India's $7 trillion future needs to be supported by green manufacturing: EY-Parthenon report

This is because carbon dioxide emissions from just the steel, cement, and power sectors could reach approximately 2 gigatons annually within the next 15 years

India has to prioritise green manufacturing and aggressive decarbonisation, especially in sectors like oil and gas, steel and cement, according to an EY-Parthenon report titled, ‘How green manufacturing is reshaping India’s industrial landscape'.

Projections indicate that within the next 15 years, carbon dioxide emissions from three specific sectors alone could reach approximately 2 gigatons annually within the next 15 years.(Representational Image/Pixabay)

This is because projections indicate that within the next 15 years, carbon dioxide emissions from such types of sectors could reach approximately 2 gigatons annually, within the next 15 years.

At the moment, steel accounts for 12% of India's total greenhouse gas emissions, cement accounts for 6%, and power and utilities account for 5.2%, according to the report.

It stated that without proactive decarbonisation measures, these emissions could nearly double as capacity expands.

“India’s journey to Viksit Bharat must balance high growth with sustainability," said Rajiv Memani, Chairman and CEO, EY India. "Besides renewable energy integration into the industrialisation process, green industrialisation and manufacturing require new technologies, and fuel sources to make the manufacturing process cleaner."

"Businesses in India have a huge opportunity to proactively integrate green technologies into their operations on a cost competitive basis, thereby gaining a significant advantage as global supply chains transition towards sustainability,” he added.

How India can promote green manufacturing

"Strengthening CO₂ reduction targets, scaling up green hydrogen, unlocking climate investments and robust public-private collaboration are key steps in shifting to sustainable industrialisation while ensuring energy security and long-term competitiveness,” said Kapil Bansal, Partner, Energy Transition and Decarbonisation, EY-Parthenon India.

The report touts green hydrogen as potentially playing a pivotal role in cutting emissions.

At the moment, India’s refineries consume 2.7 Million Metric tonnes (MMT) of hydrogen, produced via Steam Methane Reforming (SMR), which emits 24 MMT of carbon dioxide annually.

Replacing just 15% of this with green hydrogen would cut emissions by 6.3 MMT by 2035, the report read.

Apart from refineries, blending green hydrogen with city gas distribution (CGD) networks also helps, but the cost is a barrier with green hydrogen priced at $6–7 per kg, which is nearly four times the cost of grey hydrogen ($1.5/kg).

The report also recommends Carbon Capture, Utilisation, and Storage (CCUS) which is a concept still evolving in India, but leading oil and gas players have already made investments.

The report recommends the government set clear carbon dioxide reduction targets, introduce tax incentives for green initiatives, and establish a carbon pricing mechanism to encourage low-carbon investments.

Apart from this, the report also recommends boosting research and development (R&D) investments, public-private collaborations, and providing skill development programs for emerging green economy jobs.

All of this is to meet the needs of India's economy which is on course to become worth $7 trillion by 2030, with the projected growth in economic activity leading to a huge growth in India’s energy requirements.

For instance, India's peak electricity demand alone is projected to be 366.4 GW by 2031-32 as per the 20th Electric Power Survey and by 2040, this would have gone up further due to the higher population, higher levels of industrialisation, and the growing needs of AI computing.