.
Institute of Petroleum (IIP) and IOCL during FY In vehicle level studies, fuel economy decreased
2014-15, with funding from the Department of by up to 6% (depending on the vehicle type) on
Heavy Industry (DHI). Material compatibility tests average. The test vehicles passed startability and
revealed that the metals and metal coatings had drivability tests under hot and cold conditions
THE GREEN SHIFT 70
with E0 and E20 test fuels. In all the cases, no optimal performance with E10 fuel. Vehicles with
severe malfunction or stalling was observed at E20 tuned engines will be rolled out nationwide
any stage of vehicle operation. No abnormal from April 2025. These vehicles will run on E20
wear of engine components or deposits or only and provide high performance.
deterioration of engine oils were observed after
An ambitious and calibrated transition towards
the on road mileage accumulation trials. Joint
an E20 regime will expectedly impact multiple
studies reported by the Massachusetts Institute
stakeholders in the ecosystem in myriad ways.
of Technology and Honda R&D indicate that upto
Higher reductions in CO emissions were observed
20% improvement in relative efficiency can be
with E20 fuel at almost 50% lower in two wheelers
achieved with E20 compared to regular gasoline
and 30% lower in four wheelers. Hydrocarbon
when the engine is tuned correctly.
emissions are reduced by 20% with ethanol
Flex Fuel Engine technology (FFE) is a well- blends compared to regular gasoline.
accepted concept in Brazil, representing over
For consumers, while using E20 fuel, there will
80% of the total number of new vehicles sold in
be a drop in fuel efficiency by nearly (a) 6-7% for
the country. The Flex fuel vehicles used in Brazil
four wheelers designed for E0 and calibrated for
operate with E27 or E100 Hydrous ethanol or any
E10, (b) 3-4% for two wheelers designed for E0
blend between these two. So, the selection and
and calibrated for E10 (c) 1-2% for four wheelers
optimization of technology for the engine must
designed for E10 and calibrated for E20. However,
be undertaken considering the availability of
with the modifications in engines (hardware and
ethanol fuel. The cost of flex fuel vehicles (four
tuning), the loss in efficiency due to blended fuel
wheelers) would be higher in the range of Rs
can be reduced.
17,000 to Rs 25,000. The two-wheeled flex fuel
vehicles would be costlier in the range of Rs 5,000 For vehicle manufacturers, engines and
to Rs 12,000 compared to standard petrol vehicles components need to be tested & calibrated with
(according to SIAM). E20 as fuel. Vendors need to be developed to
supply additional components compatible with
It is recommended in Niti Aayog’s roadmap that
E20. All the parts required can be made available
E20 material compliant and E10 engine tuned
in the country. Component manufacturers must
vehicles may be rolled out across the country
ensure the availability of compatible piston rings,
from April 2023. These vehicles can tolerate 10%
piston heads, seals, fuel pumps etc., in India.
to 20% of ethanol blended gasoline and give
KEY POLICY INTERVENTIONS
Supply / Feedstock related
■ OMCs would be following the path laid ■ Encourage production from crops with
down in the Niti Aayog Roadmap for Ethanol a lower environmental burden: Expand
Blending 2020-25. production from maize, sorghum and other
low water consuming feedstock. Even energy
■ Promote proliferation of nonfood feedstock:
cane prominently used in Brazil for 2G Ethanol
Promote technology for the production
can be adopted as a low water guzzling crop.
of ethanol from nonfood feedstock, called
“Advanced Biofuels,” including 2G and 3G ■ Establish an efficient supply chain for
(Industry off-gases, Municipal Solid Waste) to feedstock / ethanol movement: Develop a
minimize trade-offs with the food production supply chain policy framework (including
system. Governments to declare a mandate for storage & distribution infrastructure) to
for a minimum quantity of ethanol to be optimize the movement of feedstock and
procured from 2G/3G sources. ethanol from production to consumption
points with the lowest carbon footprint.
Transportation through pipelines and rakes ■ As railways are going for 100% electrification
is to be encouraged to reduce logistical in the coming 3 to 4 years, there will be a
costs and carbon footprint. Strong synergies surplus of diesel storage tanks in Railway
between the center, states and cooperative Consumer Depots (RCDs) across India. The
societies will be required. It will be important same surplus tanks may be used by OMCs for
to work on regional planning. Excess ethanol ethanol storage..
capacity in states can be moved to adjoining
■ Micro plans for each depot would be prepared
states where there is a shortfall. Based on
by the primary coordinators. This should
upcoming plants, a medium term picture of
indicate month-wise expected capacities for
at least up to FY 2025 -26 can be worked out to
their respective depots from producers within
arrive at a regional balance. CPSUs’ upcoming
50 Km, beyond 50 Km and up to 100 Km and
project capacities to be considered for the
beyond 100 Km. The primary coordinators
calculation of the overall ethanol supply /
can then calculate storage requirements and
demand position & commissioning dates of
monitor supplies as well as blending. They
each CPSU plant may be ascertained.
must also estimate the assured capacity and
■ In states where there were nil or few likely capacity from each supplier within these
responses in 1st EOI, OMC can go for ethanol geographical ranges.
offtake from vendors who wish to set up
■ Establish feedstock pricing mechanism:
ethanol plants at this stage without a long
Design a feedstock pricing mechanism linked
term offtake guarantee. They can register for
to bioethanol prices and the logistical distance
5 years to get an assurance of offtake and may
at various collection points to avoid feedstock
be encouraged to set up capacities.
suppliers’ (farmers’) exploitation by the biofuel
■ OMCs may discuss with ethanol manufacturers producers.
/ ISMA for direct loading of rakes from
■ Institutionalize certification systems for
distilleries where railway sidings already exist
GHG savings: Utilize recognized certification
and supply to those states which are likely
systems such as the International
to remain in deficit even after 2025. Ethanol
Sustainability & Carbon Certification (ISCC)
hubs or large storage can be developed in
system for sustainability and GHG savings of
places where supplies can be aggregated and
all kinds of biomass, including feedstocks for
transported to deficit states.
bioenergy and biofuel production.
■ Promote investment in the North East: Attract
■ Disincentivize export of feedstock sources:
investors to the North East of the county to
Mitigate the low feedstock situation by
avail of the Interest Subvention Scheme of
designing export prohibition mechanisms.
DFPD and build adequate distillation capacity
to avoid long distance transport of ethanol.
Associated Infrastructure
■ Storage for ethanol to be developed at ■ Transition to E20 and beyond fuels: OMCs
distilleries, OMC depots, and OMC rake must plan to dispense E20 and beyond by
loading locations. The cumulative storage for putting up required infrastructures at retail
OMCs and ethanol distilleries should at least outlets so that flex fuel vehicles can purchase
cover requirements for 45 days, i.e., storage any blend over and above 20% and up to 100%.
of around 135 Cr. Ltrs. Distilleries that supply Base fuel should initially be kept at 20% and
outside the state shall have higher storage progressively increased to a higher blend
capacity. Ethanol vendors must have at least depending upon the availability of ethanol
20 days of coverage. year on year.
THE GREEN SHIFT 72
■ Enable speedy information support & ■ Establish an enabling ecosystem to attract

government clearance: Establish a system external investment: The Government must
for single window clearances by DPIIT to actively generate investor interest to ensure
accord quick approvals for new and expansion the sufficient installation of new biorefineries.
projects for ethanol production by Central and This includes accelerated clearances and
State agencies, including PESO. Facilitate ease expanding marketing through the support of
for investors in land acquisition, geographical alternative uses such as power generation &
information of various producing areas, backup usage (such as for cooking or telecom
financing options etc., through cross ministry towers).
coordination.
■ Establish an alliance for collaboration &
■ Expedite establishment of a National knowledge sharing: Establish an International
Biofuel Fund: Establish a fund reserve for Biofuels Alliance, in line with the International
providing financial incentives as indicated in Solar Alliance, to collaboratively learn and
the National Policy on Biofuels, like subsidies grow by facilitating access to technological
and grants for new and 2G feedstocks and innovations and creating a structured market.
associated conversion technologies. The Since India holds the G20 presidency from
possibility of aggregating the mitigated December 2022 to November 2023, it would
carbon footprint and using proceeds from be apt to promote the International Biofuel
carbon credits should be examined to reduce Alliance at the G20 summit.
the cost of funds.
■ Simplify movement of goods: Unrestricted

movement of denatured ethanol meant for
EBP should be allowed by all states.
Vehicle Standards / Awareness
■ Promote the adoption of flex fuel vehicles: ■ Financially incentivize compliance with
Flex fuel vehicles should be encouraged higher ethanol blends: Provide tax benefits
and popularised for moving beyond E20. In to vehicles compliant with higher ethanol
India, E20 should be declared as the base blends. Promote adoption by setting the
fuel on similar lines as Brazil, where E27 is the retail price of such fuels lower than normal
base fuel. Dispensing of pure ethanol to be petrol to compensate for the reduction in
introduced on a large scale to fast track the calorific value. Eventually, ethanol-blended /
adoption of flex fuel vehicles. hybrid vehicles would help reduce the carbon
footprint of vehicles and hence need to be
■ Popularise benefits of EBP in the masses:
supported through a policy.
Launch nationwide educational campaigns,
led by concerned ministries in partnership ■ Need for closer coordination with vehicle
with the industry, to educate the consumers manufacturers through policy and other
about the benefits of EBP and enable the enablers to ensure that vehicle production
selection of appropriate fuel for their class technology is also upgraded consistently with
of vehicles. This will help gain customer changing fuel rollout plans.
confidence and acceptance for E20 and
higher blends.
BIO DIESEL
INTRODUCTION
Rudolph Diesel developed biodiesel in 1890, fatty acid methyl esters. Biodiesel is being used
wherein pure vegetable oils were used in diesel worldwide now due to its positive contribution to
engines for agriculture when petroleum diesel addressing global warming concerns.
was unavailable.
The future of biodiesel lies in the world’s ability to
Modern biodiesel fuel is an outcome of research produce renewable feedstocks such as vegetable
conducted in the 1930s in Belgium and made by oils and fats to keep it cost competitive with
converting vegetable oils into compounds called petroleum fuels.
OUTLOOK
The world biodiesel market is estimated at only about 0.4% of the world market. Weather
approximately 43 Mn MT per year (2021), with the impacts on biofuel crops, growing corn and
EU at 14 Mn MT (2018), the USA at 7.2 Mn MT (2018), soybean demand in China and certain other
and Brazil at 4.68 Mn MT (2018). The remaining markets, and higher shipping costs contribute to
markets comprise of Southeast Asia (i.e., for palm higher biofuel prices. These costs have increased
oil) and China (i.e. for soybean oil, palm oil and by between 70% and 150% from the 2019 average
UCO or “gutter oil”). and bio-diesel feedstock prices are more than
prices for crude oil in most cases, increasing the
India produces only a minuscule portion of global
spread between bio-diesel and fossil fuel costs.
volumes at 0.163 Mn MT per year, constituting
INDIAN BIODIESEL MARKET
Regulatory History
The Ministry of Petroleum & Natural Gas The focus was on indigenous biodiesel feedstock
proclaimed a biodiesel purchase policy effective production. Importing oil from other crops (e.g., oil
from January 2006. According to the policy, oil palms) was not permitted. Biodiesel plantations
marketing companies were to purchase biodiesel on community and government lands were
for Rs. 26.5 / Litre at 20 purchase centres in 12 encouraged, while plantation on fertile irrigated
states. Suppliers had to register with state level lands was not encouraged.
coordinators and meet the Bureau of Indian
In the National Biofuels Policy 2018, India set a
Standards (BIS) specifications. The oil companies,
target of 5% biodiesel blending in diesel by 2030.
on their part, were to blend conventional diesel
The Policy encourages the setting up of supply
with biodiesel up to a maximum of 5 % at the
chain mechanisms for biodiesel production from
purchase centres.
non edible oilseeds, UCO, and short gestation
In September 2008, a “National Policy on crops. With a thrust on Advanced Biofuels, the
Biofuels” was approved, and it was decided to set Policy includes a viability gap funding scheme for
up a National Biofuel Coordination Committee. 2G ethanol bio refineries of Rs 5,000 Cr in 6 years
The National Policy on Biofuels reaffirms that in addition to additional tax incentives and a
biodiesel production will only be promoted higher purchase price as compared to 1G biofuels.
based on non edible oil seeds on marginal lands.
Biodiesel Demand in India
Biodiesel is expected to play an important role The consumption of High Speed Diesel (HSD) in
for the oil & gas industry in promoting energy the country stands at 76.7 MMT/93.13 MKL in FY
sustainability and security as India progresses 2021-22 and is projected to be 96.2 MKL in 2022 by
toward a clean energy ecosystem. PPAC. At 5% blending, 481 Cr. Liters of biodiesel
THE GREEN SHIFT 74
would be needed in 2023. The consumption of HSD five large bio-diesel units currently operating in
is expected to be 16,900 Cr. Liters by 2030, thus, India with a nameplate capacity of 150 Cr. Liters
demand for biodiesel will grow to approximately per annum. About 90% of biodiesel produced
845 Cr. Liters by 2030.However, in FY 2019-20, the presently in India is from imported palm stearin,
most successful year so far, only 10.5 Cr. Liters of while the rest is from animal tallow, acid oil and
biodiesel were procured by OMCs for blending. UCO. The sale of biodiesel was highest in FY 2019-
This constituted just 0.12% of HSD against the 5% 20, which declined due to the unavailability of
target. There are more than 50 MSME units and raw materials during the pandemic (Exhibit-4.2).
Exhibit-4.2: Biodiesel Offtake (in Cr. litres)
OMCs Others Exports
31.7
4.6
10.6
16.2
4.2
11.0
9.7
0.0 7.5 7.4
5.2 3.6 8.2 16.5
2.0 1.0
0.5
1.2
6.1 4.4 5.9
4.6 3.8
1.1
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Source: BCG Analysis
Biodiesel Production & Feedstock Potential
Biodiesel Production
Biodiesel can be obtained from any triglyceride in many locations. Other vegetable oils having a
feedstock like vegetable oils (fresh or used), real or potential commercial interest as biodiesel
animal fats, algae, and algal lipids. The literature feedstocks include camelina, canola, coconut,
contains hundreds of references to biodiesel corn, jatropha, safflower, and sunflower. Presently,
production from various feedstocks. biodiesel is being produced in India primarily
from imported palm stearin oil and animal tallow.
Currently, however, the dominant feedstocks are
As per a study on the biodiesel produced in FY
soybean oil in the US, rapeseed oil in Europe, and
2019-20, 93% of biodiesel was generated from
palm oil in Southeast Asia. Animal fats (especially
palm stearin, and an almost negligible amount of
beef tallow) and UCO (also called yellow grease)
UCO was utilized for production (Table-4.6).
represent significant niche markets for biodiesel
Table-4.6: Biodiesel Production in India (2018-19)
Biodiesel Produced Contribution

Feedstocks Total availability of feedstock (MT)
(Cr. litres) (%)
Domestic RBD
9 2,00,000 MT
Palm Stearin* 93% of
Imported RBD feedstock Depends on international supply chain and
6
Palm Stearin* availability
Animal 1. 250,000 is available in India but is mostly

Tallow** 0.5 3.50% exported, thus low availability
(Bualo) 2. Import of Tallow is banned
1. Current availability is 45,000 MT
Acid Oils*** 0.4 2.50%
2. Import uneconomical at most times
Used Cooking 1. Small quantity available for Biodiesel
0.1 1%
Oil*** 2. Import is banned
Total 16 100%
* From 1 MT (1,000 Kg) RBD (Refined Bleached Deodorized) Palm Stearin = 1.156 KL (1,156 Liters) Biodiesel + 120 Kg Crude Glycerin
** From 1 MT (1,000 Kg) Buffalo Tallow = 1.156 KL (1,156 Liters) Biodiesel + 120 Kg Crude Glycerin
*** From 1 MT (1,000 Kg) Acid Oil = 0.975 KL (975 Liters) Biodiesel)
Feedstock Potential (UCO)
The Government of India is taking various Authority of India (FSSAI), launched EOIs to
initiatives to increase the usage of biofuels in procure biodiesel produced from UCO on 19th
the country. The Government has also notified August 2019 on the occasion of “World Biofuel
the National Policy on Biofuels-2018 (NPB- Day.” The purpose of inviting this EOI was to
2018), amended in May 2022, to achieve 5% encourage entrepreneurs to set up biodiesel
biodiesel blending in diesel by 2030. NPB-2018 plants from UCO processing plants and further
has emphasized on using indigenous feedstock utilize the existing potential of UCO based
for biodiesel production and identified UCO biodiesel in India. OMCs are periodically releasing
as a potential source for biodiesel production. EOIs, and as of now, 42 Letters of Intent (LOIs)
However, large quantities of UCO are being have been issued, with 1st supply delivered in Feb
diverted for edible streams through various small 2021 (Table-4.7).
eateries / vendors, which poses severe health risks
To streamline the UCO collection system, FSSAI
to the citizens of India.
has launched an initiative “Repurpose used
To promote UCO based biodiesel, OMCs, in Cooking Oil (RUCO)” that creates an ecosystem
collaboration with the Food Safety and Standards to collect UCO by authorized aggregators and
Under RUCO FSSAI implements triple ‘EEE’ strategy i.e. “Education” Enforcement” and “Ecosystem”
to promote UCO:
■ Education: Creating Awareness about UCO health hazards – ”Eat Right campaign”
■ Enforcement: Ensure disposal of UCO in Environmentally safe manner
■ Eco-system: Creating a Robust & Sustainable business model for utilization of UCO
THE GREEN SHIFT 76
convert it into biodiesel. The ecosystem will Level Committees that prepare state/UT level
ensure that the UCO does not re-enter into plans for developing sustainable supply chain
the food chain. To address the supply chain for UCO collection and further its availability to
management issues, MoPNG constituted State biodiesel plants.
Table-4.7: Status of UCO EOI Initiative (July 2022)
Parameter Units IOCL HPCL BPCL Total
EOIs Received No. of Plants 37 15 9 61

Capacity Proposed in EOIs TPD 616 155 138 909
LOIs issued No. of Plants 31 7 4 42
EOIs under evaluation No. of Plants 1 8 5 14
LOsawarded+underevaluation No. of Plants 32 15 9 56
Expected Biodiesel Production

TPD 579 130 110 819
against LOI issued
Biodiesel Plants commissioned Nos. 3 0 0 3
Source: Tracking 42 EOIs floated by Indian OMCs

Bio-diesel Procurement
Oil Marketing Companies have been procuring plantations, non availability of quality planting
bio-diesel since 2015 at competitive prices, material or seed, limited period of availability,
initially through public tender and later through unreliable and improper marketing channels,
fixed price according to market. lack of post harvest technologies and their
processing, non remunerative prices, the wide
The problems encountered under the existing
gap between potential and actual production,
situation of using tree borne oilseeds of forest
absence of state incentives promoting bio-diesel
origins as feedstock include: collection from
as fuel, and economics and cost-benefit ratio
scattered locations, high dormancy and problems
in picking and harvesting in avenue and forest
Exhibit-4.3: Non-UCO Biodiesel Base Price as per OMC figures

Price in
Rs. / Ltr.
80
60
40
20
0
Nov '15 - Apr '16 - Apr '17 - Nov '17 - May '18 - Feb '19 - May '21 -
Mar '16 Sep '16 Oct '17 Apr '18 Dec '18 Jan '20 Oct '21

Exhibit-4.4: UCO Biodiesel Base Price (as per OMC figures)

Price in
Rs. / Ltr.
80
60
40
20
0
Feb '19 - Nov '19 Nov '19 - Oct '20 Nov '20 - Sep '21
CHALLENGES
Biodiesel can be obtained from different The main step for the biodiesel production is
feedstocks like vegetable oils, algae, microbial oil selection of feedstock, which influences various
and animal fats. Biodiesel obtained from different factors, like purity of biodiesel, cost, composition
feedstocks have various purity and composition. and yield.
Exhibit-4.5: Key variables having an effect on production & availability of Biodiesel
1 AVAILABILITY OF RAW MATERIALS
The lack of an integrated and dedicated supply feedstock for production, it is majorly imported
chain for raw materials like UCO and acid oil from Southeast Asian countries, which does not
restricts the availability of raw materials for help improve India’s energy security. Similarly, the
biodiesel production. The prices of feedstocks export of animal tallow has deprived availability in
have also risen considerably in the post-pandemic the local market for biodiesel production.
era. Although palm stearin is currently the primary
2 HIGH PRICES IN THE INTERNATIONAL MARKET
Internationally, especially European countries, which has increased the export of these materials
oer much higher prices for raw materials like andresultedinasupplyde4citwithinthecountry.
UCO and animal tallow than that oered in ndia,
3 LACK OF INCENTIVES TO MANUFACTURERS
Auto manufacturers are not incentivized to make hampering the scale up of biodiesel production.
superior engines compatible with biodiesel, thus
THE GREEN SHIFT 78
KEY POLICY INTERVENTIONS
■ Promote research on new feedstocks to proven to be economically unviable. The

ensure steady supply: Explore possibility blending mandate of 5% as per NPB-18 may
of utilizing new feedstocks like algae oil to be reviewed in view of the same. There is a
reduce dependence on existing sources need to promote additional channels like
which are vulnerable to external factors (Palm utilization for ATF and exports where returns
Stearin Oil) and inconsistent in supply (Animal are remunerative.
Tallow, Acid Oil, UCO and TBO).
■ Reduce cost burden for customers: OMCs are
■ India has enormous potential for oilseeds advised to sell the biodiesel directly as B100
of Tree Borne Oil (TBO) and short gestation at retail outlet as blending invites VAT over
crops. The country has over 190 million ha. of GST, making it costlier. With direct sale this
cultivable land. India has irrigated nearly 50-60 is avoided, and biodiesel shall be a bit cost
million ha of land where 2-3 crops are grown competitive in comparison to HSD.
in a year. For various reasons, more than 40
■ Establish mandate for use of UCO: FSSAI to
million ha have been barren for years. For the
mandate use of UCO for biodiesel production.
rest of the arable land, the cultivation of the
Enforcement to be made in such a way that
crop is under rain-fed conditions, and only
UCO is collected and made available with
one crop is grown in the monsoon rendering
biodiesel manufacturers.
the land unproductive for 7-8 months in a
year. With the right interventions, significant ■ Streamlining of UCO aggregation: Policies
tracts of such land rendered unproductive for facilitating aggregation of UCO and
can be brought under the cultivation of short restricting diversion to non-biofuel uses need
gestation non edible oil seed crops. to be strengthened and enforced. The RUCO
app launched by FSSAI on World Biofuel
■ Encourage direct sale without blending:
Day 2018 needs to be re-operationalized for
Direct sale of biodiesel is recommended
tracking and monitoring.
as compared to blending, as blending has
Exhibit-4.6: The Biodiesel Value Chain Considerations
Optimization model for Simulating
Government
Tree-borne Oil Seeds Bio-reÞnery Blending Retailing
Policymakers & Storage
Oil
seeds
Biodiesel/
Seed collection Crushing pressing, Blended Fuel
treating & oil reÞning
Bio-diesel
Policy
Interventions Used Cooking Oil Bio-reÞnery
Waste
cooking
oil
Used oil collection Treating & oil reÞning
Production Procurement Transportation
Stakeholder Impacts &

Behaviour Recommendations
CBG (COMPRESSED BIOGAS)

INTRODUCTION
Waste and bio-mass sources like agricultural landfill emissions from biomass and putting
residue, cattle dung, sugarcane press mud, them to productive use, biogas supports India’s
distillery spent wash, municipal solid waste, efforts to move towards net zero. As a byproduct
sewage treatment plant waste, etc., produce of biogas production, Fermented Organic Manure
biogas through the process of anaerobic (FOM) and Liquid Fermented Organic Manure
decomposition. The biogas is purified to remove (LFOM) generated in the biogas production
hydrogen sulphide (H2S), carbon dioxide (CO2), process have significant fertilizing value. FOM
& water vapour, and compressed to form can be enriched to Phosphate Rich Organic
Compressed Biogas (CBG) or Bio-methane, which Manure (PROM), which can reduce India’s import
has a methane (CH4) content of more than 90%. dependency on phosphate fertilizers (55% of
the total). As an organic fertilizer, PROM further
Biogas can serve as a suitable replacement
supports India’s net zero goals and helps reduce
for imported fossil natural gas with close to
water pollution. The use of FOM / LFOM / PROM
net zero emissions while boosting energy
will not only help protect soil health, promote
security supported by competitive economics.
organic/natural farming, and reduce chances of
The breakeven natural gas price for favorable
water contamination through chemicals but will
production is <US$ 5/MMBTU vs. long term
also be an economically attractive proposition
average of ~US$ 10/MMBTU. Biomethane (purified
reducing imports and consequential subsidy on
biogas) can be injected into natural gas pipelines
chemical fertilizers.
and marketed as a low carbon fuel. By avoiding
Table-4.8: CBG Specification as per IS 16087: 2016 Standard
S. No. Characteristic CBG CNG
1 Methane, minimum (v/v %) 90% 90%
2 Carbon Dioxide, maximum (v/v %) 4% 3.5% (CO2 and N2)
3 Total sulphur, maximum 20 mg/m3 20 mg/m3
4 Moisture, maximum 5 mg/m3 5 mg/m3
5 O2, maximum (v/v %) 0.5% 0.5%
6 (CO2 + N2 + O2), maximum (v/v %) 10% -

7 Other hydrocarbons, maximum (v/v %) - 10%
Source: Bureau of Indian Standards

THE GREEN SHIFT 80
OUTLOOK
As per the IEA, around 3.5 Mtoe of biomethane represents about 0.1% of natural gas sales today;
is produced worldwide. The vast majority of however, an increasing number of government
production takes place in European and North policies are supporting its injection into natural
American markets, with some countries such gas grids and for decarbonizing transport.
as Denmark and Sweden having more than
The global biogas market is expected to grow at
10% share of biogas/biomethane in their total
6-10% p.a. by 2040, with bio-methane expected to
gas sales. Countries outside Europe and North
be the fastest sub-segment.
America are catching up quickly. Biomethane
Stated Policies Scenario (STEPS)
The Stated Policies Scenario (STEPS) is a scenario Exhibit-4.7: Biogas consumption under STEPS (MTOE)
in which Covid-19 is gradually brought under ‘
CAGR (’18 - 40)
control in 2021 and the global economy returns to
149
pre-crisis levels in the same
4%
year. This scenario reflects all Power & heat are the
of today’s announced policy largest applications 60
97 0%
intentions and targets, today but upgraded
1
insofar as they are backed bio-methane set to 40
9
0%
up by detailed measures for lead by 2030 1 9
38
their realization. 79
25
16%
47
STEPs scenario predicts a CAGR of 6% for 1 9
3
Biomethane till 2040 with usage of biogas for
2018A 2030F 2040F
both power & heat continuing to maintain a
10% 48% 53%
significant share.
Sustainable Development Scenario (SDS)
In the Sustainable Development Scenario (SDS), Exhibit-4.8: Biogas consumption under SDS (MTOE)
a surge in clean energy policies and investment
CAGR (’18 - ‘40)
puts the energy system on track to achieve
330
sustainable energy objectives
in full, including the Paris Deep decarbonisation 7%
%
102
Agreement, energy access is a strong upside for
10
200 3%
and air quality goals. The bio-methane, while 1 17
assumptions on public health power and heat may 67
0%
and the economy are the use more direct biogas 1 12
210
same as in the STEPS.
38 120 21%
SDS scenario predicts a CAGR of 10% for 1 25
3 9
biomethane till 2040 with deep decarbonization 2018A 2030F 2040F
driving increased conversion to pure biomethane.

10% 60% 64%
Source:
Power & Heat Building & Agriculture
IEA 2020, Stated Policies (STEPS) & Sustainable Development (SDS) Scenarios;
Industry Upgraded to Bio-methane
"Outlook for biogas and biomethane: Prospects for organic growth"
Exhibit-4.9: Compressed Biogas (CBG) Production Process
Anaerobic Sulphur Biomethane

Digestion removal Upgrading for gas
grids and
transport
Raw Clean Biogas for
Biogas SO4 Biogas electricity and CO2
heating uses
INDIAN BIOGAS MARKET
Regulatory History
The Ministry of Road Transport and Highways, ‘SATAT’ (Sustainable Alternative Towards
Government of India, vide the Gazette Notification Affordable Transportation) initiative on CBG was
no. 395 dated 16.6.2015, has permitted the usage launched by the Hon’ble Minister of Petroleum &
of CBG for motor vehicles as an alternative to Natural Gas on 1.10.2018. The scheme envisages
CNG. CBG can be used in vehicles using CNG production of 15 MMT CBG & 50 MMT of manure
fuel without making any modification to the from 5,000 plants. Under SATAT scheme, Oil &
vehicle. CBG has a high potential to replace CNG Gas Marketing Companies (OGMCs) viz. IndianOil,
in automotive, industrial as well as commercial HPCL, BPCL, GAIL and IGL have been inviting
areas, given the abundant biomass availability EOIs from potential investors / entrepreneurs to
within the country. procure CBG.
Salient features of the SATAT scheme

(adapted from the Expression of Interest floated by OMCs)
■ Plant owner shall be responsible for ■ OGMCs shall execute a Commercial Agreement
installation, operation & maintenance of plant. of 15 years with the CBG Plant owner, to be
OGMCsshallotakeCBGfromtheplant. extended on mutual consent.
The National Policy on Biofuels announced in employment, especially in semi urban and rural
2018 by the Government of India put thrust on areas and reduce pollution. This will create value
the production of advanced biofuels such as 2G and employment in the rural economy across
ethanol, CBG, Waste to Fuels, drop-in fuels etc., the supply chain, from biomass collection to
through the utilization of indigenous feedstocks. plant operation. CBG has zero associated carbon
emissions. The usage of CBG shall assist in
The Government of India has set a target to
achieving the climate change goals of India as
increase the share of gas in the energy mix
per the Paris Agreement 2015.
from the current levels of about 6.5 percent to
15 percent by 2030 to make India a gas based The production of CBG is in alignment with
economy. CBG can form a critical domestic Government of India schemes like Atmanirbhar
supply source to contribute to this build-up. Bharat, Make in India and Swachh Bharat and is
also in alignment with the Gobardhan Scheme to
Production of CBG shall increase the green
effectively utilize cattle dung.
energy mix, reduce import dependence, create
THE GREEN SHIFT 82
TECHNOLOGY
There are various technologies available for used for the purification of carbon dioxide. The
production of CBG. Anaerobic Digestion is used gas is compressed through a compressor. There
for the production of biogas which includes are various national and global entities providing
technologies like continuous stirred tank reactor technologies for existing & upcoming CBG plants.
(CSTR), plug flow, 2-stage reactors, Upflow
Pipeline Transportation: Biogas manufacturers
Anaerobic Sludge Blanket (UASB), etc. After
can leverage existing and future Natural Gas (NG)
the production of biogas, hydrogen sulphide
pipeline network for cost effective transportation
is purified through ferric chloride, iron chelate,
to consumption hubs. With about 98% of
biological process, activated carbon, etc.
country’s population to be covered by the CGD
Carbon dioxide purification technologies like network post implementation of ongoing CGD
chemical scrubbing, water scrubbing, Pressure rounds, issues relating to connectivity and off-
Swing Absorption and Membrane Separation are take of biogas will be eliminated to a large extent.
FERMENTED ORGANIC MANURE
Fermented Organic Manure (FOM) produced varies growth of plants. Creating an effective marketing
from 15-30% of the feedstock of the CBG plants. strategy for FOM is critical for CBG Plants. The
FOM is useful to maintain soil health, particularly promotion of FOM can create an ecosystem of
organic carbon, which helps microflora to flourish. organic / natural farming in the country. Further,
It is a source of nitrogen (N), phosphorus (P), and FOM can be enriched to Phosphate Rich Organic
potassium (K) and also has essential micro and Manure (PROM), which can reduce India’s import
macro nutrients which are vital for the balanced dependency on phosphate fertilizers.
FEEDSTOCKS FOR CBG
The various feedstocks of biogas are waste solid waste, etc. CBG production varies as per
and bio-mass sources like agricultural residue, technology, feedstock quality, etc. The indicative
cattle dung, sugarcane press mud, municipal feedstock-wise CBG potential is described below:
Table-4.9: Feedstock wise potential for production of CBG
Feedstock Requirement for production of 1

Feedstock
TPD CBG as per Conventional Technology
Agriculture Residue 10 ton
Press Mud 25 ton
Municipal Solid Waste 20 ton
Cattle Dung 50 ton
Napier Grass 10 ton
Source: Discussion with CBG Plant owners/entrepreneurs under the SATAT initiative
■ Agriculture Residue
The agriculture residue, like paddy straw, purpose, equipments like stubble shaver,
wheat straw, etc., needs to be aggregated raker, baler, trolley, tractors, etc. are required.
and collected from the fields. For this A special dedicated scheme, Sub-Mission
on Agricultural Mechanization (SMAM), was ■ Press Mud

introduced by the Government of India in Press mud is the compressed sugar industry
FY 2014-15. Distribution of various subsidized waste produced during filtration of cane juice.
agricultural equipment and machines to Being a waste material, it is dumped, causing
individual farmers is one of the activities landfill emissions. Alternatively, this can be
under the scheme. Promotion of ex-situ anaerobically digested to produce CBG.
management of crops like production of CBG
■ Cattle Dung
shall reduce agricultural emissions and use
the waste agricultural residue to produce CBG There are a number of large and small
and FOM. gaushalas or cow shelters across India. The
cattle dung from these gaushalas can be
■ Municipal Solid Waste (MSW) mixed with other feedstocks (considering the
The segregated organic portion of MSW, food low yield of only cattle dung) to produce CBG.
waste, vegetable and fruit waste is a good ■ Energy crop plantation
input material for CBG production. Presently,
Energy crops like Napier grass can be
bio-degradable waste is used for composting,
cultivated on barren or unutilized pieces of
where methane is released into the
land for the production of CBG.
atmosphere. The same organic waste can be
used for CBG production. Segregation at waste
generation source has to be implemented for
effective bio methanation of MSW.
ENABLERS INTRODUCED UNDER THE SATAT INITIATIVE
The following enablers/policy guidelines have been introduced for the propagation of the SATAT initiative:-
■ Financing of CBG Plants ■ State Level Committee for implementation

Reserve Bank of India has notified the inclusion and monitoring of SATAT Scheme for CBG
of CBG projects under Priority Sector Lending Presently, state level SATAT Committees have
vide directives to banks dated 4.9.2020. By this been formed in Haryana, Punjab, Uttar Pradesh,
notification, the banks are mandated to lend to Chhattisgarh, Andhra Pradesh and Tripura.
the CBG sector also, along with other priority The committees coordinate with various state
sectors, with adequate and timely credit. State departments to provide state specific enablers
Bank of India, Punjab National Bank, Canara for CBG Plants.
Bank, Bank of Baroda and Union Bank have
■ Pollution Clearance
launched a product on the financing of CBG
CBG Plants producing FOM and LFOM
Plants under the SATAT scheme.
as byproducts and not discharging any
■ Solid & Liquid Fermented Organic Manure wastewater are included in the white category
FOM & LFOM are the byproducts of the CBG for pollution clearance.
Plant and are considered to be an important
■ Explosives License
source of revenue. As an enabling mechanism,
The Petroleum & Explosive Safety Organization
FOM and LFOM produced from CBG Plants
(PESO) has issued a notification dated 21.2.2022
have been included under Fertilizer Control
stating that no separate approval or license
Order 1985.
is required from PESO for selling of CBG if an
■ Co-mingling of CBG with NG entity has obtained a license for selling of CNG
MoP&NG has issued policy guidelines for co- and vice versa.
mingling of CBG with NG in the CGD network.
THE GREEN SHIFT 84
PROCUREMENT PRICE OF CBG
Procurement pricing of CBG was revised by OGMCs from 01.06.2022, are provided below:
■ The minimum procurement price of CBG will ■ The following price slabs have been decided
not be lower than Rs. 46/kg + applicable taxes as the procurement price of CBG delivered
for the period up to 31.3.2029. at OMC retail outlets situated at a distance
of maximum upto 75 km (one way) as per IS
■ The Retail Selling Price (RSP) of CBG in a market
16087:2016 specification (or its latest version)
shall be at par with the RSP of CNG (as provided
and compressed at 250 bar pressure.
by the authorized CGD entity).
Table-4.10: Procurement price of CBG
S. Retail Selling Price of CBG, including tax, in Rs. / kg Procurement price of CBG, in Rs./kg
No. Lower Limit Upper Limit Without GST With GST
1 - Upto 70.00 54.00 56.70
2 70.01 75.00 55.25 58.01
3 75.01 80.00 59.06 62.01
4 80.01 85.00 62.86 66.01
5 85.01 90.00 66.67 70.01
6 90.01 95.00 70.48 74.01
7 95.01 100.00 74.29 78.01
Note:
i. For further increases in slabs beyond Rs. 100/kg, the procurement price will be extrapolated as per the above. If the RSP of CBG falls below Rs. 70/kg, there will be an immediate revision in the
procurement pricing.
ii. Under MoP&NG policy guidelines on co-mingling of domestic gas for supply to CNG (Transport) and PNG (Domestic) of CGD, the biogas procurement price set by GAIL is Rs. 1,082/MMBTU
(equivalent to Rs. 46/kg). Compression & CBG transportation charges of Rs. 8/kg are provided additionally.
Source: Oil Marketing Companies
CHALLENGES
■ Plant Costs: biogas plants based on MSW as feedstock.

As there are a small number of CBG Plants, Due to improper segregation, dust and inert
equipment costs are higher due to a lack of material also exist to varying degrees in the
economies of scale. feedstock. In this case, sorting of wastes needs
to be done before digestion at the plant,
■ Feedstock supply: which further increases the overall generation
There is a lack of a long term sustainable cost and complexity. Moreover, poor collection
supply of feedstocks like biomass and waste and unorganized transportation of wastes,
at viable rates. The non assurance of a steady especially in medium to small sized cities,
supply of feedstock is one of the major issues increases the supply chain disruption risk.
in setting up CBG Plants and makes the
■ Marketing of FOM:
projects non bankable.
The FOM produced is about 3 times of CBG
■ Technical & Infrastructure Barriers: production and can be a major revenue
The segregation of organic and non organic source. There is no established mechanism
waste is not done in urban households for the sale of FOM / LFOM through major
resulting in low quality organic feedstock for fertilizer companies, and agencies setting up
plants have to work on their own. While there ■ Financing:

is a subsidy on chemical fertilizers, there is Financing projects is difficult because of the
no subsidy on FOM/LFOM. Rather there are thin margin and perceived risks. The major
several restrictions like the requirement of a risks perceived for CBG Plants are technology
permit for transportation and sale from one availability for CBG plants, feedstock supply
state to another and a license for marketing chain including assurance on availability of
etc. Therefore, FOM / LFOM produced is lying quantities and rates in the long term and
unsold with several of these plants. marketing / disposal of FOM, LFOM & CBG.
Exhibit-4.10: Financial issues faced by CBG project developers
High collateral Requirement of

demand, in addition personal collateral
to considering plant
and machinery as
collateral
Financing Issues
being faced by CBG
project developers
High processing High cost

fees of interest
POLICY INTERVENTIONS REQUIRED FOR THE CBG SECTOR
Enablers for creation of a biomass supply chain
■ Providing subsidies on biomass aggregation ■ Biomass aggregation equipment (Cutter+

and storage equipment under the SMAM and Racker+ Baler) deployment in the catchment
state specific schemes. Presently about 50% area of CBG plants by state governments.
subsidy is available for biomass aggregation &
■ Identification and notification of biomass
storage equipment under the SMAM scheme.
clusters for CBG plants and other biomass
State governments may provide an additional
based biofuel projects and grant of an
subsidy of a minimum of 30% to make the
exclusivity area for a long enough tenure.
procurement of equipment more viable. The
subsidy may be provided upfront during the ■ Incentives on operating expenses of biomass
procurement of equipment and may also be aggregation and storage equipment @Rs.
extended to corporates setting up CBG Plants. 1,250 / ton of biomass by state governments.
■ Engagement of FPOs/CHCs etc., for ■ Allotment of panchayat / revenue land

aggregation and storage of biomass. for a decentralized storage facility for the
development of biomass depots.
■ Awareness and promotion activities for
biomass aggregation in the catchment area.
THE GREEN SHIFT 86
Enablers for other feedstocks
■ MSW to supply press mud with a price escalation

All urban waste in smart cities and cities clause. Environmental law may be enforced
with > 1 Mn population should be directed to ensure that the press mud is not burned or
to biogas production. Land and segregated discarded without treatment.
MSW may be provided free of cost to CBG ■ Cattle Dung
plants. MSW has to be segregated at source
Providing cattle dung free of cost through
for CBG production.
long term contracts with CBG Plants.
■ Press Mud
■ Sewage Waste
Providing press mud at sustainable rates
All Sewage Treatment Plants to be provided
on long term contracts for CBG plants.
digesters for biogas production.
Sugar mills should execute agreements of
a minimum of 20-25 years with CBG plants
CBG Market Development
■ Provide CBG blending mandates to all CGD ■ Issuance of comprehensive guidelines on

entities marketing CNG and PNG. marketing of CBG through CNG outlets and
vice versa. Dedicated “Green Hours” can
■ Promotion of CBG and CNG vehicles in
be designated for undertaking sale of CBG
locations with upcoming CBG plants and
through CNG outlets.
conversion of existing vehicles and tractors.
Manure Marketing
■ Department of Fertilizers may provide market ■ Creation of a market ecosystem for bio
development assistance for selling FOM @ Rs manure and promotion of FOM
1,500 / ton.
■ Exemption from retail license requirement for
■ Mandatory offtake arrangement of bio the sale of FOM in small quantities, including
manure from CBG Plants @ Rs 5000-6000/ packages less than 5 Kg and stock less than 10
ton by chemical fertilizer companies with MT at any given time.
minimum mandated offtake of bio manure
■ Extension activities on bio manure by the
as a percentage of chemical fertilizers in a
Department of Agriculture, Agricultural
‘Basket Approach.’
Universities, and Krishi Vigyan Kendras,
■ As per guidelines Ref. No. 12-17/86 - Fert. Law including awareness generation and inclusion
of the Ministry of Agriculture, Government of the package of practices.
of India, state governments have been
■ Awareness of soil health improvement to be
empowered to exempt dealers marketing
promoted at training meetings for farmers.
fertilizers in small packaging, weighing not
more than 5 kg (net) under Fertilizer Control ■ Creation of natural farming and organic
Order 1985. As per guidelines Ref. No. 1-1/90 farming ecosystems. The Government may
dated 12.2.1990 of the Ministry of Agriculture, declare the vicinity of CBG Plants as ‘Green
Government of India, dealers having stock Zones’ where only FOM may be used for
of fertilizers up to 10 MT are exempted from organic and natural farming.
obtaining a certificate of registration under ■ Creation of a national brand & certification for
Fertilizer Control Order 1985. organic and natural food produced by FOM.
Financing
■ Extending Central Financial Assistance (CFA) ■ Financial incentives like access to credit,
for all commissioned CBG Plants as well as accelerated depreciation, long term land
upcoming CBG Plants for the next 10 years. leases and tax holidays would help to attract
private investment to the CBG sector
■ Providing Production Linked Incentive (PLI) @
Rs. 10/kg of CBG to encourage production.
Land & Utility
■ Providing panchayat / revenue land directly to ■ Providing subsidized electricity for CBG Plants,
project developer at nominal prices on a long- preferably at domestic rates.
term lease. Land shall be used for feedstock
storage and for establishing CBG plants.
Other State Government specific Enablers
■ Creation of state level SATAT Committees for ■ Facilitate CBG plants to obtain necessary
all states with members from departments permissions, registrations, approvals etc.,
dealing with agriculture, urban development, through an easier process.
fertilizer marketing, renewable energy,
■ Provide a single window clearance for CBG
animal husbandry, sugarcane, cooperatives,
plants on all statutory approvals with a one-
panchayati raj, pollution control, etc., as well as
time nominal fee.
OGMCs and fertilizer marketing companies.
■ Assure preferential supply of feedstock for
■ State specific subsidies for CBG Plants during
CBG plants to ensure their long term viability.
the initial phase.
Research
■ Promotion of research & development of CBG ■ Creation of model CBG Plants by and with
production technologies and its deployment, backup support from technical universities
supported by government funding. across the country.
■ Development of additives for the enrichment

of FOM.
Training & Development
■ Courses on CBG technology, feedstock and O&M in state universities and technical
management, manure enrichment, marketing, and agricultural institutes.
Emission Trading
■ CBG plants assist in the mitigation of carbon carbon trading in CBG Plants. The emissions
emissions. They also help reduce emissions saved through the injection of CBG at a
due to crop burning and divert waste from certain location may be traded for emission
landfills. Accordingly, we should book and mitigation at another location.
claim or provide a trade mechanism for
THE GREEN SHIFT
88

Chapter
5
THE INDIAN
COOKING FUEL
SCENARIO
In this section
1. Clean Cooking Fuel 91
2. Type of Cooking Fuel 93
3. Correlation between electrification and cooking 96
4. Cooking Fuel in India 97
5. India’s Clean Cooking Fuel Journey 98
6. LPG setup in India 101
8. Challenges in overall coverage 103
9. Potential solutions for transition 104
9. Conclusion 107
CLEAN COOKING FUEL

Energy is used for multiple household applications, become a major priority on the global development
ranging from lighting and heating to cooking. agenda as part of UN Sustainable Development
Almost 3 billion of the world’s poorest people still Goal (SDG) 7, which is to ensure affordable and
rely on solid fuels (wood, animal dung, charcoal, clean energy for all by 20303.
crop waste, and coal) for their cooking and
While there is no universally agreed-upon
heating needs.1 The use of such fuels results in
definition of clean cooking energy, the term
exposure to high levels of air pollution, resulting in
refers to cooking solutions that result in low or no
approximately 4 million premature deaths annually
household air pollutants (particulate matter and
from respiratory and cardiovascular diseases and
carbon monoxide) and outdoor air pollution in the
cancer2. It is thus crucial for the world to move to
form of black carbon emissions. The World Health
alternate ways of cooking and energy generation
Organization defines clean cooking as the use of
to promote the welfare of the masses.
clean fuels such as liquefied petroleum gas (LPG),
Clean cooking fuel has been on the development ethanol, biogas, solar power, and electricity, and
agenda for decades. But only recently has the topic improved technologies for cooking with them.
Exhibit-5.1: Region-wise breakup of people needing access to clean cooking fuel, million people
66% 31% 2% 0% 0% 100%
64 9 8
901
2,905
1,923
Asia Africa Latin America & Ocenia North America Total

The Carribean & Europe
Source: Energy Sector Management Assistance Program, Tracking SDG 7: The Energy Progress Report, 2019
As can be seen, according to the database that in Africa. To meet the SDG of affordable and clean
tracks SDG 7, there are approximately 2.9 billion energy for all by 2030, it will be essential to solve
people without access to clean energy globally, of the issue predominantly in these two regions.
which about 66 % are in Asia, and around 31 % are
1
World Health Organization, WHO guidelines for indoor air quality: Household fuel combustion, 2014
2
International Energy Association
3
UN Sustainable Development Goals
THE GREEN SHIFT 92
Exhibit-5.2: Population without access to clean cooking fuel
3.0
STEPS: Stated Policies Scenario
NZE: Net Zero Emissions Scenario
2.5
2.0 Rest of the world

Billion People
OtherAsiaPaci4c
1.5
South-east Asia
1.0 India
Sub-Saharan Africa
0.5
Source:
International Energy Agency (IEA)
2000 2010 2020 2030
As seen from Exhibit-5.2, current projections and remain large and should be a priority in the future.
the International Energy Agency’s policy scenarios Another priority area, specifically in the backdrop
show the world is not on track at the current of net zero and climate change is the switch to
pace to achieve universal access to clean fuels clean cooking fuels. It is widely recognised that
and technologies for cooking. It is expected that the abatement of CO2 emissions from cooking is
more people will have access to clean cooking among the costliest measures globally. Suitable
fuels in Asia by 2030, but in Africa, the population R&D, commercialization and scaling-up of clean
without access to clean cooking fuels will, in fact, cooking fuels remains a necessary step to change
increase. The magnitude of the challenge will this picture.
Exhibit-5.3: Abatement cost, € per ton of CO2 equivalent
Induction Cooking
700
Biofuels Aviation
600 CementBiomass
+
Electric Industrial Boiler
500
Heat Pump (Apartments)
400 Ground Heat Pump
Ammonia Blue Hydrogen
300
H2 based steel making
200 Heat Pump (Commercial)
District Heating (High Cost)
100 Enhanced Fertilizers
Heat Pump (Houses)
0
EV SUVs
Power(4rst5%)
-100
District heating (low cost)
-200 Insulation
Heat cascading in industry
-300 EV Sedan Car
-400 BEV agricultural equipment
EV city cars
-500 EV light commercial vehicles
-600 Solar Thermal Heating
-700
0 100 200 300 400 500 600 700 800 900 1000 1100 1200
Source: McKinsey, Net-Zero Europe, November 2020
TYPES OF COOKING FUEL

Over the past few centuries, multiple fuels have renewable energy source only if the same amount
been used for cooking. These range from solid of wood cut down is allowed to grow back. However,
fuels such as firewood to gaseous fuels such as LPG the usage of these sources represents enormous
and biogas in the recent past. health costs. Except for harvesting, collecting, and
chopping, firewood is otherwise unprocessed,
Solid fuels can be categorized into renewable,
whereas charcoal and agricultural residues and
biomass, and fossil fuels (the latter includes coal).
dung are often processed into briquettes, pellets,
Renewable solid biomass fuels include firewood,
dung sticks, or plates. As is the case with all solid
charcoal, dung, and agricultural residues.
fuels, moisture reduces a fuel’s net usable energy
Fuelwood, including firewood and charcoal, is a
Exhibit-5.4: Types of cooking fuel
User selects
cooking energy
on demand
SOLID TRADITIONAL NEW AGE

BIOMASS FUELS FUELS
Unprocessed & Liquid Electricity

Un-carbonised
Kerosene Electricity
Agricultural Residues
Methanol (Electric stove, oven,
Dung induction, kettle etc)
Ethanol
Wood
SVO
Processed & Gas Solar

Un-carbonised
LPG Heating
Briquettes
Natural Gas (Solar Cookers)
Chips
Biogas Electricity
Pellets
Woodgas
Processed & Solid

Carbonised
Coal
Charcoal
Charcoal Briquettes
Source: Adapted from Christa Roth, Micro-gasification: Cooking with gas from dry biomass,
Deutsche Gesellschaft für Internationale Zusammenarbeit, February 2014
THE GREEN SHIFT 94
because the evaporation of water itself requires thus hindering the efficiency of cooking process.
heat. So if not dried, the energy used in the process Thus, use of biomass, coal, firewood, charcoal, etc.,
of evaporation of moisture is unavailable for is generally done only after being dried.
increasing the fire temperature and takes longer,
FIREWOOD
The oldest cooking fuel is firewood, a subcategory energy (carbon) content relative to its volume.
of fuelwood, which is defined by the Food and However, the energy content per weight is similar
Agriculture Organization of the United Nations for all hardwood and softwood. The moisture
as “wood in the rough (from trunks and branches content of firewood is a key determinant of its
of trees) to be used as fuel for purposes such as energy content. The drier the firewood, the less
cooking, heating or power production.” Firewood energy is required to evaporate the water, more
can be categorized into hardwood and softwood. efficient the combustion process, thus making
Compared to hardwood, softwood burns more more energy available for heating or cooking.
quickly but generates less heat owing to lower
CROP RESIDUE
Agricultural residue is generated in large volumes matter and ash, lower density and energy values.
after each harvest season and is often discarded Conventional stoves are primarily designed to
as waste. In India, most agricultural residue and burn firewood or charcoal. Micro-gasifiers are
the residue from processing agricultural products a good option for using agricultural residues,
are used as fuel in their natural state with limited mainly in a densified way, because they can burn
pretreatment. Compared to fuelwood, crop small energy carriers very efficiently.
residue typically has a high content of volatile
COAL
Coal is not often used as a cooking fuel on its It comes in different forms, such as beehive
own. Instead, it is used in regions where cooking briquettes, coal cakes, coal balls, and raw coal. The
and heating fuel are combined. Due to its World Health Organization does not recommend
regional availability, coal is used for cooking in using unprocessed coal in households due to
countries such as India and China. The coal used carcinogenic emissions and toxic elements such
in households for cooking and heating varies as fluorine, arsenic, lead, selenium, and mercury,
in composition, form, and way of application. which are not destroyed by combustion.
KEROSENE
Among the liquid fuels, ranging from alcohols serious disadvantages, as it is a highly polluting,
(such as ethanol and methanol), plant oil, and flammable and is a non-renewable source. Due
those generated from fossil fuels, kerosene to a policy push by the Government to make
is the most commonly used for cooking. superior cooking fuels like LPG and PNG widely
Cooking with kerosene is popular because of available, kerosene usage in India is currently
its affordability, ease of storage, availability in restricted to very few areas and is dwindling at an
small quantities, and convenience for cooking. accelerated rate.
However, using kerosene for cooking comes with
4
Miguel A. Trossero and Luiz Horta Nogueira, “Unified wood energy terminology,” Food and Agriculture Organization of the United Nations, March 2001.
DUNG CAKES
Made from the by-products of animal husbandry, joules of energy. These are popular because they
dung cakes are traditionally used as fuel in India are efficient, readily available, and cheaper than
for cooking food in a domestic hearth called a most modern fuels, alleviate local pressure on
chulha. They are made by hand by village women wood resources, and cause less environmental
and are usually composed of cow or buffalo dung. pollution than most other fuels.
An average-sized dung cake gives off 2,100 kilo-
LIQUEFIED PETROLEUM GAS
LPG is a by-product of natural gas extraction and transported, stored, and used almost anywhere.
crude oil refining. It is a mixture of hydrocarbon However, affordability for the masses, the
gases, the most common being butane and potential risk of explosion (due to incorrect use or
propane. A mixture of air and LPG can be ignited worn-out equipment), variable prices, etc., are still
if the amount of LPG in the air is between 2 and some of the reasons that have hampered large-
10 %. The ignition temperature is above 380°C scale adoption.
and thus serves as convenient cooking fuel. The
India predominantly used solid fuels for cooking
main advantages of LPG are that it is a clean fuel
until the late 2010s, but a recent push from the
and releases fewer pollutants and CO2 than any
Government via incentives and subsidy programs
other cooking energy source except electricity.
has resulted in a shift toward LPG as the primary
Moreover, it heats quickly and provides much
cooking fuel. Going forward, as India enables
greater efficiency than even the best biomass
mass electrification, there will be a need and
stoves. LPG stoves can also be controlled
potential for electricity to become primary fuel.
more precisely, speed up cooking, and require
practically no cleanup. Additionally, LPG can be
Exhibit-5.5: Regional distribution of populations cooking with solid fuels
S H A R E O F P O P U L A T I O N (percent)
Less than 5 5 to 25 26 to 50 51 to 75 76 to 95 More than 95 Data not available Not applicable
Source: Adapted from Christa Roth, Micro-gasification: Cooking with gas from dry biomass, Deutsche Gesellschaft für Internationale Zusammenarbeit, February 2014
THE GREEN SHIFT 96
CORREL ATION BETWEEN

ELECTRIFICATION AND COOKING
Electrification solves part of the clean cooking penetration. In doing this, there is a potential to
fuel challenge, as some households are switching use electricity as the primary means for cooking,
from traditional fuels to electricity for some but it remains to be seen if that will be viable, given
of their domestic needs, such as lighting and India’s push for LPG use in recent years.
cooking. Electrification of a household can reduce
India has made tremendous investments in the
household CO2 emissions by 32 to 36 kilograms
area of ensuring the supply of cleaner cooking
per year and black carbon emissions by 225 to 455
fuels. The Indian Governments efforts through the
kilograms of CO2 equivalent per year.
globally acknowledged Ujjawala scheme serve as
Clean cooking technologies (such as solar cookers) a reference for others to address the situation at
are often used as an entry product in un-electrified scale and with speed. As a cooking fuel, LPG is a
households, followed by either a move to LPG- superior option as compared to traditional biomass
based stoves or electric stoves, depending on or cow dung, etc, which were widely prevalent
the rate at which these technologies are made as energy providers for cooking. Recent Indian
affordable. As per the Energy Sector Management Government push to increase the share of gas in
Assistance Program, few countries contribute to the domestic energy mix, massive investments
80% of the population deprived of both electricity in pipeline expansion and coverage of about 98%
and clean cooking access across the world. It is of the population through the CGD network shall
thus essential to solve not only the issue of access create necessary conditions for PNG to become
to clean cooking fuel but also that of electricity another supply source of natural gas over time.
Electri cation of a
household can reduce
household CO 9
emissions by to
kilograms per year
and black carbon
emissions by to
kilograms of CO
9
equivalent per year–

COOKING FUEL IN INDIA

Until recently, solid fuels like firewood, crop The target under the scheme was to release 8
residue, and dung cakes were the mainstay of Crore LPG Connections to the deprived households
primary cooking fuels for most Indian households. by March 2020. This target was achieved on 7th
In 2011, 70% of Indian households primarily relied September 2019 when the Hon’ble Prime Minister
on solid fuels to meet their cooking fuel needs.5 For of India handed over the 8th Crore LPG connection
increased access to clean cooking fuel across India, in Aurangabad, Maharashtra. This scheme has
the Indian government distributed subsidised contributed towards increasing LPG coverage from
LPG connections to more than 8 crore low-income 62% on 1st May 2016 to 99.8% as on 1st April 2021.
households under the Pradhan Mantri Ujjwala
As on 1st September 2022, total connections
Yojana (PMUY) program between 2016 and 2019.6
released under PMUY are about 9.5 Crore. PMUY
In May 2016, the Ministry of Petroleum and Natural has helped take domestic LPG customers to over
Gas (MOP&NG), introduced the ‘Pradhan Mantri 30 crore. The program was hailed globally for both
Ujjwala Yojana’ (PMUY) as a flagship scheme with the scale and speed of implementation.
an objective to make clean cooking fuel such as
As of today, more than 70% of Indian households
LPG available to rural and deprived households.
use LPG as primary cooking fuel, and 85% have LPG
These households were dependant on traditional
connections.7 However, many households continue
cooking fuels such as firewood, coal, cow-dung
to use traditional solid fuels. In August 2021, Prime
cakes etc which have detrimental impacts on the
Minister Narendra Modi launched PMUY 2.0,
health of rural women and the environment. The
aimed at providing free LPG connections to 1 crore
Scheme is being implemented by three Central
additional low-income & migrant families in India.
Public Sector Oil Marketing Companies (OMCs) viz.
IOCL, HPCL and BPCL.
5
Census of India, 2011
6
Bhaskar, 2019
7
Council on Energy, Environment and Water (CEEW)
THE GREEN SHIFT 98
INDIA’S CLEAN COOKING FUEL JOURNEY

In India, household air pollutants are the leading gendered activity, which further limits their
cause of air pollution-related deaths, which opportunities for education, employment, and
accounted for many lives lost in 2019.8 The use of leisure activities.10 Thus, access to clean cooking
solid fuels for cooking affects the health of women fuel is critical for achieving multiple developmental
and young children disproportionately, due to priorities, including improved health, gender
their higher exposure to the fumes.9 Moreover, equality, equitable economic development, and
women spend a significant amount of time on environmental protection.11
fuel collection and preparation, a predominantly
GOVERNMENT PROGRAMS FOR PROMOTING CLEAN COOKING FUEL
India has introduced several policies over the and increase the uptake of clean cooking fuel
past few decades to displace the use of solid fuels options, primarily LPG. Some of the specific
(such as firewood, dung cakes, and crop residue) initiatives are as follows:
Biogas
The National Project on Biogas Development, provides support for training users, workers,
launched in 1981, was the first national policy and staff on the benefits of biogas plants
for promoting biogas plants. It was renamed and on regular operations and maintenance
the National Biogas and Manure Management requirements. The program activities are carried
Programme in 2003. The program offers central out by nodal state departments and agencies,
financial assistance for domestic biogas plants. the Khadi and Village Industries Commission, and
The Ministry of New and Renewable Energy the Biogas Development and Training Centres.
Improved cook-stoves
The National Programme on Improved Chulhas, improved cook-stoves, with several pilot projects
the first program to support improved cook- being undertaken to improve stove efficiency
stoves, supplied 35 million chulhas from 1986 and demonstrate the benefits of improved cook-
when it was launched to 2002 when it was stoves using existing technology.13 It also included
discontinued. 12
In 2009, the Ministry of New initiatives on carbon financing for biomass cook-
and Renewable Energy launched the National stoves to reduce prices and increase affordability.
Biomass Cook-stoves Initiative to continue R&D in
LPG
While the central government has been providing voluntarily surrender their LPG subsidies so that
LPG subsidies in various forms since the 1970s, the funds can be diverted to households that
its latest efforts have been geared towards a need them the most. However, the main thrust
more focused targeting of beneficiaries. The for improving LPG access among low-income
Direct Benefit Transfer for LPG attempts to curb and rural households came from the PMUY
leakages by transferring subsidies directly into program, launched in May 2016. Under PMUY, the
the bank accounts of beneficiaries. The ‘GiveItUp’ government distributed more than 80 million
campaign encouraged well-off households to LPG connections at a subsidised cost.14
8
Global Burden of Disease Study, 2019; Tripathi, 2020 12
Ministry of Non-Conventional Energy Sources, 2004
9
Arora, 2018 13
Ministry of New and Renewable Energy, n.d.
10
Jha, Patnaik, and Warrier, 2021; Patnaik and Jha, 2020; Choudhuri and Desai, 2020 14
Press Information Bureau, 2019
11
World Health Organization, 2018
Piped Natural Gas (PNG)
The central government has been promoting the the availability of PNG in urban areas help reduce
use of PNG in cities by allocating domestically their reliance on LPG; this helps divert LPG to rural
produced gas (which is cheaper than imports) areas. With the completion of the 11th and 11A
to city gas distributors at a uniform price. In CGD bid round, it is expected that CGD will cover
2014, the government revamped the allocation about 98% of the population, creating necessary
policy, giving city gas distributors first priority for conditions for piped gas to become an option for
receiving domestically produced natural gas and cooking energy for nearly entire Indian populace.
helping them keep PNG prices low. To improve
15
Backed with suitable pricing and priority policies,
the penetration of PNG in other urban areas, the PNG can potentially become dominant cooking
government allocates viability gap funding to city fuel practically for all Indians, though some may
gas distributors if required. Policies that increase upgrade to electricity.
Electricity-based cooking
At present, there is no national strategy to rural electrification programs such as Deen

popularise or deploy electricity-based cooking Dayal Upadhyaya Gram Jyoti Yojana look at
options. Much of the success of such cooking electrification from a wider lens but need to give
solutions will depend on the achievement of equal emphasis on the reliability of the electricity
the government’s intention of electrifying all supply, which is sin qua non for use of electricity
households with a 24/7 supply by 2022.16 Current as an effective source of cooking energy.
While the Indian government has taken steps to increase the penetration of not only LPG, but also
of alternatives like biogas, PNG, improved cook-stoves, and electricity-based cook-stoves, there has
been limited focus on the sustained use of these options. Thus, going forward, the government should
also start focusing on sustained use of intended source and eventually migrating to access to reliable
availability of electricity to ensure India meets its decarbonization targets and also help address the
aspirations encapsulated in Sustainable Development Goal-7.
CURRENT PENETRATION OF CLEAN COOKING FUEL
While the share of Indian households using LPG number will only increase going forward. With
or PNG as their primary cooking fuel is 71 percent, greater affordability and access to electricity
this is still lower than the share of households that across the country, number of uers of electricity as
own an LPG or PNG connection (85 percent). This cooking fuel or an otion for the same will increase
number is higher for households in urban India, in future. However, half of the Indian households
where 95 percent use LPG as their primary fuel, also continue to use firewood for cooking, and
versus 61 percent of households in rural India. nearly a quarter report using dung cakes and
Having said that, the penetration of LPG use in other solid fuels. Most solid fuel users are in rural
rural India has improved significantly since 2011, India, where despite 80 % of households having
when only 11 percent of the households used LPG an LPG connection, 67 % still use firewood for at
as their primary cooking fuel. Apart from LPG and least some of their cooking needs. The practice of
piped natural gas, electricity is also emerging as stacking solid fuels with clean fuels is a concern
a key clean fuel, with 5 percent of the population due to the resultant exposure to hazardous air
using it today. With greater affordability and pollutants in these households.
access to electricity across the country, this
15
Press Trust of India, 2014
16
Press Trust of India, 2015
THE GREEN SHIFT 100
Exhibit-5.6: Share of households using LPG as a primary cooking fuel, percent
Urban India India Average Rural India

95
87
81
71
65
61
61
44
48
29
24
11
Census National Family Health National Sample India Residential

(2011) Survey (2015-16) SurveyOzce(2018) Energy Survey (2020)
Source: Council on Energy, Environment and Water, State of clean cooking energy access
in India: Insights from the India Residential Energy Survey (IRES) 2020, 2021
Exhibit-5.7: Spread of cooking fuels across households
LPG/PipedNaturalGas Firewood Dung Cakes Crop Residue Other Electricity
Share of households, percent

97.6
85.1
79.9
66.5
49.4
32.5
23.7
21.0
15.4 17.1
13.0
10.3
8.5
5.0 3.1
2.0 2.7 1.9
India Rural India Urban India
Source: Council on Energy, Environment and Water, State of clean cooking energy access in India:
Insights from the India Residential Energy Survey (IRES) 2020, September 2021
LPG SETUP IN INDIA

Of the list of currently available clean cooking to December 2021. During the same period, they
fuels, LPG has emerged as the most viable option added 109 distributorships. This infrastructure has
in India, at least in the short term emerging as helped achieve the current penetration levels of
the primary alternative in the switch from solid LPG, making it the most widely used primary fuel
fuels before more eco-friendly solutions such as for cooking in India.
electricity and solar become viable. According to a
The LPG refill consumption rate is a valuable proxy
report from the Petroleum Planning and Analysis
to track household transition to clean cooking fuel.
cell of the Ministry of Petroleum and Natural Gas,
According to the Council on Energy, Environment
India’s public sector oil marketing companies
and Water’s India Residential Energy Survey
(Indian Oil Corporation Limited, Bharat Petroleum
(IRES), an average LPG-using household in India
Corporation Limited, and Hindustan Petroleum
consumes 6.7 LPG refills (or around 95 kilograms
Corporation Limited) together have 305.3 million
of LPG) per year.17 The refill rates are higher among
active LPG customers in the domestic category,
urban households, despite smaller family sizes,
whom 25,192 LPG distributors are serving. Public
primarily due to the low prevalence of stacking. A
sector oil marketing companies have 202 LPG
typical household that stacks LPG with biomass
bottling plants all over India, with a rated bottling
but uses the latter as the primary cooking fuel
capacity of around 21.6 million metric tons annually.
consumes four refills annually on average. On
They sold nearly 18.8 million metric tons of packed
the other hand, households that consume LPG
domestic LPG from April to December 2021.
exclusively require seven to eight refills per year.
Public sector oil marketing companies enrolled
14.1 million new domestic customers from April
Exhibit-5.8: LPG refills per year (average numbers consumed)
7.7 7.6
6.7
6.5
6.2
4.1
India Rural India Urban India Solid fuels as LPG as the

the primary primary LPG as the
cooking fuel cooking fuel exclusive
cooking fuel
Source: Council on Energy, Environment and Water, State of clean cooking energy access in India: Insights
from the India Residential Energy Survey (IRES) 2020, September 2021
17
Sunil Mani, Shalu Agrawal, Abhishek Jain, and Karthik Ganesan, State of clean cooking energy access in India: Insights from the India Residential Energy Survey (IRES) 2020. New Delhi:
Council on Energy, Environment and Water, September 2021.
THE GREEN SHIFT 102
KE Y N U MB ERS O N I ND O O R AIR POLLUT ION AND RELAT ED IMPACT S
~1/3rd
Global population cooks using open fires
or inefficient stoves fuelled by kerosene,
biomass (wood, animal dung and crop
waste) and coal, which generates harmful
household air pollution.
Women &
Children ,
typically responsible for household chores such as cooking

collecting firewood, bear the greatest health burden from the
use of polluting fuels and technologies in homes.
Household air pollution exposure leads to
many non-
communicable
diseases
including stroke, ischaemic heart disease, chronic
obstructive pulmonary disease (COPD) and lung cancer.
3.2 million 2 lakh+

Estimated deaths per year in 2020 Annual deaths of children under the
due to household air pollution age of five from indoor air pollution
Adapted from WHO 2022

CHALLENGES IN OVERALL COVERAGE

Government efforts in the form of subsidies and A new LPG connection typically costs 3,200 rupees
promotion of clean cooking fuels have led to a (around $44), and the LPG refill cost which has
rise in the number of households using LPG as varied over a period of time.18 Under PMUY, the
their primary fuel. However, 84% of households government, subsidised only the LPG connection
continue to use traditional solid fuels along with cost, and consumers had to pay the remaining
LPG for cooking purposes. High cylinder cost is the amount either through a loan from an oil marketing
main reason cited by most households that stack company or cash. Both the initial and recurring
solid fuels with LPG. Other reasons for fuel stacking expenses represent a substantial outlay for these
include a preference for cooking on traditional households. Three-quarters of households without
chulhas (72% of households), the availability of LPG connections earn less than 10,000 rupees per
free biomass (59% of households), and the limited month and live in kutcha (temporary) or semi-
availability of LPG refills (46% of households). For kutcha houses. Further, most of these households
the households without an LPG connection (15% of rely on labour activities as their primary income
total households), the main reason for not having source, thus making LPG unviable at current prices.
one remains high connection cost or the recurring
expense of LPG refills.
Exhibit-5.9: Reasons for not having an LPG connection
Share of household which use only solid fuel for cooking, percent
High-connection cost and monthly expense 30
High monthly expense only 28
High-connection cost only 23
Food cooked with LPG doesn’t taste good 24
Didn’t have the required documentation 23
Notavailableorre4llstoofarfromhome 15
Don’t know how to get an LPG connection 9
Free biomass easily available 9
Source: Council on Energy, Environment and Water, State of clean cooking energy access in India: Insights from the India Residential Energy Survey (IRES) 2020, September 2021
Even though, PMUY is aimed to simplify the is an opportunity to identify and support more
enrollment process by reducing documentation socio-economically marginalized households.
requirement and introducing a quick application Also, to sustain the use of LPG as the primary
process through outreach camps19, some fuel, efforts to improve LPG access would need
households also highlighted the non-availability of to be supplemented by incentives to make LPG
LPG in their vicinity and easy availability of biomass consumption affordable. Beyond LPG, as the
as reasons for not having an LPG connection. Apart global push for decarbonization accelerates, it
from the expense, some of the other reasons cited will be important for India to move to solar and
for not having an LPG connection include the electricity as options for cooking. This will, however,
taste of food cooked with LPG not being good or be a longer-term transition as India improves
households not having required documentation. It its electricity penetration and composition of
is thus clear that, as India rolls out PMUY 2.0, there renewables in grid.
18
Kumar, 2018
19
Giri and Aadil, 2018
THE GREEN SHIFT 104
POTENTIAL SOLUTIONS FOR

TRANSITION TO CLEAN COOKING FUELS
Studies have highlighted that long-term health While the complete transition to renewable
benefits can only be gained with sustained and sources of cooking fuel will take time, efforts need
universal use of clean cooking energy. Hence, to be made to increase the use of LPG and PNG in
there is a need to simultaneously emphasise households. There are several ways to increase LPG
and facilitate the sustained use of clean cooking uptake in India. One solution is to incentivise rural
fuel within households. Sustained use of clean distributors to improve home delivery of LPG by
cooking energy implies continued use of fuel providing higher commissions per refill and linking
as the primary cooking fuel without occasional the commission amount to connection density.
relapses to traditional biomass. The current state of Another is to connect LPG programs to broader
Indian cooking necessitates LPG to be the primary social assistance or rural development programs.
cooking fuel to ensure the move from solid fuels A third solution is to promote the production of
to clean fuels, while directional efforts to transition biomass pellets and briquettes for commercial or
to electricity and solar as cooking fuels could be industrial use to create new markets for biomass
taken up such that these sources gain prominence and nudge consumers toward adopting LPG for
and wider usage as we move forward. their cooking needs.
The current state of Indian

cooking necessitates LPG to
be the primary cooking fuel
to ensure the move from
solid fuels to clean fuels,
while directional efforts to
transition to electricity and
solar as cooking fuels could
be taken up such that these
sources gain prominence
and wider usage as we

move forward.
INITIATIVES TO SUPPORT TRANSITION TOWARDS CLEANER COOKING FUELS IN INDIA
1 Subsidizing up to eight LPG refills annually for domestic use
Before the discontinuation of LPG subsidies, around three quarters of the LPG users, who
households received subsidies for 12 LPG consume more than seven refills annually,
refills per year. According to the IRES, a typical belong to the wealthier sections of society.
household relying exclusively on LPG for Besides, movements like ‘GiveItUp,’ which could
cooking consumes around seven to eight refills be termed hugely successful, could be used
per year. Limiting the annual subsidy to seven to encourage those who can afford to give up
or eight LPG refills (as opposed to 12 refills) subsidies. This will also help bring down the
could reduce the subsidy bill by 13 to 15 %. These subsidy burden.
measures will also result in better targeting, as
2 Leveraging robust indicators to exclude households with high income or wealth status
In 2018, the Ministry of Petroleum and Natural making up less than 2 % of Indian households
Gas announced the exclusion of households (assuming one individual per household). A new
with an annual income greater than 1 million categorization for eligibility for subsidy should
rupees ($13,700) from the LPG subsidy. However, be mandated to avoid inclusion errors.
only 4.6 million households fall into this category,
3 Strengthening the LPG supply chain infrastructure
Another alternative would be to strengthen the LPG reduce stacking and increase their LPG
LPG supply chain infrastructure and incentivize refill consumption. Adding home delivery
same-day home delivery, so that the households infrastructure and the associated improvement
that stack because of poor availability of in refill rate can also help job creation.
4 Using historic consumption data to provide differential subsidies
Households lower down on the economic annual consumption of up to three refills (in the
ladder exhibit lower refill rates, all other things past one to two years) could be given a higher
being equal. The administrative data on LPG subsidy per refill than those with a historical
refills could be used to study linkages between consumption of four to seven refills. It must
household LPG consumption behavior and be noted that any targeting measure would
LPG’s affordability. This assessment could likely incentivize some households that would
be used to target subsidies for consumers no longer be eligible for the subsidy to take
with low refill rates—a consumption linked up multiple LPG connections or exploit other
approach. For instance, consumers with an loopholes in the targeting mechanism.
5 Electric/Solar Cooking
To transition at a rapid pace, Electric cooking the net-zero ambitions, equipment like Solar
needs to be promoted through campaigns. stoves (Surya Nutan) and Concentrated Solar-
Wherever possible at least 50% of the cooking Thermal Power (CSP) Cookers need to be
should be done through electricity. To further adopted on a commercial stage.
THE GREEN SHIFT 106
6
Timely receipt of subsidy
Besides subsidy provision, ensuring timely is crucial to monitor whether households

subsidy receipt is also essential. Since 2015, the are aware of and able to access the subsidy
LPG subsidy was directly credited to consumers’ transferred to their accounts. With recent
registered bank accounts after every refill. 20
developments in the area of fin-tech and overall
However, there have been instances of the connectivity and advancement of technology,
subsidy getting transferred to the wrong this should no longer be a significant hindrance.
account or receiving no subsidy.21 Thus, it
7
Ease of availability of LPG
Apart from affordability, the limited availability delivery), and the time between placing the
of LPG refills is another key reason households order and cylinder delivery. Given the significant
cited for stacking LPG with solid fuels. Ease increase in LPG dealerships and improvement
of LPG availability depends on factors such as in supply mechanism over the last few years,
access to home delivery, the travelling distance this might only be an issue of perception and
(and the associated economic implications) hence could be sorted out through campaigns.
to procure an LPG cylinder (if there is no free
8 Target setting for promoting PNG
The demand for PNG in urban areas has even in urban areas. Moreover, there are only
primarily been driven by its convenience and about 80 Lakh PNG connections in India. The
lower recurring costs than LPG and electricity. coverage of PNG needs to be expanded and a
However, the PNG’s connection cost (5,000 target of 3 Crore connections by 2030 needs to
rupees plus other charges) can limit its be set to boost PNG consumption
affordability among the lower economic strata,
9 Clean fuel blending in LPG
Like the blending of Ethanol in Petrol, blending needed to discover other substitutes to LPG
alternatives in LPG needs to be researched. that are derived from biomaterials available in
DME blending in LPG has shown promise to India. Stoves working on biofuels like ethanol,
provide a solution. Similarly, trials of Hydrogen methanol etc., need to be further developed
blending in CGD are in progress. More R&D is and commercialized.
The objective of all the initiatives is to reduce the dependence of Cooking on LPG and promote cleaner
cooking. India should target to reduce this dependence by 20% before 2030 and further improve by
reducing it by a minimum of 50% by 2030.
20
Jain, Agrawal, and Ganesan, 2018
21
The Hindu Business Line, 2018; Anbuselvan, 2019
CONCLUSION
LPG penetration in India has reached a new high to implement targeted subsidies to only PMUY
due to the Government’s recent efforts, with users and incentivize rural distributors to improve
more than 85% of households now with an LPG the home delivery of LPG. Meanwhile, CBG could
connection. However, more than 50% of these be the bridging fuel for some parts of India, while
households still use some proportion of traditional local CBG based network could also be evaluated
solid fuels, primarily due to the relatively higher in villages with a concentrated population.
cost of LPG refills. These solid fuels are a leading
Over the next ten years, a large part of urban India
cause of household air pollutants. Thus, access to
will have PNG grids laid out on account of the
clean cooking fuel is critical in achieving improved
build out that is happening after the awarding
population health, along with the benefit of
of GAs over the last few years. The speed of
environmental protection.
household connections may be accelerated to
Government programs such as PMUY have increase connections from 95.21L to cover at least
helped increase the penetration of LPG in India. 50% of urban households by 2030. In parallel, the
However, due to the volatility in LPG market prices electrification of cooking is a natural trend that has
on account of global linkages and the subsidies happened in several countries, especially in urban
on LPG being withdrawn, many households are areas. This may be encouraged, as the share of
shifting to using traditional cooking stoves. In the renewables in the electricity mix increases, given
shorter term, better affordability and availability that it will result in automatic decarbonization.
of LPG across the country is critical to ensure that Solar based cooking could also be a means to
LPG penetration in the usage of energy for cooking decarbonize but would only work effectively for
continues to stay high and gradually reaches mass cooking use cases.
close to 100%. To achieve this, it will be essential
THE GREEN SHIFT
108

Chapter
6
HYDROGEN
In this section
1. Introduction to Hydrogen 111
2. Green Hydrogen Production Technologies 113
3. Supply Chain of Hydrogen 117
4. Blending Hydrogen in CGD Pipeline 120
Global and domestic Hydrogen demand

5. 121
and supply
6. Major Green Hydrogen Projects 125
7. Challenges in Scaling up Green Hydrogen Market 127
8. Green Hydrogen by Indian O&G Companies 129
9. Conclusion 131
INTRODUCTION TO HYDROGEN
Hydrogen was first identified as a distinct In 1845, Sir William Grove, known as the “father of
element by British scientist Henry Cavendish the fuel cell,” unveiled a practical scale of hydrogen
after he generated hydrogen by reacting zinc usage by creating a “gas battery.”
with hydrochloric acid in 1776. However, some
Hydrogen is increasingly being seen not only as
work around hydrogen was done even as early
a potential solution to the predicaments of the
as the 1500s. French chemist Antoine Lavoisier
present global energy system – mainly climate
gave hydrogen its name, which was derived from
change and air pollution – but also as a means of
the Greek words—“hydro” and “genes,” meaning
scaling up ways of complementing other clean
“water” and “born of.” Since then, different scientists
energy forms. At present, most globally produced
have worked on the usability of the element as a
hydrogen is used as chemical feedstock (Chemical
part of the energy system. In 1838, the fuel cell effect
usage) in refineries, fertilizers and methanol
combining hydrogen and oxygen gases to produce
production. However, hydrogen has the potential
water and an electric current, was discovered by
to be used in other sectors as an energy carrier.
the Swiss chemist Christian Friedrich Schoenbein.
Exhibit-6.1: Use of hydrogen across various sectors
P O WE R T RA N S P O RT AT ION S PAC E HEAT ING IND US T RY
Hydrogen can be used Hydrogen can be used Hydrogen can be used Hydrogen can be
as a tool for daily in hydrogen fuel cell for domestic space used as a feedstock
and seasonal system vehicles and even in heating purposes. for high-temperature
balancing when power internal combustion applications that are
generated from engines (ICE) as the essential for some
renewables dwindles. fuel of the future. industries to survive
such as methanol and
fertilizers.
Presently, hydrogen is primarily being used as the budget speech of 2021, the finance minister
feedstock in many industries. However, with launched the National Hydrogen Mission for
technological advancements in electrolyzers (for generating hydrogen from green power sources.
green hydrogen) and developments in carbon
Different color codes have been assigned to
capture and storage technology (CCS used for blue
distinguish between hydrogen generated from
hydrogen), it is expected to be the clean fuel for the
various sources. “Black,” “Grey,” or “Brown” refers
future, notably to be utilized by the many countries
to the production of hydrogen from coal, natural
pledging for carbon neutrality and reducing
gas/naphtha, and lignite, respectively. “Blue” is
emissions in line with the Paris Agreement.
commonly used for hydrogen produced from
According to the recently held COP26 summit in
fossil fuels with the capture of CO2 generated in
Glasgow, hydrogen is integral to the global 2050
the process. Carbon emissions are reduced by
vision, with nearly 30 countries releasing hydrogen
utilizing carbon capture utilization and storage
roadmaps.
(CCUS) technology. “Green” is a term for hydrogen
The hydrogen economy is an important produced through water electrolysis using
consideration for the Indian Government. In renewable electricity.
THE GREEN SHIFT 112
GREY HYDROGEN
Grey hydrogen is obtained from natural gas or technology and hydrogen obtained from this
naphtha through steam methane reforming route is relatively cheap (~$2/kg), however large
(SMR) reaction. More than 76% of global amounts of carbon dioxide emissions (10 times of
hydrogen is produced this way. This is a mature hydrogen produced) are also associated with it.
BLUE HYDROGEN
Blue hydrogen is produced from fossil fuels production adds to the cost of hydrogen (~1.5
capturing carbon emissions using Carbon times), i.e., $80 to $120/ton of carbon dioxide.
Capture Technology, in which carbon dioxide The transportation of captured carbon dioxide
emissions can be reduced by 85%. This type of utilization adds complexity.
GREEN HYDROGEN
Green hydrogen is the zero-carbon production with rapid development in technology and bulk
pathway. Water Electrolysis is done using deployment through demand creation through
renewable energy (solar / wind electricity) policy interventions is expected to bring down
whereas bio-based technology is also prominent. the cost and the long-term forecast seems to be
It is currently expensive ($5 to $6/kg), however attractive ($1.5 to $2/kg).
Exhibit-6.2: Comparision of Green Hydrogen Policy of India and that of the United Nations Framework
Convention on Climate Change (UNFCCC)
Indian Government UNFCCC
■ Green hydrogen can be manufactured by a ■ 100% renewable energy will be defined as:
developer using energy from a co-located renewable electricity supplied through a direct
renewable energy plant or sourced from a connection to the hydrogen production from
remotely located renewable energy plant, a source of supply that comes into operation
whether set up by the same developer or a third after or at the same time as the hydrogen
party, or procured from the power exchange. production facilities.
■ 25 years of free power transmission for any ■ 100% renewable energy, provided the
new renewable energy plants set up to supply conditions to be laid down in the delegated
power for green hydrogen production before acts are satisfied, will be defined as: electricity
July 2025. This means that a green hydrogen that has been transmitted through the
producer would be able to set up a solar power grid where it can be shown that the other
plant in Rajasthan to supply renewable energy applicable sustainability criteria have been
to a green hydrogen plant in Assam and met (including temporal and geographical
would not be required to pay any interstate correlation of supply and demand) and that (as
transmission charges. above) the relevant source of supply has come
into operation after or at the same time as the
hydrogen production facilities.
■ Electricity taken from the national grid –the

share of renewable energy in the relevant
national grid as a whole – will be used to
determine the share of such energy that will be
considered renewable.
GREEN HYDROGEN
PRODUCTION TECHNOLOGIES
Green Hydrogen is
produced through
water electrolysis using
ALKALINE
renewable power.
It is a well-established technology. Advantages capital cost, threat of leakage and cross-over of
include relatively low cost, high durability and gas. There are a few limitations related to current
tolerance to impurities, highest-scale of green alkaline electrolyzer technology, namely, limited
hydrogen production with lowest cost. Challenges operational flexibility (although, this is improving),
include high lower limit of minimum load, high a larger area footprint, and low output pressure.
PEM
PEM electrolyzers have several advantages level of partial load, a fast response for electrical
including the ability to scale output up and down grid balancing and several others. Challenges
rapidly, work above capacity for short periods, include the high cost of catalysts and electrodes,
smaller footprint, and deliver hydrogen at a higher the corrosive nature of non-noble metal used as
output pressure. Its advantages include a low catalysts, and carbon monoxide poisoning.
SOLID OXIDE ELECTROLYSIS CELL (SOEC)
Uses solid ceramic material (such as Y2O3 doped high operating temperatures (900 to 1,000˚C),
ZrO2) as electrolyte to combine electric current which results in high overall costs. Its advantages
and water for hydrogen production, oxygen include extremely high efficiency, lowest level
produced at anode is utilized to generate of minimum load, and its operability with
electrons for external circuit. SOEC technology is inexpensive / stable catalysts. Its disadvantages
not commercially available and is the least mature. include increased start-up / break-in times due to
The process has relatively low material costs, but high temperature and low durability.
these materials face rapid degradation due to
Table-6.1: Comparison of above three electrolyzer technologies
Electrolyser Type
Attribute
Alkaline PEM Cell SOEC
Status Well Established Established Status Developing
Electrolyte KOH/NaOH Polymer Y2O3 doped ZrO2
Cell Temperature 60 to 800C 60 to 800C 60 to 800C
Stack Pressure < 30 bar < 30 bar -
CellVoltageEzciency 52 to 69% 57 to 69% -
System Lifetime 20 to 30 years 10 to 20 years -

THE GREEN SHIFT 114
ANION
To overcome challenges of an alkaline electrolytic leakages, the high efficiency and purity of the
environment, polymer technologies such as anion hydrogen generated, and its use of inexpensive
exchange membrane (AEM) are currently being catalysts. Its disadvantages include the high
developed. AEM electrolyzers use an alkaline lower limit of minimum load, lower water splitting
solution of lower concentration, thereby making than PEM, the decreasing ion conductivity of the
them less prone to corrosion. Advantages include membrane, and its extreme sensitivity to carbon
the prevention of potential electrolyte and gas dioxide affecting performance.
HYDROGEN FROM BIOGAS
Similar to the steam reforming of natural gas/ to produce hydrogen. Plants for production of
naphtha, hydrogen can also be produced from biomethane from organic waste are usually
renewable biogas. Biogas can be produced by the located close to points of feedstock production.
anaerobic digestion of various organic matters, Hence, biomethane-based hydrogen production
such as municipal solid waste, food waste, animal is well suited for decentralized hydrogen
manure, sewage, crops, and agricultural residues. production, thereby overcoming the challenges
Biogas contains methane in the range of 50 to associated with hydrogen transportation and
70% with 30 to 50% carbon dioxide and minor storage (classified as blue or grey, depending
quantities of nitrogen, particulates, and other on technology used for biogas clean-up step).
contaminants that complicate the gas cleanup However, major technical barriers for converting
processing. Hydrogen sulfide, siloxanes, and biogas to hydrogen are like those found in the
halogens are the most damaging impurities conversion of natural gas using a SMR process.
that need to be removed to sub-ppm levels, Furthermore, the requirement of preconditions
and this adds to the cost of cleanup. Therefore, and the cleanup of biogas before reforming
an additional biogas cleanup step is required constitute an additional set of challenges for the
for the removal of carbon dioxide, sulfur, and widespread application of hydrogen production
other impurities before converting biogas into from biogas. In addition, the transportation and
hydrogen. Once the biogas has been upgraded distribution systems for bio-methane have not
to natural gas quality biomethane or bio-CNG yet been established, which add to the cost of
(compressed natural gas), it can be used as a hydrogen production.
substitute for natural gas in the SMR process
Exhibit-6.3: Production cost* of green hydrogen worldwide by country in 2020
The cost of hydrogen produced Country 2020 min 2020 max Country 2020 min 2020 max
from electrolysis today is relatively
Argentina 4.25 4.50 Morocco 4.25 4.50
high, at around Rs 40/kg versus
Australia 4.50 4.75 Poland 5.00 5.25
Rs 140 to 180/kg from natural gas
Brazil 4.50 4.75 Russia 3.75 4.00
reformation. Capex requirements
Canada 3.75 4.00 Saudi Arabia 4.25 4.50
today are in the range of $50
Chile 3.50 3.75 South Africa 4.25 4.50
to 0/kilowatt
$1,4 electric (kWe)
China 4.00 4.25 South Korea 6.25 6.50
for alkaline electrolyzers and
France 4.25 4.50 Spain 4.75 5.00
$1,0 to $1,80/kWe for PEM
Germany 4.75 5.00 Sweden 7.25 7.50
electrolyzers, while estimates for
India 4.25 4.50 United Kingdom 3.75 4.00
SOEC electrolyzers range close to
Japan 6.25 6.50 United States 4.25 4.50
$2,80to$5,60/kWe.
* The above prices are in euros per kilogram.
Source: https://www.statista.com/statistics/1086695/green-hydrogen-cost-development-by-country/
PHOTOLYSIS
Solar energy is a promising source of energy as it conditions, engineering challenges, and

is inexhaustible, clean, and environment-friendly. hydrogen production opportunities. More than
Solar energy can be used for renewable hydrogen 300 water splitting cycles have been reported in
without any greenhouse gas (GHG) emissions. the literature.
Concentrated solar power (CSP) technologies
STCH is a promising technology for the clean,
are presented as solutions with high economical
sustainable production of hydrogen in large
and technical potential for hydrogen production.
quantities. Current R&D priorities focus on
The heat generated from CSP, also referred to
materials development for the reactive material
as solar thermochemical (STCH), can be used
as well as the reactor material and design. STCH
for high temperature thermochemical splitting
processes are divided into direct cycles that
of water into hydrogen and oxygen. Chemicals
only use concentrated solar thermal energy
used in this process are reused within each
and hybrid cycles, which additionally use an
cycle, creating a closed loop that consumes only
electricity-driven electrolysis step as part of the
water and produces hydrogen and oxygen. This
water splitting cycle. Direct thermal cycles have
is a long-term technology pathway and calls for
a lower complexity but require higher operating
producing hydrogen in semi central and central
temperatures, whereas hybrid cycles operate at
facilities. Several solar thermochemical water
relatively lower temperatures and offer practical
splitting cycles have been assessed for hydrogen
advantages in reactor design and durability.
production, each with different sets of operating
COAL-TO-HYDROGEN
Exhibit-6.4: Producing hydrogen from coal
INPUTS
Air Combustion Step-1: C+O 2
CO2
Carbon
Heat
Coal Dioxide
Gasi4cation Step-2: C+CO 2

2CO
Carbon Dioxide
Steam water Water-Gas Shift Step-3: CO+H 2

O CO2+H 2
Hydrogen Carbon
Dioxide
OUTPUTS
BIOMASS GASIFICATION
Biomass gasification is a thermochemical hydrocarbons such as tars. The gasification

conversion of biomass into synthesis gas (syngas). process can potentially convert all organic
Syngas is a mixture of carbon monoxide, hydrogen, matter, including lignin, present in biomass to
methane, and carbon dioxide, and heavier syngas. Syngas is a very versatile product as it
THE GREEN SHIFT 116
can be used for numerous applications such around the globe. However, the cleaning of
as the production of heat, power, transport syngas generated in biomass gasification
fuels, hydrogen, and chemicals. Air-blown for removal of impurities still involves many
biomass gasification is a mature technology operational problems due to the presence of
with many operating demonstration plants large quantities of tars.
Exhibit-6.5: Pathway for hydrogen production from biomass
1 Air-blown Biomass
Gasification
n air-blown biomass gasi4cation, biomassseparate the hydrogen from the other gaseous
reacts with air in a gasi4er operating atmixture.
high Dierent gasi4er con4gurations such as
temperatures (>700°C) to generate syngas. downdraft,updraft,andRuidizedbedreactorsare
Generated syngas is subjected to rigorous commonlyusedforthegasi4cationofbiomass.
gas cleaning process to remove carbon/char
Air-blown biomass gasi4cation has been widely
particulates, tars, and nitrogen- and sulfur-based
used for power generation. However, air-blown
compounds, trace metals, etc. Puri4ed syngas
biomass-gasi4cation based hydrogen generation
from a gas cleaning system is admitted into a
is associated with various challenges such as
water gas shift (WGS) reactor to convert the carbon
the presence of large quantities of nitrogen and
monoxide present in syngas to hydrogen and
heavier hydrocarbons in syngas, a lower hydrogen
carbon dioxide by reacting with steam. Hydrogen-
yield, a variation of syngas quality with biomass
rich syngas leaving the WGS reactor is admitted
feed type, and removal of all syngas impurities.
to a hydrogen separation/puri4cation system to
2 Oxy-steam Biomass
Gasification
Air-blown biomass gasi4cation generates quite
process per kg of biomass is 104 g. Various
low hydrogen yield per kg of biomass compared biomass resources such as wood, agricultural
to its theoretical potential. Oxy-steam biomass residues, briquettes, and consumer wastes can be
gasi4cation is a promising technology for the
processedinoxy-steambiomassgasi4cation.
production of hydrogen, economically using
Though oxy-steam biomass gasi4cation process
indigenous biomass-based feed stocks. Oxy-
looks promising for low-cost hydrogen, the
steam-biomass-gasi4cation-based hydrogen
technology has not yet been demonstrated at
production involves the oxy-steam gasi4cation
higher plant capacities. Indian Institute of Science
process for syngas generation followed by a
(IISc), Bangalore has developed a novel oxy-steam
syngas cooling and conditioning/cleaning system
biomass gasi4cation process & developed proof
coupled with a hydrogen separation system for
of concept to generate hydrogen-rich syngas. The
generating hydrogen. The hydrogen yield and
institute has demonstrated a hydrogen production
hydrogen-to-carbon monoxide ratio in the syngas
plantatkg/ 2 hscaleonitscampus.Scndian & Oil
generated from oxy-steam biomass gasi4cation
Corporation Ltd. signed an agreement to optimize
depends on the equivalence ratio (ER) and steam-
the developed process and aim to demonstrate
to-biomass ratio (SBR). The maximum achievable
oxy-steam-biomass-gasi4cation-based hydrogen
hydrogen yield in oxy-steam biomass gasi4cation
productiontechnologyat10kg/hscale
SUPPLY CHAIN OF HYDROGEN
Step-1 Production
Type of Hydrogen Produced
nndia,mosthydrogenisproducedvianaturalgasforuseinthere4nery
■ Grey and fertilizer industries. Dierent colour coding has been given to
■ Turquoise production routes in addition to grey (natural gas based), blue (fossil fuel
■ Green
with CCUS technology), and green (renewable energy based) hydrogen.
■ Blue&Blue+
■ Yellow Turquoise hydrogen is the hydrogen obtained from pyrolysis, yellow is
■ White obtained from electrolysis with mixed–origin grid energy as feedstock,
whereas naturally occurring hydrogen is considered white hydrogen.
Step-2 Storage
Type of Storage
Hydrogen can be stored physically as a gas or liquid. The storage of
■ Compressed hydrogen as a gas in vehicles requires high pressure (~350 to 700 bar) due
■ Lique4ed to space constraints but can be stored at lower pressures for stationary
■ Metal & Chemical
Hydrides applications (~100 bar). Storage as a liquid requires cryogenic temperatures
(253mC) (BNEF, 2019). The appropriate storage medium depends on the
volume, storage duration, required discharge speed, and the geographic
availabilityofdierentoptions(EA,2019).
Table-6.2: Hydrogen Storage
Technology Year Unit Cost Description
Salt Cavern Storage

2020 3.7
Salt Cavern (20% vol.)
Storage Salt Cavern Storage
2050 1.5
(20% vol.)
Rs./ Rock Cavern Storage

2020 10.4
Rock Cavern kg of (20% vol.)
Storage H2
Rock Cavern Storage
2050 3.7
(20% vol.)
2020 48.1 700 kg capacity

Steel Tank
2050 40.0 1,100 kg capacity
Source: The Potential Role of Hydrogen in India, TERI,2020

THE GREEN SHIFT 118
Step-3 Compression
Type of Compression
Hydrogen not only needs to be produced, but also transported and stored
■ Diaphragm close to the place of consumption. Such activities are challenging due to
■ Ionic
the characteristics of hydrogen. t is Rammable, it has low density, and
■ Cryogenic
is easily dispersed into the air. The easiest and most economical way to
■ Electrochemical
store and use hydrogen is in the form of compressed gas at a pressure of
200 to 250 bar (and over). Recently, remarkable progress has been made
by introducing metal structure tanks and thermoplastic structure tanks
reinforcedwithcarbon4ber,glass4ber,andothermaterials,whoseweight
is one third to one fourth of common tanks.
Step-4 Transportation
Type of Transportation systems
The low energy density of hydrogen means that it can be costly to transport
■ Trailers over long distances. Nonetheless, several possible options are available to
■ Pipelines overcome this hurdle, including compression, liquefaction, or incorporation
■ LOHC
of hydrogen into larger molecules that can be more readily transported
■ Methanol &
Ammonia as liquids. New infrastructure could also be developed, with dedicated
pipeline and shipping networks potentially allowing large scale overseas
hydrogen transportation.
Table-6.3: Hydrogen Transport
Technology Year Unit Cost Description
50 km distance, 1 MTPA
2020 2.2
Transmission 1000 tpd steel plant
approx.
Pipeline 50 km distance, 150 tpd
2050 1.5
1000 tpd
50 km distance,
2020 Rs./ 6.7
Distribution 100 tpd
kg of
Pipeline 50 km distance,
2050 H2 5.2
100 tpd
50 km distance,
2020 11.8
700 kg capacity
Truck Refuelling
50 km distance,
2050 40.0 station
200 kg capacity upto 1 tpd
Source: The Potential Role of Hydrogen in India, TERI,2020
... contd. from previous page
Step-4 Transportation ... contd. from previous page
Models for Hydrogen Production & Transport in India
■ On-site, distributed production model for co-located users
■ Production hub and grid model (similar to the current natural gas infrastructure)
Ammonia is an important route to carry hydrogen – starting with

obtaining hydrogen from water, nitrogen from air, and using green
electrons for electrolysis to split water into oxygen & hydrogen. The
same energy can power the separation technology to obtain pure
nitrogen from air. Once nitrogen & hydrogen are produced, Haber-
Bosch process can be used to produce ammonia.
Ammonia contains 18% H2 by weight, requires no cooling and is

more efficient to transport & store, making it an efficient hydrogen
carrier. Among common & stable molecules, only methane has more
hydrogen content (20%). Liquid hydrogen, is fairly dense, requiring
extensive cooling and special storage in robust tanks. Gaseous
hydrogen (100% pure) lacks density, making it ineffective.
Step-5 Applications
Type of Applications
The industrial sector is currently the dominant user of hydrogen both in
■ Stationary India and globally. Most of the globally produced hydrogen is currently
■ Mobile utilizedinfoursectors:fertilizers,re4neries,petrochemicals,andmethanol.
■ Process
There are also several new sources of hydrogen demand in previously
untapped industries. The main sector of interest is iron and steel, where
hydrogen has the potential to replace coking coal, non-coking coal, and
natural gas, depending on production route.
Beyond the steel sector, there is also the potential for hydrogen to replace
fossil fuels as a source of industrial heat:
■ Chemical – ammonia, polymers, and resins
■ Refining – hydrocracking and hydrotreating
■ Iron and steel – annealing, blanketing gas, and forming gas
■ General industry – semiconductor, propellant fuel, glass production,

hydrogenation of fats, and cooling of generators
THE GREEN SHIFT 120
BLENDING HYDROGEN IN CGD PIPELINE

Many countries have started injecting hydrogen In January 2022, GAIL Limited started India’s
(low percentage by volume) in the natural gas maiden project of blending hydrogen into the
pipeline network. Natural gas pipelines are natural gas system in Indore – supplying 2%
considered a long-distance transportation option hydrogen blended (by volume) natural gas via 1,100
for hydrogen extraction at PR stations, bringing kms Avantika Gas pipeline network. Oil India has
down the cost. CBG pipelines are being set up under also taken up similar project in Assam.
the Sustainable Alternative Towards Affordable
Green hydrogen can be blended in natural gas
Transportation (SATAT) program for various gases,
networks, substituting imported natural gas and
which, subject to some further investigation could
reducing end-use carbon emissions. It is estimated
become potential carriers of hydrogen. Studies
that blending 1% hydrogen by volume would
are being carried out to understand the impact of
substitute about 0.3% of natural gas demand.
hydrogen transportation on pipeline metallurgy.
Exhibit-6.6: Regulatory Blend Walls for Hydrogen, % hydrogen by volume
France
UK
Germany
Spain
Italy
Austria
USA
Switzerland
Lithuania
Finland
Netherlands
Japan
Belgium
0 5 10 15 20
Source: S&P Global Platts Analytics, HvLaw
Exhibit-6.7: Tolerance of existing components for hydrogen blending in Natural Gas
Available under certain circumstance

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Distribution
Transmission &
Distribution
Gas Meters
Transmission
Compressors
Underground Storage
Boilers
Cooking
End Use
Engines
Gas Turbines
CNG Tanks
Source:
Altfeld and Pinchbeck (2013), “Admissible hydrogen concentrations in natural gas systems,” Gas Energy http://www.gasfor-energy.com/products/2013-admissible-hydrogen-concentrations-in-natural-gas-systems-1/; Jones, Kobos and Borns (2018), “Geologic
storage of hydrogen: Scaling up to meet city transportation demands,” Inter. Journal of Hydrogen Energy; Kouchachvili and Entchev (2018), “Power to gas and H2/NG blend in SMART energy networks concept”, Renewable Energy; Melaina, Antonia and Penev
(2013), “Blending hydrogen into natural gas pipeline networks: A review of key issues,” National Renewable Energy Laboratory; Müller-Syring and Henel (2014), “Wasserstofftoleranz der Erdgasinfrastruktur inklusive aller assoziierten Anlagen,” DVGW; Reiten-
bach, et al. (2015), “Influence of added hydrogen on underground gas storage: a review of key issues,” Environmental Earth Science; Weidner et al. (2016), “Sector Forum Energy Management/Working Group Hydrogen Final Report.”
GLOBAL AND DOMESTIC

HYDROGEN DEMAND AND SUPPLY
Globally, ~94 MMT (Million Ton) of hydrogen is uses, while about 21 MT is used for methanol, steel
used in different processes annually; 73 MT is used making, and other mixed uses.
for refining, ammonia making, and other pure
Exhibit-6.8: Build-up of hydrogen usage for refining, Ammonia making and other pure uses
MT H2 Others Iron & Steel Chemicals Refining
100
80
60
40
20
Source: IEA
0
2005 2010 2015 2020 2021
Exhibit-6.9: Trends in the Indian hydrogen demand
H2 Demand (MTPA) Implied Electrolyser Scale (GW) Incremental H2 scale (GW)

>
p.a. 51 - 81
+3%
0.2 - 0.3 Methanol
.a.
4-6
+3%p 6.8
42 - 66
0.5
5.5 4-6
22 - 36 0 Steel
0.5
3.0 15 - 24
2.0
7 - 12 Re4ning
24 - 38
3.2 22 - 36 1.5 - 2.0 Fertilizers
3.0
2022 2030 2022 2030

Methanol Steel (Gas based DRI) Refining Fertilizers Copyright © 2022 by Boston Consulting Group. All rights reserved.
THE GREEN SHIFT 122
HYDROGEN USAGE IN REFINERY, FERTILIZER & METHANOL
99%
Of pure hydrogen demand
in India comes from
primarily two sectors, i.e.
2ł2oˇ2HN2:
Almost all hydrogen in refinery & fertilizer units is produced through the SMR process using natural gas
or naphtha.
■ Grey hydrogen consumes approximately ■ SMR process releases approximately

three times the amount of fossil fuels per ten times the carbon dioxide per unit of
unit of hydrogen production hydrogen produced
Petroleum Refining
Typical hydrogen production

units in refineries
■ Hydrogen Generation Unit
■ Catalytic reforming unit (as

a by-product of pressure-
swing adsorption(PSA)
Usage of Hydrogen in Petroleum Refining
1 Hydrotreating of petroleum fuel to meet fuel

speci4cations, primarily desulphurization 2
Hydrocracking of heavier petroleum
feedstock into a lighter and more valuable
and for blending with MS and HSD product
(methanol and ethanol).
The level of hydrogen consumption in oil hydrogen consumption, part of the hydrogen
refineries is dependent on several factors, gets produced as a by-product of the catalytic
including the density of the crude oil; the sulfur reforming process (~15%), depending on the
ratio of the crude oil; the complexity of the refinery configuration. The rest of the hydrogen
refining operations and the quantum of bottom- is primarily produced from SMR and the WGS of
of-the-barrel refining; the product slate of the fossil fuels. In most cases, hydrogen is produced
refinery; and the emission norms applicable at on site for captive consumption, with the typical
the end-user level. The Indian refining sector uses hydrogen consumption of a refinery being ~1% of
~2.1 MMTPA of hydrogen. Out of the total refinery the refining capacity.
Fertilizer Industry
India consumes 3.1 MMTPA of hydrogen to ■ Hydrogen consumption in urea production

produce ~15 MMTPA of ammonia. Hydrogen is is ~0.1 kg per kg of urea
used in production of ammonia for urea and di-
■ Hydrogen consumption in DAP production
ammonium phosphate (DAP). Ammonia is used
is ~0.035 kg per kg of DAP
to produce urea and non-urea fertilizer like DAP.
Exhibit-6.10: Global Ammonia Market (in MMTPA)
40-45 MMTPA green

160-180 GW
NH3 cap announced
electrolyser
by giga-scale projects
capacity required
20 - 25
70 - 80
40 - 45
5 - 10
~185 170 - 175
FY 20 Grey NH3 Organic Growth New Demand Potential

replacement (Shipping) Market 2030
Source: IEA, Kearney Energy Transition Institute, Kearney analysis
Exhibit-6.11: Indian Ammonia Market (in MMTPA)
Domestic Production Urea Import (in ammonia equivalent) 20-25 GW

NH3 Import Market Growth electrolyser
capacity required
2.0 - 2.5%
5.0 - 7.0
9.5 - 11.0
5.0 3.5 - 4.0
3.0
~18.0
14.0
FY 20 Upcoming Growth Potential

Capacity Market 2030
Source: IEA, Kearney Energy Transition Institute, Kearney analysis
THE GREEN SHIFT 124
Methanol Industry
The methanol industry in India is relatively small, methanol production in the Middle East is ~$2 to
with a demand of around 2.26 MT in fiscal year $3/MMBtu (Metric Million British Thermal Unit),
2021, and a forecast is 4.01 MT by the fiscal year versus the historical average of imported price of
2030. The average price of natural gas used in natural gas of ~$10/MMBtu for India.
Exhibit-6.12: Methanol Demand - domestic production & import, 2020-2050
Methanol Demand, MT
Import Production
14
12
10
0
2010 2020 2030 2040 2050
Source: TERI analysis based on (Ministry of Chemicals and Fertilizers, 2029)

MA JOR GREEN HYDROGEN

PROJECTS (GLOBAL)
AquaVentus, Germany
(10 GW)
NortH2, Netherlands
(10 GW)
Green Marlin,
Ireland (3.2 GW)
HyDeal Ambition,
Spain (67 GW)
Aman, Mauritania
(16 GW)
Project Nour,
Mauritania (5 GW)
Base One,
Brazil (2 GW)
Unnamed, Namibia
(3 GW)
H2 Magallanes, Chile
(8 GW)
THE GREEN SHIFT 126
Unnamed, Kazakhstan
(30 GW)
Helios Green Fuels Project, Beijing Jingneng,

Saudi Arabia (2 GW) China (5 GW)
Oman Green
Energy Hub,
Oman (14 GW)
Asian Renewable Energy

Hub, Australia (14 GW)
HyEnergy Zero Carbon Pacific Solar Hydrogen,
Hydrogen, Australia (4 GW) Australia (3.6 GW)
Murchison Hydrogen Renewables

Project, Australia (3 GW) H2-Hub Gladstone,
Australia
Western Green Energy
(3 GW)
Hub, Australia (28 GW) Moolawatana Renewable
Hydrogen Project, Australia (3 GW)
CHALLENGES IN SCALING-UP
GREEN HYDROGEN MARKET
1 2 3
Technology
Cost Maturity Efficiency
The cost of clean hydrogen, Some technologies required Hydrogen production and
particularly green hydrogen, for decarbonization in the conversion involve significant
is still high relative to high- hydrogen value chain still have energy losses at each stage
carbon fuels. Not only the cost a low level of technological of the value chain, including
of production but the costs readiness and need to be production, transportation,
of transporting, converting, proven at scale. For instance, modification, and use. Moreover,
and storing hydrogen are also gas turbines that operate the production of blue hydrogen
high. Adopting clean hydrogen exclusively with hydrogen are is energy-intensive, adding to
technologies for end uses can unavailable off the shelf. When the overall energy demand and
be expensive, and CCS is yet to it comes to maritime trade, thus becoming costlier.
be deployed at scale. only one prototype vessel can
transport liquid hydrogen.
THE GREEN SHIFT 128
4 5 6
Renewable Policy / Regulatory Standards &
electricity availability uncertainity Certification
By 2050, hydrogen production Although over 140 countries Countries lack institutionalized
with electrolyzers may consume have pledged to achieve net- mechanisms to track the
close to 21 000 TWh (600- zero emissions within the production and consumption
650 mn MT of H2 production coming decades, the speed of any shade of hydrogen and
equivalent)– almost as much with which these goals will be identify its characteristics (e.g.,
electricity as is produced achieved remains uncertain. origin and life-cycle emissions)
globally today (IRENA, 2021a). Stable, long-term policy (IRENA, 2020b; IRENA, IEA,
As more end-use sectors are frameworks are needed to and REN21, 2020). Moreover,
electrified, a lack of sufficient support development and hydrogen is not counted in
renewable electricity may deployment at scale. official statistics of the total
become a bottleneck for green energy consumption, and
hydrogen. the economic value of clean
hydrogen’s contribution to
emission reductions is not
recognized.
There is a chicken-and-egg problem in building

the necessary infrastructure for hydrogen. Without
demand, investments remain too risky for wide-scale
production that could reduce costs, but the technology
remains too costly without economies of scale.
GREEN HYDROGEN POTENTIAL

IN INDIAN O&G COMPANIES
Exhibit-6.13: Hydrogen production in Indian refineries (hydrogen generation units)
H2 3000
Production Capacity 2020 Projected Capacity 2030
Production,
KTPA
2500
2000
1500
1000
500
IOCL CPCL HPCL BPCL MRPL NRL HMEL RIL NEL TOTAL
Production Capacity
476 80 37 191 99 45 110 0 185 1,406
(2020)
Projected Capacity
825 171 302 191 99 140 110 529 185 2,593
(2030)
Source: MoP&NG; MNRE

Table-6.4: Indian O&G sector Green Hydrogen Plans
Organisation Project Site Green Hydrogen Electrolyser Capacity

Capacity (kTA), 2024-25 (MW), 2024-25
5 40
IOCL Mathura&PanipatRe4neries
2 16
12.2 85
HPCL Visakh&BarmerRe4neries
4.3 30
BinaRe4nery 2.6 20
BPCL
Gaseous Hydrogen for H-CNG 0.63 5
Hydrogen Blending in Pipeline 6.5 50

GAIL
Electrolyzer in Vijaipur 1.4 10
MangaloreRe4neryPetrochemicals
&
MRPL 0.5 3
Limited
NRL Numaligarh, Assam (2025-26) 3 20
Total 38 279 MW
Source: Oil Marketing Companies

THE GREEN SHIFT 130
Table-6.5: Electrolyser Technology Providers
Organisation Electrolyser Type Remark
Ohmium PEM ndia's 4rst Green Hydrogen Electrolyser Gigafactory.

International Capacity:0.5GW/Year
Nel Hydrogen Alkaline & PEM Dierentserieswithvaryinghydrogenproductionrates
Linde PEM ...
Haldor Topsoe SOEC ...
ThyssenKrupp Alkaline Water Electrolysis Standard Module of 20 MW
H2Pro Membrane free E-TAC ...
Enapter AEM ...
Siemens PEM Model Silyzer 300 (rating 17.5 MW per full module array
(24 modules) - hydrogen capacity 35 kg / hr per full
module
Cummins Inc. Alkaline & PEM ...
Elogen PEM Modular, upto 10 MW
Green H2 Systems PEM 1 to 100 MW
Giner ELX, Inc. PEM ...
Green Hydrogen Alkaline 20 MW

Systems
Source: E4 Tech, 2019
IMPROVING POLICIES & ENABLERS TO BOOST GREEN HYDROGEN IN INDIA
■ Facilitate access to low-cost renewable ■ Production-linked-incentive schemes for

electricity different components in green hydrogen
or ammonia value chain:
■ Allow hydrogen mixed with natural
gas to be used in existing natural gas » Solar modules (announced)
infrastructure (as per safety regulations)
» Glass, EVA, and steel
by defining a remuneration mechanism
to encourage renewable hydrogen » Electrolyzers
injection into gas networks » Sea water desalination
■ Develop appropriate mechanisms to » Hydrogen & ammonia storage
price the emissions of GHGs, which
would encourage decarbonization of the Government has taken significant steps
economy to create a transition ecosystem with a
key role played by Hydrogen. It is desirable
■ Partial exemptions of grid charges, taxes, that the progress against the plans is
and levies for electrolyzers monitored actively & any impediments
shall be addressed immediately.
CONCLUSION
Despite being one of the earliest discovered requiring a capex of $500 - $1800 /KWe and having
elements and being recognized by scientists for its a current price in the range of US$3.75 to $5.25
promise for applications in energy, hydrogen is yet across various countries.
to live up to the occasional promise exhibited by
Transportation and storage are the key elements
it. Once again, there is a lot of discussion around
in the hydrogen supply chain that require
hydrogen being one of the major solutions as an
extreme temperatures and pressure to make it
energy source for transitioning toward net zero.
viable. Potential exists to use the current city gas
It is hoped that necessary conditions are created
distribution pipeline. However, studies are being
this time around and green hydrogen will play a
carried out to understand the impact of hydrogen
dominant role in the transition journey. Given the
transportation on pipeline metallurgy.
history, it is imperative that necessary conditions
for transitioning towards a thriving hydrogen Globally 115 MT (megatons) of hydrogen is being
economy through gradual build up supported used in different processes - 73 MT is used for
by an enabling framework of policies and global refining, ammonia making, and other pure
coordinated sharing of knowledge and technologies uses, while about 42 MT is used for methanol,
are created. It is quite likely that initially the most steelmaking, and other mixed uses. In India, pure
cost effective and pragmatic approach to scale up hydrogen is primarily consumed in two sectors,
hydrogen usage could be insitu production and namely refineries and fertilizers (~99% of total
consumption of hydrogen through co-located demand). Currently, the Indian refining sector uses
production and consuming plants. Ongoing ~2.1 MMTPA of hydrogen, and the ammonia sector
experiments about mixing hydrogen with piped uses ~3.1 MMTPA of hydrogen.
gas could be another area, along with the use ~20 green hydrogen projects exist or have been
of hydrogen fuel cells for mobility to eventually announced across the world with a combined
build up towards wider usage of hydrogen across capacity of ~230 GW. The challenges for scaling
the spectrum. Given the highly cost intensive up the green hydrogen market include cost,
nature of current pathways, reserving a part of technology maturity, efficiency, renewable
green financing for advancements in hydrogen electricity and regulatory uncertainty. However,
technologies and applications must be considered. policies and enablers such as access to low cost
We have looked at various types of hydrogen based renewable electricity, allowing hydrogen to be
on the production methods available, along with mixed with natural gas, developing appropriate
the multiple use cases where it can be used. Green mechanisms to price the emissions of GHGs, partial
hydrogen, which uses renewable energy as the raw exemptions of grid charges, taxes, and levies for
material, is the most viable option for India to move electrolyzers and Production Linked Incentive
towards a net carbon zero aspiration. Alkaline schemes (potentially similar to those provided for
electrolyzers and PEM are the most commonly PV solar) for different components can help boost
used processes to produce green hydrogen today, green hydrogen demand.
THE GREEN SHIFT
132

Chapter
7
ENERGY OPTIONS
AND ROADMAP FOR
SURFACE TRANSPORT
In this section
1. Global Overview 135
2. The story in India 145
3. Key Recommendations 155

GLOBAL OVERVIEW
The transport sector and the mobility it affords is been expanding rapidly. However, this growth
a crucial driver of any economy and a significant has resulted in several negative externalities,
catalyst for development. This is even more especially climate change.1 With more and more
evident in an increasingly global economy, where Governments and business entities recognizing
economic opportunities are closely linked to the energy transition as core to future growth trajectory
mobility of people and freight. With the global as evidenced by growing commitments, the issues
economy growing at an unprecedented pace over relating to mobility and associated emissions have
the last few decades, the transport sector has also assumed special significance.
Exhibit-7.1: Growing focus on Net Zero
Legislated In legislative process Govt. stated position Under discussion* No Target
2%
3% 9%
8%
7%
33%
34% 66%
21%
with atleast with atleast
net-zero net-zero
66% discussion discussion
32%
18%
January 2020 May 2021

* “Under discussion” stage occurs when governments have begun concrete official discussions to implement a target. Source: Bloomberg NEF
Europe, Middle East & Africa 2.8x

2,843
3000 AsiaPaci4c
Americas 2,166
2000
1000 775
366
147
2018 2019 2020 2021 2022

(Jan - Apr)
The COP 26 climate change conference took place in Edinburgh, Scotland from October 13 to November 12 2021
Source: CDP, Science Based Target Initiative; Bain Analysis
1
https://www.teriin.org/sites/default/files/files/Decarbonization_of_Transport%20Sector_in_India.pdf
THE GREEN SHIFT 136
As the transport sector accounts for nearly a approximately 7.3 billion metric tons of carbon
quarter of energy consumption in the world, dioxide (CO2) emissions.4 The total energy use
decarbonization of the transport sector will play in the transport sector is responsible for 25% of
a critical role in energy transition and climate direct carbon dioxide (CO2) emissions from fuel
change mitigation2. The role of transportation combustion. Transport also depends on oil more
was well recognized at COP26 in Glasgow, than any other sector, as more than 90% of the
Scotland, where governments and businesses energy use still comes from petroleum products.
demonstrated a strong commitment to Without more ambitious policies, the global
addressing the climate emergency. 197 countries demand for passenger travel and the movement
signed the Glasgow Climate Pact, formalizing of goods is expected to more than double from
their commitments and pledges to net zero 2020 to 2050, leading to an expected 16% growth in
targets3. The number of companies pursuing CO2 emissions by 2050. Improvements in fuel and
science based decarbonization targets has nearly vehicle efficiencies are not advancing fast enough
quadrupled since 2020.3 Leaders from nations, to reduce overall emissions as mechanized mobility
cities, international organizations, NGOs, and demand is increasing due to population and GDP
notably the private sector zeroed in on the role of growth. Reducing transport CO2 emissions is critical
transport as one of three critical sources of carbon to meet the overall emission reduction targets and
emissions and the only sector still increasing in the goals of the net zero target pledged by various
its greenhouse gas (GHG) footprint. In 2020, the countries and economies 5.
global transport industry was responsible for
Exhibit-7.2: Scope of emissions considered by sector (2020)
Fuel Emissions Process Emissions Other
Carbon Dioxide (Gt CO2) Nitrous Oxide (Gt CO2e) Methane (Mt CH4)
Building (heating) 5.3 0.1

Building (other) 4.9 0.1
Road Transport 6.3 0.1

Shipping 0.9 0.0
Aviation 1.1 0.0
Rail 0.3 0.0
Cement 2.6 0.0
Iron & Steel 3.4 0.1
Chemicals &
Petrochemicals 2.3 0.3
Other Industries 2.3 0.1
Fuel production
(fugitive emissions) 0.3 0.0 135
Waste Management 0.0 0.1 81
AFOLU Land Use change 6.8 2.3 Agriculture 160
TOTAL 39.6 Gt CO2 3.3 Gt CO2e 375 Mt CH4
2
https://www.sciencedirect.com/science/article/pii/B97801281596510000288
3
As per the IPCC’s definition of “net zero”, in IPCC, Annex I: Glossary, in Global Warming of 1.5°C, op. cit.
4
IEA
5
https://www.energy-transitions.org/wp-content/uploads/2022/04/Mind-the-Gap-How-Carbon-Dioxide-Removals-Must-Complement-Deep-Decarbonisation-to-Keep-1.5C-Alive-1.pdf
Road transport currently accounts for nearly three The electrification of private transport is showing
quarters of transport CO2 emissions. Up to 2020, signs of disruptive transition — global sales of
however, emissions from aviation and shipping electric cars in 2020 grew by 43% compared to 2019,
were growing faster. Emissions are projected to reaching 3.2 million units and accounting for 4.2%
grow over the next few decades. Depending on of global new car sales. Key enabling technologies,
post Covid-19 full recovery trends, this projection such as battery packs and cells for mobility
may change. Further, the transformation of applications, saw rapid cost reductions from an
global value chains and political concerns about average of USD 181/kWh in 2018 to USD 137/kWh
high import dependency may bring changes in 2020 (the lowest-cost applications were under
to intercontinental shipping. Similarly, holiday USD 100/kWh). At the same time, the use of electric
patterns may vary, as may some business travel, as two-wheelers and public transport is increasing
the world shifts to rely more on virtual meetings. as alternatives to private cars. It is important to
No matter how post-Covid developments impact underline that electrification of transport needs to
transport demand, there is still an urgent need be closely linked to renewable energy expansion
to transform the sector to improve mobility, and growth in the charging infrastructure.
especially in developing countries, and at the same
time reduce energy consumption and associated
emissions of CO2 and other air pollutants.
A transformation will require

sustained policy moves by all countries
to address the challenges faced by
different parts of the sector.
An interesting option to explore is how the growing can be integrated into planning and policy. Several
pool of vehicle batteries might provide important, options are available for reducing both direct and
short-term storage flexibility to the power indirect energy use.
system. E§H2ł§H P:— /2:Ho hƒ
Many of these are gaining increased interest, such
technologies is not currently a scalable option for
as making vehicles with less or lighter material,
heavy-duty transport, shipping, and aviation. This
increasing the recycling of different material
may change with innovation, but in the short term,
components, and extending the total lifetime of
there is a focus on increased use of sustainable
vehicles. How relevant different elements will be
biofuels and clean hydrogen in these sectors.
for transport sector transformation in each country,
Beyond the direct energy consumption associated
depends on national circumstances.
with the transport service provided, there needs to
be consideration of how broader life-cycle issues
THE GREEN SHIFT 138
GLOBAL APPROACH
Transforming the transport sector is an important a process needs to establish and be based on
part of the overall energy sector transition. The mid- & long-term targets aligned with national
current high dependence on fossil fuels in the sustainable development plan and net-zero
sector needs to be reduced quickly to make it goals. It is important to analyse the pathways
part of an overall net-zero GHG emissions path. for reaching the targets and identifying the
requirements for success. An implementation
Governments need to establish a transport sector
plan should include requirement for policy &
plan of action as part of an integrated energy-
institutional development, enhancement of
sector transformation strategy, engaging actors
labour skills, and finance & infrastructure needs.
at both national & local / city level, private sector,
civil society, and others. From the outset, such
Governments need to adopt a comprehensive “avoid-shift-improve” approach, where reducing

demand, changing transport modes and improving the energy efficiency of mobility are
considered in an integrated manner.
1 AVOID
Managing travel demand can be done in many direct and indirect ways. Options include
infrastructure design, such as building higher density cities and local integration of workspaces
and domestic dwellings. Pricing in different forms is also essential, including taxes on vehicles,
fuels and parking, road use levies, freight handling charges in harbours and departure and
arrival taxation in airports.
2 SHIFT
Stimulating use of the least energy-intensive modes of transport by, for example, creating
favourable conditions for pedestrians, building bike lanes, and strengthening public transport
and car-pooling choices through subsidies, and constructing fast track lanes in congested places.
Integration of different transport modes benefits end users and enhances system efficiency.
Electrification of both private and urban public transport, where possible, and creating fast
electric train connections between major cities is another option.
3 IMPROVE
Increasing energy efficiency of vehicles & motorized two-wheelers through design, engine
improvements, efficient air conditioners, and use of more efficient electrical motors. For land
& sea freight and aviation, , where electrification is not relevant, exploring & promoting use of
modern biofuels, hydrogen, or ammonia will be critical. Policy tools like vehicle efficiency norms
and fuel standards need to be documented to encourage the adoption of more sustainable
transport technologies. Vehicle and fuel pricing are efficient tools, particularly when combined
with functional charging infrastructure for EVs. To realize true and lasting climate benefits,
electricity would need to be “green”. The same is true for hydrogen.
Exhibit-7.3: The Avoid-Shift-Improve Principle in action
No travel Activity Active Transport Public motorised Individual motorised

Transport Transport
No desire or need Walking, cycling
to travel Public transport (bus, rail) Car, Taxi, Motorcycle
AVOID SHIFT IMPROVE

Shift to more mproveezciency
Avoid or reduce
energyezcient through vehicle
travel or the
modes technology
need to travel
Planning Instruments Regulatory Instruments Economic Instruments Information Instruments Investment

Land-use planning Norms and standards Fuel taxes, road pricing, Public awareness campaigns, Instruments
Planning/providingfor (emissions, safety), subsidies, purchase mobility management, Fuel improvement, green
public transport and organisation (speed limits, taxes, fees and levies, marketing schemes, technologies, end-of-pipe
non-motorised modes parking, roadspace allocation, emissions trading co-operative agreements, control devices, cleaner
production processes) eco-driving schemes production
Source: Tumi
OPTIONS FOR DECARBONISATION
Transport is a complex system with infrastructure, grid (V2G), vehicle-to-everything (V2X) and off
services, pricing, and social norms influencing grid charging. It also covers sharing means of
a multitude of decisions and behaviour. These transportation and rides, integrated multi-modal
system elements need to work together to deliver trip planning and payment systems like MaaS, as
sustainable mobility. While much can be done well as access & parking management solutions
at local level where most services are provided, allowing effective implementation of policies that
framework conditions are often determined at the prioritize low carbon, light, and active modes.
national level for legal powers, funding etc., or at
A sustainable electric mobility policy must pay
international level for technical support, funding or
attention to the mobility needs of different
emission reduction obligations, emission trading
potential user groups, especially women,
systems etc. Hence there is a need for coherent
disadvantaged and vulnerable groups. The
and consistent policy action across all levels. The
potential user groups need to be identified
basic elements of a sustainable transport system,
carefully to ensure access to new means of
including integrated and affordable public
transport for these user groups. Therefore,
transport, safe walking and cycling facilities, car
challenges such as safety and accessibility
sharing, fuel economy standards, and parking
must be factored all along the planning and
management, should be pursued in parallel to
implementation process.
investments in electric mobility. Growing low
carbon energy supply and new means of electric In many countries, affordability is key. For
transport have generated interest in the potential example, in rural areas, electric buses would
of electric mobility to transform mobility systems be too expensive, both from the producer and
and improve transport for all. However, electric consumer perspective, but two or three wheel
mobility is not without its risks. electric vehicles could be transformational.
Electric mobility offers excellent potential to drive
The ongoing digitalization of the transport sector
urban transformation, attract new actors, and
offers various opportunities that have the power
trigger private investment in mobility solutions.
to accelerate deployment of sustainable mobility.
New electric mobility solutions also provide an
Intelligent transport systems (ITS) allow for more
opportunity to shift travel to more sustainable
efficient routing and speed control in favour of
and multi-modal mobility patterns, including
energy efficiency, intelligent charging solutions
walking, biking, public transport, and car sharing.
and battery management, including vehicle-to-
THE GREEN SHIFT 140
FUTURE OF EV VEHICLES
Road transport electrification continues to EV markets are expanding quickly. Electric car
expand globally. Sales of electric cars reached sales accounted for 9% of the global car market
another record high in 2021 despite the Covid-19 in 2021, four times their market share in 2019. All
pandemic and supply chain challenges, including the net growth in global car sales in 2021 came
semiconductor chip shortages. About 120 000 from electric cars. The number of electric cars on
electric cars were sold worldwide in 2012. In 2021, the road reached 10 million in 2020, a 1% stock
that many were sold in a week. After increasing share. The electric truck stock exceeded 30 000
in 2020 despite a depressed car market, sales of units, and electric bus registrations are rising. At
electric cars, including battery electric vehicles the same time, a shift towards SUVs and larger
(BEVs) and plug-in hybrid electric vehicles vehicles has stalled fuel consumption and CO2
(PHEVs), nearly doubled year-on-year to 6.6 emissions reductions of new light duty vehicles
million in 2021. This brought the total number sold globally.
of electric cars on roads to over 16.5 million. As in
previous years, BEVs accounted for most of the
increase at about 70%.
Exhibit-7.4: Status and evolution of electric vehicle model availability, 2015-2021
BEV PHEV
450
300
Available Models
150
0
2015 2016 2017 2018 2019 2020 2021
Globally, over 450 electric car models were worldwide by 2050, and remainder is estimated
available in 2021, an increase of more than 15% to be hydrogen powered cars. The increase in
relative to 2020 offerings and more than twice electric passenger car sales globally over the next
the number of models available in 2018. Between ten years is estimated to be more than twenty
2015 and 2021, the CAGR for new models was times higher than the increase in ICE car sales
34%. The increase in available EV car models over the last decade. Electrification is going to be
is accompanied by a notable increase in sale slower for trucks because it necessitates higher
volumes in all markets. This reflects the interest density batteries than those currently available
of automakers to capture the EV market share by in the market, especially for long‐haul trucks. On
producing new options quickly to appeal to an new high‐power charging infrastructure, electric
ever broadening pool of consumers. trucks nevertheless will account for around 25%
of total heavy truck sales globally by 2030 and
The share of electric vehicles will increase from
around two‐thirds in 2050. The electrification of
less than 2% in 2020 to around 45% in 2050. More
shipping and aviation will be much more limited
than 60% of total passenger car sales globally are
and will get underway only after significant
expected to be EVs by 2030, compared with 5% in
improvements in battery energy density.
2020. The car fleet will be almost fully electrified
Exhibit-7.5: Number of available EV models relative to EV sales share in selected countries, 2016 and 2021
100%
Share of EV in Car sales
2016
NOR 2021
90%
SWE
40%
DNK
30% FIN NLD

NOR
CHE DEU
SWE NLD GBR
20% ITA PRT
BEL FRA
ESP GBR CHN
CHE BEL
PRT
10% USA ITA
FIN ESP
FRA
DNK USA
DEU CHN
0%
0 20 40 60 80 100 120 140 160 180 280 300
Number of available EV models
Nearly 20 battery giga-factories are projected example, lithium demand for batteries will grow
to open annually until 2030 to satisfy battery 30 fold by 2030 and will be more than 100 times
demand for electric cars in the net zero emissions higher in 2050 than in 20206. Some revolutionary
scenario (NZE). Higher density batteries are changes in battery technology and substantial
needed to electrify long haul trucks. In the NZE, improvements in sodium and zinc-based battery
demand for batteries for transport will reach solutions will further contribute towards faster
around 14 TWh in 2050, 90 times more than in developments in various end uses, with mobility
2020. Growth in battery demand translates into being the primary beneficiary. As a summary,
increasing demand for critical minerals. For to meet NZE’s energy efficiency milestones and
Exhibit-7.6: Power demand for a EV-centric transport sector
TWh per hr Watt-hr per kg
16
800
Li-S (or other) (650 Wh per kg) required for electric aircrafts
12
600
Solid state (400 Wh per kg) required for electric long-haul trucks
8
400
4
200
0
2010 2020 2030 2040 2050
Long-haul Trucks Cars, buses & delivery trucks Battery cell density
(Right Axis)
6
IEA,2021
THE GREEN SHIFT 142
emissions trajectory, stringent fuel economy Many fuels and technologies that offer potential
standards, as well as supportive government for long-term decarbonization of transport
policies and corporate commitments, will need modes for which emissions abatement is
to ensure changing the ratio of electric & ICE challenging tend to be in the very early stages of
vehicles sold. Additionally, fuel economy of heavy development. The range of zero emission heavy
road vehicles must improve continuously, with duty vehicle models in road transport continues
electric and fuel cell vehicles making up 30% of to expand. Still, experiments in high pressure,
heavy trucks sold in 2030. HEV, FCEV, PHEV and high throughput hydrogen refuelling and
FFEV can also play a dominant role in India given charging options for heavy freight trucks tend to
push from Government of India for bio-fuels. be treated as proof of concept activities only.
POLICIES TO PROMOTE EV DEPLOYMENT
Governments are boosting policy to promote EV deployment, build charging

infrastructure and secure supply chains
Today most EV charging takes place at same in 2021. The number of public fast chargers
residences and workplaces. Consumers will in Europe went up by over 30% to nearly 50 000
increasingly expect the same services, simplicity units. The 2014 Alternative Fuel Infrastructure
and autonomy for EVs as for conventional Directive (AFID) regulates public electric vehicle
vehicles. Publicly accessible chargers worldwide supply equipment deployment in the European
approached 1.8 million charging points in 2021, of Union (EU). The policy recommended that EU
which a third were fast chargers. Nearly 500,000 member states reach ten light duty electric
chargers were installed in 2021, more than the vehicles (LDVs) per public charger by 2020. The
total number of public chargers available in 2017. proposed new EU legislation, the Alternative Fuels
Publicly accessible fast chargers facilitate longer Infrastructure Regulation (AFIR), would mandate
journeys. With more deployment, they will enable 1 kW of publicly available charger per BEV and
longer trips, encourage consumers who lack 0.66 kW per PHEV, as well as the minimum
access to private charging to purchase an EV, and public charger coverage on highways. The Fit-
tackle range anxiety as a barrier to EV adoption. for-55 package in the European Union brought
forward a host of policy and stimulus measures
Fast charging is being rolled out at a quicker pace
to accelerate ZEV transitions. These include a
than slow charging in China, where fast charging
proposal for 100% ZEVs by 2035 through its CO2
installations (power rating >22 kW) increased by
emissions standard and new mandated charging
over 50% to 470,000 fast chargers in 2021. The
infrastructure deployment targets set under the
drivers behind the rapid deployment of public
AFIR proposal for both light duty vehicles (LDVs)
chargers in China are government subsidies
and heavy duty vehicles (HDVs).
and active infrastructure development by public
utilities. Regulatory controls on electricity prices, In the United States, a key EV market, the
public charging demand coming from urban federal government announced its first targets,
dwellers, and increasing electrification of taxis, including 50% EV sales by 2030 and 500,000
ride sharing and logistics fleets have improved public chargers. The targets are underpinned by
the profitability of EV charging businesses. The existing incentives and new funding packages
massive speed and scale of the Electric Vehicle of US$ 7.5 billion to build charging infrastructure
Supply Equipment (EVSE) rollout led to reductions and US$ 3 billion for advanced battery supply
in the costs of manufacturing charger modules chains under the Infrastructure Investment and
for fast charging stations by 67% between 2016 Jobs Act. New EV market entrant countries are
and 2019. In contrast to 2020, when Europe’s creating conditions to support electric mobility.
fast-charging installations significantly outpaced Common measures include tax benefits and cuts
slow charging ones, installations were about the in customs duties for EVs and their components.
Government expenditure on subsidies for electric cars doubled in 2021
Strong policy measures to boost nascent EV direct subsidies in recognition of the ongoing
industries have been used over the years in some closing of the gap between the purchase price of
markets, e.g. China and European Union. Now electric and conventional cars, and to push auto
some markets, such as China, Korea and United manufacturers to lower costs.
Kingdom, are steadily reducing per vehicle
Governments announced more ambitious ZEV targets and policies in 2021 than ever before
Following the pathfinders for ZEV deployment, the emissions as outlined in Nationally Determined
number of countries that have announced some Contributions or net zero targets. Strategic
form of ZEV or electrification target increased direction / incentives provided by national &
significantly. Some employ a CO2 target which, state governments can provide pivotal signals to
in effect, would ban ICE cars by requiring zero shift investment to secure EV supply chains and
tailpipe emissions. It has become increasingly for OEMs to develop a wide variety of affordable
clear that a growing number of countries have ZEV car and truck models as manufacturing
incorporated the electrification of cars and companies seek to meet stricter regulatory
trucks as a key part of their strategy to reduce requirements & net zero commitments.
Leading countries announce ZEV targets to decarbonize medium- & heavy-duty vehicles
Momentum to catalyze ZEV deployment in heavy demonstrated their support by committing to

duty vehicle segments picked up considerably in the first global Memorandum of Understanding
2021. With decreasing costs and improvements (MoU) on Zero Emissions Medium and Heavy Duty
in battery performance, the potential to electrify Vehicles. Signatories intend to work together
certain operations and vehicle types above 3.5 to achieve 2030 and 2040 targets for new ZEV
tonnes of gross vehicle weight is paired with truck and bus sales. Progress towards these goals
a realization of the transformative impact of will be reported annually, and signatories are to
electrifying these operations to achieve global develop plans to support such ambitions. Thirty
climate goals. In 2021, 15 countries representing nine companies, subnational governments and
roughly 5% of global medium and heavy duty other key stakeholders also endorsed the MoU,
vehicle [M/HDV] sales announced support for the signaling additional industry support for these
‘Global Drive to Zero’ campaign. These countries ZEV targets.
Adoption of digital technologies & smart charging can alleviate the need for grid upgrades
Uncoordinated EV charging risks are compounding network constraints known at a granular level,
concerns for grid operators to balance supply identifying areas under the most stress, including
and demand and placing additional pressure at the distribution system level. This allows
on networks. This could necessitate additional smart charging to be tailored accordingly. A
investment in peaking resources. The impacts major precondition for smart charging business
can be difficult to manage, especially at very development is the ability to control the charging
high EV stock penetrations and in systems with of a large number of EVs. Interoperability
a weak grid. Coordinated smart charging of EVs allows aggregators to pool vehicles more easily
offers the potential to help smooth increases in and without cumbersome procedures and
peak demand. Time of use tariffs can facilitate interventions at consumer residences. This is
demand side response by giving consumers price key to smart charging development. Standards
signals to shift EV charging to off-peak periods. should be robust and cover cybersecurity,
A practical approach to minimize the need for data accessibility and minimum requirements
grid investment due to EV loads will be to make applicable to both private and public chargers.
THE GREEN SHIFT 144
IMPLICATION OF ELECTRIC VEHICLES
Electric vehicles reduce the use of oil in transport that lowers government fuel tax revenues
Reductions in government taxes due to EVs are the short term is to flexibly adapt existing taxation
limited today. However, the scale of the global EV schemes to changes in the fuel market, balancing
fleet by 2030 implies a possible net fuel tax loss the net decline in use. However, these short-term
of almost USD 75 billion in the Stated Policies measures cannot be protracted in time, as they
Scenario and USD 90 billion in the Announced risk creating distortions and equity issues. The
Pledges Scenario. Europe is expected to see the longer term measures to stabilize tax revenues
largest net loss of around USD 35 billion in 2030 involve deeper reforms in tax schemes. These,
due to the relatively high tax rate on oil products. for example, could include coupling higher taxes
It will be important for governments to anticipate on carbon intensive fuels with distance based
this reduction in fuel tax revenues and design charges. Road taxes or distance based charges
mechanisms that enable continued support for applied to EVs serve better as longer term
EV deployment while limiting the impact on tax measures once price parity has been reached, so
revenue. A principal way to deal with the issue in EV adoption is not slowed in the short term.
Battery metal prices increased dramatically in early 2022, posing significant challenge to EV industry
High battery demand has spurred significant that battery pack prices might increase by up
increases in demand for key metals used in to 15% from the 2021 weighted average price,
their production. Between the beginning of 2021 all else being equal. To meet the demand for
and May 2022, lithium prices increased more projected EV deployment, various elements in
than seven times, and cobalt prices more than the supply chain will need to expand. In the long
doubled. Nickel prices almost doubled over the term, recycling will contribute significantly to
same period reaching levels not seen for nearly supply. However, only minor contributions from
a decade. If metal prices were to remain at levels recycling are expected by 2030, particularly for
experienced in the first three months of 2022 lithium and nickel.
throughout the rest of the year, it is estimated
China dominates entire downstream EV battery supply chain, but investments underway worldwide
China dominates production at every stage of material global production capacity. Over half of
the EV battery supply chain mining downstream. global raw material processing for lithium, cobalt
Three quarters of battery cell production capacity and graphite also occurs in China. With 80% of
is in China, and the same is the case for specialized global graphite mining, China dominates the
cathode and anode material production. China entire graphite anode supply chain, end to end.
accounts for 70% of cathode and 85% of anode
THE STORY IN INDIA

Transport Sector accounted for 4.9% of India’s electrified in coming years. India needs to work
gross value addition and 14% of the country’s on an integrated multi-modal logistic model to
greenhouse gas emissions in 2019. In passenger reduce the carbon footprint and cost of logistics in
mobility, considering India’s low rate of car the entire value chain.
ownership (22 cars per 1,000 people), a high share
Cargo Railway’s share is currently at ~23% nationally.
of non motorized transport and shared mobility
This should go up to 50% in the next 15 years. Trucks
and a rapidly growing domestic innovation
should shift to LNG until other fuels like Hydrogen
ecosystem, the country has an opportunity to
or Green Methanol become a feasible option. Small
leapfrog over a car centric paradigm to a shared,
and medium vehicles deployed in cities for the
electric, and connected passenger mobility future.
delivery of goods can shift to electric because they
In freight transport, considering India’s skewed
operate within the city and, therefore, they don’t
modal share where 71% of India’s freight transport
have to travel long distances.
is road based and only 17% is rail based, less fuel
efficient vehicles and low operational efficiency, India has shown a strong commitment to electric
India has an opportunity to shift to a cost effective, passenger mobility through the FAME II scheme,
clean, and optimized freight transport system. the National Mission on Transformative Mobility
and Battery Storage, guidelines on EV charging
India is charting its path towards offering cleaner
infrastructure from various ministries and the
fuels in the transport sector.A major shift to cleaner
announcement of state EV policies in eight states.
fuel is also required in the transport sector. Two-
A supportive policy environment has also been
wheelers and three-wheelers are already shifting
created in freight segment through ‘Make in India,’
towards electric, and it is anticipated that by 2030
an initiative to encourage domestic manufacturing
these will have completely shifted away from fossil
along with ‘Digital India,’ a program to transform
fuels, so manufacturing of fossil fuel-based two-
India into a digitally empowered society and
wheelers and three-wheelers will get phased out
Logistics Efficiency Enhancement Program, which
over a period of time. Four-wheelers, including
aims to improve infrastructure, procedures, and
passenger cars and taxis, are expected to shift
information technology. Business leaders are
partially to electric, and the rest to ethanol blended
capitalizing on these emerging markets by creating
Petrol. Roughly 50% of these would be in each of
new products and business models. New models
these two categories in the long run. Ethanol-
in electric two- and three-wheeler segments,
blended Petrol with up to 40% Ethanol could be
indigenous mobility as a service and food delivery
targeted in the long run and can be considered
service platforms have been instrumental in India’s
close to clean fuel if emissions across the value
move towards clean mobility. The Auto Expo held
chain on Well to Wheel basis are taken into account.
in February unveiled new models of electric four
In the medium term, say up to 10 -15 years, CNG-
wheelers and two wheelers that hit the Indian
driven four-wheelers may also continue.
market in 2020. Experts believe that despite the
City buses are likely to be totally electric, and city Covid 19 impact, EV market growth will continue
transport has to be a mix of electric buses and in light mobility segments, such as two wheelers,
Metro. By 2030, no city buses should be added rickshaws, and autos.
which are not electric. CNG may continue till 2035,
To maintain its momentum in energy transition
but diesel buses for city transport should not be
in transport, India must continue to prioritize
added from 2024 onwards. Long-distance buses
shared, electric, and connected passenger mobility
will have to be a mixture of electric with battery
and cost-effective, clean, and optimized freight
swapping and CNG/LNG. For this, mechanism for
transport. Together, India’s passenger and freight
the smooth movement of electric buses across
transport sectors can avoid about 600 Mtoe of oil
states must be ensured. A major shift of passenger
equivalent (Rs 20 lakh crore of oil import savings)
and goods traffic to Railways would also be
and 1.7 gigatonnes of tailpipe carbon dioxide
required to achieve a lower carbon footprint in
emissions by 2030.
surface mobility, as railways are likely to be fully
THE GREEN SHIFT 146
Exhibit-7.7: Efficiency to reduce oil demand and CO2 emissions
2020-2030 cumulative CO2 emissions 2020-2030 cumulative oil demand

(in GtCO2) for India's transport sector (in Btoe) for India's transport sector
8 3
6 23%
2
24%
1
2
0 0
Business-as-usual EzcientScenario Business-as-usual EzcientScenario
Scenario Scenario
Reductions in passenger mobility, fuel demand, internal combustion engine vehicles that remain
and emissions can come from reducing on the road will be important. Reduction in freight
demand for motorized mobility through non- transport fuel demand and emissions can come
motorized transport, working from home for from shifting long-haul freight from road to more
those populations who can do so, and shifting energy-efficient and less carbon-intensive rail,
to more efficient modes of transport such as making vehicles more efficient and electrifying
public transport and shared mobility. Additionally, them where it makes economic sense, and
switching to EVs while improving the efficiency of optimizing logistics and operations.
KEY TRENDS TOWARDS DECARBONIZATION
■ Road-based transport represents ~40% of ■ India extended its EV demand stimulating

global oil demand. Countries dependent FAME II Policy till 2024. It also increased
on oil imports, such as India, view electric subsidies for electric two-wheelers, made
mobility transition as a potential opportunity budgetary commitments for battery swapping
to gain energy independence. As India and development of EV manufacturing &
continues to grow and urbanize, accelerating battery supply capacity.
EV penetration is becoming increasingly
■ The year 2022 would witness a greater
important for the nation.
penetration of electrification, self-driving
■ In India, the electric vehicle (EV) transition is technology, new fuel cell technology, smart
one of the key elements for realization of a charging, great thermal management
sustainable transportation future. The nation’s technology in electric vehicles.
target of 30% EV penetration by 2030 would be
■ In last two years, the COVID-19 pandemic
a vital step towards India’s major sustainability
has changed the face of the mobility
goals. So far, EV adoption has been slow,
industry, gradually shaping up the industry’s
however, there is tremendous potential for
operations and products. Trends are expected
electrification due to the country’s rapidly
to continue in 2022.
increasing demand for transportation.
RECENT FACTORS IMPACTING ELECTRIC MOBILITY
Prolonged periods of very An unanticipated boom An active programme of

1 2 3
high prices of diesel and in e-commerce deliveries subsidies to promote electric
petrol in the country during the pandemic, vehicles, both from the
where sellers had to absorb supply side (to incentivize
most of the skyrocketing localized manufacturing of
fuel prices on last-mile both vehicles and batteries,
delivery costs in order to and also partial payments
retain customers towards the installation of
an EV-charging network)
and from the demand side
(cost-sharing grants to lower
the upfront purchase cost
Since 2020, Indian and increase affordability)
consumers have started

paying increased

attention to EVs.
The biggest factor by far driving shift towards other sources of government revenue that had
alternative transport solutions is petrol and diesel dried up with loss of economic activity.
price, which has been breaking new records for
In short, the public perception is that high
nearly two years. At the start of 2020, before the
excise duties & state VAT levies on petrol and
pandemic, the average nationwide retail petrol
diesel may prevail over near term. The ongoing
price at the pump was INR 69 per litre (just under
global geopolitical situation raises the spectre
$1); by mid-2021 it had crossed the psychological
of severe disruption of international supply
threshold of INR 100 per litre and on 19 April 2022,
chains, which are critical for sustained product
it stood at INR 112 (just under $1.50). Indian retail
supply, especially in the backdrop of India having
pump prices for most of 2020 and 2021 bore
increasing dependence on oil & gas imports.
little relationship to global crude oil prices due
Therefore, considering EV and ethanol-based
to taxes. This was deliberate, resulting from the
vehicles as alternatives to ICE vehicles and how
government’s decision to retain and add to legacy
to make them affordable becomes a matter of
tax rates on petrol and diesel and compensate for
increasing awareness and urgency.
DECARBONIZATION POLICIES
In the last few decades, policymakers have largely infrastructure has also been a key area of focus.
focused on expanding transport infrastructure to The National Urban Transport Policy, JNNURM,
meet skyrocketing demand. The main strategy Smart city project, and AMRUT are some
has been augmenting infrastructure for all recent urban policies with a focus on transport.
transport modes. The road sector has seen the While these policies have overarching goals of
largest outlay, leading to massive growth in road promoting holistic and integrated transport,
connectivity. An estimated 44% of all transport implemented projects have largely focused
funds are allocated for road construction on improving road infrastructure. The bulk of
alone7. The development of urban transport expenditure by city governments on transport
THE GREEN SHIFT 148
infrastructure still focuses on building new roads, processes since the creation of the Convention
bridges, and flyovers8. In the past, the policy focus in 1994. In fact, the transport sector has often
has been on enabling mobility to meet the goals been coupled with the energy sector at COP
of economic growth and social development. meetings, where transport mitigation actions
With the multi-fold increase in transport activity, under discussion were limited to alternative fuel
recent environmental issues associated with sources. However, the transport sector has been
carbon emissions and air pollution have come to progressing in innovative ways where mitigation
the fore. Policy actions have also adapted to these measures have gone far and beyond energy-
needs and policies related to decarbonization related solutions. Initiatives to decarbonize the
have come up in the recent past. Significant sector while allowing for more inclusive mobility
efforts have already been undertaken by the State include managing transport demand and
and Central Governments for implementing mode shift using economic instruments, better
decarbonization policies in the country. Some of infrastructure, shared mobility services, traffic
the most prominent ones are listed in the table. management, integrated land use and transport
There is a real positivity and acceptance of the planning and changes in regulatory frameworks,
need for a clean carbon-free transport sector including parking and vehicle restrictions. These
from all stakeholders.9 measures are effective for climate action and
support the advancement of national climate
Transport sector stakeholders, including
goals towards attaining successful energy
governments, have been largely missing from
transition and net zero compliance.
COP meetings and other climate change policy
Table-7.1: India's policy landscape supporting EV propagation
Policy Instruments
Market-based Regulations Infrastructure-based
Improve » Faster Adoption and » Auto-fuel Policy 2015 » National Electric Mobility
Manufacturing of Electric » National Policy on Biofuels, 2018 Mission Plan
Vehicles (FAME) Scheme » National Hydrogen Mission
» CAFE-1
» State-level EV Policies » Electri4cationofRailway
» CAFE-2 (upcoming)
» Scrappage Policy operations
» FuelezciencystandardsforM/HDVs
Policy Approach
» Green Tax » CNG program

» Acceptance of hydrogen and LNG as
automotive fuel » Focus on empowering ethanol
usage in transportation
Shift » National Rail Plan, 2020

» Waterways Act, 2016
» Higher budget allocation for
buses and metros
» JNNURM Scheme
Avoid / » National Transity Oriented

Reduce Development (TOD) Policy
» Urban Green Mobility Fund
» Smart Cities Mission
7 Sharma and Rajput 2017

8 Shakti 2017
9 https://www.teriin.org/sites/default/files/files/Decarbonization_of_Transport%20Sector_in_India.pdf
PROPOSED ALTERNATIVE PATHWAYS FOR SURFACE TRANSPORT
The shift towards decarbonization will require rising from zero in 2020 to 149 TWh by 2050,
increased use of natural gas, ethanol and reflecting a significant increase in the share
biodiesel/renewable diesel as a transport fuel, and of hydrogen use in transportation. This would
thus demand for these fuels is likely to increase. require a major augmentation in hydrogen
production capacity in India. As hydrogen is
LNG is especially expected to be an attractive
produced rather than extracted, the costs
solution for hard-to-abate heavy-duty vehicles.
associated with production are likely to be higher
In 2019, the consumption of natural gas in India
than natural gas. There is also a debate regarding
stood at 60 billion cubic meters, of which only 27
whether the focus should be on producing blue
billion cubic meters was produced in the country
hydrogen and then shifting to green hydrogen or
(India Energy Statistics, 2019). Presently, less
whether the focus should be on directly enabling
than 2% of the demand for natural gas is from
a shift to green hydrogen. The latter option is likely
the transportation sector. However, in various
costlier but would lead to major environmental
decarbonization scenarios, demand for natural
benefits and prevent technology lock-ins as the
gas from transport is estimated to grow at a high
cost of green hydrogen production comes down.
CAGR of 9.78% between 2020 and 2050, reaching
The key aspects influencing the production
421 TWh by 2050. Given the limited availability
costs of green hydrogen include the cost of
of natural gas reserves within the country, this
electrolyzers and the price of renewable energy.
would require a significant increase in gas
The cost of electrolyzers has declined in Europe
imports. In addition to imports, considerable
and North America by almost 40% since 2014. A
public and private investment will be needed
recent study by BNEF suggests that renewable
to build storage and transport infrastructure,
hydrogen could be produced for between US$0.7
including LNG terminals and gas pipelines.
and US$1.6/kg by 2050 in most parts of the
Biofuels are currently the most viable replacement world (Bloomberg New Energy Finance, 2020).
for fossil transportation fuels as they can be used Investments would also be required to create the
with legacy Internal Combustion Engines (ICE). As right infrastructure for hydrogen transportation.
witnessed in the case of global biofuels demand, However, it would require a highly coordinated
even in India, demand for ethanol/biodiesel as a program of infrastructure upgrades as hydrogen
fuel will be primarily driven by blending mandates, is incompatible with existing pipelines. Some
widespread availability of fuel and compatible tests to assess level of hydrogen mixing without
vehicles up to limited blending percentages, and upgrading the network are already underway.
fulfillment of other infrastructural requirements.
Governments, automotive manufacturers,
As discussed in earlier section, the demand
energy companies, charging infrastructure
of ethanol is to grow to over 1000 Crore Liters
operators, mobility service providers, technology
by 2025-26, backed by introduction of ethanol
providers and aggregators across the globe are
powered (flexi-fuel or hybrid vehicles). Similarly,
preparing themselves for a rapid transition from
biodiesel consumption is expected to increase
conventional internal combustion engine (ICE)
with increase in accessibility of raw materials. For
vehicles to electric mobility. Electric vehicles are
a deep dive into Biofuels, see Chapter-4. Further
expected to account for nearly 57% of all vehicle
improvements on Hybrid Technology will result in
sales and over 30% of all vehicle fleets by 2040,
achieving higher mileage per unit of fuel, which
increasing from global sales of 2.1 million units in
will result in significant in carbon footprint.
2019. Therefore, Government of India is steadily
The current hydrogen demand in India is primarily moving towards a “shared, connected and
focused on the chemical and petrochemical electric” mobility ecosystem to achieve its stated
sector. Increased penetration of FCVs in intercity goals on emissions reductions, energy security
buses and HCVs will lead to hydrogen demand
THE GREEN SHIFT 150
and industrial development. It is doing so through domestic EV / battery manufacturing facilities.10

wide ranging policy and regulatory measures To meet the enormity of challenge, India would
to encourage adoption of greener options like need to transition surface mobility to CNG /
CNG, ethanol and EV adoption, creation of biofuels mixed fuels and then to hybrids & EVs.
public charging infrastructure and incentivizing
POSITIVE DEVELOPMENTS
■ Consistently high public investment in roads ■ Focus on improved vehicle efficiency through
and bridges has led to the rapid expansion of ambitious fuel efficiency norms.
road network and increased rural connectivity.
■ Early recognition and focus on identifying a
■ Focus on enabling electric mobility with policy clear roadmap for enabling alternate fuels like
push through purchase and manufacturing biofuels, natural gas and hydrogen.
initiatives at both Central and State levels.
■ An extensive railway system is poised to play
■ Promising adoption of electric vehicles in a key role in decarbonization with an aim to
segments such as two- & three-wheelers. become a net-zero system by 2030.
■ A dynamic automobile manufacturing ■ Adoption of economic instruments such

industry actively focused on partnering in a as scrappage policy and green taxes to
shift to electric mobility. incentivize a shift to newer efficient vehicles.
■ Proliferation of metro systems in urban areas ■ Successful deployment of CNG vehicles in

providing an alternative to private vehicles. some cities for commercial operations
KEY GAPS AND ISSUES

■ Coordinated policy planning & comprehensive appropriately calibrated in the face of
roadmap for mobility sector decarbonization emerging global trends and domestic
is lacking, too many government agencies are realities. EV buses can be the preferred mode
involved in transport planning. of road transportation, helping reduce carbon
footprint and congestion on roads. These
■ Electrification is most relevant for limited
policies need to be cohesive, uni-directional
road transport segments, these include two-
and aligned at the central and state level to
wheeler, three-wheeler segment, passenger
ensure fast adoption of EVs across India.
cars, light commercial vehicles, & urban buses.
■ Transport planning capacity remains
■ Hard-to-abate road segments, long-distance
limited leading to mobility plans not getting
buses, and heavy-duty vehicles account for
implemented. Lack of differentiated strategies
more than 40% of total energy consumption,
for cities based on existing mobility patterns.
deep decarbonization depends on finding
solutions for these segments. CNG and ethanol ■ Technology transition is heavily dependent on
mixed fuels can suit these requirements. clean power. However CNG and Ethanol with
lower carbon footprint need to be promoted
■ Low share of rail in freight and passenger
to initiate the process of emissions control.
movement, more investments required in rail
infrastructure to enable modal shift. ■ Solutions need to be identified for the aviation
and shipping sector as demand for these
■ For EVs to gain scale, it is necessary that
sectors increases rapidly.
a uniform policy regime is created and
10
https://openknowledge.worldbank.org/bitstream/handle/10986/35655/Electric-Mobility-in-India-Accelerating-Implementation.pdf?sequence=1&isAllowed=y
RETAIL REFUELLING INFRASTRUCTURE
The availability of retail fueling stations is one of fuels will likely be significantly more expensive
the biggest hurdles to consumer acceptance of in the short and long run. In this regard, ethanol/
low carbon vehicle technologies. A significant biodiesel blending with no change at retail outlet
scale up in retail fueling infrastructure would be level is ideally limited as an immediate measure.
required for alternate fuels to compete. This would This translates into higher expenditure on retail
necessitate a major increase in the penetration of infrastructure for newer fuels compared to a
electric vehicle supply equipment (EVSE), natural petroleum dependent pathway. Given that EVs
gas dispensing stations and hydrogen refilling have a lower range than their ICE counterparts,
stations as and when hydrogen enters the scene. the density of EVSE in urban areas will also likely
The capital costs associated with setting up an be higher. Retail infrastructure will have to be
EVSE and hydrogen station could be threefold established not only in urban areas but also on all
and six-fold higher, respectively, even in 2050. major intercity routes, and specific guidelines will
Thus, the cost of retail infrastructure for newer also have to be developed for this as well.
Table-7.2: Fuel-wise cost estimates for setting up new refuelling stations
Capital cost per

Gasoline Station CNG Station Hydrogen Station EVSE
100 miles
2020 $2.14 $8.0 $13. $9.8
2050 $2.14 $7.8 $8.60 $6.09
Source: Melaina, et. al., 2013
GROWTH FORECAST FOR EV IN INDIA

According to Society of Indian Automobile units in FY20 (April 2019-March 2020). Owing to the
Manufacturers (SIAM), nearly 17.5 million internal largely unorganized sector of 3w or e-rickshaws, it
combustion engine (ICE) vehicles were sold in is reported that around 1,79,706 units could have
fiscal year 2021-22 in India. As per the Federation been sold in FY 22. Of the total number of vehicles
of Automobile Dealers Association, retail sales of sold so far by FY 22, the majority (32.8%) were two
electric vehicles clocked 4,29,217 units in FY22 wheelers. Based on total ICE sales and EV sales, it
(April 2021-March 2022), as compared to 1,34,821 is clear that the annual EV sales, as percentage of
units in FY21 (April 2020-March 2021) and 1,68,300 total vehicle sales, is still below 2.3% in India.
Exhibit-7.8: EV Growth in India
EV Annual Sales Trend in India (FY 2014 - 2022) Vehicle Category-wise Market share (Cumulative till FY 2022)
5 4.29 E Car, E Bus,

E3W Cargo, 3.3% 0.4% Others,
4.0% 0.4%
4
Annual Sales (in Lakh Units)
Registered Cumulative EV
2 1.68 E2W, sales till FY 2022
1.47 1.34 10.91 lakh units
32.8%
0.97
1 0.57
0.18 E3W Passenger,
0.02 0.02
59.4%
0
FY FY FY FY FY FY FY FY FY
2014 2015 2016 2017 2018 2019 2020 2021 2022
Registered E2W E3W Passenger E3W Cargo E Car E Bus Others

THE GREEN SHIFT 152
It is estimated that India could achieve 30% EV sold in 2030. Of that 70% are expected to be two
sales penetration around 2030 because of existing and three wheelers, and the rest will be cars and
policies. It could reach 55% if aggressive measures buses. In the FAME-II scheme, out of the total
are implemented to achieve the goal of limiting fund of US$ 1.3 billion, nearly 35% is allocated for
the global temperature rise to below 1.7-1.8°C by e-Buses and 25% for electric three wheelers for
2030 in India. EV sales penetration will be 80% public transportation. Therefore, the transition of
for two and three wheelers, 70% for commercial public transportation to e-mobility is one of the
cars, 40% for buses and 30% for private cars. top priorities for the central government.
Approximately 80 million EVs are expected to be
Exhibit-7.9: EV Penetration in India
90
80
70
EV Sales penetration (%)
60
50
40
30
20
10
0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
3-wheelers 2-wheelers Cars (Commercial) Cars (Private) Buses
GROWTH FORECAST FOR EV CHARGING INFRASTRUCTURE IN INDIA
By the end of FY 2021-22, there were 4305 density/ distance between two public charging
publicly accessible EV chargers in India, of stations (PCS), the estimated number of PCS for
which only 15% were fast chargers. It is observed the rollout of EV public charging infrastructure in
that the number of fast chargers is minimal as India is depicted in the figure.
compared to the number of slow chargers. To
Exhibit-7.10: Estimated number of public
increase the availability of public chargers, the charging stations in India
Ministry of Heavy Industries sanctioned 2,636
charging stations across 62 cities in India under
Urban Areas Highways
the FAME-II scheme in January 2020. Out of
4,242
the 2,636 charging stations, 1,633 will be fast 40000
charging stations, and the remaining 1,003 will
32,563
be slow charging stations. The Government of 30000
India aims to promote EV adoption by providing
public charging infrastructure every 3 kms within 20000
cities and at every 25 km on national highways 9,880
and to facilitate destination charging across 10000
multi-storied buildings and commercial centers. 627 635 641
Considering only the minimum requirements 0

Phase-1 Phase-2 Phase-3
laid down by the Ministry of Power regarding (upto 2022) (upto 2025) (upto 2030)
Presently, many electric cars or electric two around 50,000 charging stations by 2030, with
wheeler owners charge their EVs at home. nearly 2,50,000 publicly accessible charging
According to research reports, 60-70% of Indian points, then this will result in an investment
vehicle owners do not have a dedicated parking opportunity of around US$ 6 billion for public
space at home. With a lack of dedicated parking & private sector organizations. This will result
spaces for vehicles, public charging will be more in increased demand for both electricity and
prevalent in the future in India, as compared to associated grid infrastructure.
home charging. It is estimated that if India has
SITUATION ON THE GROUND
Less interest in shared transport, more interest in private vehicles and modes
■ While ridership of public transport is expected ■ Indian consumers may seek to move away
to decline in the short term, this price-sensitive from shared mobility options and invest in
market may not be able to switch modes two- and four-wheelers, as well as second-
easily, making it important to strengthen and hand products, which are available at
improve public transport options, especially affordable price points.11
bus systems and metros.

■ Last-mile modes will be affected due to lower
■ Ridership of shared and ride-hailing services passenger mobility demand and use of public
like Ola and Uber has dropped by as much as transport, with shared modes like electric
60 percent during the work-from home shift.12 rickshaws and autos being the most affected.
■ Car-sharing platforms, such as Zoom, expect a

three-fold increase in demand as consumers
have higher safety perception.13
Robust demand for EV products for low speed two and three wheelers and pick up in demand for
electric four wheelers and e-buses to be accelerated in the medium term.
■ Rising disposable incomes due to economic ■ Many OEMs have added or are planning to add
growth and a tendency towards fuel cost new models for their EV business portfolio in
saving will lead to accelerated demand for EV various vehicle segments, such as Tiago EV by
products. Tata Motors, XUV400 electric SUV by Mahindra
and Mahindra, EQS 580 India’s first locally
■ Under the gross cost contract model, e-bus
manufactured luxury EV by Mercedes-Benz,
operators may not have the capital to run
Montra Electric 3W Auto by TI Clean Mobility,
buses, and OEMs may not want to own and
3W- OTUA for logistics, last-mile delivery by
operate their own buses. However, a new
Dandera Ventures etc.
business model on revenue sharing basis
without incurring upfront Capex is being ■ There is huge potential for various customer
adopted by STUs, which may pave the way to segments to rapidly pick up in short to
overcoming the capex issue. medium term, including corporate customers
and last mile logistics firms.
11
https://www.pwc.in/assets/pdfs/services/crisis-management/covid-19/impact-on-the-automotive-industry-and-navigating-the-turbulence.pdf
12
“Uber restarts partial operations in India; recovery will vary across geographies, says CEO,” Economic Time Tech, 9 May 2020
13
https://www.deccanherald.com/business/shared-mobility-to-remain-subdued-firms-gear-up-for-post-covid-phase-834378.html
THE GREEN SHIFT 154
Absence of robust localized supply chains
While local supply chains are not fully established, lead to disruptions in EV manufacturing.
curbs on imports of Chinese components may
Impacts of Financing
Due to rising safety concerns and rising interest The situation may, however, improve as the
rates, there may also be declining venture capital safety concerns recede with concerted efforts by
funding in the EV and mobility startup space. manufacturers and regulators.
Impacts on Policy Change
Many state EV policies and e-bus projects may be inflation, shortage of raw materials and rising
delayed due to other priorities, given fuel prices prices of critical minerals and commodity.
There will be many new challenges

and opportunities in the future for EV
penetration in India, particularly in
the wake of a post-COVID era.

K E Y R E CO M M E N DAT I O N S 1 4 , 1 5
GENERAL
Continuation of FAME II scheme beyond 2024
■ FAME II FAME II scheme has already been extended till 31st March 2024. The government
might need to evaluate the targeted extension of the scheme based on progress
and specific needs (dedicated charging for E-buses, mushrooming pick up in
uptake of 4w, e-buses and high speed two wheelers etc.) to continue to enable
the alternate fuel ecosystem in India.
■ Expansion The accelerated pace of approvals may be continued for charging infrastructure
of charging to expand reach beyond the 68 cities, which are already approved and cover all
infrastructure the high volume national highways.
■ Subsidy for Under the scheme, subsidy to OMCs for the deployment of one or more EV
deployment of Chargers (Type CCS II - DC) in OMC retail outlets in any of the following capacities
EV chargers or a combination thereof depending upon feasibility: 25 KW – 30 KW capacity,
50 KW – 60 KW capacity, 100 KW and above. OMCs may be given the freedom
to fix prices based on fair return on investment in view of lower footfalls for
charging in the near term.
■ Public charging Public transportation offered by State Transport Undertakings faces twin
infrastructure challenges, such as limited charging infrastructure and upfront financing.
Fame II may also encompass suitable and graded provisioning for expanding
charging infrastructure for city buses. Public charging infrastructure, including
heavy duty vehicles and buses in tier 2 and tier 3 cities, must be improved to
promote wider public e-mobility.
■ Non-motorized Create an urban road retrofit program to support more accessible walking,
transport cycling, and electric micro-mobility solutions to offer clean, safe mobility
infrastructure alternatives and create jobs.
■ Quantum of Increase the quantum of FAME subsidy per EV, rather than targeting more EVs
FAME subsidy with lesser subsidy, with a focus on most sustainable vehicle segments, to offer
per EV gap viability and linking the cost parity with ICE counterparts for accelerated
adoption of EVs other than low speed two and three wheelers.
14
https://openknowledge.worldbank.org/bitstream/handle/10986/35655/Electric-Mobility-in-India-Accelerating-Implementation.pdf?sequence=1&isAllowed=y
15
https://www.niti.gov.in/sites/default/files/2022-01/Banking-on-EV_web_2.0a.pdf
THE GREEN SHIFT 156
Public transport upgrade and expansion
■ Public Create an initiative to enhance reliability in public transport, including the

transport procurement of more buses, the adoption of e-buses, designs for new buses and
upgrade and corridors and bus rapid transit systems, and the digitization of public transport.
expansion This may also include alternative funding sources and revenue models, such as
advertising and real estate assets. Substantial action on this front has already
been taken or is understood to be in the offing. While working towards this, the
following aspects may also be considered:
» City buses of different sizes should be put on the road instead of standard-
size buses to serve diverse mobility needs. For cities, OEMs should be
encouraged to come up with a range of models for launching as per
the diverse needs of the public transportation system and prevalent
environmental acts and regulations.
» Major players in the promotion of public transport are state transport

departments and urban bodies. However, they are financially weak. Some
schemes like pay per Km and revenue sharing have to be explored and
launched. Any gap that may arise in the process should be funded by the
respective state governments by providing suitable budget allocations. The
broad objective should be to apply economies of scale to offer the masses
convenient, efficient and affordable public transport.
» Electric trams as means of public transport may also be explored. Batteries

or electric lines can be explored as an innovative measure to ensure last
mile connectivity.
National level strategy for freight expansion and optimization
An integrated national strategy for optimizing Logistics Policy may end up being a game
and digitizing freight sector & its supply chain changer for developing long-term wholesome
may be developed. The recently unveiled National solution for passenger & goods transport.
■ Mode shift Encourage shifting of long haul bulk goods movement from road to rail
of long haul based transport with complete electrification of the traction with renewable
goods to rail power. The modal share of railways in India is much lower than most other
countries with a developed rail system. An ideal modal mix would require a
significant increase in the share of rail in passenger and freight movement.
However, the railway’s infrastructure and marketing policies also need to
keep pace with the road segment due to the paucity of investment and rigid
administrative structures. Enabling modal shifts will require improving capacity
to enable better transit times, especially for freight services. Already significant
investments are being done in terms of dedicated freight corridors, high speed
rail, track, and rolling stock augmentation. As per recent plans, railways aim to
cater to the needs of 24% of freight transport, which is estimated to increase to
35% by 2030 and reach 50% by 2050. Such an aggressive plan can be dovetailed
to facilitate the most efficient rail based long haul transport solutions.
■ Electric delivery Issue guidelines to state governments to encourage the electrification of last
vehicles mile delivery vehicles and light duty commercial vehicles plying on dedicated
routes as freight demand n increases over the next one to two years. State
governments could potentially push last mile logistics companies to continue
with their EV deployment plans and create awareness about the benefits of
electrification amongst delivery operators. Some dedicated schemes may be
put in place by state governments for LCV electrification on dedicated routes.
■ Freight Encourage the development of several electric freight corridors to promote use
corridors of LNG and the electrification of the medium and heavy duty truck segment.
■ Foster There are no clear frontrunners for low or zero emission technologies for HDVs,
innovation in intercity buses, and aviation. The future availability of technologies will depend
low-carbon upon the pace of innovation in potential technologies. Some steps for nudging
technologies innovation are outlined below:
for heavy-duty
» State and central governments
long-distance
segments (i) Direct funding and support for research organizations involved in low carbon
technology research, such as fuel cells, battery technology, and storage
technology.
(ii) Establish courses in premier public institutions related to electric mobility

and fuel cell technology.
(iii) Technology agnostic economic incentives for low carbon trucks and buses
could facilitate the uptake of the most cost effective technologies. This would
require providing subsidies and increasing taxes based on carbon emissions,
regardless of the technology.
(iv) Most e-buses procured by State Transport undertakings (STUs) ply for intra-
city movements, with some operating on inter-city routes. To give further
momentum for wider EV bus adoption, it is vital that a more robust ecosystem
is created so that these vehicles can ply effectively with minimal approvals
across various neighboring states.
(v) Some measures to promote public transportation are outlined below:

‒ EV policy by all states / UTs: As of now, only 20 states and UTs have notified or are
about to declare the EV policy. All the states and UTs are required to put forth an
EV policy whose key attributes should be uniformly aligned among the states
for supporting such expansions and attracting investment for more variants of
e-buses.
‒ Mandate fleet addition and phased conversion: Mandate state and local
agencies to add more EV bus fleet. There should be a requirement to convert a
certain percentage of fleets to electric power within a specified period of time.
‒ Develop government procurement guidelines: Establish standardized
guidelines to streamline the e-bus procurement process and facilitate
government purchases.
‒ Permit exemption by all states / UTs: The permit required for inter-state
movement of buses should be exempted by all the states and UTs in unison.
Central portals like Vahan could be used to facilitate the smooth inter state
operations of EVs. For the adoption of e-buses, permitting inter state movement
will help create economies of scale.
‒ Effective utilization of EV related infrastructure: The central government should
encourage state governments to create hubs and depots for e-Buses capable
of providing charging, maintenance, boarding lounges and basic facilities
for commuters and drivers essential for safe driving in a pre-agreed business
construct for inviting PPP bids where the state government arranges land and
electricity connectivity based on a long term lease.
THE GREEN SHIFT 158
■ Foster » Original equipment manufacturers

innovation...
(i) Increased funding for R&D of low carbon technologies.
(continued from
previous page) (ii) Set targets for shifting away from the manufacture of diesel trucks and buses.
(iii) Engaging in international collaborations to import knowledge related to

electric, hybrid, and fuel cell vehicles.
Improve the efficiency of the logistics sector
The road logistics sector in India is characterized wasteful trips, and overloading. Streamlining
by obsolete vehicles and fragmented markets logistics movement could enable significant
(RMI India NITI Aayog, 2021). This leads to emission reductions.
inefficient operations causing poor fuel economy,
■ Central » Fuel economy standards and emission standards for trucks should be revised
Government periodically. This should be done in consultation with truck manufacturers
to ensure feasibility and timely implementation.
» Ensure strict enforcement of standards through periodic monitoring of the

on-road performance of trucks.
» Introduce attractive economic incentives to promote the scrapping of older

trucks.
» Improve warehousing location through better data collection related to the

origin and destination points. This can be aided by leveraging existing data
available from the GST e-way bill system.
» Relook at biofuel policy. Identify enabling cost-effective pathways for 2G

biofuels.
■ Private logistics » Ensure optimal usage of truck capacity.

operators
» Periodic upgrade of obsolete vehicles.
» Improve placement of warehouses to improve load factors and reduce

empty trips.
» Utilize larger size trucks.
Non-motorized transport infrastructure
Create an urban road retrofit program to support micro mobility solutions to offer clean, safe
more accessible walking, cycling, and electric mobility alternatives and create jobs.
THE PROLIFERATION OF HYBRIDS / EV
Constitution of a stakeholder’s dialogue forum
Consult the EV industry, OMCs, EV fleet operators, sector towards selling only Hybrid, CNG, flex/flex
EV corporate consumers and other stakeholders hybrid vehicles and electric vehicles, starting with
to understand the required changes and the four wheeler fleet segment, where a time-
formulation of comprehensive mobility policy. bound mandate might be considered, which can
The key focus should be to gradually move the be further spread out to other CV / PV segments.
Supporting charging and battery swapping infrastructure expansion
■ Charging » Charging infrastructure installation to be focused on top EV-demand

infrastructure cities in the early stages of the market. Expansion to other cities must be
evaluated when top cities have achieved a certain density and saturation
level of public EV charging infrastructure.
» Establish a simplified and fast-track approval process for EV chargers. Also,

rate the DISCOMs on their process for providing EV charger approvals as
part of the ease of doing business matrix.
» Some other vital measures that can be considered for the rapid development
of charging infrastructure have been enumerated below:
(i) DISCOMs to bear the cost of the upgradation of electrical infrastructure

required for the installation of charging stations under the RDSS scheme.
(ii) Waiver of fixed demand charges on EV power connection.
(iii) Mandatory concessional EV tariff by all State DISCOMs
(iv) Single window time-bound approval for EV power connection
(v) Allow electrical load up to 250 KW to be on LT.
■ Battery » In line with battery swapping getting included under Ministry of Power
Swapping guidelines, subsidy support for the battery swapping model in the FAME-II
infrastructure scheme may also be developed.
» In order to make minimal policy and regulatory changes, the swappable

battery could be provided along with the vehicle, and the subsidy could be
provided to the OEM just like it is currently being done for vehicles with
factory-fitted batteries. The OEM could pass on the subsidy to the battery
swap operator, which would reduce the price of the swapping service and
ultimately pass the benefit on to the end consumer.
» Reduce GST on swappable batteries, charging service and battery swapping

service from 18% to 5% in line with GST rates for EVs, EV chargers and factory-
fitted batteries in EVs
THE GREEN SHIFT 160
Focused revision / updation in EV policies
■ State and » A rating and incentive system for manufacturers based on share of EVs in
central their production basket could lead to more EVs entering the market.
government
» Large scale public investment to establish charging and swapping stations
in public places. This would aid in creating a critical mass of infrastructure,
incentivizing increased private investment. Standardization of battery and
swapping form factors may be critical to achieve this move.
» Awareness campaigns to highlight the benefits of EVs and provide practical

information may go a long way in resolving the concerns and myths about
EVs and educating the masses.
» Promote indigenous manufacturing of batteries by identifying long

term sources for raw materials and providing economic incentives linked
to localized advanced chemistry with high energy density. Additional
government efforts to localize the manufacture of batteries and cells and
the use of public resources to fund R&D on alternative battery technologies
under PLIs and the national program for Advance Chemistry cell moving
away from lithium-ion chemistry will help lower battery costs, develop
high energy density battery (over 400 Wh/Kg) and speed up the adoption
of e-mobility across all income levels of society. The advance chemistry cell
batteries should be stipulated to be high energy density to make them
compatible and feasible for wider adoption in heavy duty vehicles.
» Develop regulations to encourage the organized EV retrofitting market and

increase organizational capacity to ramp up the certification infrastructure
for safety considerations.
» Institute fleet transition trajectories for certain “obligated entities,” such as

large fleet operators for certain vehicle segments over fixed timelines.
» Provide higher incentives for replacing old vehicles with EVs compared to
ICE vehicles under the current Vehicle Scrappage Policy.
» Support micro credit access for electric two and three wheelers for
microfinance institutions through the MUDRA scheme.
» Supplement lower cost, longer tenure DFI financing to support micro credit
access for e-2W and e-3W; and work closely with OEMs to explore additional
risk reduction models such as extended warranties, buyback offers & residual
value guarantees to increase confidence among financiers about EVs.
■ Original » Collaborate with OMCs to tailor relevant EV models based on specific

equipment use cases in view of affordability related issues through established retail
manufacturers network.
(OEMs)
» Identify risk sharing mechanisms to distribute the risk of financing EVs due
to uncertain resale value.
» Coordinate and share data with financing institutions to allow better

evaluation of EV performance.
Explore ways to commoditize and standardize battery option
The real challenge for India lies in electrifying extremely important in a low income consumer
two and three wheelers used by nearly a billion market where high cost products such as lithium-
people in the country daily. Converting these ion EV batteries are supposed to be adopted
vehicles to electric, making them affordable and by consumers who are struggling financially.
convenient, and doing what it takes to turn e-two Despite the billions that the government has set
and three wheelers into the first preference over aside to lower the upfront cost of entry, it appears
ICE vehicles when making a purchase decision that the product may still be out of reach for most
should be supported and measured. The adoption of the budget market, until the battery costs and
of e-mobility through the individual purchase of battery leasing costs fall further. India’s ongoing
EVs is not likely to happen very fast in the mass attempts to standardize a subset of swappable
segment of the market of180 million families or batteries for the light vehicle segment, to make
900 million people, even for two wheelers with them interoperable across multiple vehicle
leased batteries selling at a price point today of brands, are likely to increase affordability and
under Rs. 78,000. Even the battery leasing option, create market confidence as one type of battery
amounting to an estimated Rs. 7,000 per month becomes ‘commoditized’.
for a gig worker, is a financial stretch. This is
OVERCOME OVERARCHING POLICY CHALLENGES
Apart from the specific actions mentioned above, system will also create ripple effects in other parts
the transition to a low carbon transport sector of the economy. Some of the issues that need
will require certain institutional adaptations. The addressing are highlighted here.
shift away from the present gasoline dependent
Establish institutions for holistic transport planning
The transportation sector is at the beginning of one hood to achieve the desired targets. Presence
a period of significant disruptions. For instance, of multiple actors in policy implementation makes
governance in urban transport is multifaceted, establishing and managing these arrangements
where various players influence the overall quality difficult. The responsibility of implementing
and quantity of transportation infrastructure and different strategies for decarbonizing transport
its service provision. Governance plays a pivotal sector in India lies with different central and
role in implementing transport policies. A healthy state agencies. To coordinate actions for
operating institutional framework is necessary transport sector, there is a need to have a specific
for successful policy implementation. The policy institutional framework involving central & state
implementation draws multiple agencies under government institutions for transport planning.
Sustained inflow of investment in transport infrastructure
Petroleum taxes contributed over 2% of GDP in that the loss in revenue does not affect investment
the last decade. During FY 2010–17, on average in decarbonization infrastructure, alternate
45% of India’s union taxes (from customs and sources of revenue will need to be established.
excise duties) and 26% of state taxes (from sales Congestion pricing, limiting subsidies, and user
tax) were collected from the petroleum sector. access charges for using public infrastructure
Reduced consumption of these fuels will have a could be some of the strategies for mitigating
direct effect on government revenues. To ensure this issue.
THE GREEN SHIFT 162
Ensure coordinated investment in low-carbon infrastructure
Going forward, stricter criteria will need to judgments regarding the ideal modal mix as well
be evolved while assessing investment in as the segment wise potential of alternate fuel
transport infrastructure. There should be a options. Better coordination among different
focus on the lowest cost options while giving government agencies at the central and state
higher importance to investment in low carbon level will also be essential.
infrastructure. This will necessitate some
Differentiated planning for cities
National-level policies and fund allocation must would require further empowering of the city
account for city level differences in mobility level transport agencies financially and with
patterns. Investment priorities should be in line technical capacities.
with the particular city's characteristics. This
At the same time, it is noted that the national cities to prepare Comprehensive Mobility Plans
transportation sector gained specific attention (CMP) to address local transportation issues. At
through the Jawaharlal Nehru Urban Renewal present, there is a lack of comprehensive policy
Mission (JNNURM) and the National Urban preparation and evaluation criteria which creates
Transport Policy (NUTP) policies, which required a gap in achieving the desired target. This is one
a revision to accommodate updated policy of the reasons why the CMPs do not significantly
relevance. These policies aim to improve and impact on reducing transportation problems,
establish a safe, accessible, comfortable, and and as a result, private vehicles continue to grow.
affordable public transportation system, reduce A relevant CMP must be developed, aligning with
vehicle growth, encourage hybrid/electric national and state objectives and dovetailing
vehicles, and manage air pollution. These local requirements.
policies require the urban local bodies of major
OVERALL TECHNOLOGY AND PATHWAY CHOICES FOR INDIA
As discussed earlier, surface transportation corridors, and increasing mixture of ethanol in

accounts for nearly three fourth of all emissions petrol and biodiesel with diesel, will, all need to
caused in the entire mobility value chain. It is be incentivized. It is also felt that the Hybrids can
therefore, critical that urgent multi-pronged play a critical role in improving the mileage per
actions are taken to address these emissions unit of fuel, thus helping bring down the resultant
and eliminate those overtimeover time.Current carbon footprint. So during the transition journey,
predominantly fossil fuels based surface mobility India may establish an ecosystem for all options to
needs to progressively move towards a lower and flourish and avoid technology lock-ins. Similarly,
eventually to zero carbon footprint options. In this an overall system of incentives and policy push
regard, Chapters in this report have been included for these emerging options is needed such that
on Gas & Biofuels, where specific issues relating the effective relative carbon footprint is the
to these and recommendations to increase their broad criteria for the building incentive regime to
role in surface mobility have been discussed. individual options. However, for Bio CNG / Ethanol
and Biodiesel, which are expected to play a critical
It is clear that Indian surface mobility towards
role in reducing emissions, it is necessary that the

net zero will need deployment of all lower /
anomalies arising on account of the dual GST and
zero emission options till the end objective of
VAT regime are addressed either by including
zero is achieved. So Natural Gas/Bio CNG for
fuels in the GST regime or working out a system
cars and city distribution smaller trucks, LNG
that avoids stranding of the tax credit.
for heavier trucks and mobility in identified
Chapter
8
ZERO-CARBON
SHIPPING
In this section
1. Shipping Industry at a Glance 165
2. Current GHG Strategy 166
3. Indian Shipping Industry 167
4. Mitigation Strategies 168
5. Alternate Fuels 169
6. Recommendation 170
SHIPPING INDUSTRY: AT A GL ANCE

The shipping industry accounts for around 80 Exhibit-8.1: Global emissions, 2018 (GtCO2eq/
percent of global transportation volume. However, year – tank to wake)
the sector is responsible for only 10 percent of
Private
transport emissions and 2-3 percent of total Households Others
greenhouse gas (GHG) emissions. Compared to 3%
7%
other forms of freight transport, shipping is the Services
most efficient in terms of the amount of emissions 6%
Electricity
produced, just 20 to 25 grams of CO2 per ton- & Heat
km, compared to up to 600 gm for aviation and Industry 42%
between 50-150 gm for road-based transportation, 18%
as shown in Exhibit-8.1 and Table-8.1.
Source: International Energy Agency (IEA) (2020, 2019); Fourth IMO GHG Study
(2020); Intergovernmental Panel on Climate Change (IPCC) (2018) Transport 25%
Table-8.1: Transport sector–specific emissions, 2018
Transport Sector Ranges for freight Share of global emissions

(GtCO2eq/ton-km) (%)
Road 70–180 ~18%
Aviation 400–900 ~3%
Maritime 5–45 ~3%
Other* 30–60 ~1%
Total emissions ~25%
* Rail / unknown transportation means

Source: IEA (2020, 2019); Fourth IMO GHG Study (2020); IPCC (2018)
■ Shipping volumes are expected to increase alternative fuels is very large, leaving hardly any
by around 1.3 percent on average every year financial incentive to make the switch. Even
between now and the middle of the century. if ship owners wanted to make the change,
The industry's CO2 emissions are expected to supply chain of alternative fuels is not yet ready
increase steadily by 5 - 8 percent of global CO2 for global distribution to accelerate transition.
emissions by 2050, compared to 3 percent in
■ Three segments—bulk carriers, tankers, and
2018, with emissions growing significantly in
container ships—are responsible for around
most dynamic trading regions, e.g. East Asia.
65 percent of the shipping industry’s CO2
■ The maritime industry faces a matrix of output. These three categories make up
challenges on its journey towards zero carbon, around 90 percent of shipping volume; thus,
which will delay or even prevent the transition they contribute the most in terms of absolute
if not addressed upfront. Firstly, the maritime emissions volume.
industry is a highly complex, global and
■ Short-haul vessels may electrify or adopt
decentralized sector with more than 1,00,000
hydrogen fuel, while decarbonizing deep-sea
commercial vessels. Secondly, the current cost
vessels will require green ammonia, methanol,
gap between conventional fossil fuels and
or any other fuel with high energy density.
THE GREEN SHIFT 166
CURRENT GHG STRATEGY:

INTERNATIONAL MARITIME ORGANIZATION (IMO)
In April 2018, the IMO, through its Marine efficiency standards and increased investment in
Environment Protection Committee (MEPC), clean energy technologies and alternative fuels,
unveiled the Initial IMO Strategy on the reduction through cooperation amongst public and private
of GHG emissions from ships. All 100-plus member stakeholders. Considering the sustained growth
nations of the IMO agreed to an ambitious target of in international seaborne trade and the current
reducing annual shipping emissions by at least 50 lack of low-carbon fuel alternatives, the 50 percent
percent by 2050, relative to 2008 levels. Exhibit-8.2 reduction target does, indeed, seem ambitious.
depicts the projected trajectory. The MEPC More ambitious measures could be included in the
highlighted measures such as stricter energy next revision of the strategy, which is due in 2023.
Exhibit-8.2: The shipping industry’s GHG emissions trajectory, as foreseen by the Initial IMO Strategy
CO2 emission Historical CO2 Business-as-usual CO2 emission reduction foreseen

(million tonnes) emissions CO2 emissions by the IMO initial GHG strategy
1400 1400
1200 1200
1000 1000
800 800
600 600
400 400
200 200
0 0
1990 2000 2010 2020 2030 2040 2050
Year
Source: World Bank (https://blogs.worldbank.org/)

INDIAN SHIPPING INDUSTRY

India’s ports and shipping industry play a vital role geographical placement and connectivity. A
in sustaining the growth of the country’s trade and technologically enabled integrated multimodal
commerce. India is 16th largest maritime country in end-to-end solution for inland and coastal freight
the world, with a coastline of about 7,517 km. needs to be developed with support from all
relevant agencies and stakeholders. This can, over
According to the Ministry of Ports, Shipping and
time, be upgraded to integrate the movement of
Waterways, around 95 percent of India’s trading by
goods relating to imports and exports. For ease
volume and 70 percent by value is done through
of business, it will be critical that a single set of
maritime transport.
approval / clearances is developed with inputs
India has 12 major ports and 205 non-major ports from all relevant agencies such that over time
(details provided in Exhibit 8.3). The addition of the movement of goods does not have to require
capacity at ports is expected to grow at a CAGR multiple and disjointed approvals. These aspects
of 5 to 6 percent till 2022, thereby adding 275 to may need to be appropriately addressed as a part
325 megatons of capacity. Under the National of a holistic national policy.
Perspective Plan for Sagarmala, six new mega
Currently, various ministries and stakeholders
ports are proposed to be developed in the country.
manage matters relating to the movement of
Ports in India have very ambitious expansion plans. passengers and goods. Roads are under the
It is anticipated that by 2030, the world's largest Ministry of Road, Transport and Highways,
port will be in India. In October 2021, the Adani railways fall under the control of the Ministry of
Group announced its intention to make APSEZ a Railway, while goods movement through air and
net zero carbon emitter by 2025 and power all its water is handled by the Ministry of Civil Aviation
data centers with renewable energy by 2030. and Shipping. For the seamless movement of
India has one of the largest shorelines in the goods and to avoid logistic nightmares, it is
world, which can be advantageously leveraged critical that there is overall coordination among
to serve as effective means of freight movement. some of these agencies to ensure that India is
India also has large river systems, which have the able to provide world-class logistic solutions at a
potential to be developed as an effective mode reasonable cost, minimizing the time taken and in
of transportation through inland waters in a cost an environmentally sustainable manner. This will
effective and environmentally sustainable manner. also ensure the full utilization of the infrastructure
being created by different ministries, e.g., it will
India is a large country, and as such, the movement help railways capture a higher share of on-land
of goods across the length and breadth of the goods movement once its expanded network of
country would, at times, require more than one 100 'Gatishakti' cargo terminals are commissioned.
means of transportation, depending on the local
Exhibit-8.3: Ports in India
Ports in India
Major Non-major (minor)
■ There are 12 major ports in the country - 6 on ■ India has ~205 non-major ports
eastern coast and 6 on western coast ■ Non-major ports account for 46% of the total cargo
■ >54% of the total cargo is being handled at 12 major traffic at Indian ports in FY 21
ports in India ■ Non-major ports come under the jurisdiction of the
■ Major ports are under he jurisdiction of the Governments' Maritime Boards (GMB) of respective
Government of India and are governed by Major states
Port Trusts Act 1963, except Ennore Port, which is
administered under the Companies' Act 1956
Source: IBEF, https://www.ibef.org/
THE GREEN SHIFT 168
MITIGATION STRATEGIES
Efforts are being made to mitigate the adverse stricter restrictions on the emission of sulfur oxides,
environmental impact of oil and gas supply chains particulate matter, nitrogen oxides, and other
through various measures, such as reduced flaring, emissions from ships, which is forcing operators
process optimization, and the utilization of clean to consider other alternatives, such as low sulfur
fuels, which have been extensively reviewed in fuel fuel oil (LSFO), marine gas oil (MGO), high sulfur
utilizing industries. As a result of growing energy fuel oil (HSFO) in combination with scrubbers,
security, environmental and economic concerns, liquefied natural gas (LNG), methanol, ammonia,
policymakers have begun to shift their attention and hydrogen. Exhibit 8.4 illustrates the projected
away from fossil fuels. The IMO has imposed share of marine fuels by 2030 and 2050.
Exhibit-8.4: Maritime energy demand and projected fuel mix up to 2050
Projected Fuel
Mix (EJ / Yr) 2030 2040 2050
LFSO/MGO HFO & LPG LNG Lique4ed Hydrogen Electricity Ammonia Advanced
Scrubber Methane from grid Biofuel
(Bio/Electro)
Source: DNV GL Maritime Forecast to 2050, Energy Transition Outlook 2019

Photo by Pixabay: https://www.pexels.com/photo/business-cargo-cargo-container-city-262353/
ALTERNATIVE FUELS
Maritime engineers, naval architects, and other overall lifecycle emissions of fuels, in addition to
shipping experts are busy evaluating alternative other factors, such as the economics of shipping.
fuels and ways to achieve low or zero emission Methanol and ammonia are expected to play a
shipping. These analyses consider the raw pivotal role in the decarbonization of the shipping
materials, production methods, performance, and industry by 2050.
METHANOL
■ In one study, Joanne Ellis and Martin Svanberg shipping and reduce the industry's overall
of SSPA Sweden, ship research and testing environmental impact.
center, together with colleagues at the Luleå
■ Methanol is currently produced mainly via
University of Technology, evaluated renewable
the catalytic conversion of synthesis gas, a
methanol as a shipping fuel.
mixture of carbon monoxide and hydrogen
■ However, there are economic barriers, obtained from reforming natural gas or from
including capital investment and the fact coal gasification.
that bio methanol currently costs more than
■ Methanol offers advantages over some
conventional fuels.
alternative fuels. It is a liquid that is
■ However, methanol has also been produced stored, transported, and used at ambient
from many types of solid and liquid biomass temperature. Its utilization as a shipping
feedstocks, including agricultural and forest fuel would be more straightforward than
residues and farming and poultry waste. switching to cryogenic LNG or gaseous fuels
Switching to methanol sourced from these such as hydrogen.
biomass sources could lower emissions from
AMMONIA
■ Over time, India should explore development

of an international scale ammonia supply hub
catering to regional and domestic shipping
industry needs. Considering the traffic
movement in the region and the requirement
for domestic shipping, it is estimated that
India can emerge as a major activity centre in
hydrogen and ammonia supply value chain.
■ Ammonia can be produced from renewable

electricity, using electrolysis to extract
hydrogen from water and combine it with
nitrogen extracted from the air.
■ 90+ percent of world's ammonia production

is generated using the Haber–Bosch process.
Natural gas is converted to hydrogen through
steam reforming and then processed to yield
ammonia. In this process, an iron-based
catalyst is utilized to combine the hydrogen
and nitrogen atoms by subjecting them to
high pressure and temperature.
■ The ammonia production process contributes

about 1 percent to the world's GHG emissions.
THE GREEN SHIFT 170
RECOMMENDATIONS
India needs to develop an integrated multimodal reasonable cost while minimizing the time taken
end-to-end solution for inland and coastal freight and in an environmentally sustainable manner.
to eliminate the problems currently faced by users This will also ensure the full utilization of the
of mobility services when the goods are required infrastructure being created by different ministries,
to be moved through more than one mode. This e.g., it will help railways capture a higher share of
solution can be upgraded over time to integrate goods movement once its expanded network of
the movement of goods in relation to imports and 100 'Gatishakti' cargo terminals are commissioned.
exports. For ease of business, it will be critical that
Although hydrogen has several obstacles that
a single set of approval / clearances is developed
hinder its development as a bunker fuel, a
with inputs from all relevant agencies such that
pathway to its utilization still exists. With further
over time the movement of goods does not have
advancements through research and improved
to require multiple and disjointed approvals.
technology, hydrogen usage can become an
India has one of the largest shorelines in the important way forward by mixing the currently
world, which can be advantageously leveraged used bunker fuels with hydrogen to create a
to serve as effective means of freight movement. fuel blend that generates fewer emissions at an
India also has large river systems, which have the acceptable efficiency level.
potential to be developed as an effective mode of
Methanol, ammonia, and hydrogen are good
goods transportation through inland waters in cost
options for replacing the currently used bunker
effective and environmentally sustainable manner.
fuels since they are mostly free of sulfur; therefore,
Currently, various ministries and stakeholders their consumption as fuels will have a positive
manage matters relating to the movement of impact on the amount of sulfur oxide and
passengers and goods. For the seamless movement particulate matter emissions. Over time, India
of goods and to avoid logistic nightmares, should explore the possibility of becoming an
it is critical that there is overall coordination ammonia supply hub catering to the domestic and
amongst these agencies to ensure that India is international shipping industry.
able to provide world-class logistic solutions at a
GLOBAL INITIATIVES IN ALTERNATE FUELS FOR SHIPPING INDUSTRY
Many leading shipping companies are starting to utilize alternate fuels. Initiatives undertaken
regarding clean fuel utilization include the following:
■ Germany's MAN Energy Solutions and ■ An increasing number of shipping

South Korean shipbuilder Samsung Heavy organizations have started viewing
Industries have undertaken an initiative to hydrogen as their preferred option. The
develop the first ammonia-fueled oil tanker China Maritime Safety Administration
by 2024. authorized the China Classification Society
to compile the first national set of technical
■ A.P. Moller – Maersk is planning to introduce
rules for hydrogen fuel in shipping.
the first in a groundbreaking series of eight
large ocean going container vessels capable ■ CMB TECH's Hydroville is a dual fuel
of operating on carbon neutral methanol. passenger shuttle that uses hydrogen to
The vessels will be built by Hyundai Heavy power a retrofitted diesel engine to carry
Industries (HHI) and have a nominal people between Antwerp & Kruibeke in
capacity of approximately 16,000 containers Belgium.
or twenty foot equivalent units (TEU).
Chapter
9
SUSTAINABLE
AVIATION
FUEL (SAF)
In this section
1. Perspective on the Aviation Industry 173
2. COP 26 and the adoption of CORSIA 174
3. Sustainable Aviation Fuel: Global Scenario 175
4. Current Production & Policies 177
5. Deploying SAF in India 179
6. Delivery Infrastructure and Operations 181
7. SAF Certification 182
8. SAF in India: Progress and Recommendations 183
9. Way Forward 185

PERSPECTIVE ON THE
AVIATION INDUSTRY

Aviation is one of six hard-to-abate sectors, the policymakers are looking at reducing carbon
others being cement, steel, plastics, trucking, and emissions, specifically from the international
shipping. Together, they represent approximately aviation sector. Prior to COVID-induced reductions,
30 percent of global carbon emissions. According annual jet fuel consumption was about 360 billion
to the European Commission, by the middle of liters. This was forecast to more than double by
the 21st century, demand for flying could increase 2050 (Galford, 2019; ICAO, 2019a; OPEC, 2020).
aviation’s greenhouse gas (GHG) emissions by
Achieving deep emissions reductions will require
more than 300 percent from 2005 levels—although
new technologies, including modifications to
this increase has been temporarily slowed by the
existing aircraft, new propulsion systems such
COVID-19 pandemic.
as those in electric and hybrid aircraft (suitable
As travel picks up in the wake of the weakening for small aircraft, short-haul routes, and limited
pandemic effect, aviation will return to producing passenger numbers), and the use of hydrogen
its share of about 3 percent of total global GHG (suitable for short and medium-haul routes
emissions. Globally, the aviation industry produced and medium-sized aircraft). Although these
915 million metric tonnes1 of carbon dioxide (CO₂) alternatives are likely to be used in the future, in
in 2019. the short to medium term, the use of sustainable
aviation fuel (SAF; fuels that have significantly
With a growing number of countries committing
reduced emissions compared to conventional jet
to net-zero emissions targets for their economies
fuel) will predominate.2
by the middle of this century, industries and
1
International Renewable Energy Agency, 2021
2
International Energy Agency, 2021
THE GREEN SHIFT 174
COP26 & THE ADOPTION OF CORSIA

Climate change is one of the biggest challenges ICAO has adopted a market-based measure,
of our time. It requires collective action to solve the Carbon Offsetting Reduction Scheme for
the cetral issue of rising emissions, embodied in a International Aviation (CORSIA), under which
shared vision and collaboration across government, aircraft operators would be required to purchase
industry, and society. The International Aviation “emissions units” to offset any increase in CO2
Climate Ambition Coalition at the 26th UN Climate emissions above a 2019 baseline.
Change Conference of the Parties (COP26) has
CORSIA only applies to international flights, which
acknowledged the International Civil Aviation
are defined as flights that take off in one country and
Organization (ICAO) as the appropriate forum to
land in another. Domestic flights, meaning flights
address emissions from international aviation
between two airports located in the same country,
through both in-sector and out-of-sector measures
are not included in the scope of CORSIA. To address
to implement short, medium, and long-term goals,
the concerns of developing nations and taking into
including the development of a global sustainability
account their special circumstances and respective
framework to support the deployment of SAF.
capabilities, CORSIA will be implemented in phases.
Exhibit-9.1: Phased implementation of CORSIA
PILOT PHASE-1 PHASE-2

2021-23 2024-26 2027-35
It applies only to the It applies to the countries that All international Rights will be subjected
countries that have voluntarily participated in to osetting requirements, except Rights
volunteered to participate the pilot, as well as any other to and from the following:
in CORSIA countries that volunteer to
■ Least-developed countries
participate in this phase
■ Small island developing states
■ Landlocked developing countries
■ Countries which represented <0.5% of

international revenue ton-kilometers
in 2018, unless they volunteer to
participate.5
■ By September 2021, ~107 countries planned to participate in CORSIA from January 1, 20223
■ The countries that have volunteered cover ~77% of all international aviation activity4
India will not participate in CORSIA’s voluntary Phase 1 but

will have to participate in the mandatory Phase 2, starting
from 2027.
3
https://www.icao.int/environmental-protection/CORSIA/Documents/CORSIA_States_for_Chapter3_State_Pairs_Sept2020.pdf
4
https://www.iata.org/en/iata-repository/pressroom/fact-sheets/fact-sheet---corsia/
5
https://www.icao.int/sustainability/Documents/RTK%20ranking/International%20RTK%20rankings_2018_SIDS_LDC_LLDC.pdf
SUSTAINABLE AVIATION FUEL (SAF)

GLOBAL SCENARIO

The SAF blending program in European countries, Other countries, including Indonesia, Japan, and
including France, Finland, Norway, Sweden, and Australia, have begun to implement efforts to scale
the Netherlands, is underway, and these countries SAF. Indonesia was the first country in the world to
are already blending 0.5 to 1 percent SAF in announce a SAF mandate in 2015, with a 2 percent
aviation turbine fuel (ATF). SAF are renewable or SAF blend—but it could not implement it due to
waste-derived aviation fuels that meet CORSIA international unwillingness to permit the use of
sustainability criteria. They are one element of unsustainable palm based biofuels in aircraft. In
the ICAO basket of measures to reduce aviation 2020, Norway adopted a mandate for 0.5 percent
emissions. The global shift to sustainable aviation SAF blends.
fuel is not just limited to Europe and North America.
Exhibit-9.2: Global progress in SAF (as of November 2022)
59 24 37.6 9 440k+
Airports Conversion Commercial
Policies adopted Billion litres of SAF
distributing processes certified flights have
or under under off-take
SAF for aviation used SAF
development agreements
Source: ICAO Global Framework for Aviation Alternative Fuels

THE GREEN SHIFT 176
SAF SUSTAINABILITY CRITERIA
For SAF to be an effective emissions reduction certifications throughout feedstock supply chain.
measure, SAF producers must adhere to strict Under CORSIA, any SAF or CORSIA-eligible fuel
sustainability criteria for feedstock and energy (CEF) needs to meet the sustainability criteria set
inputs, incorporating strong and transparent by ICAO.
Exhibit-9.3: Sustainability Criteria of ICAO before & after January 2024
SAF or CORSIA-Eligible Fuel (CEF)
Pre-2024 Post-2024
BASIC CRITERIA ADDITIONAL CRITERIA
■ CORSIA-eligible Fuel (CEF) should generate ■ Maintain / enhance water quality &
10 percent lower carbon emissions on availability
a life-cycle basis. The baseline GHG
■ Maintain/enhancesoilhealth
emissions for crude-based ATF are
4xed at 89 grams of CO equivalent per ■ Minimizenegativeeectsonairquality
2
megajoule. According to CORSIA, for ■ Maintain biodiversity, conservation value

any SAF feedstock-process product to & ecosystem services
be accepted as a quali4ed CEF, it has to
achieve a 10 percent or greater reduction ■ Promote responsible management of
waste and use of chemicals
in emissions, that is, less than 80.1 grams 2024
of CO2 equivalent per megajoule. ■ Respect human rights and labour laws
■ CEF should not be made from biomass ■ Respect land use rights and land law,
obtained from land with high carbon stock. including indigenous or customary rights.
■ Respectformal/customarywaterrights
■ Contribute to social & economic

development in regions of poverty
■ Promotefoodsecurityinde4cientregions
The ICAO Council has allowed fuel manufacturers Certification Scheme has certified that their fuel
to collaborate with Sustainability Certification meets the ICAO criteria for CEF and must do so
Schemes to undertake fuel certification using the before airplane operators can use the SAF to
CORSIA sustainability criteria. SAF manufacturers claim emissions reductions under CORSIA.
are required to demonstrate that a Sustainability
ICAO approved Certification Schemes
Roundtable on Sustainable International Sustainability & Carbon

Biomaterials (RSB), Switzerland Certi4cationSystem,Germany
SUSTAINABLE AVIATION FUEL (SAF)

CURRENT PRODUCTION & POLICIES
Exhibit-9.4: Global SAF production facilities (operational)
Total La Mede Neste Porvoo
Type HEFA SAF Type HEFA SAF
Capacity 1,0t/yr Capacity 1,0t/yr
Atmosfair Werlte, Germany
Type PtL
Capacity 365t/yr
Repsol Petronor, Spain Repsol Tarragona
Type SAF Type Co-proc. SAF

World Paramount,
Energy California Capacity n/a Capacity n/a
Type SAF
Repsol Puertollano BP Castellon, Spain
Capacity 10,t/yr
Type Co-proc. SAF Type Co-processing
Set to increase SAF production to
4,30t/yrin20 Capacity n/a Capacity n/a
Source: Argus, April 2022
Exhibit-9.5: Global SAF Policy Highlights
5
Country Policy Status Policy Type Description
Brazil Adopted Economic National bio-kerosene program: The

incentive policy directs federal agencies and
institutions to provide resources to SAF
projects,aswellas4scalincentives.
Norway Adopted Mandate 0.5% SAF blend mandate: Started in 2020;

considering a 30% target for 2030.
United Adopted Economic Low-carbon fuel standard: Crediting for

States incentive fuel pathways and projects, based on a
SAF Policies carbon intensity score
United Adopted Economic Renewable Transport Fuel Obligation:

have been Kingdom incentive Rewards SAF production with the same
economic incentives given to road vehicles
adopted Indonesia Adopted Mandate 5% SAF blend mandate: Target must be
met by 2025
globally
18
More SAF Policies are
under development
THE GREEN SHIFT 178
Exhibit-9.6: SAF Production Pathways
9
There are
approved pathways
available for producing SAF
ASTM Conversion Process Abbreviation Possible Feedstocks Blending Commercialization

Reference ratio by Proposals & Projects
volume
ASTM D7566 Fischer–Tropsch hydro- FT Coal, natural gas, 50% Fulcrum Bioenergy, Red Rock
Annex 1 processed, synthesized biomass Biofuels, SG Preston, Kaidi,
paraznickerosene Sasol, Shell, Syntroleum
ASTM D7566 Synthesizedparaznickerosene HEFA Bio-oils, animal fats, 50% World Energy, Honeywell UOP,
Annex 2 from hydro-processed esters recycled oils Neste Oil, Dynamic Fuels, EERC
and fatty acids
ASTM D7566 Synthesizediso-paraznsfromSIP Biomass used for sugar 10% Amyris, Total
Annex 3 hydro-processed fermented production
sugars
ASTM D7566 Synthesized kerosene with FT-SKA Coal, natural gas, 50% Sasol
Annex 4 aromatics derived by alkylation biomass
of light aromatics from non-
petroleum sources
ASTM D7566 Alcohol-to-jet synthetic ATJ-SPK Biomass from ethanol or 50% Gevo, Cobalt, Honeywell UOP,
Annex 5 paraznickerosene isobutanol production Lanzatech, Swedish Biofuels,
Byogy
ASTM D7566 Catalytic hydro-thermolysis CHJ Triglycerides such as 50% Applied Research Associates
Annex 6 jet fuel soybean oil, jatropha oil,
camelina oil, carinata oil,
and tung oil
ASTM D7566 Synthesizedparaznic HC-HEFA-SPK Algae 10% IHI Corporation

Annex 7 kerosene from hydrocarbon-
hydroprocessed esters and
fatty acids
ASTM D1655 Fat, oil, and grease co- Fats, oils, and greases 5%
Annex A1 processing frompetroleumre4ning
ASTM D1655 Fischer–Tropsch co-processing Fischer–Tropsch 5% Fulcrum

Annex A1 biocrude as an allowable
feedstock for petroleum
co-processing

DEPLOYING SAF IN INDIA

India is working with sector leaders around the operated India’s first domestic biofuel test flight
globe to decouple GDP growth from CO2 and on a 25 percent blend of SAF in 2018. India’s
other GHG emissions. Making air travel more Centre for Military Airworthiness and Certification
efficient could help India achieve this goal. (CEMILAC) piloted SAF use across the Indian
While the aviation industry contributes less Air Force’s AN-32 fleet as a milestone toward
than 1 percent of India’s total emissions today, expanded use in India. Indigo also recently
it is among the fastest growing sectors of the operated its first flight using SAF with a blend of
economy. India is on track to become the world’s 10 percent SAF and 90 percent conventional ATF
third-largest aviation market by 2024. in February 2022.
Around the world, more than 360,000 flights

have already been powered by SAF. SpiceJet
FEASIBLE TECHNOLOGIES IN AN INDIAN CONTEXT
Exhibit-9.7: Comparison of SAF production pathways in an Indian context
1 2
Alcohol to jet fuel (ATJ) Hydro-processed esters and fatty acids (HEFA)
The ATJ pathway appears to be a better suited The HEFA route appears to be the more cost-
pathway for India, considering the availability competitive pathway for the widespread
of feedstock, the possibility to modify adoption of SAF. It uses oil, such as used cooking
existing sugar and ethanol plants, and better oil, as feedstock. Due to the limited availability
commercial viability. The Government of India’s of UCO, the Ministry of Agriculture, Ministry of
E-20 program will also lead to better availability Rural Development, and state governments may
of ethanol. If the number of electric vehicles coordinate to promote Tree Borne Oil and short
grows substantially, then surplus ethanol can be gestation crop cultivation so that the availability
diverted to SAF production. of indigenous feedstocks is improved for the
production of SAF through HEFA pathway.
3 Gasification / Fisher-Tropsch
It is particularly capital-intensive; although the

4 Power to Liquid (PtL)
Power to Liquid (PtL) concept is based on the

technology is anticipated to improve over time, conversion of renewable energy (RE) to liquid
even Nth-of-a-kind projects are anticipated to fuels and chemicals such as methanol, oxy-
have very high capital costs in the near term. methylene ether (OME), ammonia, and Fischer-
Tropsch (FT) products, through production /
use of green hydrogen, carbon dioxide and
water. It is currently more expensive than any
Alcohol to Jet (ATJ) other considered pathway, owing to it being a

relatively nascent technology.
appears to be the best

suited pathway for India
Source: Deploying sustainable aviation fuels at scale in
India World Economic Forum report, June 2021
6
World Economic Forum, June 2021
7
ICAO Global Framework for Aviation Alternative Fuels
THE GREEN SHIFT 180
SAF DEMAND PROJECTIONS
At a 1 percent blending ratio, the requirement aviation, the total SAF requirement would be
of SAF for international aviation would be 100 300 metric tons per day.
metric tons per day in India. For domestic
SAF PRICE
SAF is significantly more expensive than relatively cheaper, shifting to SAF will require
conventional jet fuel. Global estimates of the the support of government, industry, and
price difference being from two to seven times consumers, particularly as growth in the Indian
higher (International Air Transport Association, aviation market accelerates.
2015a; Hollinger, 2020). Since fossil jet fuel is
Exhibit-9.8: Impact of increasing sales quantity on cost of production & SAF price
Production cost per metric ton of SAF is The price of SAF is also expected to vary.
expected to vary.
■ $1,100 to $1,500 (Rs. 66 - 90 / litre) for HEFA ■ ATJ from waste-gas-derived ethanol is the
lowest-cost fuel at $660 to $850 per metric
■ $1,200 to $1,600 (Rs. 72 - 96 / litre) for ATJ
ton (39.50 to 51 rupees per litre)
(sugar streams)
■ $1,800 to $2,200 (Rs. 108 - 132 / litre) for ATJ

(agricultural residues)
■ $1,600 to $2,500 (Rs. 96 - 150 / litre) for

gasification / Fischer–Tropsch (municipal
solid waste and agricultural residues)
Source: McKinsey Analysis Source: Lanzatech Techno-Commercial Assessment

DELIVERY INFRASTRUCTURE
& OPERATIONS
Since SAF is a drop-in fuel, delivery infrastructure partners including United Airlines and Microsoft,
will require only minimal adjustments to achieve has developed a system for certifying book-and-
compatibility, and airport operations are not likely claim transactions. The airline that purchased
to require any changes. SAF credit accounting the biofuel can claim the CO2 benefits based
can be based on book-and-claim model. on requirements such as proof of procurement,
proof of sustainability, and proof of transportation
Book-and-claim is a chain-of-custody model
and delivery to the airport. This system will
in which the administrative record flow does
provide benefits such as flexible blend limits and
not necessarily connect to the physical flow
cost optimization (as no new infrastructure will
of material or product throughout the supply
be required).
chain. RSB, in collaboration with Air BP and other
Exhibit-9.9: The book-and-claim model explained
Methodology Accounting Advantages
■ Virtual Movement of Fuel ■ RSB (Roundtable on Sustainable ■ Flexible Blend Limit - Allows airlines
Bio-materials) has developed an to purchase any blend volume of SAF
■ No need for buyer & seller to be
approach for certi4cation of 'B+C'
contacted with physical supply chain ■ Cost Optimization - New infrastructure
transactions
is not required
■ Sustainability attributes can transact
■ RSB is presently working in
independently from sale and
collaboration with Airbo, United
transport of physical fuel molecules
AirlinesandMicrosofton'B+C'
Exhibit-9.10: RSB’s book-and-claim system
SAF Physical
Fossil Jet SAF Producer
SAF Book & Claim sale
SAF Supplier SAF Supplier
ry
st
Airport gi Airport
Re
Sustainability claim by No claim

airline or corporate
Source: https://rsb.org
THE GREEN SHIFT 182
SAF CERTIFICATION
SAF certification8 in India is provided by two Airworthiness and Certification (CEMILAC) and
regulatory institutional bodies: Centre for Military Directorate General of Civil Aviation.
■ CEMILAC, a regulatory body under ■ The Directorate General of Civil Aviation

the Defence Research & Development certifies civil aircrafts. If an SAF producer
Organisation. It certifies the air-worthiness requires certification on fuel for a test
of military aircraft, helicopters, aero-engines, flight, the fuel will first have to meet the
and other airborne equipment. CEMILAC requirements of Bureau of Indian Standards’
has given full clearance to the Indian Air IS 17081:2019 Aviation Turbine Fuel (Kerosene
Force to operate all flights using biofuel Type, Jet A-1). Subsequently, the producer
made by Council of Scientific & Industrial will require approvals from the Director
Research–Indian Institute of Petroleum General of Civil Aviation.
(CSIR-IIP), Dehradun.
Sustainable Aviation Fuels
-80%
Lifecycle CO2 Emissions as
compared to fossil fuels
8
World Economic Forum Report, “Deploying sustainable aviation fuels at scale in India,” June 2021
SAF IN INDIA :
PROGRESS & RECOMMENDATIONS
PROGRESS MADE
■ In India, CSIR-IIP has developed a bio-ATF national bio-ATF program to encourage the
technology using nonedible vegetable oils, use of biofuels in the aviation sector. It has
including used cooking oil, as feedstock on a proposed a demo plant based on CSIR-IIP
pilot scale. technology at the Mangalore refinery.
■ August 27, 2018: SpiceJet, a private Indian ■ December 8, 2021: Indigo signed an
airline, operated a test flight between agreement with CSIR-IIP to become partners
Dehradun and Delhi with 25 percent bio-ATF- in leading the deployment of SAF in India.
blended SAF, provided by CSIR-IIP, in one
■ February 18, 2022: Indigo operated its first
engine.
flight using SAF, with a blend of 10 percent
■ CEMILAC has given full clearance to the Indian SAF and 90 percent conventional ATF.
Air Force to operate all flights using biofuel
■ March 25, 2022: Groupe ADP and GMR Airports
from CSIR-IIP, including its fleet of more than
signed a memorandum of understanding
100 AN-32 turboprop transportation aircraft.
with Airbus, Axens, and Safranto to conduct a
■ The Indian Ministry of Petroleum and Natural joint study on SAF and its potential in India.
Gas has taken the lead to give impetus to the
RECOMMENDATIONS
■ The HEFA route appears to be the most cost- help address this issue. Viability gap funding,
competitive pathway for the widespread co financing, or tax incentives are required for
adoption of SAF. Due to the limited availability pilot and demo projects.
of UCO, The Ministry of Agriculture, Ministry
■ SAF-VGF should be included in “Pradhan
of Rural Development and State government
Mantri Jaiv Indhan-Vatavaran Anukool Fasal
may coordinate to promote Tree Borne Oil
Awashesh Nivaran Yojana” to boost production
and short gestation crop cultivation so that
projects.
the availability of indigenous feedstocks is
improved for the production of SAF through ■ Presently, the goods and services tax
the HEFA pathway. applicable on SAF is 18 percent. Because SAF
is a green fuel, this tax could be reduced to
■ Relevant entities and scientific institutions
5 percent, similar to the tax on ethanol and
may focus on R&D of new indigenous
biodiesel.
feedstocks and processing technologies for
efficiency enhancement & achieve economies ■ Adopting the book and claim accounting
of scale. model will reduce the infrastructure cost and
transportation-related emissions, specifically
■ To overcome initial impetus, the Indian Air
in the initial stage when SAF is out of reach for
Force could provide offtake certainty to
some airlines due to limited production and
guarantee the purchase of initial volumes of
availability.
SAF for its continuing test flights.
■ The Government of India can declare a clear
■ SAF is costlier compared to conventional ATF.
mandate for international and domestic
The Government of India can play a major role
airlines to help build up potential demand.
through various policy support incentives to
THE GREEN SHIFT 184
CLEAN SKIES FOR TOMORROW
~20 100 MN 10 % $ 2.8 BN

Organizations Target passengers Target fuel blend Estimated GDP-eq
from India part of on SAF by 2030 by 2030 generated from
the coalition SAF industry in
India
Source: World Economic Forum Report, June 2021

WAY FORWARD
Air travel is growing faster in India than almost Although SAF is significantly more expensive than
anywhere else in the world. The country is fossil-derived jet fuel today, costs are expected
predicted to move from the world’s eighth- to fall in the coming decades as technologies
largest user of aviation fuel in March 2019 to the mature and the industry reaches economies of
third largest by 2050. Given this expected growth, scale. By investing early in SAF, India can stay
decarbonizing the sector is very important ahead of the technology curve in air mobility.
for India. Early action on this front will also
The SAF industry could be included in an existing
avoid reversing some intermediate moves and
framework of biofuel programs that establish
regretted expenditures.
minimum off-take agreements, available in
Hybrid-electric and hydrogen-powered aircraft the road sector, for example. This would create
could significantly help the industry reach synergies between producers of biofuels for the
the next efficiency horizon. However, the road and aviation sectors and build a level playing
development and deployment at scale could field of incentives for the participation of state-
take 10 to 20 years, and the technology will be run oil marketing companies.
initially limited to smaller, shorter-range aircraft.
Deployment of SAF to decarbonize the sky is the
Producing SAF and blending it with conventional most feasible immediate option available. India
ATF are the immediate options available. This can be a hub for SAF production using the ATJ
would add to the total volume of jet fuel available pathway. In addition to meeting its own targets,
in the Indian market, displacing equivalent it can also meet the requirements of other
volumes from imported oil feedstock and thereby international markets.
supporting the Government of India’s vision of
self-reliance and the “Make in India” agenda.
THE GREEN SHIFT
186

Chapter
10
NATURAL
GAS & LNG
In this section
1. Introduction 189
2. Transitioning to a Gas Economy 190

INTRODUCTION
India, currently among the top 13 globally gas- renewable energy, gas can play the most influential
consuming nations, must transition fast from other role besides being a source of meeting low carbon
fossil-based fuels to natural gas to help achieve its base load energy requirements. Hence despite
climate commitments. It is a well-known fact that being a fossil fuel, because of its lower carbon
carbon emissions from other fossil fuels, such as footprint and being an ideal bridge to address
coal, crude etc., are significantly higher and thus intermittency, gas is likely to play a defining role in
cause global warming, contributing to climate the transition journey.
change. Efforts are being made to transition from
0.27
fossil fuels to sustainable and alternative energy Mn Tons of
sources towards renewable viz solar, wind, hydro CO2 emission
etc. However, to meet the ever-growing zero / low per annum
carbon energy demands of a growing economy like Estimated emission reduction from
India, a substantial increase in clean energy output every 1 MMSCMD of natural gas
means wind and energy capacity have to increase substituting other polluting fossil fuels
by nearly twice the speed of the current pace.
Natural gas can play a decisive role in transitioning
This is no mean challenge, as switching towards
to a low-carbon energy system as a transition fuel
renewable energy options would be possible
from fossil fuel to renewable energy sources.1
only when the core problem of intermittency is
addressed. To solve the intermittency issue of
Exhibit-10.1: Role of Natural Gas in India's Energy Transition
Increase the pace at which fast-growing Provide low-carbon energy when combined
emerging economies reduce their dependency with solutions like carbon capture, use and
on fossil fuels storage (CCUS)
5 A's to transition from existing

India's transition from the fuel mix to clean fuel mix
current ~6% gas in the primary
energy mix to 15% by 2030 will
Acceptability
require CGD expansion with Affordability
effective monitoring, faster
expansion of the gas pipeline
Accessibility
network, focused LNG adoption
§2:::§H2:D:Pˇł§H
availability of LNG and creation Adoptability
Availability
of strategic gas storage reserves.
1
BP Energy Outlook, 2022
THE GREEN SHIFT 190
TRANSITIONING TO A GAS ECONOMY

'A' – ACCEPTABILITY: LOWER CARBON EMISSIONS AS COMPARED TO OTHER FOSSIL FUELS
Consistent efforts are being made to reduce existing fuel for the same amount of energy
GHG emissions worldwide. In this context, the consumed. The specific carbon emissions from
standard norm for acceptability of the transition different fossil fuels in terms of kg of CO2 emitted
fuel requires that the carbon emissions of the per Million Metric British Thermal Units (MMBTU)
new/transition fuel should be less than the are as shown in Exhibit 10.2.2
Exhibit-10.2: Specific Carbon dioxide emission from various fuels

Figures in kgCO2e per MMBTU
Coke 114
Coal (All Types) 96
Diesel 74
Kerosene 73
Jet Fuel 72
Motor Gasoline 71
Propane 63
Natural Gas 53
Source: https://www.eia.gov/environment/emissions/co2_vol_mass.php
It is evident from the above graph that Natural sources (IEA 2020). India aims to become a
Gas has the lowest emission levels as compared natural gas-based economy by increasing its gas
to other fossil fuels. It produces only around half share to 15% of the primary energy mix by 2030.
the carbon dioxide (CO2) and just one-tenth of The International Energy Agency (IEA) predicts
the air pollutants of coal. Presently, gas accounts India's natural gas share to be 11-15% by 2040 as
for ~6% of India's energy mix which remains coal- the country is moving towards cleaner energy
dominated. This has impacted the achievement sources in a shift away from coal and petroleum,
of profound decarbonization objectives of the under its climate commitment to become a net
country. The Government has recognized this zero carbon emissions nation by 2070. Exhibit-10.3
issue and has adopted a multi-pronged approach graphically depicts the share of gas in India's
towards promoting diversification of the primary primary energy and power generation mix.
energy mix with lower carbon-emitting energy
Exhibit-10.3: Share of Gas in India's primary energy mix and power generation mix
Share of Gas in Primary Energy Mix (2020) Share of Gas in Power Generation Mix (2020)
100% 100%
Source: BP Statistical Review of World Energy 2021
55%
72%
28%
10%
7% 10%
1% 5% 4% 3%
5% 0%
Total Coal Oil Natural Nuclear Hydro Renewables Total Coal Hydro Renew- Natural Oil Nuclear
Gas Energy ables Gas Energy
Total: 31.98 Exajoules Total: 1,560.9 Terawatt Hour
In terms of transportation, natural gas is footprint. This is apart from the fact that pipelines
transported through pipelines right from the are the safest mode of transportation. These
source point to the consumption point, which factors make natural gas the best fit to act as
has lower carbon emissions for the same amount a bridge fuel in transitioning towards cleaner
of energy transported for the same distance as energy sources like renewables and green
compared to other transportation modes such hydrogen. Hence, transitioning to natural gas
as trucks, rail, aviation, LNG, other mode of gas shows enormous potential to reduce near-term
transportation, also has lower overall carbon CO2 emissions and air pollution.
'A' – AFFORDABILITY: CHEAPER FUEL
Society would more readily and rapidly accept 2016, MoP&NG introduced the flagship - 'Pradhan
cleaner fuel if the given fuel were more cost- Mantri Ujjwala Yojana' (PMUY)3 scheme with the
effective and cheaper than the existing fuel. objective to provide 8 crore LPG connections
On this count also, natural gas scores high as to households belonging to the society's
a transition fuel, especially in the Compressed marginalized & economically deprived sections.
Natural Gas (Transport) and Piped Natural Gas The Government also provided cash assistance
(Domestic) segments (barring the ongoing price for LPG connections along with the first LPG refill
surge which should be treated as an off-shoot of and Stove free of cost. With this scheme, a section
exceptional circumstances). of society has transitioned from highly polluting
and unhealthy fuels to a cleaner fuel, Liquefied
Traditional cooking fuels like firewood, coal, cow
Petroleum Gas (LPG). To meet the increasing
dung cakes etc., have detrimental impacts on
demands, India is still mainly importing LPG.
health and the environment. Accordingly, in May
Table-10.1: LPG Import Quantity & Cost
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
LPGmportinMillionUS$ 4
6,144 5,955 3,922 4,775 5,849 7,178 7,070 7,242
LPG import quantity in TMT5 6,567 8,313 8,959 11,097 11,380 13,235 14,809 16,476
Introduction of PMUY
At the same time, it is essential to analyze the base entities for CNG (Transport) and PNG (Domestic)
price of the alternate fuel. In 20136, MoP&NG had may vary on account of transportation charges
notified guidelines for the allocation of domestic and local taxes and duties. Further, MoP&NG
natural gas to City Gas Distribution (CGD) had notified New Domestic Natural Gas Pricing
entities for CNG (transport) and PNG (domestic). Guidelines in 20149, under which the Director
The guidelines were subsequently revised in General of Petroleum Planning and Analysis Cell
20147 and further revised in 20228. MoP&NG has (DG PPAC) shall notify the prices of APM / NAPM
approved the allocation of domestic APM/NAPM Natural gas as well as prices of Ultra-Deepwater
natural gas to cater to CGD entities' demand at Areas, Deep Water Areas and High-Pressure High-
a Uniform Base Price for use in CNG (Transport) temperature (HPHT) gas on US$ per MMBTU on
and PNG (Domestic) segments. However, the half yearly basis. The notified prices are as shown
delivered price of domestic gas to individual CGD in Table 10.1.
3
https://www.pmuy.gov.in/about.html 7
MoP&NG OM no. L-16013/3/2012-GP-II dated 03.02.2014 & L-16013/3/2012-GP-II
4
MoP&NG, Economic & Statistics Division, Indian Petroleum & Natural Gas Statistics dated 20.08.2014
2017-18 & 2020-21 8
MoP&NG OM no. L-16016/3/2020-GP-I-Part(1) (E: 42577) dated 06.05.2022
5
Ibid as Footnote no. 4 9
MoP&NG Gazette notification no. 22011/3/2012-ONG.D.V dated 10.1.2014
6
MoP&NG OM no. L-16013/3/2012-GP-II dated 14.11.2013
THE GREEN SHIFT 192
Exhibit-10.4: Notified APM/NAPM and Deep water + HTPT prices ($/MMBTU)
DomesticNaturalGas($/MMBTU) Deepwater+HPHT($/MMBTU)
12
10
1 Oct 2021 - 31
1 Oct 2020 - 31
1 Oct 2019 - 31
1 Oct 2018 - 31
1 Oct 2017 - 31
1 Oct 2016 - 31
1 Oct 2015 - 31
1 Apr 2022 - 30
1 Apr 2021 - 30
1 Apr 2020 - 30
1 Apr 2019 - 30
1 Apr 2018 - 30
1 Apr 2017 - 30
1 Apr 2016 - 30
1 Apr 2015 - 30
1 Nov 2014 - 31
Sep 2022
Sep 2021
Sep 2020
Sep 2019
Sep 2018
Sep 2017
Sep 2016
Sep 2015
Mar 2022
Mar 2021
Mar 2020
Mar 2019
Mar 2018
Mar 2017
Mar 2016
Mar 2015
MoP&NG in the notified allocation guidelines has the transition. Certain short-term aberrations are
provided for meeting the increasing demand possible in the future, in view of the different time
from imported LNG and, as such, approved periods for which base input prices are considered
pooling of domestic APM/NAMP natural gas for working out gas prices in India vs the LPG
with MDP/RLNG/Spot/Biogas for meeting the prices, which reflect the prevailing international
requirement of CGD entities at Uniform Base prices with minimal lag. Considering the highly
Price. The average price (5-year average) of dynamic market, the domestic gas pricing policy,
imported LPG lands at around US$10-12/MMBtu, as notified in 2014, may be reviewed regularly
whereas the average imported price of LNG is to ensure that PNG (domestic) prices remain
US$6-9 /MMBtu, suggesting that LNG import is affordably below LPG prices to incentivize the
cheaper than LPG. Given the global geopolitical transition to cleaner fuel. Also, to ensure more
crisis, LNG prices have been hovering in the high synchronous movement across different energy
thirties, which is a very anomalous situation. Over sources, the gas prices reference period needs to
the long term, except for the anomaly witnessed be curtailed.
in the market today, gas prices have tended to
It may be noted that currently, LPG is under the
be lower than crude in calorific value terms. The
GST regime, whereas natural gas is out of the
market hopes this to reverse in the long term as
purview of GST. As such, tax on these products
the ongoing crisis gets settled or subsides.
may lead to different landing prices at the
Imported LNG has generally been cheaper than consumer end, which needs further attention.
imported LPG and domestic & HPHT gas is more While there is an urgent need to bring all fuels
affordable than imported LPG on a base price within the GST regime, at least natural gas may be
basis. Uniform Base prices for the last three immediately considered to be brought under the
cycles are 8.04 $/MMBTU for the 2nd Fortnight GST purview and taxes should be levied in such
May 2022, 8.05 $/MMBTU for June 2022 and 8.91 a manner that the landing price at the customer
$/MMBTU for July 2022. Considering this trend, end is cheaper as compared to alternate fuels.
it is expected that prices for natural gas may be This will help in the transition to a lower carbon
higher than alternative fuels, which will hamper emission economy.
'A' – ACCESSIBILITY: INFRASTRUCTURE DEVELOPMENT
In India, the development of the National Natural formulated Petroleum & Natural Gas Regulatory
Gas Grid began with the commissioning of the Board Regulations, 2008 (Authorizing Entities to
Hazira - Vijaipur - Jagdishpur (HVJ) pipeline in Lay, Build, Operate or Expand City or Local Natural
1987 to supply gas to fertilizer plants in Uttar Gas Distribution Networks). PNGRB authorized
Pradesh. As of 1st April 2019, a 16,324 km natural entities to lay, build, operate or expand city or
gas pipeline is operational, and more than 15,000 local natural gas distribution networks. PNGRB
km is under construction, spread across the has held 11 bidding rounds of Geographical Areas
length and breadth of the country. It has enabled (GAs) under its 2008 Regulations, providing
the growth of City Gas Distribution (CGD) to the necessary impetus for expanding the CGD
supply CNG and PNG. CGD activities started network and increasing gas usage. In 2022, the
around 1992 in India and have rapidly expanded 11A bidding round was held, adding five more GAs
to many Geographical Areas (GAs). to the overall list of 328 GAs covering 538 districts
spanning 88% of the geographical area and 98%
In 2006, the Government of India passed the
of the population. Exhibit 10.5 elucidates the year-
Petroleum and Natural Gas Regulatory Board
wise details of Gas authorized in India.
(PNGRB) Act to establish PNGRB. PNGRB has
Exhibit-10.5: Year-wise details of GA authorized in India
PNGRB expediting the authorization of new cities for CGD
5 332
# GAs out for bidding by CGD 61
Current
(Round 11
50 & 11A)
4th Round was
cancelled due to
low response. 86
5th Round saw 18 GAs awarded Round
out of 34
few participants 9 & 10
5 7
34
20
15 Series
8
6 7
Round-1
Round-2
Round-3
Round-4
Round-5
Round-6
Round-7
Round-8
Round-9
Round-10
Round-11
Round-11A
Total
CGD: City Gas Distribution

GAs: Geographical Areas Source: PNGRB / Press Search / BCG Analysis
10
https://en.wikipedia.org/wiki/HVJ_Gas_Pipeline#:~:text=The%20project%20was%20started%20in,grid%20was%20commissioned%20in%201987.
11
https://www.ppac.gov.in/content/154_1_PipelineandCGDStructure.aspx
12
https://www.pppinindia.gov.in/infrastructureindia/web/guest/project-list?p_p_id=projectlist_WAR_Projectportlet&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-1&p_p_col_
count=1&_projectlist_WAR_Projectportlet_jspPage=%2Fhtml%2Fprojectlist%2Fview.jsp&_projectlist_WAR_Projectportlet_searchName=&_projectlist_WAR_Projectportlet_searchType=Sub+Sector&_projectlist_
WAR_Projectportlet_id=53&_projectlist_WAR_Projectportlet_projectTypeeids=&_projectlist_WAR_Projectportlet_authorityName=&_projectlist_WAR_Projectportlet_isShowAllTerminatedProjects=true&_projectlist_
WAR_Projectportlet_cur=1&_projectlist_WAR_Projectportlet_delta=75&_projectlist_WAR_Projectportlet_keywords=&_projectlist_WAR_Projectportlet_advancedSearch=false&_projectlist_WAR_Projectportlet_
andOperator=true&_projectlist_WAR_Projectportlet_orderByCol=status&_projectlist_WAR_Projectportlet_orderByType=asc
13
PIB, Press Release dated: 10.02.2022, As on 31.12.2021, 3628 CNG stations have been commissioned across the country.
THE GREEN SHIFT 194
The expansion of CGD through multiple GA rounds Exhibit 10.6 below lists the total number of PNG
across geographies has helped grow CNG and and CNG stations across the country between the
PNG connections in India. year 2015 and 2021.
Exhibit-10.6: Year-wise CNG station and PNG connection across India
No. of PNG connections

Year No. of CNG Stations
Domestic Commercial Industrial
2015 1,010 28,69,348 22,356 5,918
2016 1,081 31,63,588 23,304 6,225
2017 1,233 35,85,646 21,996 6,670
2018 1,424 42,65,284 26,131 7,601
2019 1,730 50,43,188 28,046 8,823
2020 2,208 60,60,826 30,617 10,256
2021 3,095 78,20,387 32,339 11,803
Number of CNG Stations Number of PNG Connections

78,20,387
3,095
60,60,826
2,208 50,43,188
42,65,284
1,730 35,85,646
1,424 31,63,588
1,233 28,69,348
1,010 1,081
2014- 2015- 2016- 2017- 2018- 2019- 2020- 2014- 2015- 2016- 2017- 2018- 2019- 2020-
15 16 17 18 19 20 21 15 16 17 18 19 20 21
Digitalization is an emerging trend that offers monitoring that will help improve transparency
opportunities throughout the CGD value chain. and tracking of the progress of all CGD entities.
From demand management to improving
Entities often face various hurdles when setting
operational resilience, remote condition
up distribution networks, especially with respect
monitoring to real-time customer communication
to land acquisition. Appropriate land acquisition
and new technologies and data analytics provide
or purchase from a suitable person has always
multiple digitalization adoption avenues for CGD
remained challenging. The district administration
firms to achieve specific business goals while
may create a pool of land that can be provided
maximizing efficiency. Regulation 2008 has
for setting up the CNG stations. Further, different
provisions for online monitoring of the progress of
models are being adopted for installing the CNG
the MWP submitted by the authorized entity. An
stations, such as – Company Owned Company
online system or mobile App may be developed
Operated (COCO) and Dealer Owned Dealer
to monitor the real-time progress of CGD entities,
Operated (DODO) models, wherein DODO is
wherein the relevant data related to the progress
prominent. In the DODO model, the entire
of DPNG connections and CNG stations in
investment in the range of crores of rupees is
each GA may be submitted by CGD entities at
made by the person providing the land. For
regular intervals. It would enable real-time data
the CGD network to expand to tier-2 and tier-3 flexible supply chains to deliver to multiple
locations, there is the possibility that the owners of smaller distributed users. LNG can be transported
appropriate land may not be financially sound to by road into skid-mounted storage or train to the
be capable of making investments. Accordingly, point of use, providing flexibility to deliver LNG at
new and innovative approaches are required to the targeted locations.
match land availability with financial capabilities.
Draft LNG Policy 202114, by MoP&NG, talks about
A hybrid model may be introduced wherein land
creating a Virtual Pipeline by transporting
will be provided by the dealer, equipment and
gas through rail and LNG trucks to industries.
other investments will be made by the company,
As the National Gas Grid develops over time,
and the outlet is to be operated by the dealer.
the virtual pipeline may be replaced by the
Alternatively, financial incentives may also be
physical pipeline, and the setup may be shifted
introduced for equipment and other machinery.
to other places for minimizing and efficient
A few other challenges also need to be looked investment management over the life cycle.
into. India's growth is broad-based, i.e., spread It may be noted that the volume delivered
over large geographical areas across different through cascade-mounted CNG trucks is small,
regions. Some areas have lower demand density increasing transportation costs and detrimental
that does not meet the minimum anchor load to the environment because of the higher carbon
requirement, hindering network expansion footprint. However, SSLNG can deliver LNG up
owing to low returns. In India, we have seen that to 1 million metric tons per annum (MMTPA),
the development of the National Gas Grid and equivalent to around 3.6 million metric standard
CGD network played a vital role in connecting cubic meters per day (MMSCMD)15 of Natural Gas.
the consumption centers with the supply points. Such volumes are sufficient to supplement the
However, the development of the National Gas CGD requirements of gas which are currently
Grid has a long gestation period. In such a scenario, un-serviced by pipelines. This approach can
alternative options, such as skid-mounted CNG deliver the required volume in a lesser number
trucks, are being utilized. With the advancement of transits reducing the transportation cost and
of technology, Small Scale Liquefied Natural Gas carbon emissions. Therefore, critical analysis
(SSLNG) technology can play a crucial role in among alternatives of LNG virtual pipeline, NG
bridging the gap left by National Gas Grid and Virtual Pipeline vs Physical Pipeline may be done,
CGD network. In locations where National Gas which could serve as a guide for planning the
Grid is still developing or the remote locations optimum infrastructure for providing natural gas
that would be unserved by conventional natural accessibility. Preferred options could be different
gas infrastructure, the SSLNG technology enables for different locations.
14
MoP&NG F No. L-12018/7/2016-GP-I (E:35893) dated 17.02.2021
15
https://gailonline.com/BVNaturalGas.html - Energy conversion matrix
THE GREEN SHIFT 196
'A' – 'ADOPTABILITY': SWITCHING TO CLEANER FUEL
With GDP growth, freight transportation For the same, thrust must be put on companies
by road might increase. As such, innovative to push for fleet conversion. To start with,
solutions are required against two competing government entities may consider converting
but equally desirable objectives of reducing road fuel delivery trucks to run on LNG fuel.
transportation as much as possible as well as GHG
At the same time, the chicken-egg dilemma
emissions. In line with the draft LNG policy 2021,
resolution is vital between 'adoptability' and
LNG should be pushed as auto fuel, and heavy-
accessibility. Therefore, accessibility of LNG fuel
duty trucks should be converted into LNG trucks.
is critical for such adoption. To achieve this, the
It is estimated that around 87% of diesel sales are
draft LNG policy 2021 aimed to establish LNG
in the transport segment, with trucks and buses
dispensing stations on identified highways.
accounting for about 68% of diesel sales in the
Further, it was estimated that three states – Uttar
country16. While, at the moment, it seems easier
Pradesh, Maharashtra and Haryana18 contributed
to convert diesel trucks to CNG trucks, however,
nearly 40% of the diesel sale in India.19 Similarly,
there are limitations. LNG overcomes the CNG's
LNG dispensing stations can be set up in high
limitation of being used for shorter distances and
diesel-consuming states to cater to intra-state
lower tonnage carrying capacity.
transportation needs. Additionally, companies
Further, LNG has a higher calorific value than undertaking fleet conversion might set up LNG
diesel, which means trucks can travel longer dispensing stations near their premises. All these
distances with the same fuel quantity17. Notably, efforts may create the required ecosystem for
emissions from LNG are much lower than those switching to this cleaner fuel.
from diesel and can help reduce GHG emissions.
'A' – AVAILABILITY: SUPPLY OF GAS
The demand for natural gas is expected to Over the last decade, India's natural gas sector
increase in emerging economies like India due to has been impacted by the reduced availability
industrialization . Both domestic production and of low-priced natural gas owing to a decline in
imports ensure the supply of natural gas in India. domestic gas production and the costly option
Natural gas production in 2020 was 85+ Million of imported LNG. Over the last decade, LNG
Metric Standard Cubic meters per Day (MMSCMD). imports have steadily increased to reach about
About 84.67% of this domestic gas production is 55% in the financial year 2021. Exhibit 10.8 depicts
by ONGC and OIL from the nomination regime. the increased share of LNG imports to India over
The remaining 15.33% of natural gas production the last decade. By 2030, dependency on LNG /
was by Private / JV companies from the PSC imports is expected to rise even more. The import
regime. Exhibit-10.7 outlays the domestic natural forecast has been carried out by various agencies
gas production by company ownership. like NITI Aayog, BCG, British Petroleum and
16
All-India study on sectoral demand for petrol & diesel report -https://www.ppac.gov.in/WriteReadData/Reports/202203291206002029009ExecutiveSummarySectoralConsumptionStudy.pdf
17
https://www.forbesindia.com/blog/economy-policy/why-trucks-should-consider-switching-to-liquefied-natural-gas-lng/
18
Ibid as Footnote no. 23 (Crisil report)
19
Ibid as Footnote no.1 - BP Energy Outlook, 2022 edition
Exhibit-10.7: Natural Gas production by Company Ownership
(in MMSCMD)
PrivateJV
/ Companies Public Sector Undertakings
17.4 15.0
22.6 18.8 13.1
72.1 75.1 72.4

65.8 68.6
2015-16 2016-17 2017-18 2018-19 2019-20
Source: Ministry of Petroleum & Natural Gas; Economic Times; Petroleum Economist
PNGRB, with LNG import growth ranging from US Henry-hub and others. Besides reducing
4.3% to 12%. Exhibit-10.9 lays out the scenario-wise geopolitical risks, diversification in the sourcing
projected CAGR for import growth. portfolio also reduces supplier negotiation power.
Considering demand forecast in other markets,
The price of LNG is a significant concern for the
net zero emission targets and pressure exerted
government and commercial buyers. Prices of
from the other cleaner fuels such as hydrogen,
spot LNG have never been more volatile. They
biofuels, renewable energy etc.; it is expected that
have ranged from as low as US$1.8 per MMBtu
demand for LNG may decline in the rest of the
in April 2020 to highs touching even US$50
world over the medium term, though the current
per MMBtu during the recent past. India's LNG
global geopolitical crisis has made LNG as the
contracts are mostly linked to crude oil indexes
only hope for Europe to be able to meet even its
like Dated Brent Crude, Japan's Crude Cocktail,
rationed energy needs.
Exhibit-10.8: India Gas Consumption split by domestic & imported gas, 2011-22
Share of LNG imports has been increasing

over the past decade, reaching ~55% in FY21.
54%
53% Domestic
45% 46% 47% 47% Production
Total Consumption
41%
34% 36%
31% 83 LNG Imports
MMSCMD
127 76 93
87 88
28% 85
95 90 85
109 Percentage
share of
93 90
LNG imports
75 79 84
49 49 51 59 68 in total gas
48
consumption
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Source: Petroleum Planning and Analysis Cell

THE GREEN SHIFT 198
Exhibit-10.9: India's gas demand forecast with projected growth in dependency on LNG / imports
Gas Consumption (MMSCMD) Projected

CAGR
600 549
PNGRB Forecast 12%
500 450 NITI Aayog Forecast 9.2%
414
(Optimistic Scenario)
400 370
358
BCG Analysis -9%
305 309 362
319 (Realistic Scenario)
300
226 251 281
233 BP Forecast 4.3%
231 250 (Pessimistic Scenario)
200 148 155 181 214
162 182
100
0
2019 2020 2022 2024 2026 2028 2030
Demand in MMSCMD
148-156 159-167 173-186 230-247 269-290 310-329 340-367
(Consensus Estimates)
50-55% 50-55% 55-60% 55-60% 60-65% 60-65% 65-70% Share of LNG (%)
OPTIMISTIC SCENARIO REALISTIC SCENARIO PESSIMISTIC SCENARIO
■ Revival of gas power to support ■ Domestic gas for peaking power ■ CGDs launch pushed to 2024
peaking load and RE integration demand ■ Status-quo in gas power (with
■ New CGDs operative by 2022 ■ New CGDs to operate from 2023 30% PLF)
■ Petrochem investment target ■ 50% petrochemical investments ■ Signi4cantdrawdown/delay
is met expected operational on-time (-75%) in planned petrochem
■ Fertilizer imports substituted investments
Source: Niti Aayog; British Petroleum; PNGRB; BCG Analysis

Copyright © 2022 by Boston Consultancy Group. All Rights reserved.
Accordingly, India should be able to leverage its In India, majority of the LNG is currently imported
buying position as the impact of the ongoing crisis from Qatar, Russia, US and Australia. Other
recedes. This provides India with an opportunity countries exporting gas to India are Oman,
to negotiate the terms of LNG contracts by UAE, and Angola. India may consider further
developing its own index as the market reaches diversification of its LNG import portfolio to
maturity. The development of such an index may cushion the impacts of uncertainties, thereby
also help mitigate the volatility in LNG prices. mitigating the volatility in prices and reducing
supplier risk. These capacities will be sufficient
There are 20 major LNG exporting countries
for the LNG portfolio. Accordingly, actions must
globally, though the number of LNG importing
be taken to develop LNG terminals in the eastern
countries, currently above 40, is steadily
and western regions to cater for imports from
increasing. Exhibit-10.10 depicts the world LNG
around the world.
trade movement.20
20
BP Statistical Review of World Energy 2022
Exhibit-10.10: Major Natural gas (Pipeline + LNG) trade movement in 2021
112
75.9 25.5
45.8 30.8
58.7
16.8 14.8
Legend
United States
7.0
Canada
Mexico
South & Central Americas
Europe
CIS
Middle East
Africa Pipeline Gas
Asia-Paci4c LNG
The draft LNG policy 2021 by MoPNG aims to terminals. These terminals are envisaged to be
create a regasification capacity of 70 MMTPA by created along India's eastern and western coasts.
2030 and 100 MMTPA by 2040. The policy also aims India needs to create a free and competitive
at developing common carrier capacities in LNG regasification market, including on-shore and
THE GREEN SHIFT 200
17.4
167.0
27.1
2.9 15.1
7.6
15.3
41.7 6.2 40.6
34.1 19.5
17.9 22.5 57.8 46.7
9.1
23.7 43.6 15.6
21.1
5.7 32.7
8.4 6.7
7.5
off-shore facilities, to meet the LNG needs of all and further developed action plans along with
areas, including A&N and Lakshadweep. Hence, the recommendations need to be provided by
draft LNG policy must be notified at the earliest the present committee.
Table-10.2: Existing LNG Terminals
S. No. Existing Re-Gas Terminals Promoters Capacity (MMTPA)
1 Dahej (Gujarat) Petronet LNG Ltd. 17.5#
2 Hazira (Gujarat) Shell Energy India Pvt. Ltd 5.2
3 Mundra (Gujarat) GSPC LNG Ltd. 5
4 Dabhol (Maharashtra) Konkan LNG Ltd 5 (2.9*)
5 Kochi (Kerala) Petronet LNG Ltd 5
6 Ennore (Tamil Nadu) Indian Oil LNG Pvt Ltd. 5
Grand Total 39 MMTPA
* Further expanding capacity to 22.5 MMTPA.

** To be increased to 5 MMTPA on completion of Break Water.
Source: Petroleum Planning and Analysis Cell; Petronet LNG Ltd; Press Search
Table-10.3: Proposed / Upcoming LNG Terminals
S. No. Proposed / Upcoming Re-Gas Terminals Terminal Promoter Re-gas Capacity (MMTPA)
1 Jafarabad (Gujarat) Swan Energy 5
2 Jaigarh (Maharashtra) H-Energy 3-4
3 Kakinada (A.P.) GAIL and AP govt. 3-5
4 Karaikal (A.P.) AtlanticGulf&Paci4c 1
5 Dhamra (Oddisa) Adani 5
6 Chhara (Gujarat) HSEPL (Subsidiary of HPCL) 5
7 Dahej Expansion (Gujarat) Petronet LNG Ltd. 5
8 Gopalpur (Odisha) Petronet LNG Ltd. 4-5
Grand Total ~31 MMTPA
Source: Petroleum Planning and Analysis Cell; Petronet LNG Ltd; Press Search
COAL GASIFICATION
With its coal reserve of 307 billion tons, India uses and other necessary details. Coal gasification is
about 80% of it for power generation. Presently considered a cleaner option compared to burning
coal forms ~55% of India's total energy mix. With coal. BHEL has developed technology to convert
the rising environmental concerns, the Ministry of high ash Indian coal into methanol. Syngas
Coal is considering the diversification of coal for production is an intermediary step of the process;
its sustainable use. In this regard, NITI Aayog has thereby, the process can also be utilized to create
prepared a "National Coal Gasification Mission" synthetic natural gas. Although coal gasification
to achieve a 100 MT capacity of coal gasification can be a potential source of energy, however,
by 2030. The mission documents outlay the based on current technologies, it is a capital
availability of coal, type of gasifier, cleaning of gas and energy intensive process. Taking note of the
THE GREEN SHIFT 202
same, several incentives have been provisioned Accordingly, it is a carbon-intensive process.

in the Mission, of which Viability Gap Funding Therefore, coal gasification to create synthetic
is the most prominent one. It is estimated that natural gas from vast amounts of high ash coal
around 10 Giga-calorie of energy is consumed in available in India would be a real success if either
producing a ton of urea through coal gasification lower energy-intensive technology is developed
compared to 5 Giga calories of energy consumed or the energy utilized is green with the necessary
in producing per ton of urea from natural gas. policy support.
STRATEGIC STORAGE RESERVE
India needs to build strategic gas storage reserves caverns. India may consider establishing UGS
to fill the large gap between the projected facilities using depleted oil & gas fields of national
consumption of natural gas and domestic oil companies, salt caverns and aquifers. In
consumption. This will strengthen the country's addition, these storage facilities are to be chosen
energy security and shield it from disruptions close to pipeline infrastructure for the ease of
and associated price fluctuations. Presently, use. Needless to mention that these storages
India doesn't have any strategic gas reserves. have no commercial viability but are of national
India has strategic oil storages with a capacity of importance and would require substantial
5.33 MT at Vishakhapatnam (1.33MT), Mangalore funding. These depleted storages can be
(1.5MT) and Padur (2.5MT) and can serve India's offered on a competitive basis to interested gas
crude oil requirement for ~9 days. In addition, marketers. Overseas gas producing companies
two additional storage reserves are proposed may also be offered a stake in such storage. Policy
at Chandikol and Padur under public-private support is required in this matter.
partnership mode.
Thus, gas will help abate the carbon footprint
Worldwide, countries have understood the of electricity for the commercial and industrial
importance of underground storage reserves sectors. Gas usage could also eventually help
(UGS) and are continuously undertaking such transition towards the hydrogen economy
UGS development projects. Worldwide, as of by using the same infrastructure, subject to
2019, there were more than 650 operational technical feasibility, to deliver hydrogen mixed
UGS facilities with a gas storage capacity of gas which can provide early support to hydrogen
422 billion cubic meters (BCM). Present UGS growth. To displace coal and other higher carbon-
facilities, spread across North America, Europe, emitting fossil fuels for hard-to-abate industrial
CIS (Commonwealth Independent States), Asia- sectors, gas usage needs to be promoted. Gas
Oceania, and the Middle East (mostly Iran). can help meet increasing Indian energy demand
pushed by tail-winds of increasing population,
Around 80% of the global working gas storage
industrialization, and growing prosperity.
happens in depleted fields and ~20% in salt
Table-10.4: Global Strategic Gas Storages
Region UGS Working Gas Capacity (BCM) Deliverability (MCM/D)
North America 441 163 3,726
Europe 141 108.6 2,082
CIS 47 121 1,242
Asia Oceania 28 22.4 200
Middle East 3 6.9 34
Source: CEDIGAZ – Natural Gas Information

KEY RECOMMENDATIONS
The transition journey across different parts of and transport sectors. Indian investments in
the world could require the adoption of situation- expanding the gas grid and coverage of nearly the
specific unique solutions. For India, with its vast entire population through CGD make gas an ideal
shoreline and proximity to some of the prolific gas- choice. This will also ensure effective utilization of
producing regions and also to build multiplicity of the existing investment besides helping achieve
sources of energy supply, gas can play a crucial role, emission reduction targets.
especially to decarbonize hard-to-abate industrial
NATURAL GAS TO SERVE AS A TRANSITION FUEL
Natural gas is best suited to play a role in the issue of renewable energy. India has aspirations
transition to a low-carbon energy system as a to increase the share of natural gas in the energy
transition fuel from conventional hydrocarbon basket to 15%, which will help create an ideal foil
fuel to renewable energy sources. However, the for desired growth of renewables as a solution
long-term vision is to switch entirely to renewable to intermittency. On the way to the net zero
energy sources. It is worthwhile to note that objective, natural gas can play a critical role as a
switching to renewable energy options would transition fuel, with its share in the energy mix
be possible only if the energy storage solutions rising over the next 25-30 Years.
are commercialized to solve the intermittency
USE OF DIGITAL TECHNOLOGY TO PROVIDE IMPETUS TO EXPAND CGD NETWORK
A country-wide common digital portal may must also provide a single redressal platform to
be established to monitor the Minimum Work address the different challenges, including land
Program (MWP) of CGD entities at the time of allocation, RoU permission etc., to help expedite
bidding for GA allocation. In addition, this portal the expansion of the CGD network.
CREATION OF STRATEGIC NATURAL GAS STORAGES
To increase gas share in the primary energy mix, up to two months of natural gas consumption.
the CGD network is expanding exponentially, It is worth noting that countries in Europe and
leading to a significant shift in using natural gas America have strategic gas reserves of around
as a cooking fuel. To address any adverse supply four months. These depleted storages can also be
chain disruptions, India needs to consider the offered on a competitive basis to interested gas
establishment of storage facilities equivalent to a marketers or overseas gas-producing companies
certain number of days of national consumption, as applicable. For long-term sustenance, the
which may include development of UGS facilities model will need to be financially viable, which
using depleted oil & gas fields, salt caverns and requires a supportive policy, tax incentives,
aquifers of capacity, over time, equivalent to store commercial framework and financing.
PROMOTING LNG-BASED TRANSPORT IN THE LCV & HCV SEGMENT
Liquefied Natural Gas (LNG) for Light Commercial Quadrilateral, the program will be a real success
Vehicles (LCV) and Heavy Commercial Vehicles if conversion of existing diesel vehicles to LNG
(HCV) is the most efficient way of reducing carbon based is duly incentivized by the Government
and particulate emissions, which will result in of India so that investments made towards
cleaner air of 'Good' Air Quality Index (AQI) across creating this ecosystem results in fair returns to
the country. Considering its lower emissions all stakeholders. Coordinated actions among all
and higher calorific values than diesel, LNG is key stakeholders, viz. Government, Gas Industry
a promising alternative fuel. It will contribute and automobile manufacturers will go a long
during the transition journey and be vital to way to ensure the requisite financial support,
achieving the net zero target. Although MoP&NG technology availability, faster fleet conversion etc.
has provided targets to set up LNG stations As an enabler, a suitable policy must be notified
across major highways, including the Golden in this regard.
THE GREEN SHIFT 204
INCLUDE NATURAL GAS UNDER GST
The alternative fuels to natural gas are already based economy. At the same time, high volatility
under the purview of GST, enabling stakeholders in natural gas prices necessitates that taxes
to avail of GST input tax credits. Currently, should be levied such that the landing price at
credit for taxes paid on the gas value chain is the customer end is cheaper than alternate
unavailable, which leads to complex compliances fuels at all points of time. Therefore, taxes may
and higher costs due to stranded tax credit. This be considered on a specific value-based rather
acts as a deterrent for industrial consumers to than on an ad-valorem basis and appropriately
switch to natural gas. Therefore, it is necessary modulated to ensure that gas consumption
to include natural gas under the purview of GST remains competitive.
to promote the transition towards a cleaner gas-
ENSURING ENHANCED DOMESTIC GAS AVAILABILITY
CBG potential needs to be realized to its fullest Therefore, policy support is required, including
by addressing the challenges in this sector. Going financial incentives to provide the impetus for
by current business ecosystem, it is worthwhile setting up MSW-based CBG plants across the
to note that only CBG plants based on press country. For CBG to take off in a big way, it is
mud can operate at name plate capacity. In necessary to ensure the availability of finance,
contrast, agriculture residue-based & Municipal support the creation of a supply chain and
Solid Waste (MSW) plants are yet to achieve ensure the preferred availability of bio-material.
this feat. Further, MSW-based CBG plants are Moreover, India has large coal reserves; coal
most difficult to secure industry investment gasification can be an excellent potential source
considering challenges of non-quantification of for transitioning away from the direct usage of
raw material, feedstock availability & quality, land coal. As coal gasification is a capital-intensive
parcel allocation etc. process, it is necessary to provide financial support
for coal gasification to acquire scale. Further, coal
Further, there is a need to encourage CGD entities
gasification should be based on lower energy
to set up CBG plants in respective GAs under
intensive technology suited to Indian coal or use
SATAT, aligned to the grid, to ease evacuation of
green energy. So, the country must continue to
CBG through injection into the pipeline. This will
invest in Research & Development.
boost propagation of the Government of India's
SATAT scheme and help achieve net zero target.
GAS MARKET & INDEX
Given the declared objective of the Government shoreline and massive investments underway
to increase the share of gas in the energy mix, in gas-related infrastructure like LNG terminals,
it is critical that the country has an efficient gas CGD and gas pipeline network, is already slated
market. The country also needs to strengthen to become a major global demand center for
the Gas Exchange in this regard for a faster incremental energy in general. For interesting
transition towards natural gas from conventional energy-related business models to develop
hydrocarbons. It may also be noted that with and flourish in the gas space, India should try
the significant increase in consumption, India to develop its own reference index in the lines
can leverage its buying position. This provides of Japan-Korea Marker (JKM), which references
an opportunity for the country to develop its the consuming nations. This can also serve as
own index. Generally, indices are developed a regional index to negotiate the terms of LNG
by net-exporting countries such as Henry hub, contracts which may eventually help mitigate
USA; Brent crude oil index (adopted by Middle the volatility of LNG prices.
East countries) and others. India, with a long
Chapter
11
DIESEL – FUTURE
POSSIBILITIES &
BLENDING
In this section
1. Introduction – Future of Diesel 207
2. Diesel demand from the transport sector 209
3. Diesel demand from the non-transport sector 216
4. Diesel alternatives and blends 218

INTRODUCTION – FUTURE OF DIESEL

Diesel currently accounts for about 40% of of COVID impact and reduced economic activity
India’s petroleum products1 consumption. Diesel (Exhibit-11.1). Consumption improved to 76.69 MMT
consumption increased from 60.01 MMT in 2011 in 2022 and it is expected to reach 79.3 million in
to 83.53 MMT in 2019. Consumption dropped to the fiscal year 2023 (still projected to be lower than
82.60 and 72.71 MMT in 2020 and 2021 on account pre COVID levels).
Exhibit-11.1: Diesel Consumption in India (in Million Metric Tonne)
COVID Impact
4% 84 83
81
75 76 77
73
69 68 69
65
60
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: Petroleum Planning & Analysis Cell Copyright © 2022 by Boston Consulting Group. All rights reserved.
Exhibit-11.2 shows the end-use sales of High-Speed the total diesel demand in 2021, up from 70% in
Diesel (HSD) across different segments and the 2013. The most significant shift occurred in the
change in the consumption mix from 2013 to 2021. commercial trucks segment, where the demand
The transport sector contributed to about 80% of doubled from 28.25% (19.5 MMT) to 55.40% (40.3
1
Petroleum Planning & Analysis Cell, MoP&NG, Government of India
THE GREEN SHIFT 208
MMT). However, the share of diesel demand from to 19.3% in 2021 (14 MMT), witnessing reductions
other transport segments including private taxis, both in share as well as in volume even if overall
three-wheelers, and buses has reduced over the offtake of diesel in the country increased. Similarly,
last eight years. The demand from commercial diesel usage declined in the agriculture sector from
taxis dropped from 8.94% (6.2 MMT) to 2.90% (2.1 13% (9 MMT) to 4.80% (3.5 MMT) as the industry
MMT) and private vehicle diesel demand dropped moved towards greener alternatives like solar
marginally from 13.15% (9.1 MMT) to 12.4% (9 MMT). energy. The diesel demand for power generation
Consumption from the 3-wheeler segment and mobile towers also reduced from 4.06% (2.8
dropped from 6.39% (4.4 MMT) to 1.20% (0.9 MMT). MMT) and 1.54% (1.1 MMT) to 1.60% (1.2 MMT) and
Demand from buses also dropped by a third, from 0.30% (0.2 MMT), respectively. However, the use
9.55% (6.6 MMT) to 5.90% (4.3 MMT). of diesel for industrial applications has increased
from 4.96% (3.4 MMT) to 6.30% (4.6 MMT) driven by
Demand contribution from the non-transport
growth in the underlying demand sectors.
sector also decreased from 30% in 2013 (20.7 MMT)
Exhibit-11.2: Diesel consumption across various sectors
Transport Non-Transport
6.2 9.1 4.4 19.5 6.6 2.2 0.3 48.4 9.0 3.4 2.8 1.1 4.5 20.7 69.1
0.44% 30.00% 100.00%

4.06% 1.54%
4.96%
13.00%
3.24% 0.48% 70.00%

9.55%
2013
28.25%
6.39%
13.15%
8.94%
Taxis Private Three- Trucks Buses Railways Aviation/ Transport Agriculture Industrial Power Mobile Others Non- TOTAL
wheelers Shipping Application generation Towers Transport
2.1 9.0 0.9 40.3 4.3 1.5 0.6 58.7 3.5 4.6 1.2 0.2 4.6 14.0 72.7
6.30% 19.30% 100.00%

6.30% 1.60% 0.30%
4.80%
5.90% 2.10% 0.80% 80.70%
55.40%
2021
12.40% 1.20%
2.90%
Taxis Private Three- Trucks Buses Railways Aviation/ Transport Agriculture Industrial Power Mobile Others Non- TOTAL
wheelers Shipping Application generation Towers Transport
xx Diesel Consumption in MMT
Source: Petroleum Planning & Analysis Cell Copyright © 2022 by Boston Consulting Group. All rights reserved.
DIES EL DEMAND FROM THE

TRANSPORT SECTOR
DEMAND FROM PASSENGER VEHICLE SEGMENT
Passenger vehicles contribute to 16.5% of diesel The price difference between petrol and diesel
demand today, considerably lower than 28.5% in fuels has come down significantly from 26 rupees
2013. While overall diesel consumption increased in 2012 to just 8 rupees in 2021 (Exhibit-11.3). The
from 69 MMT in 2013 to 73 MMT in 2021, the demand for diesel engine passenger vehicles has
demand from the passenger vehicles segment also seen a steady decline over this period. From
dropped from 19.67 MMT to 12 MMT over the same 52% share in the passenger vehicle segment in
period. The lower cost of diesel in comparison to 2013, diesel vehicles in the mix reduced to 25%
petrol had historically driven demand for diesel in 2021. The consumption of diesel from the
engine powered passenger cars. While the initial commercial taxi segment, which is more price-
purchase cost of diesel engine vehicles is higher sensitive to fuel prices, has seen a steep decline
than petrol engine vehicles, the lower cost of from 8.94% (6.2 MMT) in 2013 to 2.90% (2.1 MMT)
diesel fuel translated to a lower total cost of in 2021.
ownership for consumers.
Exhibit-11.3: Production of passenger vehicles by fuel type (in million nos.)
% 3.60 3.54 3.76 4.12 4.41 4.68 4.12 3.25 4.15 INR
100 25
80 42 20
47 51 53 55 54 57
67 67
60 15
6
6
6 5 5 5
40 7 10
8 8
52
47 43
20 42 41 40 5
37
25 25
0 0
2013 2014 2015 2016 2017 2018 2019 2020 2021
FuelPriceDierence Petrol CNG Diesel XX Production numbers (in million nos.)
Source: S&P Global Mobility Copyright © 2022 by Boston Consulting Group. All rights reserved.
Further, the cost of production of diesel engine The BS-VI Stage-II emission norms, planned to
vehicles has increased with the implementation be implemented in 2023, are expected to further
of BS-VI emission norms. While petrol engine increase the cost of production. In response to
vehicles saw an increase in cost of INR 10,000 - these changes, several automotive OEMs have
30,000, diesel engine cars have increased by INR already announced plans to phase out diesel
40,000 – 120,000. passenger vehicles from their portfolio.
THE GREEN SHIFT 210
Maruti Suzuki has already phased out diesel market, which have a larger fill size compared
vehicles from its portfolio in 2020. Tata, Mahindra to hatchbacks and sedans. The share of SUV
and Honda have also discontinued producing production in India increased from 12% (0.28 Mn)
1.2-Liter diesel engines. Diesel variants are in 2011 to 41% (1.22 Mn) in the calendar year 2021
available only for engine capacity of 1.5-Liter (Exhibit 4). The share of diesel-engine variants is
or higher. Hyundai introduced 1.2-Liter BS-VI about 35-40% in compact SUVs, while it is about
complaint diesel variants in Grand i10 NIOS and 55-60% in mid-size SUVs. The average fuel fill
Aura models in 2020 but has discontinued the size of SUVs is 27 Litres, compared to 17 Litres
production of 1.2-liter diesel vehicles from 2022. for other passenger vehicles2. The dominance of
SUVs is expected to continue, and diesel demand
The impact on diesel demand from the drop
is expected to remain strong in this segment.
in sales of diesel engine cars has been partially
offset by the increase in demand for SUVs in the
Exhibit-11.4: Sale of SUVs in India
Million Units % share
1.5 Share of SUVs SUV Sales 50
41%
1.2 40
32%
30%
0.9 28% 30
27%
22%
0.6 17% 18% 17% 1.22 20

15%
12% 0.85 0.91 0.88
0.76
0.3 0.62 10
0.41 0.44 0.47
0.37
0.28
0.0 0
2011 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: S&P Global Mobility

Copyright © 2022 by Boston Consulting Group. All rights reserved.
2
PPAC study on all India sector demand for petrol and diesel (2021)
Diesel is being displaced in the 3-wheeler segment The share of electric 3-wheelers increased from
also. The sales of diesel 3-wheelers reduced from 15,502 in 2016 to 177,872 in 2022.
290,298 in 2020 to 63,272 in 2022. Diesel demand
Diesel demand from the passenger vehicle
from this segment reduced from about 4.4 MMT
segment is expected to continue its decline,
(2013, 40% share in sales) to 0.9 MMT (2021, 16%
driven by the higher cost of ownership of diesel
share in sales), driven by the increase in sales of
vehicles and the declining price gap between
CNG and electric 3-wheelers. In FY2022, electric
diesel and petrol. Further, demand for EVs has
and CNG vehicles contributed to 46% and 27% of
been on the rise in India.
the total 3-wheeler sales, respectively (Exhibit-11.5).
Increasing public awareness about pollution and climate change has been driving a shift in
consumer preferences toward cleaner options of travel including EVs.
Demand drivers for EV sales
While the upfront purchase costs for EVs are significantly higher, the operating cost of EVs is
lower than petrol and diesel vehicles.
EVs also have lower maintenance costs as they have fewer moving parts than traditional
combustion engine powered vehicles.
Government of India is providing various incentives to boost EV sales including direct

discounts on the cost of EVs, road tax exemption, low interest rates on EV car loans, and
income tax benefits.
Exhibit-11.5: Sale of 3-wheelers in India (in ‘000 nos.)*
Diesel Electric CNG Petrol-CNG Petrol LPGPetrol

/ LPG
-
455 571 638 719 258 388
16%
38% 37% 40% 35%

49%
48%
16% 17%
20% 34%
12% 1% 0%
2% 0%
29% 28%
21% 24%
13% 27%
5% 4% 3% 3% 5%
4% 4%
11% 11% 14% 13% 2%
8% 5%
2017 2018 2019 2020 2021 2022
* Data does not include sales figures from four states, i.e. AP, MP, TS & LD
Source: VAHAN database, Ministry of Road Transport & Highways

THE GREEN SHIFT 212
DEMAND FROM TRUCKS: HCV / LCV
The diesel consumption from the commercial freight transportation is carried out by road,
vehicles segment has increased from 28% (19.5 with LCVs accounting for ~70% of the market
MMT) in 2013 to about 55% (40.3 MMT) in 2021. sales (Exhibit-11.6). With the agriculture and
The freight movement by road increased from manufacturing sectors dependent heavily on
1.52 trillion tonnes km in 2013 to 2.67 trillion road logistics, diesel demand from this sector is
tonnes km in 20193. Around 65% of India’s overall expected to continue its growth.
Exhibit-11.6: Sale of commercial trucks (in ‘000 nos.)
LCV Medium Heavy
1022
952
905
828
776 769 789 788
651 685
69% 569
70%
73%
70% 70% 72% 71%
77% 68%
73%
78%
8% 9%
8% 8% 8% 9% 10% 9%
8% 8%
22% 19% 24% 22% 22% 21% 18% 8% 21%
15% 20% 14%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: S&P Global Mobility

In 2021, the government of India launched unfit for service. While replacement of the older
Voluntary Vehicle Scrappage Policy to phase vehicles will drive demand for vehicles, newer
out old and unfit vehicles. Under the policy, vehicles are more fuel efficient, and the transition
commercial vehicles more than 15 years old is therefore expected to result in lower fuel
and passenger vehicles more than 20 years old consumption. Similar to the passenger vehicle
will have to be mandatorily scrapped if they do segment, attempts to transition from internal
not pass emission and fitness tests. Incentives combustion engines have been underway in
that were provided under this scheme to scrap the commercial vehicle segment also. Electric
old vehicles and purchase new vehicles include vehicles and hydrogen fuel cell-powered vehicles
zero registration charges for new vehicles, a are being explored as alternate power drives to
rebate on road tax, and a discount of up to 5% internal combustion engines in heavy vehicles.
on new vehicles from manufacturers. This policy OEMs including Tesla are undertaking extensive
is expected to reduce pollution and increase research to develop electric trucks with a range
demand for new vehicles. As per Ministry of Road of 800-1000 Km, which if successful, has the
Transport and Highways, it is estimated that more potential to disrupt supply chains worldwide and
than 17 lakh commercial vehicles (both buses reduce logistic costs and emissions.
and trucks) in India are older than 15 years and
3
Ministry of Road Transport and Highways, Government of India
The success achieved in transitioning the heavy vehicle segment, especially in long haul transport, has
been limited thus far.
1 Energy density of lithium-

ion batteries and resultant 2 The current charging times
3 The charging infrastructure is
are high, which signi4cantly in nascency in most markets
weight of batteries are not reduces the utilization of the & requires signi4cant
conducive for heavy vehicles vehicles investment to complete
in long haul applications build-out of network
OEMs like Toyota are also exploring hydrogen fuel impact on the utilization of the trucks. But some
cell technology as an alternative. The Government technical and commercial challenges are yet to
of India is investing in research and development be solved for the adoption of green hydrogen as a
of green hydrogen and intends to produce 75% of transport fuel. Green hydrogen is more expensive
the country's hydrogen from renewable energy (in comparison to gray hydrogen as well as
sources by 2050. Adani group and Total Energies other transport fuels), and costs under current
of France have recently formed a partnership conditions will be in excess of US$4-5 per kg. The
to develop the world's largest green hydrogen transportation of hydrogen is complex, capex
ecosystem. The Company plans to invest US$ intensive and needs to address underlying safety
50 Bn over the next ten years to develop green considerations. In summary, hydrogen fuel cell
hydrogen production capacity of 1 Mn tons per technology, while promising, is still nascent, and
annum. Reliance Industries also plans to invest commercial readiness is yet to be established.
USD$ 75 Bn in renewable energy over the next
Fuel innovations in traditional combustion
decade. Indian energy sector PSUs also have
engines of heavy vehicle segment are being
their own hydrogen plans, which, if successful,
explored. Alternate fuels that can be used in
could help find options for hydrogen as a
internal combustion engines include CNG and
transport fuel. Hydrogen fuel cells have ten times
LNG. However, CNG and LNG cannot be directly
higher energy density than lithium-ion batteries.
used in existing vehicles without modifications.
Hydrogen fuel cell vehicles can also be refueled
quickly in comparison to EVs minimizing the
LNG-powered Trucks
Liquefied Natural Gas (LNG) as a road transport energy density of LNG is 22 MJ/L (~60% of diesel,
fuel is seeing a surge in demand globally over 2.4x of CNG). The demand for LNG vehicles is
the past few years, and segment LNG demand strongly dictated by the cost competitiveness
reached 11.7 MMT in 20204. Rapid expansion of of LNG over diesel. LNG cannot be directly used
LNG consumption has been driven by strong in current internal combustion engines, and the
government efforts in Asia and Europe to move cost of conversion is about US$10,000 per vehicle.
away from diesel vehicles. China has become the The payback period on the conversion cost is
largest market for LNG in road transport since the dictated by the price difference between diesel
introduction of LNG as an alternate fuel for heavy- and LNG. Currently, LNG-powered trucks are not
duty vehicles. China's total fleet of LNG-powered available in India. While TATA Motors unveiled an
trucks crossed 300,000 in 2019. LNG truck at the Auto Expo in 2014, no vehicles
have been released in the market yet. The focus
LNG is used for long-range medium and heavy-
of Indian Auto OEMs has been on CNG-powered
duty vehicles because of its higher energy density
trucks, which are seeing an increase in demand.
when compared to compressed natural gas. The
4
World LNG Report, International Gas Union
THE GREEN SHIFT 214
Adoption of LNG in commercial vehicle segment faces some hurdles:
1 Countries are ultimately

looking to move towards zero- 2 Tank-to-wheel emissions
of LNG are 22% lower than 3 The refuelling infrastructure
for LNG and cost-eective
emission vehicles. As such, diesel. But, concerns remain conversion technologies of
LNG is seen as a technology around the overall well-to- diesel to LNG trucks must
bridge in the long-term wheel GHG emissions from be developed to boost the
vision of a fully emission-free use of LNG including methane demand for LNG trucks.
transportation industry. emissions during upstream This will require capital
production of shale gas5. investments from private and
government sector.
CNG-powered Trucks
The demand for CNG-powered commercial global gas market and is a deterrent for larger
vehicles in light and small segments has rapidly adoption. CNG is suitable for light commercial
increased over last two years. According to Society vehicles for shorter ranges (up to 400 km/day),
of Indian Automobile Manufacturers (SIAM), the given its low energy density. The energy density
sales share of CNG trucks reached 10% in FY 2021- of CNG is 9 MJ/L which is about 25% of diesel.
22. TATA Motors has seen an increase in share 98% of CNG sales to trucks is concentrated in
of CNG vehicles in light and small commercial five states – Delhi, Maharashtra, UP, Gujarat, &
segments from 16% & 5% in FY 2020-21 to 44% Haryana. CNG infrastructure is well developed
& 33% in FY 2021-22, respectively. In its overall in these states compared to rest of the country,
commercial portfolio, CNG accounted for over and they account for 75% of the total refueling
16% of sales in FY2021-22, against 3.4% in FY2020- stations (Exhibit-11.7). Refueling infrastructure
21. The increase in demand has been driven should be developed nationwide to boost CNG
by the rise in diesel prices, the government's vehicles market. The diesel demand from this
push for greener vehicles, and the improving sized vehicle segment is expected to drop in the
CNG infrastructure in the country. However, future with the increase in penetration of CNG in
cost of natural gas has also increased by about light and small commercial vehicles.
25% in 2022, driven by market changes in the
Exhibit-11.7: CNG stations across India as of May 2021
Gujarat 794
Maharashtra 461
Uttar Pradesh 454
New Delhi 436
Haryana 175
Madhya Pradesh 109
Telangana 98
Punjab 98
Andhra Pradesh 85
Karnataka 73
Rajasthan 73
Kerala 28
Tamil Nadu 28
Jharkhand 25
Odisha 24
Others 103
Source: Petroleum & Natural Gas Regulatory Board
5
LNG Trucks: A Bridge to Nowhere, International Council on Clean Transportation, 2020
DEMAND FROM BUSES
The diesel demand from buses decreased from However, the adoption of electric buses has also
9.55% (6.6 MMT) in 2013 to 5.90% (4.3 MMT) in increased for inter-city commutes. This segment
2021. As of 2019, there are 1.9 Mn buses in the is expected to thrive as the government is trying
country. However, it is estimated that India needs to push EVs through policies like FAME-II. Electric
about 3 million buses to meet its demand for buses continue to face some hurdles, including
public transport. There is a large gap between lower utilization, low ranges, and inadequate
the supply and need for both public and private charging infrastructure. Electric buses currently
buses. Multiple Indian cities are undertaking available in the market offer a range of 150 -
improvements in the road infrastructure and 200 km and require a charge time of 3-4 hours
increasing the number of buses in operation using DC fast chargers. The charging time is
to bridge this gap. This is expected to drive an higher if AC charges are used. Given the current
increase in the sales volume of buses. limitations of electric buses, the impact on diesel
demand is expected to be marginal in the near
In 2021, the Indian government allotted INR 18,000
term. However, in the mid to long term, electric
Crores to acquire, operate and maintain 20,000
buses are expected to gain a larger share in the
buses for public transportation through public-
intra-city passenger transport segment.
private partnership models. This will further
boost the demand for diesel in the coming years.
DEMAND FROM THE RAIL SEGMENT
The demand share of diesel from the railway in the next 2-3 years. The government is also
sector dropped from 3.24% in 2013 to 2.1% in 2021. trying to downsize the Indian Railways' fleet
The diesel consumption from railways decreased of diesel locomotives. As of December 2021,
from 3.06 Bn Litres in FY 2018-19 to 1.63 Bn Litres Indian Railways operates about 13,500 trains,
in FY 2020-21. The demand will further reduce as of which diesel locomotives haul only 37%
the government is targeting 100% electrification (5,000 trains) currently. Over the next few years,
in rail. 80% (52,247 km) of the entire rail network diesel locomotive usage is expected to become
was electrified as of March 2022, up from 30% in marginal, and diesel consumption from this
2010. It is expected to reach 100% electrification sector will become negligible.
THE GREEN SHIFT 216
DIESEL DEMAND FROM THE

NON-TRANSPORT SECTOR
Diesel demand from the non-transport sector has agriculture sector, where farmers are moving
reduced from 30% (20.7 MMT) to 19.7% (14 MMT) to solar energy. Diesel usage in agriculture has
over the past eight years. The demand is expected reduced significantly from 13% to 4.8%. The diesel
to go down further with the increased usage demand for power generation also declined from
and availability of alternative energy sources. The 4.06% (2.8 MMT) to 1.60% (1.2 MMT).
most significant transition is taking place in the
AGRICULTURE
The use of diesel in agriculture has come down Tractor sales have increased from 4,93,400 in FY
from 8.98 MMT in 2012-13 to 3.5 MMT in 2020-21. 2016 to 7,80,032 in FY2019. The sales dropped to
The demand in this sector comes primarily from 7,05,011 in FY 2020, but the sales picked up in FY
consumption for tractors, water pumps, and 2021 and reached an all-time high of 8,99,407
other agricultural equipment. (Exhibit-11.8).
Exhibit-11.8: Tractor Sales in India (‘000 nos.)

9% 899
842
780
711 705
582
493
2016 2017 2018 2019 2020 2021 2022

Source: Tractor Manufacturers Association
The government is targeting to replace diesel the electricity capacity from non-fossil energy
with renewable sources in agricultural equipment sources by 2030 and become a net-zero emitter
and machinery by the end of 2024. The initiative by the year 2070.
is part of India’s commitment to achieve 40% of
Government of India launched PM Kusum Scheme in 2019 to increase the use of renewable energy in the
agricultural sector. The scheme has three components.
1 Installing 10 GW of grid-
connected renewable energy 2 Installing 1.75 Mn stand-
alone solar pumps to replace 3 Converting 1 Mn existing
grid-connected agricultural
power plants. the existing diesel pumps in pumps to solar.
o-gridareas
Government will financially support farmers based agriculture equipment instead of diesel, as
by subsidizing 60% of the project costs and these can be run on ethanol.
providing 30% in the form of a loan. Sales of solar
Thus, while the demand from tractors is expected
pumps have increased from 11,626 to 246,074,
to remain strong, overall demand for diesel from
with a CAGR of 66% between 2014 and 2020.
agricultural sector is expected to decline.
There is also a push for petrol and flex engine-
MOBILE TOWERS

The demand for diesel from mobile towers The Government of India is also incentivizing
reduced from 1.54% (1.1 MMT) in 2013 to 0.30% companies to move away from diesel generators
(0.2 MMT) in 2021. The improved connectivity through net metering policies, group captive
of the country's grid infrastructure, access to models, and reduction of subsidies on diesel.
solar-powered energy sources, and a strong While diesel-based power generators are still
government push have reduced the industry's used for backup, due to their high operating costs,
dependence on diesel generators. Out of more companies are switching to batteries for backup
than 520,000 mobile towers installed across the in case of power outages, impacting diesel
country, only 4% are off grid with no access to usage. Demand for diesel from telecom sector is
electricity, down from 36% in 20146. expected decline and become negligible.
OTHER INDUSTRIAL APPLICATIONS
Diesel is also heavily used in the construction sector is expected to continue to grow and
and mining industries for the operation of heavy has seen a significant inflow of Foreign Direct
machinery like cranes and crushers. Demand for Investment (FDI). In FY 2020-21, the infrastructure
diesel from this sector is ~6.3% (4.6 MMT, 2021), up sector accounted for about 13% of the total FDI
from 4.96% (3.4 MMT) in 2013. Road infrastructure inflows of USD 81.72 Bn. Currently, there are no
in the country has seen rapid growth over the viable alternate technologies that can be used
past few years, with the length of National to operate the heavy equipment required in
Highways constructed increasing from 4,510 km construction and mining, and diesel demand
in 2015 to 16,420 km in 2019. The infrastructure from this sector is expected to grow.
6
Global System for Mobile Communications Association (GSMA)
THE GREEN SHIFT 218
DIESEL ALTERNATIVES & BLENDS

Blends and substitutes to conventional diesel blending percentages stand at 2% for petrol and
have been explored with the objective of finding less than 0.1% for diesel.
cleaner and sustainable alternatives. However,
Biodiesel and renewable diesel are the commonly
their adoption has been limited thus far globally
used alternative fuels to diesel and are produced
and in India. The National Policy on Biofuels,
from biomass. Ethanol blending, aided by additives,
2018 aims to achieve 20% blending in petrol and
is also being explored as a cleaner option.
5% blending of biodiesel in diesel. The current
BIO-DIESEL
Biodiesel can be produced from different sources, National Biodiesel mission. The government had
such as used cooking oils (UCO), vegetable oils, set a target of 11 Mn hectares of land for Jatropha
and animal fats, through trans-esterification. The cultivation. However, only 0.5 Mn hectares of land
physical & chemical properties of biodiesel are is currently used for Jatropha cultivation. The
similar to diesel, and has several advantages over gestation period of these crops is also high (3-5
conventional diesel - Biodiesel is biodegradable, years), which results in a longer payback period.
non-toxic, and produces fewer pollutants. The lack of R&D to improve the yields of Jatropha
However, it can only be used in 2-20% blends with plantations further disincentivized the large-
conventional diesel in existing diesel engines scale production of these crops.
since higher blends affect engine durability.
The current biodiesel production is ~225 Mn Liters
Most vehicles in the market today can handle a
against an installed capacity of ~680 Mn Liters, and
blend of up to 5%. Biodiesel is also currently more
the existing capacity is underutilized (Exhibit-11.9).
expensive than conventional diesel.
Challenges hindering the growth of the biodiesel
The biodiesel industry in India has not reached market include feedstock unavailability and the
scale (Exhibit 11.9), and feedstock availability lack of channels for sourcing raw materials. These
has been a major constraint in ramping up issues need to be addressed to drive further
production. In the 2000s, India invested in growth and private sector investment in biodiesel
developing Jatropha-based biodiesel through the trans-esterification plants.
A deep dive on Biodiesel is covered in Chapter 4 of the report.
Exhibit-11.9: Production Capacity vs Volume of Biodiesel in India (in million litres)
Capacity Production 680

670
650
600
550
480 500
450 460 465
230 225
185
152 158 170
126 132 138
111
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Global Agricultural Information Network

RENEWABLE DIESEL
Renewable diesel is produced by the hydro- of renewable diesel globally with a cumulative
processing of fats, vegetable oils, and waste production capacity of about 6.56 Bn Litres as
cooking oils. It is chemically and structurally of 2019. Production facilities are concentrated in
identical to conventional diesel. Renewable diesel Europe and USA (Exhibit-11.10).
is cleaner and produces 70% lower life-cycle
About 50% of the production is attributable to
emissions than conventional diesel. Unlike bio-
Neste, the Finnish petroleum refining company.
diesel, renewable diesel is 100% interchangeable
Neste has four operating facilities, with two in
with conventional diesel and can be used as
Finland, one in Rotterdam and one in Singapore.
a direct substitute in vehicles without any
modifications. Renewable diesel can be handled Availability of feedstock will dictate scalability
by the existing supply chain infrastructure and of renewable diesel production. Raw material
equipment. Further, renewable diesel can be availability must be addressed, and at-scale
stored for extended periods without quality sourcing channels should be set up to promote
deterioration. There are ten production facilities growth in production of renewable diesel.
Exhibit-11.10: Global production of renewable diesel
Neste
Porvoo 2, Finland
Porvoo, Finland
Rotterdam
385Mn UPM
Lappeenranta, Finalnd
World Energy 385Mn
(AltAir) 1.3Bn ENI
Renewable
150 Mn Energy Group Total 1.0Bn Gela
Paramount, 641Mn
California La Mede
Geismar, Louisiana
1.0Bn 284Mn
Diamond
Green Diesel
Norco, Louisiana
Neste
1.3Bn
Singapore
TOTAL CAPACITY 6.56Bn
Source: International Renewable Energy Agency (IRENA) Copyright © 2022 by Boston Consulting Group. All rights reserved.
THE GREEN SHIFT 220
ETHANOL BLENDED DIESEL
Ethanol blending in diesel is constrained (<1%) successful, and no negative impact on engine
due to the immiscibility of ethanol in diesel. An performance was observed. On ARAI's approval,
additive is needed to blend ethanol with diesel, this blended fuel can be deployed across the
but available additives in the market are mostly country as an immediate solution for vehicles
imported. The Automotive Research Association with payload capacity of over 3.5-tons with BS-IV
of India (ARAI) is developing an indigenous (& below) engine specifications, including trucks,
blending additive that can be manufactured transport buses, and some heavy construction
locally. In 2017, ARAI developed a chemical equipment. However, this blended fuel cannot
formulation that is commercially viable and be used for BS-VI engines. ARAI has also
manufacturable in the country. ARAI has also collaborated with Praj industries to conduct trials
developed a process for blending ethanol & diesel. & performance tests on BS-IV and BS-VI vehicles
weighing less than 3.5 tons. Apart from trucks, the
ARAI has completed performance testing of
blended fuel can also be used in diesel generators
this blended fuel (90% diesel+7.7% ethanol+2.3%
as engine specifications of these generators are
blending additive) on heavy vehicles above 3.5-
lower or equivalent to BS-IV standards.
ton with BS-IV engines. The test results were
74%
Lower lifecycle emissions
for 100% Biodiesel (B100) as
compared to diesel as per study
by Argonne National Laboratory

K E Y R E CO M M E N DAT I O N S
India aspires to continue to grow at a fast pace renewables, energy efficiency/conservation etc.,
to become a $20 Trillion economy over the next may be low, the offtake of fossil fuel-based energy
few decades. The achievement of this kind of will continue to rise. However, over the medium
growth rate will require the consumption of higher and long term, the demand for diesel could
quantities of all forms of energy. Over the near be significantly affected due to the following
term, as the incremental energy supplied through emerging trends:
■ Declining trend in the passenger vehicle Kusum Scheme. This will cause a decline in
segment: Declining price gap between petrol diesel consumption in the agricultural sector.
and diesel, the rise of EVs, the implementation Although demand for diesel use in tractors is
of BS-VI Stage 2 emission norms, and the expected to remain strong, overall demand in
higher cost of ownership of diesel vehicles have the agricultural sector is expected to decline
affected the incremental demand for diesel due to the increased use of stand-alone solar
vehicles, which will, in the long run, result in pumps and the push for flex engine-based
lower offtake. agricultural machinery..
■ Promote R&D investments in diesel ■ Establishment of renewable diesel production

alternatives for heavy vehicles: Continued facilities: Though scalability concerns exist,
R&D investments on use of hydrogen fuel cell India is exploring setting up renewable diesel
powered vehicles as alternate power drives to production facilities due to 70% fewer emissions,
IC Engines in heavy vehicles will help reduce 100% interchangeability with conventional
diesel demand in long term. diesel and zero modification needs for existing
vehicles. In addition, the issues relating to
■ Push for LNG-powered vehicles: LNG has
raw material availability necessary for at-
the potential to replace both diesel and CNG
scale sourcing channels for renewable diesel
in heavy-duty vehicles and thereby reduce
production are intended to be addressed over
GHG emissions. Its push in both medium and
time with the government's push on bio-based
heavy-duty vehicles, despite cost constraints
energy. Incremental volumes through this
and higher payback periods, can be a game-
route could affect diesel offtake in the long run.
changer for the Indian logistics market.
■ Transition mobility to more sustainable modes:
■ Increased investment by government in
Higher electrification and an increased share of
public transport with a push for the adoption
passenger and goods transport by railways will,
of EVs: The development of road infrastructure
over time, result in lower diesel offtake. Indian
and demand for public transport (buses) will
mobility will undergo a paradigm shift under
provide a slight uptick in demand for diesel, but
the newly declared National Logistic Policy.
increased governmental push for the adoption
of EV with FAME-II policy will reduce diesel ■ Adoption of ethanol blends: With ARAI in
demand. collaboration with Praj developing indigenous
additives, blending of Ethanol has specially
■ Higher utilization of renewables in agriculture:
shown promise and 5% blends can be adopted
The government is pushing for increased use
as it is without any engine modification.
of renewables in agriculture through the PM
THE GREEN SHIFT
222

Chapter
12
TECHNOLOGY,
INNOVATION AND
POLICY SUPPORT
In this section
1. Climate Innovation and Investment 225
2. Digital Unlock 228
3. Process Innovation 232

CLIMATE INNOVATION & INVESTMENT

The sustainability agenda is vital for countries technologies are needed if we are to achieve
worldwide, and considering the circumstances, net zero as per committed timelines. Climate
it is also a priority to have on top of their minds. innovation, therefore, presents a tremendous
Significant strides on pathways towards climate opportunity – valued at US$3-5 Tn annually
innovation across abatement, capture and removal (Exhibit-12.1) - for companies to create competitive
of emissions are essential to meet the goals of the advantage and long-term value on the path to
Paris Agreement. It is estimated that existing their net zero goals. Projections by agencies could
technologies can eliminate about 25% of current differ, but it is clear that for the transition journey
emissions, and technologies in early adoption can to reach the intended goal, much depends on
address another 40%. This still leaves approximately yet to be developed technologies. Beyond doubt,
35% of current annual emissions, for which new transitions will involve substantial investments.
Exhibit-12.1: Modelling for annual investment until 2050 (for next three decades)
An estimated climate investment of $3-5 trillion is required every year

to meet the ambitions of Paris Agreement
Supports a 1.50C scenario,
$ 1.6 Trillion Supports net zero economy, $ 3.7 Trillion annual investment for energy
ETC annual investment through 2050 IPCC sector only through 2050
Supports aligning with Paris

$ 1.5 Trillion Agreement Goals, annual
$ 3.8 Trillion Supports a 1.50C scenario,
UNEP IRENA annual investment through 2050
investment through 2030
Supports the COP 21 2015

$ 1 Trillion pledges, annual investment for $ 6.9 Trillion
Supports aligning with Paris
Agreement Goals, annual
TCFD energy sector only through 2030 OPEC investment through 2030
Estimated $ 3 - 5+ trillion range
Source: TCFD, ETC, IPCC, IRENA, OECD, UNEP, BCG Analysis Copyright © 2022 by Boston Consulting Group. All rights reserved.
1
BCG article “Governments That Invest in Climate Innovation Invest in Growth“ by Joerg Hildebrandt, Dave Sivaprasad, Marco Duso, Chafic Mourad, Daniel Kiefer, and Bernard Graf
THE GREEN SHIFT 226
The projections by BP on the segment-wise corresponding significant business opportunities

investments required, as below, also bring out a that will form the hallmark of the transition journey.
huge fund requirement for energy transition and the
Exhibit-12.2: Investment required towards energy transition
2015 - 2019
Accelerated
Wind
& Solar Net Zero
New Momentum
2015 - 2019
Oil & Accelerated
Natural Gas Net Zero
New Momentum
2015 - 2019
Accelerated
CCUS
Net Zero
New Momentum
0 100 200 300 400 500 600 700 800

Average Annual Investment Range, $ 2020 Billion
The global oil and gas (O&G) industry is directly 30-35% by the year 2030. Achieving this requires
or indirectly responsible for close to half of all investment and innovation across proven and
global GHG emissions. Despite the investment risk emerging technologies, making India a lucrative
perception, O&G companies have also joined the market for digital solution providers to drive
net zero commitments and are investing heavily to energy transition strategies and for clean energy
attain those objectives. In the past 5 years, 61% of technology developers.
large O&G acquisitions / investments have been in
Despite the opportunity, climate innovation
new energy, green tech or digital – where digital
funding faces challenges as most VC & PE funds
has accounted for 30 % of the investments in 5 out
are not yet oriented for or leaning towards such
of 8 companies (Exhibit-12.2 & 12.3).
investments in a meaningful manner. VCs don’t
India is the 3rd largest consumer of primary energy favor the high-risk perception, extended payback
in the world after the US and China. According to cycles and/or lengthy public processes associated
BP Energy Outlook, the energy consumption in with the sector. The lack of understanding of the
India will increase by 129% by 2035 compared to science and IP further exacerbates the problem.
a 31% increase in the global average. Energy is a To mitigate these concerns, public funding via
critical input for socioeconomic development. The co-investment and matching mechanisms helps
energy strategy of a country aims at efficiency, lower risk perception and mobilize investor interest.
security, affordability, providing environment The public sector can absorb increased levels of
friendly options and achievement of an optimum investment risks that are not feasible for the private
mix of primary energy resources. India has sector to support leap-frogging technologies and
committed to reducing its carbon footprint by increase overall investor confidence in the domain.
Exhibit-12.3: O&G acquisition / investment in new energy, green tech or digital
I:Ho2:D…Æ¨ˇ2—GO §1P:HO
investment have been made in new energy, green
tech or digital
Source: Quid, BCG analysis, BCG Center for Growth & Innovation Analytics
Exhibit-12.4: Digital Initiatives by Global O&G Majors
Digital technologies have accounted for more

than 30% of the investment in 5 out of following 8
—:2:I
Source: Quid, BCG analysis, BCG Center for Growth & Innovation Analytics
THE GREEN SHIFT 228
DIGITAL UNLOCK
To realize sustainability as an advantage, technology platforms & analytics, digital twin and blockchain
and data are key levers to magnify both ecological are driving Green Tech growth. These are expected
and economic value. Research involving more than to grow 25-30% annually for the next 5 years
850 companies worldwide has established a clear (Exhibit-12.5).
link between digital capabilities and sustainability,
Deployment of these technologies is expected
with technology being an enabler to break
to help ETAC create an integrated ecosystem -
economic constraints and engineer new solutions.
combining digital and physical assets – focused on
Increasing adoption of sustainable use cases across emission monitoring and reduction.
IoT (Internet of Things), cloud computing, data
Exhibit-12.5: Green Tech Market Split, by Technology, in$Billion
IoT Digital
Cloud Computing Cyber-security

$ 45 - 50 Bn
AI & Analytics Block Chain
20-25%
0%
-3
25
20-25%
13-17%
7-13%
$ 8 - 12 Bn
23-28%
15-20%
17-22%
10-15%
8-13%
15-20% 10-15%
13-18%
2020 2027
Source: Allied Market Research, BCG Analysis

Green Tech is poised to grow at 25-

30% CAGR and become a $45-50
Bn global opportunity by 2027
DIGITAL TWIN-ENABLED COMMAND CENTRE
Digital Twins are disrupting project management and desired production configurations aligned
and are regarded as one of the top 10 strategic with efficiency & emission goals. Maintenance
technologies that companies want to adopt for can be predictive instead of reactive – increasing
improving operations. It involves the creation of a machine life cycle & efficiency and avoiding
virtual replica of a physical asset thereby enabling unexpected downtimes. Digitizing assets enables
visualization of the actual asset conditions. This the development of an integrated command
allows the asset owner to measure and track centre with 360°-degree view of operations
asset performance, monitor process quality and to realize significant value across multiple
maintenance lifecycle status. It also enables the dimensions (Exhibit-12.6). It also helps prevent
simulation of different pre-defined scenarios information loss and speed up handover with
that can help identify high-risk components new technologies.
Exhibit-12.6: Digitizing assets can help realize significant value
Economic Performance Optimization Enabler
Optimal Fluid Mix

Production
Optimization
Production Manage Actual Limits (Optimisation) 2 - 4% Production Uplift
Throughput
per Hour Physical Capacity (Debottlenecking) Debottlenecking
Production
Planned Shutdown: Frequency & Scope
Volume
Unplanned Shutdown: Occurences

Production
Uptime Maintenance 20 - 25% Cost Reduction
Shutdown Duration
Optimization 2- 4 weeks advance warning of problems
Timetorampup/down(Transient)
Maintenance Program: Frequency & Scope
Inspection Program: Frequency & Scope Asset Integrity Upto 50% inspection cost savings
Maintenance
Costs
Maintenance Planning & Scheduling Maintenance
& Inspection
30 - 50% productivity improvement
Optimization
(On repetitive tasks)
Maintenance Execution
OPEX
VALUE
Chemicals
Operations
Operational
Costs
Energy Consumption EnergyEzciency 10 - 20% improvement
Logistics
Brown4eldModi4cations
CAPEX
Field Development
Environmental
Operational Risk Reduction 30 - 40% reduction in off-spec events
Monitoring
80% reduction in reaction time

HSE Improvement Safety
5-10% reduction in near miss & LTE

THE GREEN SHIFT 230
EMISSION-LINKED DECISION SUPPORT SYSTEM
Big data & advanced analytics can be leveraged historical data and effectiveness can be improved
to develop a decision support system that with learnings from real-time performance data.
provides real time transparency on the emission A simple control panel screen can empower the
& economic implications of each of the key ground-teams with real-time data on the impact
operational parameters. Emission critical KPIs can of their decisions and enable supervisory control
be prioritized for real-time quantification of value at different management levels (Exhibit-12.7),
and trade-offs and track adherence to targets. The fostering cooperation and alignment to the
calculation of the emission and economic impact company’s strategy goals.
can be done based on advanced analytics on
Exhibit-12.7: Align operations and management with consistent KPIs, linked to emission targets
1 Select KPIs
for each plant 2 Link operational
KPIs to emissions
3 Set limits and
targets 4 Display real-time
information
5 Clear
visualisation
Control Panel with a collection of ... with clear limits defined and
identified KPIs... impact of change highlighted
Operational KPI 1
XX
Emission Impact
(tCO2e/day)
XX XX

ADVANCED ENERGY SCENARIO MODELLING
Linear programming & scenario modeling equilibrium on integrated energy markets with
can provide a comprehensive overview of the the objective of optimizing the total surplus and
energy system and help address resource mix energy costs while factoring in environmental
problems & demand elasticities. Models backed and technical constraints (Exhibit 7). The PLEXOS
by a rich set of inputs can help validate company model, by Energy Exemplar, can help achieve
strategy and guide the path & progress through rigor testing of detailed power system features,
net zero by combining operational parameters such as system reliability & flexibility and the
with expected demand & supply scenarios. The impact of renewable energy on the system,
TIMES2 model, developed as part of the IEA- through high-resolution modeling of the electric
ETSAP (Energy Technology Systems Analysis power system.
Program), can compute an inter-temporal partial
2
TIMES – The Integrated MARKAL-EFOM System
Exhibit-12.8: TIMES modelling of energy system flows provides holistic Southeast Asia country-wide view
SEA Country Example
Multiple learnings can

be drawn from the
model e.g.
• Substitution between
gasoline & electricity
• Ezciencydriveschange
in energy demand
• Impacts from changes in
radiative forcings

PARTNER ECOSYSTEM ENABLEMENT
Cross-industry / sector data partnerships enable be greatly improved by incorporating data from
joint abatement initiatives across the ecosystem. multiple sources and under different operating
With partners engaged across different stages of conditions. Data collaboration also ensures
the value chain, ETAC can benefit from learnings transparency and accountability, enabling
and best practices across partners through open period reviews on performance vs targets and
data collaboration. Richness of insights and implementation of mitigation initiatives in case
effectiveness of predictive analytics employed can of any challenges.
CUSTOMER PERSONA IDENTIFICATION & MANAGEMENT
Digital offers major opportunities to manage Multichannel strategy – receipts, mobile, email
the relationship with clients through new - can enhance engagement and improve the
communication channels, even real-time. quality of insights from the platform. A forward-
Limited data availability and usage of segmented looking and strategic view of how technology and
marketing compared to targeted campaigns data can be leveraged from the very start before
have made it challenging for O&G retailers to making major commitments of resources, time
historically capture value from personalization. and energy is a key differentiator for success.
Building a customer data platform can help This mindset is characterized as “technology eco
analyze customer behavior and purchase advantage”3 —using advanced technologies and
patterns to optimize operations. Behavioral ways of working to enable profitable solutions
analytics can help redefine promotional nudges that also have a positive impact on net zero and
to incentivize sustainable customer behaviour other environmental, social, & governance goals.
while fostering customer retention and growth.
3
BCG article “How Tech Offers a Faster Path to Sustainability“ by Karalee Close, Norbert Faure, and Rich Hutchinson
THE GREEN SHIFT 232
PROCESS INNOVATION
While digital solutions can help extract tremendous of emissions can help unlock new opportunities
potential from the existing portfolio of operations that create business advantage and value while
and guide future investments, innovations accelerating the climate cause. The focus then
in process design are critical to hit net zero shifts to new sources of revenue over significant
aspirations. Process innovation can open multiple costs, and the objective moves beyond incremental
new opportunities for businesses, investors, and improvements to transformative business models
governments. A mindset shift to look at companies (refer Exhibit-12.9).
as providers of solutions instead of just as a source
Exhibit-12.9: BCG's Climate Innovation Canvas unlocks business value while accelerating the
sustainability goal
Organisations can take multiple ap- ... choosing the innovation archetype
proaches to expand & re-invent... most suitable to the corporate objective
Business Model
Solution Providers
Driven by revenue
Re-imagine Invent
Create
new Newsolutionsthatful4lthe Deep-tech approach
models / customer needs in a new through breakthrough Climate
markets way, avoiding emissions technologies Solution
Sector Focus
Existing models and Innovation
value chain
Need Focused
Climate
Improve Re-engineer Reboot Risk
New value chain and
existing models
new Towards better, accelerated Improve the product Innovation
models / deployment of existing low oeringwithnewlow-
markets carbon solutions carbon technology
Large Emitters
Scale-up Breakthrough
Driven by cost and reduction
Technology of risk

In some areas, the solutions already exist, however to evaluate the potential to implement them
when they are mixed and matched, the results in conjunction or alternatively to produce more
can be dramatically different. For instance, it is desirable results could accrue significant value
widely known that horizontal drilling and fracking in terms of abatement of costs or timelines.
have both existed and when used on a standalone Abatement & green growth technologies are
basis, these yielded sub-economic results, but their emerging rapidly across dimensions, targeting
usage together has produced hugely pronounced efficiency improvement of current systems along
positive impact for oil and gas production. Re- with development & optimized utilization of new
examining existing solutions and technologies sources of energy (Exhibit-12.10).
Based on the energy landscape and expected demand, India presents a lucrative opportunity for the
following priorities:
EFFICIENCY OPPORTUNITY
Along with re-imagination and invention, re- enrichment, residual oil hydro-processing, residue
engineering through energy enhancement pyrolysis, dividing wall column for separation of
programs within the refineries must be explored. hydrocarbons and petrochemicals, membrane-
Integrated CDU / VDU energy optimizations, based separation of hydrogen, C3 stream, olefin
low temperature distillation, low grade energy / paraffin and low temperature heat recovery
utilization, process intensification, energy systems like ORC are some examples.
optimization in furnaces & heat trains, oxygen
BIOFUELS OPPORTUNITY
Strong technology focus on the development on lignin rich residue, efficient utilization of
& cost optimization of second generation used cooking oil for biofuel production and
and advanced biofuels utilizing domestic development of Sustainable Aviation Fuels (SAF)
feedstock is underway. Innovations in the areas are key value drivers. In SAF, the hydro-processed
of cost optimization of biomass pre-treatment, esters & fatty acids (HEFA) production pathway
indigenous development of cellulase enzyme & makes up the largest share of the current market,
co-fermenting yeast, value addition technologies but processes with higher long-term growth
Exhibit-12.10: Abatement & green technologies on the path to net zero
Efficiency Renewable Power Electrical Methane, Flaring CCU

Demand-speci4cidenti4cation Capacitors Associated/StrandedGas
Wind Mineralization
of drives & energy monitoring SMES (Super conducting Magnetic monetization
Expansion of solar thermal Onshore Conventional Storage) Small-scale/o-gridpower Aggregates
energy for heat supply
Oshore4xed Chemical Small-scale LNG Inorganic Carbonates
EnergyEzciencyin.. OshoreRoating Mobile/small-scalegastoliquids
Fuel Cell Chemicals
Compressed air generation and Emerging (Magiev, Airborne, Methane emission
Bladeless) Hydrogen
applications maintenance and equipment Methanol
Pumps Synthetic Natural Gas
Solar PV Vapour Recovery Units Urea
DrivesthroughE3/E4motors Air Controlled Systems Ethylene
and frequency inverters Wafer-based
Ventilators Conventionalthin4lm
Waste / Biomass GasEquipmentElectri4cation Polycarbonates/Polyols
Enclosed Combustion (with heat Building Polymer Blocks
Refrigeration Plants Concentrator Producing biogas via recovery)
Ventilation and air conditioning
anaerobic digestion of - Butanol
Emerging Technologies (Organic, Other Optimized Equipment
technology Perovskite,Quantum dot Agricultural waste
ICT
Methane Emissions Leak Direct Use
CSP Animal waste
Detection and Repair
Lighting Organic fraction of Municipal Dry Ice
Waste Continuous Monitoring
Stationary (Flat Plate)
Compressors Wastewater sludge
Line-focus (Parabolic Trough; Remote Sensing Feed
Steam Generation Linear Fresnel) Industrial Residue - Pulp Industry
(Black Liquor) Algae Biomass
Savings in process heat Point-focusing (Solar Tower;
through digitalization Stirling Engine) Industrial Residue - Bagasse Hydrogen Fuel
Savings in mechanical energy Marine Industrial Residue - Food Industry
through digitalization Alkaline Electrolyzer Algae Oil
Tidal Producing Biogas ...
Building automation & energy Liquid Fossil Fuels
ezciencyinheatingsystems Wave PEM Electrolyzer
from algae
Substitution of HFCs etc, in Novel Uses
Current viagasi4cation
coding & air conditioning H2 production from...
Thermal gradient Carbon Nanotubes
via pyrolysis
Heat Recovery Biogas Organic Solvent Bacteria
Salinity gradient via Hydrothermal Carbonization
(HTC) Bio-methane Carbon Black
Low Temperature Waste
Hydro via Hydrothermal Liquefaction (HTL) Bio-methanol CO2 Fuel Cells
Absorption Heat Transformers
Conventional Dams viaSupercriticalGasi4cation Bio-Ethanol
Organic Rankine Cycle
Run-of-the-River via Enzymatic Fermentation Bio-Naphtha
Kalina Cycle
to Bio-methanation via upgrading CCS
Crude Glycerine
PPA (compression & liquefaction)
Furnaces/Boilers
Valorizing digestate produced Combustion
SOEC Electrolyzer
Combustion Optimization via AD as fertilizer
Post Combustion
Oxygen Enrichment Energy Storage Valorizing bio-char produced Anaerobic Digestion
viapyrolysisasfuel/fertilizer Chemical-loop Combustion
Electric Furnaces
Mechanical Converting bio-oil produced Pyrolysis/Gasi4cation Oxy-fuel Combustion
Processes via pyrolysis to HVO Pre-Combustion

Pumped Hydro
Upgrading biomass Plasma Reforming
Progressive Crude Distillation Flywheel properties with pre-treatment CaptureinSpeci4cUnits
Alternative desulfurization CAES (Compressed Air Energy Drying, shredding, grinding Supercritical Water
Storage) Gasi4cation FCC
Microwave Cracking Pelletisation and Briquetting
Adiabatic CAES Power Plant
Torrefaction
Photo-electro Catalysis
Separation Membranes Gravity Potential CDU
Pyrolysis
Photo Catalysis SMR
H2recoveryandpuri4cation Electro-mechanical
Paraxylene Separation
Burning biomass in Thermo-chemical Water Transport
Lead-acid
Fixed Boilers (travelling, vibrating Splitting
Ole4n/Paraznseparation
Li-ion or step grate) Onshore Pipe
Alternative uses for Fuel Gas NaS Fluidized bed Boilers (bubbling or OshorePipe
circulating) Renewable Heat
Super capacitors Ship Pipe
Stripping Buying Biomethane
Co-generation
Na-ion Certi4cates(eq.topowerPPA) SHIP Storage
NiMH Heat Generation
SMR Stationary (Flat Plate)
Saline Aquifer Onshore
Flow Biomass for Heat Line-focus (Parabolic Trough;
Linear Fresnel) SalineAquiferOshore
Metallic Biomethane for Heat
Thermal Storage Point-focusing (Solar Tower;
Li-anode Stirling Engine)
Power Generation
Molten Salts Liquid Metal
Geothermal
Biomass for Power
Liqui4edAirEnergyStorage Biogas for Power Thermal Energy
Bio-methane for Power Liquid dominated Plants

Pumped Heat Electrical
Storage Enhanced Geothermal System

THE GREEN SHIFT 234
potential, like alcohol-to-jet (ATJ) and power-to-X The abundance of cheap feedstock, however,
are gaining relevance. HEFA is the best near- is counteracted by the significant CAPEX
term option given existing capacity, but limited investment required. Power to liquids (PtL) can
availability of low emissions feedstock remains be a long-term option, given the lack of feedstock
a constraint and costs remain high. ATJ can issues. However, it is in the nascent stage and yet
use two different feedstock types: sugar (e.g., to be demonstrated at an industrial scale.
sugarcane) & cellulose (e.g., agriculture residues).
RENEWABLES OPPORTUNITY
With renewable sources being abundant, of absorbing and managing fluctuations in

innovations to ensure maximum capture and demand and supply. Substantial development
utilization for prolonged periods have the and indigenization of potential technologies
capability to drive the most value. Emerging long along with suitable policy support are required
duration energy storage (LDES) technologies for accelerated deployment. This will also be key
will be critical for supporting the wide scale for round the clock renewable power availability
deployment of renewable energy sources. for process industries to sustain operations.
These systems will provide flexibility in terms
BATTERY OPPORTUNITY
According to the World Energy Outlook 2021 mainly driven by regulation, although economic
by the International Energy Agency, the annual factors and volume growth will also be important
demand for lithium-ion batteries in 2040 would considerations. Pyro-metallurgical and hydro-
be equal to the output of more than 20 times the metallurgical treatment technologies currently
capacity of today’s largest Giga-factory. Building exist to scale. However, innovations to reduce
battery recycling and reuse capabilities would energy consumption and control operating costs
be a major opportunity. Battery recycling will be can help unlock significant potential.
CARBON CAPTURE, UTILIZATION & STORAGE OPPORTUNITY
Currently, most applications of CCUS are not Reducing technology costs, increasing demand
viable. The cost of CCUS ($/MT) is the highest in for captured CO2, and creating an enabling
sectors with dilute CO2 streams like cement (US environment of supporting infrastructure &
$ 72), steel (US $ 79) and power generation (US $ demonstrated business models are all critical for
90 - US $ 100), and it is most competitive in pure- faster deployment of CCUS technologies.
stream CO2 sources like ammonia and ethanol
Coal is not only the backbone of electric power
(US $ 15 - US $ 20).
generation, but many major industries like
Innovations for enabling scalable & cost-effective cement, iron and steel, bricks, and fertilizers also
CO2 capture technology is in demand, with consume large quantities of coal. Gasification
technologies based upon absorption, adsorption, of coal helps enable the capture of CO2 prior to
cryogenics, chemical looping etc. The CO2 the combustion, from the fuel gas mixture, at a
captured opens a multitude of new business relatively lesser cost as compared to the post-
avenues through the production of value-added combustion CO2 capture. CCS in gasification
chemicals such as methanol, formic acid, urea, projects is considered a promising technology for
polycarbonate/polyol, methane, ethylene, ethanol, cost-effective carbon mitigation for deep-seated
butanol, glycerol, petrochemical feedstocks, deposits. Syngas produced from coal gasification
and polymers. The aim is to build a portfolio of is used in producing liquid fuels, Synthetic Natural
solutions scientifically and economically suited to Gas (SNG), energy fuel (methanol & ethanol, DME),
current conditions and sustainability goals. ammonia for fertilizers and petrochemicals.
HYDROGEN OPPORTUNITY
Scale-up of efficient indigenous electrolyzer (LOHC) as hydrogen carriers. Utilization of

technologies (viz. membrane-less electrolyzers, hydrogen-enriched compressed natural gas
Anion Exchange Membrane type etc.) need (HCNG), with better fuel economy and lower
to be explored to reduce import dependence NOx, CO & CO2 emissions, as vehicle fuel or in
and to lower costs. This will also open other city gas distribution networks has tremendous
pathways of green hydrogen conversion to green value. Many institutions have taken field trials of
ammonia & green methanol for ease of storage, buses and light-duty vehicles using HCNG as fuel.
transportation, and utilization of green fuels. Due to the high potential for emission reduction,
Direct decomposition of gas to hydrogen and further research is required to determine
carbon and utilizing the carbon as nanotubes the optimized H2 / NG (Natural Gas) ratio,
also has high value. metallurgy compatibility, engine tuning and cost
optimization in H-CNG utilization.
In addition to production, innovations in hydrogen
storage & transportation will be required. Hydrogen is promising to become a widely
Due to low density and high flammability, H2 used tool in the transition to green energy
handling/storage poses major challenges like pathways through usage in refineries, hard-to-
the requirement of very high pressures cylinders, abate sectors like steel etc., through co-located
the potential for hydrogen embrittlement and hydrogen production, usage centers. Hydrogen
high capex. Research is required to identify cost- can also contribute through the ammonia route
effective novel materials to store the hydrogen. for broader use across the energy value chain,
On the other hand, several organizations are as a storage medium and potentially as fuel for
working on developing novel processes using mobility, especially ships.
ammonia and liquid organic hydrogen carriers
The technologies to achieve energy transition

already exist; but systemic innovation is urgently
needed to integrate them into new market
structures and regulations, business models, and
energy system operations. To achieve our climate
targets, therefore, we will need to prioritise certain
innovations in key areas of energy, process and
the market.
- IRENA
THE GREEN SHIFT 236
PRODUCTION-LINKED INCENTIVES OPPORTUNITY
Climate action is gaining strong focus PLI scheme, where the applications were received
amongst the priorities for GOI, the “Panchamrit for ~110 GWh against the 50 GWh PLI scheme.
Commitments” being a testament to the same. The Government may consider increasing the PLI
Public sector support is critical to encourage outlay for this sector on similar lines as for solar
innovations across the sustainability spectrum. PV modules PLI, considering the massive interest.
Production linked incentive (PLI) schemes can
Similar incentives under the PLI scheme for niche
be an effective way to drive volumes. Till date, the
sustainability-related technologies can provide an
cumulative government outlay for the scheme is
impetus to local innovation and manufacturing.
Rs 3 lakh Cr and is expected to attract investments
The Government of India has taken a host
worth Rs 4 lakh Cr across 14 key sectors to create
of proactive policy measures, including an
national manufacturing champions.
elaborate set of schemes aimed at channelizing
In renewables, the Government has raised the growth of energy transition areas for building
outlay for solar PV modules to Rs 24,000 Cr in the domestic production capacity and reducing
FY 2022-23 budget after seeing an encouraging dependence on imports and local employment.
response in the first round for the Rs 4,500 Cr It is hoped that the progress against these shall
scheme. Based on the waitlist from the first be constantly measured and the policies shall be
round of bidding, it seems like the entire Rs modified/supplemented as required over time in
24,000 Cr PLI outlay would be well covered. A sync with the evaluated feedback.
similar demand was visible in the ACC batteries
■ Deploy advanced digital tools for emission ■ Mobilize investor interest with public sector
tracking and mitigation: Deployment of digital backing: Increase public funding via co-
technologies like Digital Twin, Emission linked investment and matching mechanisms to lower
DSS (Decision Support System), Advanced investor risk. The public sector, with due policy
Energy Scenario Modelling, etc., can help create and funding support through fiscal measures
an integrated ecosystem combining digital and and/or greater access to green finance, should
physical assets focused on emission monitoring absorb increased levels of investment risks
and reduction. currently associated with emission reduction
technologies (early adoption stages).
■ Develop & promote emerging green
technologies: Establish internal process ■ Use of Production Linked Incentive schemes
innovation as a priority to develop green for building domestic capacities and helping
technologies by adopting the framework – create global competitive ability. Constant
Re-engineer, Re-imagine, Reboot, or Invent. evaluation of the PLIs, timely reinforcement,
Promote investment in abatement & green- enhancement and increase in the scope of the
growth technologies by piloting emerging PLIs as required through the transition journey.
technologies. PLIs, as enunciated by the Government of India,
can prove to be powerful tools in the transition
■ Establish coordination framework knowledge
journey for not only serving local needs but
sharing and joint accountability: Set up
being able to lead in the area of innovation and
sectoral bodies to reap the collective benefits
technology to be supplied at a global scale. It
of efforts being made by individual entities,
also needs to be ensured that the PLIs act as a
enabling the rollout of emerging solutions in
catalyst for building domestic capacity but does
an expedited manner with the least cost and
not result in any hurdles for the new entrants
with minimal loss of time. International oil & gas
due to any advantages to the incumbents
players may also be invited as partners.
THE GREEN SHIFT
238

Chapter
13
GREEN
FINANCING
In this section
1. Introduction 241
2. The stark realities of Climate Finance in India 243
3. Case Study: India’s Solar Energy Journey 246
4. Climate Finance Action Plan for India 248

INTRODUCTION
India is the 5th largest country by GDP and is home (1.96 TCO2e vs 6.55 TCO2e1) and about 3-9 times
to more than 17% of the world’s population. India lower than the other super-emitters. Also, India’s
emits 7% of the world’s GHG, making it the 4th cumulative contribution to global emissions is just
largest emitter after China, the USA & the EU in 3.3% since 1750 despite being home to the second
2020. However, to put it in context, India’s per capita largest population in the world (Exhibit-13.1).
emissions are much lower than the global average
Exhibit-13.1: Evolution of cumulative CO2 emission by world region (%)
IfiH
: OÆ th
of the world’s population
but historically has accounted for only 3.3% of
cumulative global emissions
100 China
14%
75 USA India
25% 3%
50
EU-27
25
18%
0
1750 1800 1850 1900 1950 2020
Europe (excl. EU-27) EU-27 USA North America (excl. USA) South America
Ocenia Africa India China Asia (exc. India and China)
Note: The 5 regions include United States, Europe, China and Asia (exclusing China and India). Data call outs refer to cumulative emissions as of 2020.
Source: Our World in Data
Indian population demographic is one of the energy, water, and transport to our underserved
youngest in the world it is only at the beginning of population, all of which will contribute to higher
our economic growth journey with aspirations to be GHG emissions.
a $5 Tn economy by 2025. As per UN in 2019, ~28% of
India is also the 7th most vulnerable country with
our population is poor, and a significant proportion
respect to climate extremes2. Extreme weather
still lacks access to reliable energy. India’s economic
events have been increasing over the past decade
growth is likely to be accompanied by investments
such as cyclone Amphan in the Bay of Bengal,
in infrastructure to provide increased access to
1
World Bank emissions data
2
Germanwatch 2020
THE GREEN SHIFT 242
cyclone Tauktae in the Arabian Sea, landslides climate action can have benefits beyond averting
and floods in Uttarakhand and Kerala. In response, a climate disaster- as per a WEF study3. India
climate adaptation & resilience investments alone could create more than 50 Mn net new
in early warning systems, climate-resilient jobs and generate over $1 Tn in economic value
infrastructure, improved dryland agricultural by 2030 by enabling a just transition to a green
crop production, global mangrove protection economy. Climate action will thus be key not just
and more resilient water resources are critical to for achieving a world net zero, but also for securing
enabling quality of life for our growing population. India’s economic future.
Ever higher temperatures in different parts of
In essence, India being the largest economy
the world, coupled with severe adverse weather
aspiring to higher levels of economic prosperity, the
events at higher frequency, intensity and ferocity
journey to Net Zero will be critical for enabling the
leaving behind a trail of destruction and losses, are
achievement of global commitments to climate
becoming the order of the day.
change and will require a significantly different
Given India’s historic performance and future pathway from developed countries to enable
growth potential, it forms an ideal candidate for economic growth & increased climate resilience.
global climate investment. Further, investing in
Extreme weather events have been

increasing in India over the past decade
such as cyclone Amphan in the Bay
of Bengal, cyclone Tauktae in the
2ƒ
A SDfi:fi:fiøfi:
Uttarakhand and Kerala.
3
Mission 2070: A Green New Deal for a Net Zero India
THE TWO STARK REALITIES OF

CLIMATE FINANCE IN INDIA
Since 2018, there has been a rapid increase Renew Power etc., are also committing significant
in governmental & corporate commitments investments in green projects over the coming
towards climate globally and in India. Globally decade. All Indian companies in the oil & gas sector
140 countries, covering 90% of global emissions, are seriously working on their company-specific
410 publicly traded companies (including climate situations and have their strategies well decked
neutral pledges) and 450 financing institutions to handle the emerging issues relating not only to
representing USD 130 Tn in assets have committed transition but across the entire ESG spectrum. In
to Global Net-Zero. addition, net-zero commitments of global giants
like Amazon, LG, and Hyundai are pushing their
India, too has committed to a net-zero carbon
value chains in India (including MSMEs) towards
emissions target by 2070 with four short term
greener options.
goals viz.
While this is a promising start, we will need
■ Reaching a non-fossil fuel energy capacity of
significant climate finance to enable India’s Net
500 GW by 2030
Zero vision. There are several projections about
■ Fulfilling 50% energy requirements via the amount of funds that may be required for
renewable energy by 2030 a just and orderly transition for the world and
■ Reducing CO2 emissions by 1 Bn tons by 2030 various countries. These estimates vary in the
specific amount of funds needed. However,
■ Reducing carbon intensity below 45% by 2030 these are unanimous in concluding that the fund
Significant traction in the Indian corporate sector, requirement for energy transition will be huge.
with 85+ leading corporates committing to science- As per one such estimate4, as below, it has been
based targets to reduce emissions is already seen. projected that $10 Tn will be required to fund India’s
In fact, 8 out of the 10 largest companies in India 2070 net zero scenario, with a currently projected
(by market capitalization) have set net-zero goals, financing gap of $3.5 Tn and catalyzing climate
with most targeting net zero emissions by 2030. investments, particularly by and in the private
Indian corporates like Reliance, Adani, NTPC, GAIL, sector will be key to bridging this gap (Exhibit-13.2).
Exhibit-13.2: The Indian Green Financing Ecosystem is in early stages, urgent scaling-up of finances needed
While green capital1 raised in India is growing, Significant capital shortfall anticipated in
but it is a fraction of the global capital India’s target to achieve net zero by 2070
$
Green Capital raised in 2019
India2 $21 Bn > Estimated

Highest ever Funds needed >$10 Tn
Expected
World -$1 Tn Shortfall ~$3.5 Tn
1
Including debt, M&A and Equity Funding
2
$15.7 Bn by Bank of America alone Source: Business Standard; World Economic Forum; Council of Energy, Environment and Water
4
CEEW: Council on Energy, Environment & Water
THE GREEN SHIFT 244
Ifiu:—2ł§—fi:§/:Hi//:H2H:
affecting climate investments today.
REALITY-1: INDIA NEEDS 9 TIMES MORE CLIMATE FINANCE ANNUALLY
India’s climate finance flows in 2019 were US$21 climate ambitions, and there is a need to scale
Bn. However, the projected annual funding need this funding urgently, particularly given the large
is more than US$170 Bn. India requires nine up-front costs estimated with decarbonization of
times more climate investment to meet our sectors such as power, oil & gas, steel and cement.
India’s Climate Finance Landscape
1 Domestic sources are driving climate finance; limited foreign capital inflows despite public
commitments from developed countries
85% of climate finance was from domestic sources like commercial banks, government budgets
and public sector grants. India has so far received less than a fraction of the global climate finance
flows, despite commitments from developed countries to provide US$100B of climate finance
annually to developing countries like India and an excellent track record of the country in following
up on its commitments so far.
2 Limited maturity of financial instruments; high reliance on debt and grants
More than 60% of finance flows were in the form of loans from commercial banks and multilateral
organizations. Government funding was primarily offered via grants.
3 Funds are primarily directed towards renewables, limited funding for climate adaptation
and low carbon mitigation technologies
Climate funding is majorly towards renewables, with the power generation sector remaining
the primary recipient with ~80% of funds. Other low-carbon pathways, such as biofuels & last-
mile technology like CCUS and green hydrogen, have yet to receive enough funding. Sustainable
transport – primarily large metro projects received a significant share of bilateral & multilateral
financing. Adaptation funding was critically underserved, with less than 10% of overall funds.
India needs heavy investment to grow its renewable energy capacity to 500GW. It also needs
infrastructure investments in building out our cities. Further, to achieve our net zero aspirations,
the following areas need focused funds flows:
Building new power Investing in Low carbon

Improving energy
transmision DRUGDEOHHQHUG\ technolgy for hard
H]FLHQF\DWVFDOH
infrastructure VWRUDGHWHFKQRORG\ to abate sectors
Sustainable
Resilient city Adaptation &
agriculture, water &
infrastructure resilience
fod security
REALITY-2: LACK OF A BANKABLE PIPELINE OF PROJECTS IN INDIA FOR INVESTORS
Innovations that switch to being adopted with funding coming in from domestic and
and funded at scale typically do so when it is international investors at competitive prices.
environmentally and economically viable. For
Technology areas other than renewables, viz. low
example, in 2007, power from solar plants was
carbon technologies for hard-to-abate sectors,
much more expensive than from traditional
energy storage, sustainable agriculture & climate
sources. State subsidies and grants led to early
adaptation, have yet to be proven commercially
adoption, but it was only when solar achieved
viable and are therefore considered less bankable
grid parity that adoption took off. 2/3rd of India’s
(Exhibit-13.3).
solar capacity has been built over the last 5 years,
Exhibit-13.3: Bankability of Climate Change opportunities vary
Forestry & Agricultural Resilient City Public Energy Large-scale

Land-use Adaptation Infrastructure Transport Efficiency Renewables
Clean Distributed Energy

Transport (EV) Generation
No Return1 Below market-rate Returns Market-rate Returns
Grants Blended Finance incl. Concessional Equity Market Rate Debt

Zero-interest Loans Components
1
However, with carbon markets evolving, increasing potential for some returns via offsets
For innovations to become bankable, governments have an essential role to close this investment
gap through the provision of 4scal incentives that drive economic viability. The consistency a
enforcement of these incentives are what would drive bankability. These projects also face a few
other challenges in getting funding such as:
1 Lack of a standard definition of “green” in ndia resulting in limited visibility on fund Rows,
project end use and thereby increasing fears of green-washing
2 Limited incorporation of climate risk in credit rating/ risk frameworks resulting in higher
perceived risks of green investments
3 Long term institutional investors such as insurers and pension funds are not factoring climate
risks in investment portfolio
4 Lack of mature climate financing instruments & market mechanisms that factor in carbon
pricing and help de-risk climate investments
THE GREEN SHIFT 246
CASE STUDY:
INDIA’ S SOL AR ENERGY JOURNEY
n/A 2ˇ§HoN—§Hł§
In 2010, India launched the National Solar Mission, In this report, an attempt has been made to enlist
with objective of being a global leader in solar the key initiatives that enabled the solar success
energy by creating the policy conditions for rapid story. This list is non-exhaustive but is a good
solar technology diffusion across the country. The representation of various parameters that need to
mission achieved its initial target of 20,000 MW emerge / co-exist to enable adequate capital flows
of grid connected solar power by 2017 – five years to low carbon technologies.
ahead of time, this target was subsequently revised
to 100,000 MW by 2022 (Exhibit-13.4).
Exhibit-13.4: Indian Solar Installation (MW)
Annual Cumulative
Installations Installations
12,000 50,000
40,000
9,000
30,000
6,000
20,000
3,000
10,000
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Annual Rooftop Solar Installations Annual Large-scale Solar Installations Cumulative Large-scale Solar Installations
Source: Mercom India Research (Dec 2021)

5
CEEW: Council on Energy, Environment & Water
M A JO R D R I V E R S B E H I N D T H E S U C CE S S OF S OL AR IN INDIA
Thebelowdescribed4veinitiativesintandem
direction
were and provided rich learnings for India, and
the. While there were implementation hurdles and this case provides an excellent reference base as
initiative associated criticism, they were in the right the country devises a Climate Finance policy.
1 Setting an implicit price on carbon, increasing affordability of clean energy

India put in place a nationwide carbon tax on coal under the Clean Energy Tax, fossil fuel subsidies for oil & gas
werereducedoveraperiodoftimefrom30B $ into
2014 $9Bin2019 5
. Subsidies in this context include direct
and indirect transfers, foregone revenue, and provision of goods or services below market value and income
andpricesupportthroughregulations.Further,Renewableenergycerti4cates(REC)werelaunchedinas 201
a market mechanism to enable the tracking and trade of renewable energy.
2 Introducing a legal framework to promote renewable energy
Electricity Act 203, National Electricity Policy, 205 and the Tari Policy 206 set guidelines and regulations
topromotepreferentialtarisforrenewablestomakethemcostcompetitiveandtocreatestabledemand
mandating a minimum percentage of energy consumption via renewable energy for states. In addition to the
central legal framework, states like Rajasthan, Gujarat and Karnataka have introduced their own solar policies
withspeci4cguidelines,capacitytargetsandpreferentialtarimodels
3 Leveraging fiscal incentives to encourage investment in solar power

ndiapromotedrenewablesthroughseveral4scalincentives,includingtaxationincentivessuchasaccele
depreciation, tax waiver for eligible projects, opening the sector for 100% FDI, and budget allocations such as
the Production-linked incentive (PLI) scheme for solar companies. allocations such as the Production-linked
incentive (PLI) scheme for solar companies.
4 Reducing the risk and improving the commercial attractiveness for solar
a. Bundling of expensive solar power with conventional coal-based power was used to reduce the cost
of power supplied to the utilities. Special procurement mechanisms & Viability Gap Funding (VGF)
too enabled a lowering of price
b. Guaranteed otake mechanisms were created to de-risk solar projects for instance - Solar Energy
Corporation of India (SECI) signed 25 years power purchase agreements with solar park developers
reducing producer’s risk
c. Supply price reduction via Utility auctions - Reverse bidding was introduced as the market-oriented
procurementmechanismasagainstthepracticeoffeed-intariandcapitalsubsidies.
5 Catalyzing investment via public capital infusion
Strategic public capital infusion designed to de-risk investment encouraged a large volume of private
investment over time. These included initiatives such as:-
a. Signaling & guidance for banks & lenders via RBI’s inclusion of renewable energy in priority sector
lending, guidelines for rooftop solar lending by the Department of Finance
b. nfusingpatientlongtermcapitalviataxfreeinfrastructurebondsvaluedatUS$Mn
80 for4nancing
RE initiatives through 2015 and 2016
c. Concessional loans & multilateral grants from World Bank and Asian Development Bank (ADB) were
made available to State Bank of India and Punjab National Bank for solar rooftop projects
THE GREEN SHIFT 248
CLIMATE FINANCE ACTION PL AN

FOR INDIA
1 2 3
STEPS FOR CATALYZING CLIMATE FINANCE
Create the policy & Clearly define a green Targeted investment

regulatory environment taxonomy and climate to catalyze private &
to encourage climate risk framework for low multilateral investors
investments carbon development
The illustration in Exhibit-13.5 details the various government and policy initiatives that can help drive
climate finance in India.
Exhibit-13.5: Climate Finance Strategy
CO2
Climate Finance Strategy
Policy & Robust & intl. Catalyze Private

Regulatory aligned framework & Multilateral
Mechanisms for low carbon Investment
development
1 Carbon Pricing 3 Clearde4nitionofGreen 5 Clearde4nitionofGreen

Carbon Taxes Green Taxonomy (aligned to NDCs and Project blended Finance
Compliance Carbon Markets international standards) CreditGuarantee/Firstlosslending
Internal Carbon Pricing Disclosure & reporting norms Patient long-term capital
Fuel Subsidy Reduction Direct investment to demonstrate viability
4 Climate Risk Frameworks
Carbon Border Tax Adjustment Priority sector lending
Climate Risk Framework
Strategic Partnership
2 Fiscal Policy Financial Market Regulations
R&D Funding
Climate Tax Incentives Investor Guidelines
Incentives for low carbon & climate
Green allocation in budgets Climate Risk Guidelines for pensioners
resilient goods
& insurers
FDI & ECB norms Green government Securities
Green Asset Regulations
Sectoral policies & incentives
Climate4nanceinstrumentsandmarketmechanismsincludingCarbonMarkets
Awareness, advocacy & capacity building
Climate Data & Intelligence
Governance, reporting & oversight

Carbon dioxide and other GHGs cause negative
externalities (indirect costs to individuals and
society) that are not sufficiently priced into the
market. This has led to a systemic market failure,
wherein the true cost of products and services is not
fully accounted for and hence not paid for. These
unpriced externalities are unevenly distributed
Establish a legally Define a
enforceable price on across economic sectors and regions, leading to
taxonom
carbon significant market inefficiencies and distortions. As
disclosure fra
a result, there is an uneven playing field between in Ind
low-carbon and high-carbon activities.
In the absence of a levelling mechanism such

as a carbon tax or compliance carbon markets,
capital will continue to flow to fossil fuels which are
Enforce
inherently fiscal
cheaper with efficiencies built in from
policies
decades including &tax
of investment research.
incentives for low
The lack of atechnologies
carbon stated cost for carbon also leads to
the often-cited symptoms of a sub-scale climate
finance market, such as a limited pipeline of
bankable projects, challenged economic viability
for projects, higher risk levels, the inability of the
Banking and Capital Markets sector and the real
Move towards establishing economy to effectively manage the risks and
opportunities arising from climate change—as well
an enforceable price on as efforts to avoid it.
carbon via a combination Governments can enforce a price on carbon
of mechanisms, including by using instruments including carbon taxes,

compliance markets, reducing fossil fuel subsidies,
carbon taxes, internal internal carbon pricing and carbon border tax
carbon pricing, and adjustments. Fundamentally, the objectives of all

these measures are the same, i.e., to enhance the
introducing a compliance commercial attractiveness of ‘green’ alternatives.
carbon market Along with lowering emissions, carbon pricing can

improve energy and industrial efficiency, create
mechanism in accordance conditions for technological upgradation and
beading out inefficient technologies, limit reliance
with Article-6 of the Paris on imported energy, promote cleaner air, protect
Agreement by creating a and regenerate landscapes, and provide a valuable
source of government revenue.
short term, medium term
and long-term plan for Carbon Taxes / Compliance Carbon Markets
The IMF has stated that limiting global warming

sectoral coverage under to 2°C or less requires ambitious policy measures,
an ETS. such as an immediate global carbon price that
would rise rapidly to $75 -$100 per tonne of CO2
in 2030. This can be accomplished using one of
two methods: a cap-and-trade system or a carbon
THE GREEN SHIFT 250
tax charge. The first method, also known as a thereby enhancing the transparency of economic
compliance carbon market, puts a cap on the total decisions. While adopting a globally aligned price
emissions that industries can emit and allows those for carbon is necessary, for developing countries
with low emissions to sell their extra allowances to like India, this price should consider the social-
larger emitters, thereby creating a marketplace for economic differences and transition pathways.
greenhouse gas emissions. India cannot immediately afford to set the high
carbon price recommended by the IMF due to
India does not have a cap & trade market, though
the pressing need for a just transition of our coal-
it does have an array of schemes and taxation
dependent, low-income population since they
mechanisms that put an implicit price on carbon,
spend a higher proportion of their incomes on
such as Coal Cess, Perform Achieve Trade schemes
energy-intensive goods and services. Further, there
and Renewable energy certificates. However, the
is fear that higher domestic prices for carbon-
average price of carbon from these initiatives is
intensive goods will make the Indian industry less
low (~US$15 as per OECD), and this covers less than
competitive in global markets.
60% of our overall emissions, especially in hard to
abate sectors. The subject relating to carbon taxes. Carbon
pricing compliances and trading with other
Article 6 of the Paris agreement encourages
related aspects have been dealt with at length in a
countries to voluntarily cooperate to allow for a
separate section.
globally aligned price for carbon, accounting for
the true, social & environmental cost of carbon,
Internal Carbon Pricing
Internal carbon pricing is a strategic planning tool by companies in 2020 was USD 25 per metric ton
that enables corporates to manage climate-related of CO2; this price is expected to rise significantly,
business risks and prepare for the transition to a low- given increasing global carbon prices.
carbon economy. It allows carbon considerations to
In 2021, 85 Indian companies either used or are
become central to business operations and helps
planning to use an ICP. This is a 50% increase in
de-risk businesses against future carbon prices.
numbers from 2020, and with growing Net Zero
It also enables businesses to create pathways to
commitments and corporate action, we expect
achieve their Net Zero ambitions.
this trend to continue.
Globally as per CDP, a non-profit organization that
India should consider introducing guidelines
runs the world’s environmental disclosure system
& disclosure requirements to promote a wider
- nearly half of the world’s 500 biggest companies
acceptance of carbon pricing for corporates,
are now factoring this type of carbon accounting
governments, and other organizations.
into their business plans. CDP’s analysis found
that the median internal carbon price disclosed
Addressing fossil fuel subsidies
Fossil-fuel subsidies are a key financial barrier “In the next few years, all governments need to
hampering the world’s shift to renewable energy eliminate fossil fuel subsidies.”
sources. Each year, governments worldwide pour
As per IEA, India’s energy demand is expected to
around half a trillion dollars into artificially lowering
rise between 35-50% from 2019 to 2030, the highest
the price of fossil fuels — more than triple what
across all countries. Over the past few years, the
renewables receive. The International Energy
Indian government has taken significant steps
Agency (IEA), in a 2021 report laying out a roadmap
to provide all Indian families with electricity and
to the world with net-zero carbon emissions, stated,
cooking gas connections. Still, adopting these While India must have a roadmap for the gradual
modern and clean energy sources remains a big phase-out of fossil fuel subsidies in Net Zero
challenge. This is compounded by the fact that a roadmap – it is critical to ensure that there is a
large portion of the population can’t afford clean just transition and that it doesn’t impact the
fuel. Transition fuels such as Natural Gas and ability of lowest income households to improve
building transmission & distribution networks are their standard of living.
critical to improving quality of life.
Carbon Border Tax Adjustment
The uneven application of carbon pricing While carbon border adjustment mechanisms
internationally leads to the potential issue of have a strong theoretical basis, their
carbon leakage, wherein industries relocate to implementation is expected to be challenging,
countries with less-ambitious carbon policies, particularly concerning developing countries
thereby increasing that geography’s contribution like India. Let us consider the implications of
to GHG emissions. A mechanism to prevent and the EU border tax on India. For instance, EU
limit carbon leakage from relocating industries carbon border tax will initially apply to products
to countries with less-ambitious carbon policies from a limited number of sectors, namely
is the introduction of border carbon adjustment cement, electricity, fertilizers, iron and steel,
mechanisms. and aluminium in a phased manner from 2026.
India is an exporter of several carbon intensive
For example, as per the EU Green Deal’s proposal
goods such as aluminium, iron & steel. In fact, the
on such a mechanism, “Europe’s efforts to go
European Union is a key export market for India,
climate-neutral by 2050 could be undermined
with USD 33 Bn of exports in 2020 (11% of which
by lack of ambition by our international partners.
were base metals & minerals, including iron &
This would mean a risk of carbon leakage. This
steel). Thus, with the Carbon Border Adjustment
occurs when companies transfer production to
Mechanism, Indian goods will run the risk of
countries that are less strict about emissions.
becoming less competitive in the EU market due
In such case, global emissions would not be
to the financial and administrative burden. The
reduced. This new mechanism would counteract
UNCTAD forecasts that India will lose USD 1-1.7 Bn
this risk by putting a carbon price on imports of
in exports of energy-intensive products such as
certain goods from outside the EU.”
steel and aluminium.
KEY FOCUS AREAS FOR INDIA
1. Introduction of a domestic carbon price

2. Commencement of bilateral negotiations with developed nations like the European Union
to ensure mechanisms are designed in a manner that accounts for potential dierences in
transition pathways between countries. Proactive engagement at global scale is likely to help
ndia negotiate a better position which can enable it transition with least 4nancial b
using this opportunity to its advantage.
3. ndia should strongly take up the issue of the Row of international funding committed by
developed nations to push energy transition eorts worldwide. Despite commitments to
contributeUSDBn 10 annually,no4nancinghasRownintowardsenergytransition.Further,
the loans should not be counted as part of the contribution. As such, it is critical that this
transition funding takes a character of a legally forcible obligation against the developed
nations.
THE GREEN SHIFT 252
Promote low carbon

technologies with
incentives such as
Define a green
taxonomy and
PLIs
disclosure framework
in India
Enforce fiscal Incorporati

policies including tax Climate Ri
incentives for low Governme
carbon technologies Financial s
framewo
To achieve India’s Net Zero ambition, a critical

MAJ OR AR E AS OF WOR K
enabler will be climate finance. India should translate
existing Net Zero & short-term commitments into
conducive framework conditions, such as national
and regional environmental and industrial policies, 1 Scaling budgetary allocation
grants for early stage decarbonization
&
to support acceleration in climate finance market. technologies such as Green Hydrogen,

CCUS, battery storage, etc. to accelerate
Several low carbon technologies needed to commercial viability
achieve Paris Agreement targets still need to
achieve commercial viability threshold, creating
2
a barrier for commercial lenders and investors to Implementing medium-term taxation
provide the necessary capital to grow and scale subsidies such as investment tax
them. For example, Green Hydrogen and CCUS credits or accelerated amortizations
are often not commercially viable technologies in technology investments that have
without a sufficiently high carbon price. They are, high upfront investments and longer
however needed for decarbonizing several sectors payback periods to make these
(including Power, Iron & Steel, Chemicals, Light / investments more economically viable
Heavy Road Transport, Aviation, Shipping, and
Buildings, among others).
As in the case of the National Solar Mission, initial

government support for renewable energy, such as
3 Preferential FDI norms: To encourage
foreign capital mobilization towards
proven low carbon technologies
wind and solar, has helped the industry flourish to
the point that these technologies are now among
the cheapest energy sources. Specific government
incentives are needed to support the development
of these cross-cutting decarbonization solutions.
4 Introduce government schemes
/ initiatives based on sectoral
decarbonization roadmaps
Enable more precise

H2§—ˇł§øi:H
green sectors, which, in turn,
Define a green De-risk cli
taxonomy and would help design effective finance via s
disclosure framework public ca
in India policy, regulations, and infusio
institutional mechanisms
directed towards increasing
both public and private
Incorporation of
investments
Climate Risk inin green sectors.
Government &
Financial sector
frameworks
India has committed to going Net Zero in 2070. key sectors, projects & technologies. A formal
However, translating this long-term target into definition of Green Finance in India and clearly
sector & state specific definitions of “green understood taxonomy would increase precision in
activities” and corresponding budgets and tracking financial flows to the green sectors. This
pathways is crucial. The transition pathways, would help design effective policies, regulations
carbon targets, and technologies vary not only by and institutional mechanisms directed to increase
sector but also by region, as these are influenced by public & private sectors' green investment.
several factors, including the state of development
The European Union has taken significant steps
of the region’s economy and the trade-offs to be
in this direction by creating the EU Taxonomy,
made versus other UN Sustainable Development
which incorporates metrics and thresholds on a
Goals (e.g., socioeconomic development).
sector-by-sector basis. The taxonomy is a ‘living’
Financing & lending activity remains constrained list of all economic activities that can genuinely be
today due to uncertainty, firstly due to lack of considered as a reference of what environmentally
specificity as to which economic activities can sustainable means, defining and providing a
be considered sustainable and secondly due to shared understanding of what is ‘green’.
the projected low financial return profiles for
CREA T IN G A G R E E N T AX O N O M Y FOR INDIA WIL L HE L P ACCOMPL IS H 4 K E Y OBJ E CT IVE S
1 2
mproveclimateinvestmentRowstopriority ncrease market con4dence by avoiding
sectors as per Nationally Determined green-washing with speci4c metrics &
Contributions criteria for measurement & reporting
3 Improve tracking, disclosure & monitoring

of sectoral investment 4 Enable development of policies, incentives
forsustainable4nance
THE GREEN SHIFT 254
India’s green taxonomy should enable a common related performance indicators and targets that
definition and set of principles concerning correspond to our Net Zero ambition. It is important
what constitutes climate finance. This should that India’s taxonomy is based on common global
be translated into sector- and region-specific principles to encourage foreign capital, but it must
taxonomies that are comparable, flexible for consider a number of unique economic & social
evolution in response to technological and factors impacting the country.
scientific developments and include climate-
U N I Q U E S O C I O - E C O NOMIC CONS IDE R AT IONS FOR INDIA
1. Indian taxonomy needs to be aligned to NDCs requirements from taxonomies such as the
and focused not just on climate mitigation EU might be significantly high for small scale
but also on climate adaptation & pressing businesses such as MSMEs (Micro, Small and
environmental concerns including: Medium Enterprises), which account for over 30
a. Sustainable agriculture & livestock percent of India’s GDP, employ about 11 crore
people and constitute nearly 40 percent of total
b. Food & Water security
exports. Some aggregation may help develop
c. Safeguarding mountainous & coastal ecosystems such situation-specific metrics.
d. Pollution control measures 4. Taxonomy needs to be objective & algorithmic
e. Disaster management to enable clarity & measurement
f. Building resilient cities etc. 5. Indian taxonomy should not focus on particular
technologies but rather on technology-agnostic
2. Need focus on transition activities that require technical screening criteria for commercial
significant funding like natural gas, nuclear activities spanning high-impact sectors such as
energy and not just zero carbon activities power, manufacturing, transport, and others.
3. Minimize administrative burden, focus on Committing to few specific technologies may
a core set of decision metrics. Compliance not be in a medium or long-term interest.

A green taxonomy for India needs to be enforced/

supported with the integration of climate into key risk
frameworks to ensure climate risks, both physical and
transition, are appropriately priced into the cost of capital,
in particular for legacy carbon-intensive activities.
De-risk climate
The Prudential
financeRegulation Authority (PRA) in the UK
via strategic
requires banks,public
insurers and other financial institutions by
capital
2021 to “address the financial risks from climate change
infusion
through their existing risk management frameworks, in
line with board-approved risk appetite, while recognizing
that the nature of the risks requires a strategic approach.
In India too, the Reserve Bank of India has committed

Incorporation of in 2021 to integrating climate-related risks into financial
Climate Risk in
stability monitoring as well as exploring the use of climate
Government &
scenario exercises to identify vulnerabilities in the central
Financial sector
frameworks bank-supervised entities as a part of the Network for
Greening the Financial System (NGFS), a grouping of 114
central banks around the world.
Ensure climate risks, both physical and transition, are

appropriately priced into the cost of capital
INITIATIVES INDIA CAN TAKE TO BEGIN MEASURING & INCORPORATING CLIMATE RISKS IN DECISION-MAKING
■ Incorporation in credit rating mechanism ■ Inclusion in existing risk assessment

frameworks
Current rating mechanisms do not adequately
consider the cost of carbon emissions and the Current risk assessment norms such as Basel-
climate related risks / bene4ts associated with
III do not adequately capture climate risks in
projects under evaluation. There is a need to assessment of an obliger’s ability to repay a loan
develop a rating system for loans, bonds & in compliance with environment safeguard laws.
other instruments that considers both carbon Basel-III also discourages longer-term funding
emissions (per unit capital) and positive and illiquid investments, which contribute to
externalities from sustainable 4nancing either
to increasing lending rates or constraining
enable a systemic shift in funding towards capital allocation for climate investments. It is
more climate positive projects. recommended that existing risk assessment
frameworks incorporate 4nancial risk arising
■ Introduce mandatory disclosures
from climate change to help increase capital
Mandate corporate & public sector disclosure Rowtoclimatepositiveprojects.
requirements, including 4nancially material
■ Introduce norms for institutional investors
and decision-relevant data relating to climate
like pension funds, insurers
risks and opportunities. India should adopt
disclosure norms consistent with global Regulations aimed at inclusion of climate risks
frameworks, such as TCFD, to strengthen when identifying eligible investment projects
transparency and comparability of climate data could help channel patient long term capital
for global investors. towards sustainable investments.
THE GREEN SHIFT 256
There is often a mismatch between capital

providers' risk profile and eligible climate projects.
There is an urgent need for forms of capital to
effectively de-risk investments in climate action to
catalyze investment from private sources of capital.
In some sectors, considerable technology and

policy risks are associated with early-stage
De-risk climate
finance via strategic decarbonization technologies and uncertain
public capital technological pathways. For example, in Aviation,
infusion it is unclear as to what extent sustainable aviation
fuels (SAFs) will be used for decarbonization—and
which specific SAF (e.g., HEFA-based biofuel versus
synthetic fuels) will be dominant. Similarly, it isn’t
yet clear how the future market will be divided
between BEVs and hydrogen fuel-cell vehicles
in Heavy Road Transport. Financing of climate
action in emerging markets like India is further
constrained by currency and political risk factors.
In addition, several projects are not yet at scale

and are small in numbers, e.g. distributed energy
Catalyze investment from generations, leading to a lower overall volume

of capital flow and need. This introduces barriers
private sources of capital. to attracting investors, particularly institutional
Create a strong legal investors that look for minimum ticket size in deals.
ˇ2i2fi—h2§:H2P§HP2ˇ2§Hł§H
centralized accountability and oversight.
Exhibit-13.6: Five archetype investment barriers that catalytic public finance can address
Archetype Barriers to Investment Catalytic Finance Instruments Typical Sectors

Unproven ■ Concerns about commercial ■ Direct investment (concessional ■ Large-scale renewables
Markets viability of sector in given market or commercial) to demonstrate ■ EnergyEzciency
viability
■ Clean Transport
Sub-scale ■ Projects too small-scale for ■ Financing facilities aggregating ■ Distributed energy generation
Investments larger investors leading to high smaller projects into one ■ EnergyEzciency
transactional cost opportunity
■ Securitization
Unattractive risk- ■ Construction Risks ■ Loan/Guarantees/FirstLoss ■ All (in emerging economy
return profile ■ O-taker/developmentrisks ■ Political Insurance Loss context)
■ Regulatory/currencyrisks ■ Local Currency Hedges
■ Subsidies ■ Public Transport
Inherent below- ■ Revenues need to be subsidized
market rate ■ GreenBonds(issuedbyDFs/ ■ Climate-resilient Infrastructure
■ Climatechangebene4ts(avoided
returns public sector, catalyzing private
losses/ESbene4ts)notfactoredin ■ Agriculture Adaptation
capital)
No Return ■ Grants (For ‘no return’ sectors, Public
■ Financial disincentives (e.g. higher ■ Forest & Land-Use
investments unlikely to catalyze
return on deforestation than ■ Agricultural Adaptation
aorestation) private sector investment - instead,
■ Climatebene4tsnotmonetized policy / regulation is needed)
Source: Climate Policy Initiative, Climate Finance Leadership Initiative, expert interviews
RE CO MMENDATIONS ON HOW INDIA C A N C HA N N E L IZ E PU B L IC S E C T OR FIN A N C E T O

C ATAL Y ZE C L IM A T E IN V E S T M E N T
1 Promote direct investment in commercial projects to demonstrate viability e.g. Fixed price
otakeagreementswithgreenhydrogenplantsviapublicsectorenterprises.
2 Adopt project blended finance with multilateral agencies to drive investment in projects such
as Agri-tech.
3 Mobilize directed priority sector lending for sustainable finance via regulatory prescription
for minimum investments & preferential capital norms for identi4ed priority low carbon
technologies/sectorspeci4cprojectsforbanks4nancial & institutions.Wecouldalsoconside
interestsubventiontosubsidize4nancingoflowcarbontechnologyprojectsetc.
4 Provide credit risk guarantees / First loss lending: A major barrier for climate 4nancing is
perceived higher risk pro4les. Credit guarantees on loans, bonds from banks, setting up of a
risk sharing facility for high priority projects can help catalyze investment.
5 Issue of green government securities: The Indian government in the latest budget committed
to issuing INR 24,000 crore as green government securities. The proceeds from these securities
should be directed towards viability gap funding for low carbon technologies, adaptation
projectsetc.Theattractivenessoftheseinstrumentscanbeenhancedwith4scalbene4ts
investorslikecapitalgainbene4ts.
6 Incorporate a nationalized green bank:SimilartohowCCcreatedadevelopment4nancial

institution for providing medium-term and long-term project 4nancing to ndian businesses
setting up an institution/ mechanism to invest in medium-term and long-term 4nancing for
priority projects involving low carbon technology, e.g., Project 4nance for Green Hydrogen
projects needs to be considered.
7 R&D Funding & incentives for Low carbon & climate resilient goods
THE GREEN SHIFT
258

Chapter
14
CARBON
MARKET &
PRICING
In this section
1. Introduction 261
2. International Standards 263
3. Carbon Pricing 268
4. Developments in India & Conclusion 273

INTRODUCTION
Economic growth is invariably associated with viable. An instrument called carbon credits has
energy consumption, which has many adverse evolved to balance economic viability with the
effects, including carbon emissions. Carbon potential to contribute towards the reduction of
emissions cause global warming and are therefore carbon emissions.
responsible for climate change. They also have ill
One carbon credit is equivalent to one metric ton of
health effects on human beings, with more and
CO2 or equivalent GHG emission avoided / removed,
more people suffering from respiratory illnesses.
which would have occurred in the absence of the
Carbon emissions have a huge social cost and put
project. All GHGs are converted into their respective
a responsibility on society to reduce them. Various
carbon dioxide emissions levels and are accounted
projects with this objective are being implemented
for by the issue of carbon credits.
worldwide; however, many are not economically
ELIGIBILITY OF EMISSION REDUCTION PROJECTS -

CORE QUALITY CRITERIA
1
ADDITIONALITY
Emissions reduction that would not have occurred in the absence of the activity (resulting in
generation of carbon credits) as a result of some other activity under BAU scenario. Also, the activity
wouldnothavecomeupasaresultofdirectgovernmentinterventionorbusinesspro4tability
2
PERMANENCE
Emissions reduction or removal cannot be reversed in the future
3
LEAKAGE
Emissions are not truly reduced and could have been displaced to other locations
4
ACCURACY
Credits are issued based on actual emissions reductions
5
INTEGRITY
No double counting of emissions reductions
In the 26th UN Climate Change Conference of reductions) for use towards nationally determined
Parties, a new mechanism was adopted under contributions or other purposes. These initiatives are
Article 6.4 of the Paris Agreement to improve the country-led. Under new UN-governed mechanism,
shortcomings of Article 6.2 and Kyoto Protocol’s there will be a supervisory body for creating a
Clean Development Mechanism. Under Article 6.2 carbon-credit database, and central accounting
of the Paris Agreement, countries are allowed to will be done to prevent double-counting. Both
transfer mitigation outcomes (such as emissions public & private sectors can participate.
THE GREEN SHIFT 262
To meet the goal of limiting global warming to have to invest in decarbonizing efforts to reduce
well below 2, preferably to 1.5 degrees Celsius, the overall GHG emissions and eventually achieve
compared to pre-industrial levels, countries would net-zero by around 2050 (refer to Exhibit-14.1).
Exhibit-14.1: Mitigation pathways compatible with 1.5°C targets
Global total net CO2 emissions Non-CO2 emissions relative to 2010

Billion tonnes Emissions of non-CO2 forcers are
of CO2 /year
also reduced or limited in pathways
50
In pathways limiting global warming to limiting global warming to 1.50C with
1.50C with no or limited overshoot as well no or limited overshoot, but they
40 as in pathways with a higher overshoot, do not reach zero globally.
CO2 emissions are reduced to net zero Methane Emissions
30 globally around 2050.
1
20
0
2020 2040 2060 2080 2100
10
Four illustrative model pathways Black Carbon Emissions
1
0
-10 0
P1
P2 2020 2040 2060 2080 2100
Nitrous Oxide Emissions

-20
P3
1
P4
0
2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 2020 2040 2060 2080 2100
Timing of net zero CO2 Pathways limiting global warming to 1.50C with no or
limited overshoot
Line widths depict the
5 - 95th percentile and Pathways with higher overshoot
the 25 - 75th percentile
Pathways limiting global warming to below 20C
of scenarios
(not shown above)
Source: IPCC 1
India is a developing country aiming to increase emissions are required. Thus, India’s transformation
its manufacturing sector’s contribution to its GDP. to a low-emission economy will be complex in
This will increase energy demand. Therefore, India nature compared to the developed world. It
must balance the need for economic growth needs to map its emissions and target the funds
and the increase in energy demand with carbon accordingly. In this regard, various standards have
emissions reduction. Sustainable economic been introduced worldwide. Some of these global
development and a road map for reducing carbon standards are outlined in the next section.
1
https://www.ipcc.ch/sr15/chapter/spm/
INTERNATIONAL
STANDARDS
Exhibit-14.2: Explaining Carbon Credits
Carbon Credit
CO2
1 ton CO2e
=
1 Carbon Credit
CLEAN DEVELOPMENT MECHANISM2
The Clean Development Mechanism was part of their emissions reduction commitments
developed under the Kyoto Protocol, which was by investing in projects in developing countries
adopted in 1997. It is supervised by the Conference or by purchasing Certified Emissions Reductions,
of the Parties (COP) of the UN Framework each unit equivalent to saving one metric ton of
Convention on Climate Change (UNFCCC)3. carbon emissions. Certified Emissions Reductions
Under this mechanism, industrialized countries, are issued to sustainable projects that lower
known as Annex I countries, are required to limit carbon emissions, such as renewable energy
and reduce GHG emissions in accordance with projects or energy-efficient boilers.
the agreed targets. Annex I countries could meet
JOINT IMPLEMENTATION4
Joint Implementation is another mechanism directly, but this could help fund green projects
under the Kyoto Protocol. It allows Annex-I in India and develop awareness and capabilities
countries with emissions reduction targets across the value chain. India cannot claim the
to collaborate to earn Emissions Reduction carbon credit under joint implementation, which
Units from emissions reduction or emissions could lead to double counting. India will receive
removal projects in other Annex-I countries. the monetary benefit for mitigation projects, but
This mechanism is primarily beneficial to the industrialized country funding the project will
industrialized countries. India not being included claim the carbon credit.
in industrialized countries cannot benefit from it
2
https://en.wikipedia.org/wiki/Clean_Development_Mechanism#:~:text=The%20Clean%20Development%20Mechanism%20(CDM,to%20meet%20international%20emissions%20targets
3
https://unfccc.int/kyoto_protocol
4
https://unfccc.int/process-and-meetings/the-kyoto-protocol/mechanisms-under-the-kyoto-protocol/the-clean-development-mechanism
THE GREEN SHIFT 264
ARCHITECTURE FOR REDD+ TRANSACTIONS5
The UNFCCC Conference of the Parties (COP) is voluntary and depend largely on the national
created the REDD+ (“Reducing Emissions circumstances, capacities and capabilities.
from Deforestation and forest Degradation”)
The Architecture for REDD+ Transactions is a
framework to guide activities in the forest sector
standard that credits emissions reduction and
that would help reduce the overall emissions from
removal from national and large subnational
deforestation and forest degradation perspective.
REDD+ programs through conservation and
This also includes practices for sustainable
forest management. It also registers national and
management of forests and conservation and
subnational project levels of forest preservation
enhancement activities for the forest carbon
and restoration, issuing carbon credits under the
stocks in developing countries. The activities
TREES program.
that are covered under the REDD+ framework
VERRA6
Verra was founded in 2007, with headquarters Jurisdictional and Nested REDD+, it provides
in Washington, DC, and manages various guidance to national & subnational governments
types of programs. Under the Verified Carbon to support development of REDD+ programs.
Emission program, it registers forest and wetland The Climate, Community & Biodiversity Standards
conservation and restoration projects, agriculture is the framework created to assess land
land management, transportation efficiency management projects. Other programs include
improvements, and many other GHG reduction the Sustainable Development Verified Impact
& removal projects for earning carbon credits. In Standard, the California Offset Project Registry,
another framework, Verified Carbon Emission and the Plastic Waste Reduction Program.
GOLD STANDARD, SWITZERLAND7
The Gold Standard was established in 2003 by change, energy-efficient projects on efficient
World Wildlife Fund. It is administered by a non- cooking, and mini-grid renewable energy
governmental organization based in Geneva, projects; secondly, renewable energy projects
Switzerland. It is a standard that combines such as photovoltaics, tidal, wind, and hydro
carbon emissions reduction targets with impact energy, renewable biomass, and waste to energy;
on the UN Sustainable Development Goals. It and thirdly, afforestation and reforestation
issues carbon credits for various types of projects projects such as planting trees. It has a Gold
that include, firstly, community service projects Standard for Clean Development Mechanisms
for waste management, water, and sanitation, and a Gold Standard for Voluntary Emissions
hygiene projects with an impact on climate Reductions.
INTERNATIONAL REC STANDARD8
The International REC Standard Foundation is the environmental attributes of generating one
an organization based in the Netherlands that megawatt hour of energy through renewable
issues Renewable Energy Certificates (RECs) sources. The minimum size of a project is 15 kilo-
for renewable energy projects. An REC is a type watts peak.
of Energy Attribute Certificate that represents
5
https://www.artredd.org/about-us/
6
https://verra.org/about-verra/who-we-are/
7
https://www.goldstandard.org/resources/faqs
8
https://www.irecstandard.org/about-us/#/
GLOBAL CARBON COUNCIL9
The Global Carbon Council is an initiative of the binding projects that started operations after
Gulf Organization for Research & Development. January 1, 2016. These projects must result in the
It develops standards for emissions reduction reduction of six designated GHGs, contribute
calculations and monitoring of GHG reduction to the UN Sustainable Development Goals, not
projects. It issues emissions reduction units harm society or the environment, and fulfill other
called Approved Carbon Credits for legally non- requirements of the Project Standard10.
CARBON OFFSETTING AND REDUCTION SCHEME FOR INTERNATIONAL AVIATION (CORSIA)
CORSIA was launched as the first global market- CORSIA enables offsetting the amount of CO2
based measure for the aviation sector. It is a emissions that cannot be reduced by leveraging
cooperative approach to offer a harmonized way classical levers such as use of technological
to reduce emissions from international aviation improvements, operational improvements, and
while respecting specific constraints faced by sustainable aviation fuels (refer Exhibit-14.3).
ICAO (International Civil Aviation Organization)
CORSIA off-setting requirements will be
Member States. The goal is to stabilize the levels
applicable from 2027 (mandatory 2nd phase
of GHG emissions from 2020 onwards (CNG2020).
of CORSIA) for Indian Operators as per the
This goal can be achieved by acquisition and
announcements from DGCA11.
cancellation of emissions units from the global
carbon market by aero plane operators.
Exhibit-14.3: Contribution of measures for reducing aviation sector emissions12
1800
1600
Operational Improvements
International Aviation Net CO2 emissions
1400
Basket of Measures
Aircraft Technology
1200
1000
Sustainable
Aviation Fuels
800 & CORSIA
600
Carbon neutral growth from 2020
400
2010 2020 2030 2040
9
https://www.globalcarboncouncil.com/about-gcc/global-carbon-council/
10
http://globalcarboncouncil.com/wp-content/uploads/2021/10/Project-Standard-v3.1.pdf
11
https://www.icao.int/environmental-protection/Documents/CorsiaBrochure_8Panels-ENG-Web.pdf
12
https://pib.gov.in/PressReleasePage.aspx?PRID=1780858
THE GREEN SHIFT 266
AMERICAN CARBON REGISTRY13
The American Carbon Registry was founded in projects, including afforestation and reforestation
1996. It operates in both voluntary and regulated of degraded lands, restoration of wetlands,
global carbon markets. It issues Emissions use of certified, reclaimed hydro-fluorocarbon
Reduction Tons against American Carbon refrigerants and advanced refrigeration systems,
Registry standards, which are equivalent to the landfill gas destruction and beneficial use,
reduction or removal of one metric ton of CO2 transportation and fleet efficiency, and carbon
from the environment. It registers a wide variety of capture and storage.
CARBON CREDITS
In addition to the above, there are many regional After successful verification of carbon emissions
and local standards. In general, five steps must reduction from a project, equivalent carbon
be followed prior to issuance of carbon credits. emissions reduction units are issued.
Five steps to be taken before issuance of carbon credits
1 2 3 4 5
Project design Validation by Registration with Monitoring Veri4cation
appraisal a third party respective registry
Voluntary carbon markets (VCM) are mechanism India is a developing country. It has announced
that act as the financial intermediaries and its target to be net zero by 2070. Taking their lead
allow carbon emitters (for e.g., a large steel from the government, many companies have
manufacturer) to offset their unavoidable also announced plans to become net zero, and
emissions by purchasing carbon credits emitted others have started planning carbon emissions
by projects targeted at removing or reducing reduction projects. Efforts from all industries are
GHG from the atmosphere. required in one way or another to achieve this
target. Accordingly, various companies will be
As can be seen in Exhibit 14.4 above, there
implementing different sorts of carbon reduction
are different entities involved in overseeing
projects and looking for green financing with the
registration, monitoring, and issuance of carbon
support of carbon-credit mechanisms.
credits for various projects. Each organization
follows respective applicable guidelines It is the need of the hour to have a simpler
to issue the appropriate carbon emissions yet internationally acknowledged process to
units. It isn't straightforward for an individual register, validate, and issue carbon credits
company to look for and evaluate the proper for Indian projects with unique co-benefits
organization to register, monitor, and validate and geographic attributes. India previously
its project(s). Generating awareness on multiple created its form of trading instruments, such
registry platforms with different evaluation as RECs, wherein one REC is equivalent to one
methodologies is onerous. The presence of megawatt hour of electricity generated from
multiple standards and registry organizations, an eligible renewable energy project. RECs are
therefore, slows down the adoption of the carbon now a popular instrument among the masses.
emissions reduction process. Similarly, Energy Saving Certificates are issued to
13
https://americancarbonregistry.org/how-it-works/what-we-do
Designated Consumers who have overachieved Management Plan. However, it has enlisted a
their respective Specific Energy Consumption group of companies who do the audits of various
reduction targets under the Perform, Achieve, companies based on these regulations and
and Trade Scheme. submit reports to the board .
It is thus necessary to have an Indian registry Along similar lines, the governance structure of
body that will outline an Indian standard, policy, the carbon market needs to be designed and
and guidelines for the registration, monitoring, implemented. As mentioned above, there is a
and validation of different projects under a need to create an Indian registry body to act as
single umbrella. At the same time, balancing a regulatory body for the carbon market. It may
the regulatory work with the execution work is enlist public or private companies to perform
necessary. Accordingly, a balancing governance project report preparation, validation, monitoring,
mechanism is required to maintain the quality and certification. A single regulatory body and
of the applicable standards and make the affiliated consulting companies with experts
execution as effortless as possible. This central who can handle all sorts of projects will provide
body can take a cue from the Petroleum and a suitable solution for maintaining quality and
Natural Gas Regulatory Board. This governance achieving the maximum adoption of carbon
mechanism issues various regulations, such as emissions reduction measures. This would
technical and safety standards and specifications, simplify the process and help create awareness
plus the Emergency Response and Disaster and peer learning.
Exhibit-14.4: Basics of Carbon Credits - Generation & Use
Emission Mitigation Project Project verification & credit issuance
i. A developer sets up a project. i. Acarboncreditis"issued"i.e.acerti4cateis

issued and a unique serial number on the
ii. Developer obtains validation and registers
registry is created for each ton of CO2e
onacerti4cationstandard
ii. The4rstcreditissuancecanbe2-3years
iii. Developer operates and monitors results
after the start of the project
iv. 3rdpartyveri4esresults
Credits retired to meet company target Trading and Carbon Markets
CO2
i. The carbon credits are "retired", by i. Issued credits belong to project developers
companies, to ful4ll either voluntary
ii. These can be bought & sold, and their
emission reduction targets or to create
ownership on registry charges, until a buyer
"carbon neutral" products for their
"redeems" (retires), at which point the
customers
credit ceases to exist (marked as "retired"
in registry)
THE GREEN SHIFT 268
CARBON PRICING
As mentioned earlier, carbon emissions also have a reduction in emissions via schemes such as those
social cost. Carbon pricing is a method of attaching pertaining to energy efficiency.
cost to GHG emissions to hold emitters responsible
Another way of implementing carbon pricing is
and to change their behavior. Carbon prices can be
to embed notional value in financial instruments
either be imposed by government agencies, in the
that reduce the capital costs of low-carbon
form of a carbon tax, or can be market driven, in
programs and projects. Explicit carbon pricing
the form of an emissions trading system (ETS).
can be complemented by shadow carbon pricing,
A carbon tax explicitly puts a price on carbon where public- and private-sector entities study
emissions, setting a price per metric ton of CO2 how future carbon pricing or changes in carbon
emissions in the form of a government-defined price will affect investment decisions. Both the
tax rate. ETS is a platform and market-driven United States and the United Kingdom use
mechanism that establishes a price on carbon shadow carbon pricing for the public sector.
emissions based on supply and demand of Shadow cost pricing is a theoretical or assumed
carbon emissions reduction units. Emitters and cost per metric ton of carbon emissions. With the
overachievers trade emissions units over the ETS shadow cost method, a cost of carbon is calculated
to comply with emissions targets. ETS refers to the within business processes, such as business
market in which carbon credits and certificates case assessments, procurement procedures, or
are bought and sold, within defined standards, for business strategy development. This price is used
prevention or reduction of GHGs. to demonstrate the cost of carbon implications of
those business decisions. The resultant cost can
Results-based climate finance is a form of climate
then be communicated to stakeholders.
finance where funds are disbursed to the recipient
upon achievement of a predefined set of climate- Around the world, carbon pricing has been
related results. These results are typically defined implemented in the form of carbon taxes and ETS.
at the output or outcome level, which means Most high-income countries have implemented
that results-based climate finance can support carbon taxes, with some of these countries now
the development of specific low-emissions moving toward implementation of ETS. However,
technologies or the underlying climate outcomes, most middle-income countries, except for African
such as emissions reduction. countries, use ETS for carbon pricing. Additionally,
some middle-income countries that initially
Another method is internal carbon pricing, which
implemented carbon taxes have now either
is a voluntary method for companies to internalize
implemented ETS or are actively considering
actual or expected cost of carbon under various
implementing ETS. As a middle-income country,
policies and regulations. Companies adopt internal
India should also choose ETS as its carbon pricing
carbon prices for multiple reasons. First, the internal
method15. Accordingly, a dedicated carbon-credit
pricing of carbon is used for risk management
exchange trading platform is needed, the details of
purposes; as companies are increasingly exposed
which are presented in Exhibit-14.3.
to regulatory and financial risks attached to the
implementation of governmental carbon pricing Some companies require less capital to achieve the
regimes, they seek to measure, model, and manage same amount of emissions reduction compared
such risks, including climate change risks. Second, to other companies. A new, advanced-technology
internally defined prices of carbon are featured in plant may find it more economically feasible to
strategic planning activities. Third, internal carbon reduce emissions over time, in contrast to an
pricing can be factored into decisions on capital older plant that has reduced economic viability. In
investments in projects involving increases in GHG this case, the older plant is better off purchasing
emissions, changes in energy source portfolio, and carbon credits, whereas the newer one is better
15
https://carbonpricingdashboard.worldbank.org/map_data
off investing in carbon emissions reduction In another instance, the Indian state of Gujarat
technology or carbon-capture utilization and launched the world’s first emissions trading
storage. Accordingly, this arbitrage will generate system for particulate pollution in Surat. The
a market of carbon credits. A market-based Gujarat Pollution Control Board created the
emissions trading mechanism gives industries platform in collaboration with researchers from
financial incentives to reduce emissions at lower the Harvard Kennedy School, Yale University, the
costs and provides them with an opportunity to Energy Policy Institute at the University of Chicago,
earn profit through trading carbon emissions and the Abdul Latif Jameel Poverty Action Lab.
reduction units. Caps on particulate emissions were imposed on
each industry. Emissions during the trading period
In India, trading of carbon credits was first started
were monitored in real-time using a continuous
on the Multi Commodity Exchange of India Limited
emissions monitoring system18. If more than 50
(MCX) in 200816. MCX was the first exchange in
percent of a continuous emissions monitoring
Asia for the trading of carbon credits. MCX is a
system unit’s data was missing or irregular during
commodity derivative trading platform that deals
the trading period, the unit’s recorded emissions
in futures. An organization could sell carbon
data dating back three months was used to
credits, either immediately or through a futures
calculate emissions. An environmental damage
market, just like any other commodity. The futures
compensation of 200 rupees per kilogram was
contracts expired in December each year, at
imposed for every kilogram of emissions above
which time each trader on MCX had to close their
the cap at the end of the trading period. It is
position. The timing was matched to the European
estimated that it resulted in a 24 percent reduction
compliance markets. However, the trading of
in particulate emissions19.
carbon credits was stopped in 2012. In India,
institutional and foreign entities are prohibited Based on knowledge gained from carbon
from purchasing commodity derivatives under emissions trading on MCX and the Gujarat
the Forward Contracts (Regulation) Act, 195217. particulate emissions trading platform, a dedicated
As Indian companies were not required to limit national carbon emissions trading platform needs
carbon emissions, they were primarily sellers of to be designed.
carbon credits. But without a significant buyer’s
The Indian government passed the Environment
market, which would typically be Annex I countries
(Protection) Act in 1986, which has been amended
under the Kyoto Protocol, the market for carbon-
several times. Section 14 of the act requires that
credit derivatives did not flourish. The purchase of
every person responsible for an industry, operation,
carbon credits by financial investors from around
or process that requires consent under Section 25
the world would have created a stream of green
of the Water (Prevention and Control of Pollution)
financing for carbon emissions reduction projects.
Act, 1974 (6 of 1974) or under Section 21 of the Air
Therefore, to create a flourishing carbon market
(Prevention and Control of Pollution) Act, 1981
by attracting foreign financial institutions and
(14 of 1981), or both, or authorization under the
investors, the Forward Contracts (Regulation) Act
Hazardous Wastes (Management and Handling)
must be amended to allow foreign investors to
Rules, 1989 issued under the Environment
trade carbon-credit derivatives in India over the
(Protection) Act, 1986 (29 of 1986) shall submit each
dedicated carbon exchange platform.
16
News article – The Economic Times Last updated dated 09.06.2008, MCX launches futures trading in carbon credit; https://economictimes.indiatimes.com/markets/commodities/mcx-launches-futures-trading-in-carbon-
credit/articleshow/3115007.cms
17
Hindu business line article by Mr. Nilanjan Ghosh – Revice derivatives in carbon credit
18
Harvard Kennedy School news dated: 06.06.2019 – India launches World’s First Particulate Emission Trading
19
IndiaSpend Explainers dated 12.11.2021 - Explained: How Surat’s Emissions Trading Scheme Works To Reduce Air Pollution
THE GREEN SHIFT 270
year an environmental audit report (Form V) for the India is one of the few countries on track, achieving
financial year ending March 31 to the relevant state its nationally determined commitments to halt
pollution control board on or before September runaway global warming by achieving its emissions
30. Accordingly, every person responsible for an intensity target and performing better than other
industry operation or process must submit an G20 peers. Banks and international financial
environmental emissions report to their respective institutions have made significant commitments
state pollution control board in the prescribed toward investing in green projects and are looking
format. These reports provide an overview of yearly for investment destinations globally. India would
emissions. Continuous emissions monitoring need a significant capital outlay (~US $ 2.5 by 2030)
systems should be made mandatory, as in Surat, to meet its climate action goals; hence, it becomes
as it will help create constant monitoring and crucial to improve overall infrastructure to attract
provide a baseline for the repository of nationwide foreign capital.
emissions, thereby reducing carbon emissions.
Exhibit-14.5: Role of respective stakeholders in carbon market
No. Stakeholder and role Considerations and activities
1 Government a. Passes acts for the formation of the Indian Registry Body and
Exchange Regulator and governs regulations or amendments,
Responsible for the
such as amendments to the Forward Contracts (Regulation) Act.
overall governance
mechanism of the carbon b. What types of drivers and mandates are required to push
market adoption of carbon reduction technologies and measures, such as
mandating the use of LED lights and green buildings?
c. What type of carbon pricing should be adopted (carbon tax, ETS,

internal carbon pricing, or results-based carbon pricing) and what
market mechanism (auctions, exchange trading, or OTC1) should
be facilitated?
2 Exchange Regulator a. What are the applicable regulations for marketplaces and
exchanges in the target jurisdiction?
Regulates the carbon-
credit dedicated b. Whatregulations(suchasthoseonsecuritiestradingand4nancial
exchange; this is a body reporting) apply to the trade or purchase of spot and future
similar to the Securities contracts for carbon credits? What clari4cations would help
and Exchange Board of market participants?
India
c. What regulations support or hinder the development of carbon
projectsinnearbyjurisdictions?Whatclari4cationswouldhelp?
d. When will trades occur? What types of instruments (derivatives,

options, swaps) should be used, and how would they be priced?
What types of products and contracts would be sold on the market
or exchange?
e. What types of participants would be part of the market?

3 Indian Registry Body a. ssuescarbonregistrystandardsfordierentprojectsanddecides

on the type and quality of carbon credits that can be issued to
Issues carbon-credit
the projects (standard for accounting, monitoring, and issuance of
regulations
carbon credits).
b. Who can issue carbon credits to projects? One option could be

a panel of consultants who will do project registry, accounting,
monitoring,andissuanceofdierentinstruments.
c. Required to work in tandem with state pollution control boards

to oversee India’s carbon reduction and net-zero emissions target
trajectory. What else is required to achieve the target?
d. Where and how will the project registration, accounting data,

monitoring, and instrument information will be stored? The
development of a nationwide central portal or system may be
required.
4 Consultants a. What quali4cations are necessary for consultants to handle the

issuance of carbon credits and instruments in compliance with
Conduct project
relevant standards?
registration, accounting,
monitoring, and issuance b. How can transaction cost be minimized to be aordable for each
of carbon credits individual industry player?
5 Exchange operator a. Register players on the exchange (such as buyers, sellers, and
brokers). What are the qualifying criteria for the exchange? How
To look after day-to-day
are Know Your Customer, onboarding, and quality assurance
operations, such as the
implemented?
Indian Energy Exchange,
BSE, and National Stock b. Whattypesoforderandorder4llingmechanismscanbeenabled?
Exchange of India
c. How are clearing, settlement, and custody designed? How is
integration with registries created and managed?
d. What is the potential revenue model for the exchange?
6 Buyers a. What might the core buyer base of an exchange be? How can this
core buyer base be expanded? What are the driving incentives
for buyers to purchase instruments over the exchange (such as
mandatory investment in green energy by foreign investors,
Indian lenders, and Indian companies)?
b. What is the current voluntary, compliance, and speculative

demand? What will the demand outlook for this buyer base be?
c. What potential can the exchange facilitate to actualize current

demand potential and scale up long-term demand?
THE GREEN SHIFT 272
7 Suppliers a. How can suppliers be driven to incentivize and implement carbon

emissions reduction projects?
b. What is the catchment area for carbon projects for this exchange?
How far can this catchment area be expanded? This may require
implementation of continuous emissions monitoring systems.
c. What is the current supply in this area and what is the potential
supply?
d. What are the main ways that the exchange can drive carbon
project development in a supplier’s catchment area?
Exhibit-14.6: End-to-end processes trading for respective stakeholders
S t akeh old ers

Stages of Carbon
Credit creation &
Buyer Exchange Registry Seller/Project
trading Developer
Create Registry Approve Create Registry

Account Account
SubmitKYCAML
/ KYCAML
/ andArticle-6 SubmitKYCAML
/
documents related checks documents
User On-boarding
User on-boarding Providecreditproject
/
including creating details
settlement accounts
Quality checks Instruct registry to

on credits transfer credits to
Pre-Trade Tranfer credits to exchange
exchange
Indicate price, quantity Indicate price, quantity

Market Surveillance
and order type and order type
Submit Bid Pre-clearance SubmitOer

Trade
Fill Order
Generate
Contract Note
Post-Trade Settlement
Receive Credits Receive Payment
(Settlement) (Settlement)
out of exchange
Retire Credits
Move credits
Secondary
Credits
Hold
Secondary Trading
DEVELOPMENTS IN INDIA & CONCLUSION

Against the backdrop of the Paris Agreement be brought under obligations in a phased manner
Rulebook being finalized in respect of Article gradually. This would require the development of
6, which focuses on carbon trading through methodologies regarding each sector/activity. The
bilateral/cooperative approaches and international envisaged ICM may include a mix of obligated
market mechanisms, India has taken steps entities meeting their compliance requirements
mandated for the Host Party/Country. India has and entities participating voluntarily through
notified the National Designated Authority for projects generating offsets. It is essential to have
the Implementation of the Paris Agreement as proper documentation of the contribution of
well as submitted the updated NDCs to UNFCCC. the Indian projects in meeting India’s NDCs. The
In order to achieve India’s NDCs, a concerted and registry to be developed for the envisaged ICM may
focused approach has been adopted by various help in tracking all the carbon credits generated by
stakeholders. There have been deliberations Indian projects. Envisaged ICM would require the
regarding the envisaged Indian Carbon Market development of methodologies, setting sectoral
(ICM). Ministry of Power has been involved in the targets/benchmarks and establishing the required
conceptualisation by engaging all concerned infrastructure and governance framework.
stakeholders. It is essential that such an envisaged
Experiences of the PAT scheme may help the
ICM facilitates the achievement of India’s NDCs.
building up of the governance structure. The
Perform, Achieve, and Trade (PAT) Scheme in
governance structure may have a decision-making
the energy sector may be transformed into an
body and an executing body. The executing
important component of the envisaged Indian
framework would include the establishment/
Carbon Market. There have been deliberations
constitution of Technical Committees, Accredited
regarding the space for the offset market in
Carbon Registry and Trading Platforms, Accredited
addition to the compliance market. This may help
Verifiers and Validators and Carbon Emissions/
in taking activities / projects that would help in
Removals Database. India is also working on
emission / removal of GHG other than those that
developing a comprehensive national strategy
relate to reducing carbon emissions from the
for leveraging international carbon finance
entities of the obligated sectors that form part of
through Article-6 mechanisms. NDAIAPA has been
the compliance market.
mandated to take decisions in regard to the type of
The envisaged ICM is intended to be developed in projects that may take part in international carbon
a phased manner, that is, different actors would market under Article-6 mechanisms.
Aspects crucial for an effective carbon market to function in India
1 3
There must be a carbon-credit standard which Asimpleandcost-eectivesupply-&-demandbased
is simple and at the same time ensure credits of mechanism needs to be created for carbon credits.
the highest quality which would recognized at This includes registration & validation of carbon
international level. credits by a third party to create a supply of credits,
implementation of a continuous monitoring system
for creating demand domestically and allowing
foreign investors as buyers of carbon credits.
2
India, given its unique position and requirements,
would need to factor in global best practices and
4
develop a unique world-class framework suited ETS should serve as the carbon pricing methodology
to its peculiar requirements, which can serve as a of India. Accordingly, a carbon exchange needs to
reference elsewhere in the world. be formulated.
THE GREEN SHIFT
274

Chapter
15
INSTITUTIONAL
SETUP TO MANAGE
ENERGY TRANSITION
In this section
1. Prerequisites for an orderly energy transition 277
2. Ilearnings from across the world 278
3 Proposed Setup for india 283

PREREQUISITES FOR AN ORDERLY

ENERGY TRANSITION
Smooth and orderly energy transition will There are three important roles that need to be
necessitate a high degree of coordination among played to ensure that various efforts towards
the key protagonists in energy supply and energy transition are coordinated, have the
energy consuming sectors. At the government right prioritization and focus for most optimal
level as well, an orderly and just transition would resource allocation and regular course correction
require coordinated moves across the concerned to incorporate changes in learnings, technology
ministries as well as states, therefore, requiring an and other external/ internal factors. The three roles
effective and responsive mechanism in this regard, that need to be delivered and which will affect the
in line with global best practices. composition and structure of the set up, are:
Exhibit-15.1: Key aspects for an orderly energy transition
There are three key roles that need to be

completed for an orderly energy transition
1
Create an integrated roadmap
2 3
Driving action and review basis Providing accurate data which
for an orderly transition, with for the roadmap and taking any is the ‘single source of truth’
actions and roles de4ned forcourse correction measures and can be used by dierent
dierent stakeholders. The task
towards meeting the overall agencies/people
will also involve proposing policy objectives
changes, as required
THE GREEN SHIFT 278
LEARNINGS FROM ACROSS

THE WORLD
Based on inputs obtained during deliberations, decisions basis their pre-existing governance
below is a brief description of institutional structure, existing agencies, and the assessed
mechanisms that are currently prevalent in magnitude of change they must go through.
different countries. Countries have taken these
CREATING AN INTEGRATED ROADMAP TO AN ORDERLY TRANSITION, WITH STEPS DEFINED

FOR DIFFERENT STAKEHOLDERS AND RECOMMENDATIONS FOR ANY POLICY CHANGES
NH:hH2HfiO§2Hfi:H2o
2—hH2ˇfih/—fi2h—HH2:H
roadmap to statutory bodies.
Table-15.1: Examples of Transition Roadmaps of some countries
Country Transition Roadmap Created
The Ministry for Industry, Energy and Emissions Reduction

is the coordinating body that is driving integrated
planning. The government has also created ‘Climate
Change Authority’ as an independent statutory agency
established to provide expert advice to the Government
AUSTRALIA
on climate change policy. Also, ‘Technology Investment
Advisory Council’ provides advice on low emissions
technology investment priorities, as well as economic
stretch goals and pathways that will drive economic
prosperity and lower emissions.
table contd. on next page...

Country Transition Roadmap Created
The first plan / roadmap called NECP (National Energy

and Climate Plan) was created through joint efforts of
more than 100 parties, keeping deliberations broad-based
to have consensus on actions. These parties signed a
‘National Climate Agreement’ to align on objectives, goals
for different time-periods and action plan. Plan Bureau
NETHERLANDS
for Leefomgeving (PBL - Netherlands Environmental
Assessment Agency) coordinated the effort. PBL is
an independent body aimed at improving the quality
of political and administrative decision-making by
conducting outlook studies, analyses and evaluations in
which an integrated approach is considered paramount.
Ministry of climate coordinated establishment of the

integrated roadmap. The plan has been created using
NORWAY
Statistics Norway’s general equilibrium model SNOW,
which is a computable general equilibrium (CGE) model.
The Directorate-General for Energy and Climate (DGEC),

which operates under the aegis of the Ministry for
Ecological and Inclusive Transition, is responsible for
drafting and implementing policies on energy and
energy transition. Structures within this Directorate-
General include the Directorate for Energy and the
Climate and Energy Efficiency Department. Directorate
of Energy ensures that the energy markets (electricity,
FRANCE gas, oil) are functioning properly under competitive and
environmentally friendly conditions and also takes into
account challenges related to energy transition. The
Climate and Energy Efficiency Department drafts and
implements policies on energy transition and climate
change. DGEC coordinated the creation of the 10 year
‘Multiannual Energy Plan (MEP) and much more shorter/
medium term and granular ‘National Low-Carbon
Strategy (SNBC).
The Department for Business, Energy and Industrial

UNITED Strategy is the nodal body responsible for creating the
KINGDOM Climate Change Act, Carbon targets and actions related
to the same.
THE GREEN SHIFT 280
DRIVING ACTION & REVIEW ON THE BASIS OF CREATED ROADMAP, AND TAKING ANY COURSE
CORRECTION TOWARDS MEETING THE OVERALL OBJECTIVES
Most countries have given the task of review and

course correction to a nominated ministry.
Table-15.2: Examples of implementation strategies adopted by some countries
Country Implementation Strategy Adopted
Implementation is with relevant agencies that own their

part of the agreement. The Minister of Economic Affairs
and Climate Policy has a coordinating responsibility
and is tasked with overall monitoring envisaged under
NETHERLANDS
the Climate Agreement. The Dutch government has
developed a progress monitor to keep track of progress
and to make any amendment in the plan (reviewed every
two years).
The Ministry for Industry, Energy and Emissions Reduction

is also the coordinating body to monitor the transition
AUSTRALIA and drive any changes in plan (reviewed once every 5
years), while reporting emissions quarterly and issuing
projections annually.
While the responsibility of driving actions is distributed

to the owning agencies, Norway has created additional
institutions to drive integrated action. This includes a
State-Owned Enterprise (SoE) Enova under Ministry
of Climate that contributes to reduced greenhouse
gas emissions and promotes technology development
through providing financial support to industry,
households, local and regional governments. Norway
NORWAY has also created another SoE Nysnø Klimainvesteringer
AS (Nysnø), an investment company wholly owned by
the Norwegian State, through the Ministry of Trade,
Industry and Fisheries. Nysnø contributes to reducing
greenhouse gas emissions through investing in non-
listed companies that are working on the transition from
technology development to commercialization. The
ministry of climate is responsible for monitoring progress
and publishing progress updates every year.
table contd. on next page...

Country Implementation Strategy Adopted
The Ministry for Ecological and Inclusive Transition

is responsible for preparing and implementing the
government's policy in the fields of sustainable
FRANCE development, climate, energy transition and biodiversity.
It is also the body responsible for reviewing progress on
behalf of the government and taking any measures to
course correct.
The UK government uses the Climate Change Act

to set five-yearly carbon budgets, these include the
amount of greenhouse gas the UK can legally emit
in a five-year period and hence is the guiding force to
drive energy transition. In doing so, the government is
required to consider the advice of The Climate Change
Committee (CCC), which is an independent, statutory
body established to advise the UK on emission targets
UNITED
and energy transition. CCC also reports to Parliament
KINGDOM
on progress made. There are powers under the Climate
Change Act to “borrow” or “bank” amounts from one
budgetary period to another. This allows the government
to increase the budget by borrowing up to 1% from the
succeeding period, which is consequently reduced by
the amount borrowed. Conversely, if it has a surplus in a
budgetary period, it can carry all or some of it forward to
the next period.
The transition away from

oil and gas needs to be
handled with care. Manage
the retirement and reuse
of existing infrastructure
carefully, some of it will
be essential for a secure
P2oHHN2I§T
H:/§ł§2::ˇ§—
producer economies.
- World Energy Outlook 2022
THE GREEN SHIFT 282
PROVIDING ACCURATE DATA WHICH IS THE ‘SINGLE SOURCE OF TRUTH’ AND CAN BE USED BY
DIFFERENT AGENCIES / PEOPLE
M:H§PH2:hH2i:HH:H§—§oO
agencies responsible for consolidation of data related
to energy transition and emissions reporting. Usually,
H:2H/§o—§:DƒPHP:H/P2o:HH:H§:
compiling agencies. Some countries have also
nominated distributed agencies to be the owners of
data in their domain.
Table-15.3: Examples of how countries have developed platforms for reporting of accurate data
Country Climate Data Reporting Platform
Nominated ‘National Data Administrators’ across different

agencies coordinate their data relating to the energy
NETHERLANDS transition, provide access to that data in a user-friendly
manner and collectively collaborate on correcting any
shortcomings in the supply of data.
Statistics Norway is the central body that coordinates

NORWAY collection, validation, and publishing data from various
sources.
UNITED While different agencies collect data, Office for National

KINGDOM Statistics is the coordinating body on publishing the same.
PROPOSED SETUP FOR INDIA
CONSIDERATIONS FOR DEVELOPING INDIA SPECIFIC INSTITUTIONAL MECHANISM
1
Clear accountability for action steps
The mechanism should ensure that the accountability for various steps is clear
2
Avoid creation of new institutional bodies
To the extent possible, use the pre-existing performing institutional bodies, as much as
possible, given the need to move with speed. Use whatever has worked well so far, revitalize
that needs some nudge / change so that the entire structure has capacity to deliver as a
cohesive unified, larger framework.
3
Broad based alignment
The mechanism should ensure that there is alignment amongst various stakeholders on
action plan so that they take real ownership of their part
4
Timely decisions on any changes / course correction
The governance mechanism should ensure that the right people in the administration are
engaged at the right frequency in process of taking view on any course correction/ changes
MINISTRY LEVEL SETUP
Given that the energy transition touches the roadmap may have the owners for different
energy providers as well as energy consumers, actions with responsibility for the timelines to
the core structure may be created around energy meet commitments as a nation.
providing Ministries consisting of MOPNG, MNRE,
A group of Ministers may be set up consisting of
Ministry of power and Coal Ministry at the core.
Ministers from the four energy related Ministries.
NITI Aayog and MOEFCC may be permanent
A larger Committee of Secretaries under Cabinet
invitees. The process may be coordinated by
Secretary may also be set up by including large
MNRE. Other ministries may be involved from
energy consuming Ministries like MORTH, Steel,
time to time, as needed. This set-up should
Cement etc. The Committee can also get inputs
orchestrate creation of the roadmap and help
from Domain experts as and when required.
it get adopted along with the stakeholders. The
PROVIDING ACCURATE DATA WHICH IS THE ‘SINGLE SOURCE OF TRUTH’
There are already agencies that are entrusted Similar agencies to be authority on data related
with the task of collecting and reporting data to their respective sectors may be set-up in
across different ministries/ sectors and are coal, RE and other ministries. Bureau of Energy
considered the authority on data pertaining to Efficiency (BEE) may be entrusted the task of
their sectors (besides ownership of the relevant validating and consolidating all data related
ministry). Notable amongst these are Petroleum to energy transition and publish the same in
Planning and Analysis Cell (PPAC) for PNG and a structured manner. Given that India will be
Central Electricity Authority (CEA) for power. largest source of incremental energy demand
THE GREEN SHIFT 284
over the next few decades, it is high time that This broad template / structure would ensure
this set up develops strength to issue own India using existing agencies to collect and report
Energy Outlook which should graduate to being data (who have played their role effectively so far
used as reference by all other agencies. This data in their respective domains and are best placed
would provide the ‘single source of truth’ on the to figure out need for refinements, and also
topic relating to energy and energy transition ensuring ownership of the data remains with the
across different stakeholders. natural owners).
MODELLING & PROJECTIONS
NITI Aayog already has the capability and processing and providing expert support to the
capacity to conduct modelling exercise and ministry level set-up on suggested actions as
make projections for future. Modelling inputs are well any strategic course correction needed in
essential for projections, future planning, course the roadmap basis any important changes in the
correction and for related decision making market, technology and other indicators.
process. NITI Aayog also has the capacity for data
EXPERT GROUP ON ENERGY TRANSITION
An expert group comprising of industry discuss various advancements in different sectors

representatives from different sectors, both and create white papers on various topics for the
energy demand and supply may be created to consideration of various stakeholders. People
provide inputs to both the ministry level set-up from industry, academia associated with this
and NITI Aayog. The expert group might meet sector and resources from relevant think-tanks
at a regular cadence (e.g., once in a quarter) to might also be included in this expert group.
TIE-UP / LIAISON WITH INTERNATIONAL ORGANIZATIONS
There needs to be a mechanism to constantly them, given India energy transition would provide
scan and note the relevant developments taking immense business opportunity as well. Given
place globally, to get a quick idea of what might that a lot of these Indian companies working the
work and what needs to be avoided. There are energy and related domains are State Owned,
several international organizations that are the government may ease out norms/ encourage
leading the thinking on energy transition areas, international partnerships and joint ventures to
especially on technology. Various companies in accelerate the process.
the India energy space may also partner with
Overall, this institutional mechanism will ensure that the existing institutional framework of creating the
plan, actions steps and reviews as well as data will largely continue given the natural ownership that
has been built over the years. As a part of the exercise, the current status of activities of the involved
agencies needs to be appraised to assess any gaps and the interface issues if any be plugged, so that the
coordination with different ministries and energy companies, which is critical, can be streamlined. This
mechanism will also ensure that the latest thinking from various quarters (e.g., industry, academia and
international agencies) is incorporated in the plan as well as used for any course correction. a focused
approach to issues at hand with mechanism for building in the international learning about what works
and what needs to be avoided / done differently to make it work, will help India transition with minimum
regretted moves. Such mechanism with also ensure that the accountability remains clear and each
protagonist understands and delivers on its role and responsibility while ensuring coordinated action.
Chapter
16
SUMMARY OF
RECOMMENDATIONS
In this section
1. Epilogue 287
2. Chapter-wise Recommendations 288

EPILOGUE
Events over the last two years have brought the trending lower. Therefore, energy security at an
issue of energy security to the forefront all over affordable price has become the most important
the World. The monopoly of some countries over issue for all, especially energy-importing countries.
the production of energy, particularly oil and gas, This has also resulted in thoughts around the fast-
and the dependence of other nations on imports tracking shift to clean energy sources. The high
to meet even the basic energy requirements energy cost has also brought focus on the viability
should not have been much of a concern in a of new energy resources like Hydrogen and its
free, connected and transparent world market for derivatives. When the entire world concentrates
energy when the demand and supply are balanced on any particular sector or starts working on a
through the interplay of market forces. However, pathway, one can expect major developments
a slight reduction in supply or disruption in the and results. Therefore, we may expect a reduction
supply chain can push the price of commodities in the cost of storage, a reduction in the price of
like oil and gas with inelastic demand to Hydrogen and some more innovative technologies
unimaginable levels creating a financial crisis in harnessing renewable energy. To overcome the
for nations, business entities and individuals, issue of import dependence, harnessing the full
as witnessed during the ongoing energy crisis. potential of all domestic energy sources, including
Price build-up during the recent past was never bio-based sources, needs to remain in focus.
anticipated, though the energy prices are now
The oil and gas sector will play an

important role in the transition of
global energy systems, and in fulfilling
the ambitions of net zero. The sectors’
understanding of energy systems,
stakeholder expectations, low carbon
innovation and investment making
ability would be key to unlocking the
doors of a greener, cleaner future.
THE GREEN SHIFT 288
CHAPTER-WISE RECOMMENDATIONS
In this section, all the key conclusions, learnings and recommendations from the study that has been
recommendations are summarized at a chapter- carried out and detailed in this report.
level. These constitute all of the committee’s
1
GLOBAL To meet the 1.5°C target as envisioned in the
Paris Agreement, it is important to reduce
ENERGY GHG emissions in the next eight years by

around 50 percent in addition to expanding
TRANSITION renewable energy, decarbonizing the

transport & industrial sectors, rapidly
phasing out coal and investing in carbon
removal.
2
INDIAN Industrial and power sectors account for
most of India's emissions of 2.7 GtCO2e.
ENERGY Decarbonizing these sectors and shifting to

renewable power generation, electrification
TRANSITION of heating in industries, clean fuels, better

energy efficiency, and circularity in plastics
will be the way forward.
Societal & Economic changes needed to support decarbonisation
■ Catalyzing effective capital reallocation and Wider use of electricity will translate into a
new financing structures shift towards greater use in transport, cooking
and industrial applications.
■ Scaling-up climate finance which could come
from both traditional and specialized financial ■ The generators have long-term PPAs with
instruments (e.g., Green Bonds) Discoms, which are specific to their thermal
power stations. If these generators are
■ Cultivating voluntary carbon markets, which
allowed to generate extra power using
would include markets for avoidance/removal
renewable resources and supply along with
and compliance credits
the coal-based power, they would have some
■ Providing demand signals & incentives to lift spare thermal capacity which can be used for
demand can help create a vibrant market. grid balancing and to cater to an increase in
■ India must look for technologies to use coal demand over the years without having to add
with lower carbon footprint in the medium more power capacity.
term, for which R&D efforts need to continue. ■ Gas is expected to play a critical role in
■ Currently, only about 18% of India’s energy Indian energy transition due to lower
needs are met through power flowing from carbon footprint, and to resolve concerns on
the grid. This must increase to ~40% by 2035. intermittency of RE. To use expensive power
like gas-based power for grid balancing, a hydro from J&K, Himachal and Uttarakhand,
fund should be created at national level. The and some hydro can also flow from Nepal. This
expensive power-supplying stations should will require state-wise planning, with each
have a defined tariff based on expected PLF if state having its RPO obligations, including for
they operate only for grid balancing. storage-based electricity drawl.
■ Buildings are another category consuming ■ As storage cost of electricity remains high,
a considerable quantity of energy. Energy- large-scale grid storage may not be possible.
efficient building designs with provision for Therefore, to manage the grid, National Load
rooftop solar have to be mandatorily enforced. Dispatch Centre has to play a more active
There is a requirement for an updated role. A thorough study of load curve in various
national-level rating system that should parts of India & variation over the year would
include renewable energy usage. There is also reveal that some states can support each
a requirement for many rating agencies and other. E.g. power requirement in Punjab &
rating domain professionals to cover the entire Haryana during paddy sowing season is very
country with an updated ECBC mechanism high, whereas a similar high peak in Madhya
administered by Bureau of Energy Efficiency. Pradesh is at a different time. In south India,
the peak months are different. Therefore,
■ To provide stability to the grid considering the
each State tying up from separate dedicated
intermittent nature of the renewable energy
power stations would imply non-utilization of
sources, the option of using stationary battery
the resources optimally. So, all these major
energy storage with AI-based management to
seasonal variations should be taken care of at
sync with the grid and feed stabilizing power
the national level. Therefore, the creation of a
can be considered.
national pool controlled by the National Load
■ Enable re-skilling & re-deployment of workers Dispatch Centre should be actively pursued.
to ensure the right skills while also instituting
■ Industry, a large energy consumer, is already
support programs (including insurance)
shifting to electricity or natural gas. However,
■ Building a global leadership position to lead some hard-to-abate sectors like Steel and
dialogue on just & equitable transition regime Cement still use a large quantity of coal due to
■ India may take a leadership position by their peculiar requirement. Industries shifting
creating International Biofuel Alliance to to electricity wherever possible has to be
increase location-specific options, which can ensured in the next three years. Natural gas
enable countries to pursue journeys that suit can be the transition fuel for next 15-20 years.
their specific circumstances. There should be closer coordination with the

industry, with larger ones of them committing
■ For grid transition from largely coal-based to to transition within a given timeframe.
renewable power (utilizing 500 GW RE power
by 2030), it's important to maintain a healthy ■ India has abundance of coal and it may not
ratio of Wind, Solar and Hydro. be possible to discontinue coal totally for the
next 15 to 20 years. Cleaner pathways of coal
■ Supporting frameworks for promoting RE usage have to be invented and encouraged.
based on favourable local characteristics Gasification of coal is advantageous in this
need to be built up. Solar power is viable in regard as carbon capture becomes easier in
most parts of the country, while wind energy this case and several derivatives like methanol
remains restricted to only some coastal states can be used as transition fuels. There are also
& Rajasthan. Prospects for offshore wind other technologies under development which
energy need to be fully harnessed. The eastern can be deployed to convert coal into energy
part of India can get hydro from North-East. with minimal emissions. R&D in these areas
The northern part of the country can get needs to be supported and encouraged.
THE GREEN SHIFT 290
3
ENERGY Scope 1 & 2 emission reductions may be
targeted by oil sector companies by 2040.
TRANSITION Scope 3 emissions need to be measured

accurately. Still, their reduction would
OIL & GAS work in conjunction with broader energy
production, and usage shifts would need
PSUs to be planned in the context of India’s
overall energy transition. Carbon footprint measurement and abatement plans must become
a component of performance reviews over time. Other sectors should also work on carbon
footprint measurement and abatement within similar timeframes.
Key recommendations to improve energy transition in O&G companies:
■ Formalize internal organization set-up to ■ The initial focus to be on energy efficiency,

tackle energy transition by establishing a with a target to figure in the top quartile of
standardized structure for a cross-functional the Solomon index.
group dealing with the entire gamut of issues ■ Adoption of alternate fuels by expediting the
relating to ESG shift to green hydrogen & natural gas
4
BIOFUEL
OPPORTUNITY
IN INDIA
Key policy recommendations for the bio-ethanol sector
■ Supply related
» Biomass management is a separate area of accounting framework to help abate the
work which should be handled by Ministry impact of stranded credit / dual taxation for
of Agriculture. Out of roughly 5,000 MMT per entire Biofuels, like ethanol and CBG needs to
year of agri-residue, at least 1,000 MMT should be established, even if the same are flowing
be targeted to be collected and marketed for and sold in mixed mode with fossil fuels.
various uses like CBG, Palletization, use of
» Promote technology to produce ethanol
power plants and the industry.
from nonfood feedstock incl. 2G and 3G to
» Till main petroleum-based fuel products are minimize trade-offs with food production
not part of the GST regime, a mechanism /
» As the biofuels like Ethanol and CBG may » Encourage cultivation of maize, sweet sorghum
require usage of existing network for etc in short to medium term to ensure the
transportation being used for transportation efficient, environment-friendly and expedited
of fossil fuels, system of separate accounting, transition. Corn variants with higher starch
as above, should enable the person supplying content should be promoted.
these products at one place to receive delivery
of the same at another place as only biofuel
(CBG or Ethanol).
■ Vehiclestandardsawareness
/
» Utilize recognized certification systems (e.g., » Incentive structure for mobility to factor
ISCC) for sustainability and GHG savings in the net carbon footprint of different
through the use of biomass, and work pathways.
towards institutionalizing the same. » Support system, both financial and
» Institutionalize an accounting body policy-based, for farmers and value chain
for fuel which provides certificates to entrepreneurs to help establish fully
entities / individuals based on green-fuel functional bio-based businesses.
consumption
■ Associated Infrastructure
» Infrastructure for handling ethanol should like railways, distilleries, OMC depots & rake
be developed with public storage systems loading.
Key policy recommendations for bio-diesel sector
■ Promote research on new feedstocks to focus for building international alliances to

ensure steady supply: Since the currently explore new feedstock (e.g., biomass, algae)
identified feedstock is insufficient, an R&D that are abundant in India is critical.
Key policy recommendations for CBG sector
■ Promote high-yield feedstock such as crop ■ CBG needs to be promoted in a big way. 10%
residue & agri-waste through targeted policies. blending of the CBG in Natural Gas should be
■ Route urban waste to CBG plants to ensure targeted by 2030. CBG transportation through
generation at scale. pipelines laid for natural gas should be
allowed free of cost for 10 years as an incentive
■ Provision for book & claim or providing a trade
for the sector. The flow should be treated as
mechanism for carbon trading in CBG Plants.
not blended with natural gas if it is marketed
■ Provision of multiple injection points by city
separately. For this, a method of accounting
gas distribution companies to promote direct
needs to be established.
selling.
■ Biogas driven tractors and other farm
■ Agri-waste, bio-based solutions should
equipment has to be introduced to build-up
provide for exclusivity to ensure the sustained
utilization of biogas
availability of feedstock over the project life.
THE GREEN SHIFT 292
5
CLEANER
COOKING
FUELS FOR
INDIA
■ Blending alternatives in LPG need to be blends of LPG & DME along with solar
researched (e.g., DME blending in LPG). solutions may be explored to reduce the
■ LPG must be blended with compressed carbon footprint effectively.
biogas made from urban waste and other ■ Use of Methanol and Ethanol as cooking fuel
sources available around these cities. The should also be popularized by introducing
blending percentage can gradually increase. user-friendly products.
Hydrogen blending up to 3% by volume is ■ Electric / solar cooking needs to be promoted
possible, which needs to be introduced as the through campaigns. The target should be to
hydrogen ecosystem builds up. have 25% of households using electricity for
■ In cities, the transition could be towards cooking by 2030.
electricity & PNG. In contrast, in rural areas, ■ Target: 5 cr PNG connections in next five years.
6
PURSUING
HYDROGEN
■ Incentivize green hydrogen usage for all new / ■ Direct usage of hydrogen in industrial
upcoming facilities through policies applications may be undertaken.
■ Green hydrogen by bulk users like refineries, ■ Efforts must be made to study and explore
fertilizer and hard-to-abate sectors could be increasing Hydrogen %age in Natural Gas in
the focus area. energy applications wherever NG is being /
■ Popularize green hydrogen derivatives for capable of being used as a transition fuel.
ships, such as ammonia and methanol, ■ For HCNG-based transport, guidelines can
while simultaneously developing ports for be further elaborated. CBG conversion to
bunkering hydrogen should be acknowledged as a green
■ Export of hydrogen derivatives to encouraged. transportation / green H2 option.
7
ENERGY FOR
SURFACE
TRANSPORT
■ 2-Wheelers and 3-wheelers
» Standardization of EV two wheeler is internal combustion engine two / three

required to ensure build-up of charging and wheel vehicles by 2035. In the intermediate
promote battery swapping. period, policy support for ethanol-blended
» EVs may be promoted as the optimal fuel with an increasing blend ratio needs to
solution in preparing for phasing out be given.
■ 4-wheelers
» Four-wheelers, including passenger cars diesel-powered four-wheelers in all Million

and taxis, to partially shift to electric and Plus cities and all towns with high pollution
partially to ethanol blended Petrol with has to be enforced in five years, i.e. by 2027.
almost 50% share in each category. » Long-term focus on transitioning to EVs
» Along with 40% ethanol vehicles, required with CNG as transition fuel (upto 10 -15 years)
changes in engine modifications and » Vehicles with flex-fuel capabilities and
revision of emissions standards also need to hybrids may be promoted in the short &
be addressed. medium terms. This can be done through
» Diesel-driven 4-wheelers may be eliminated application of fiscal tools like taxation.
as soon as possible. Therefore, a ban on
■ City Buses
» No diesel city buses addition be allowed » Expedite all-electric bus adoption with
in urban areas, to drive towards transition measures such as Govt. purchases.
towards clean fuel urban public transport in
about 10 years.
■ Intercity Buses:
» Shift towards all-electric buses with CNG » Long-term focus should be on shifting to
/ LNG as transition fuels, where CBG also railways and other mass-transit modes.
needs to serve as a supplement
■ Ecosystem for EV promotion
» The overall direction for surface transport ecosystem for EV-based mobility has to be
has to be towards transitioning in favour promoted through a policy and financial
of EVs. Requisite support for creating an support system.
THE GREEN SHIFT 294
■ Cargo
» Railway share of cargo, presently at ~23%, so that in the next 10 years, 75% of the city
may be targeted to increase above 50%. delivery vehicles can be electric in all the
» Commercial vehicles may transition to LNG Million+ cities and other specific cities
in the short term. identified by the MoEF&CC.
» From 2024 onwards, all new registrations for » Other transition fuels could include ethanol
city delivery vehicles should be only electric and methanol blends
8
ZERO
CARBON
SHIPPING
■ Promote ammonia & methanol as alternate fuels ■ Develop port hubs for bunkering ammonia
9
SUSTAINABLE
AVIATION
FUEL (SAF)
■ Promote widespread adoption of SAF, with ■ Relevant entities and scientific institutions
the HEFA & ATJ route being the most cost- may focus on R&D of new indigenous
competitive pathway to enable the same feedstocks & processing technologies for the
■ Ethanol blending in the short & medium term efficiency enhancement of SAF value chain
may also be explored
10
TRANSITION
The oil and gas sector will
continue to play an essential
FUEL - role in the transition of global

energy systems and in fulfilling
NATURAL the ambitions of net zero.

The sectors’ understanding of
GAS energy systems, stakeholder

expectations, low carbon
innovation and investment-making ability would be key to unlocking the doors of a greener,
cleaner future. This also allows the domain entities to capitalize on adjacencies to provide
solidity to their business models.
■ Promoting LNG-based transport in the LCV & ■ Strengthen the Gas Exchange for a faster
HCV segment. LNG is a promising alternative transition towards natural gas; this also
fuel with lower emissions and higher calorific provides an opportunity for the country to
values than diesel. develop its own index.
11
DIESEL -
FUTURE
POSSIBILITIES
& BLENDING
■ Increased blending may be mandated to ■ Research on appropriate additives and
ensure a higher proportion of green fuels in technology development for the same may
the energy mix and diesel replacement in the be perfected in the short term to improve
long run. efficiency.
THE GREEN SHIFT 296
12
ROLE OF
TECHNOLOGY
AND
INNOVATION
■ Deploy advanced digital tools for energy ■ India needs to promote a coordinated
efficiency, emission tracking and mitigation: institutional framework for R&D efforts in
Deployment of digital technologies can energy transition-related areas, leveraging
create an ecosystem focused on emission all domestic R&D institutions to ensure the
monitoring and reduction. quickest transfer of successful technologies/
■ Establish coordination framework knowledge ideas from the lab to the field.
sharing and joint accountability: Set up ■ Concerted efforts to establish and support an
sectoral bodies to reap the benefits of efforts R&D infrastructure for bio-based energy.
being made by individual entities
13
GREEN
FINANCE
■ Pursue higher green financing flows to international carbon markets and may not
India through a specialized body under the count within NDCs.
administrative set-up created to handle ■ Establishing a legally enforceable price on
energy transition. carbon.
■ To arrive at a healthy mix of international and ■ Define an internationally aligned green
domestic carbon markets, the high-cost RE taxonomy and disclosure framework.
sources should be kept separate from the
14
CARBON
MARKET &
CARBON
PRICING
■ Standardization of carbon credits to ensure ■ ETS may serve to enable the carbon pricing
that registered credits are of the highest methodology for India; correspondingly, a
quality and tradable at the international level. carbon exchange needs to be established and
■ A simple & cost-effective supply-and-demand supported.
process for carbon credits needs to be created. ■ India should keep Offshore wind, green
■ India must also utilize the provisions of hydrogen, solar thermal, CBG, ethanol (1 G and
clause 6.2 of the Paris Convention to have 2G), SAF, carbon capture, tidal wave energy,
arrangements with some other countries that and other technologies for harnessing ocean
on their own, do not have good RE potential. energy etc., outside NDCs.
THE GREEN SHIFT 298
15
ADMINISTRATIVE
SETUP
■ The Administrative Set-up may be created to energy transition and publishing the same
around energy-providing Ministries consisting in a structured manner.
of MOPNG, MNRE, Ministry of power and Coal ■ NITI Aayog may continue to provide modelling
Ministry at the core. NITI Aayog and MOEFCC expertise and make projections for the future,
may be permanent invitees. The process may which are essential for planning, monitoring,
be coordinated by MNRE. course correction etc., and as input for the
■ A Group of Ministers may consist of Ministers related decision-making process.
from energy-related Ministries. A larger ■ An expert group comprising of industry
Committee of Secretaries under the Cabinet representatives from different sectors, both
Secretary may also be set up by including energy demand and supply, may be created
large energy consuming Ministries like to provide inputs to this set-up.
MORTH, Steel, Cement etc. The Committee
■ There needs to be a mechanism to constantly
can also get inputs from Domain experts as
scan and note the relevant developments
and when required.
taking place globally to get a quick idea
■ For collecting and reporting data and its of what might work and what needs to be
ownership across different ministries/sectors, avoided.
existing bodies like Petroleum Planning and
■ Upgraded institutional mechanism across
Analysis Cell (PPAC) for PNG and Central
the energy domain should, besides being a
Electricity Authority (CEA) for power etc.,
repository and provider of data, also act as
should continue to play their role. The Bureau
the lead agency in issuing world-class India
of Energy Efficiency (BEE) may be tasked with
Energy and Energy Transition Outlook for
validating and consolidating all data related
global reference.
Transition is much more than a
one-time event. It is like a journey
that takes time, preparation, and
planning to bear fruits.
Copyright @ MoP&NG, 2022
Government of India,
Shastri Bhavan, New Delhi - 110001, India

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THE

About the Committee

Committee Member Designation Company / Organisation

Mr. Tarun Kapoor Chairman, Energy Transition Advisory Committee MoP&NG

Mr. Subhash Kumar Ex-Chairman ONGC

Mr Sunil Kumar JS (R) MoP&NG

Mr. Shantanu Gupta ED (AE&SD) and Member Secretary IOCL

Mr. P. S. Ravi ED (Retail) BPCL

Mr. S. Bharathan ED (R&D) HPCL

Mr. Rajarshi Gupta ED (Chief Corporate Strategy & Planning) ONGC

Mr. R. K. Singhal ED (BD and E&P) GAIL

Mr. Rajiv Aggarwal ED (Tech.) EIL

Mr. B. Lakhar ED (BD) OIL

Subject Matter Experts

Lead Authors and Contributors

Mr. Aashish Mathur, IOCL

Copyright @ MoP&NG, 2023

■ The affordability of energy will always remain an important issue.

India is the front-runner in mitigating

Shri Hardeep Singh Puri,

Photo Credit: Adobe Stock

Chapter 1: The Global Energy Transition Scenario 1

Chapter 2: The Indian Energy Transition 15

Chapter 4: Biofuel Opportunities in India 59

Chapter 5: The Indian Cooking Fuel Scenario 89

Chapter 6: Hydrogen 109

Chapter 7: Energy Options and Roadmap for Surface Transport 133

Chapter 8: Zero Carbon Shipping 163

Chapter 9: Sustainable Aviation Fuel 171

Chapter 10: Natural Gas and LNG 187

Chapter 11: Diesel- Future Possibilities & Blending 205

Chapter 12: Technology, Innovation and Policy Support 223

Chapter 13: Green Financing 239

Chapter 14: Carbon Market & Pricing 259

Chapter 15: Institutional Setup to Manage Energy transition 275

Chapter 16: Summary of Recommendations 285

LIST OF EXHIBITS & TABLES

CHAPTER-1: THE GLOBAL ENERGY TRANSITION SCENARIO Page No.

Exhibit-1.1 Annual GHG emissions and expected global warming 3

Exhibit-1.2 Global CO2 emissions in an orderly 1.5ºC transition 4

Exhibit-1.3 CO2 emissions per capita in 2017 4

Exhibit-1.4 Countries that have committed to net zero by 2050 6

Exhibit-1.5 Current policy warming scenarios 6

Exhibit-1.6 Scope 1 & 2 CO2 emissions in 2020 8

Exhibit-1.7 Decarbonization targets set by various Oil & Gas Companies 9

Exhibit-1.9 Final energy consumption by fuel 10

Exhibit-1.10 Global fossil fuel demand 11

Exhibit-1.11 Global power generation 12

CHAPTER-2: THE INDIAN ENERGY TRANSITION Page No.

Exhibit-2.1 India's 2030 commitment, progress, and drivers 19

Exhibit-2.2 India's current emissions 20

Exhibit-2.3 Cumulative CO2 Emissions for countries 1751 to 2017 20

Exhibit-2.4 Global climate risk index, 2000–19 21

Exhibit-2.5 Climate event hotspots in India 21

Exhibit-2.6 Some aspects of Climate Risk in India 22

Exhibit-2.7 Emissions per sector in India by source and consumption 23

Exhibit-2.8 India's Climate Commitments 24

Exhibit-2.9 Societal and economic changes for supporting decarbonization 25

Exhibit-3.1 City Gas Distribution (CGD) projects of OIL in India 38

Exhibit-3.2 Phased Implementation Roadmap to Net Zero for IOCL 40