India is revising its industrial climate strategy to align Make-in-India and Viksit Bharat 2047 with its 2070 net-zero goal.
Meaning and Objectives
Industrial climate strategies align manufacturing growth with emission targets, balancing economic expansion with sustainable production.
Industrial Decarbonisation
This reduces emissions in hard-to-abate sectors using low-carbon energy, carbon pricing, and Monitoring, Reporting, and Verification (MRV) tools.
Green Industrial Transformation
Scaling green hydrogen, carbon capture, utilization, and storage (CCUS), and renewables replaces carbon-heavy methods, maintaining industrial competitiveness in a carbon-constrained global market.
Industry's Contribution to GDP
The industrial sector is fundamental to India's growth. In 2022-23, CBAM-covered goods (iron, steel, aluminium) comprised nearly 10% of exports to the EU, highlighting its vital role in GDP.
Role in Employment Generation
Industries are massive employers. The National Green Hydrogen Mission aims to create 6 lakh jobs by 2030. Failure to decarbonize threatens millions of livelihoods, particularly within export-oriented MSMEs.
Industrial Emissions and Climate Change
Industry causes over 20% of India's emissions, with manufacturing fuel at 13% and processes at 9%. Sectoral decarbonization is essential to meet national climate targets.
Hard-to-Abate Sectors
Sectors like steel, cement, and aluminium lack green alternatives. India's steel emits 2.5-2.6 tonnes of CO2 per tonne—exceeding the 1.91 global average—and accounts for 10-12% of total national emissions.
National Action Plan on Climate Change (NAPCC)
The NAPCC spearheads climate action through nine core missions focusing on solar energy, sustainable habitats, water, and energy efficiency.
National Mission for Enhanced Energy Efficiency (NMEEE)
Operating under the NAPCC framework, the NMEEE drives industrial energy conservation, functioning as the launchpad for early market-based efficiency policies.
Perform, Achieve and Trade (PAT) Scheme
Launched in 2012 under the NMEEE, the PAT scheme stands as India’s foundational market-based energy efficiency initiative, assigning specific energy consumption targets to designated industrial consumers.
Carbon Credit Trading Scheme (CCTS)
Notified in June 2023 under the Energy Conservation (Amendment) Act, 2022, the CCTS marks India’s leap from pure energy efficiency to a comprehensive national carbon trading market targeting direct GHG emission intensity.
National Green Hydrogen Mission (NGHM)
Launched in 2023, the NGHM accelerates the green industrial transition by targeting 5 MMT of Green Hydrogen production annually by 2030, backed by an initial outlay of ₹19,744 crore.
Success of Energy Efficiency Measures
The PAT scheme successfully laid the institutional groundwork for carbon accounting, saving nearly 27 Million Tonnes of Oil Equivalent (MTOE) and avoiding millions of tonnes of CO2 over its operational cycles.
Expansion of Renewable Energy
India ranks fourth globally in total installed renewable capacity, successfully surpassing the goal of generating 50% of its power from non-fossil sources (reaching 51.93% by December 2025) ahead of schedule.
Green Hydrogen Push
India strongly pursues the NGHM, allocating 862,000 tonnes of Green Hydrogen production capacity to 19 companies and setting up megawatt-scale port-based hubs at Kandla and Tuticorin.
Growing Sustainability Adoption
The strategy promotes corporate accountability through SEBI’s Business Responsibility and Sustainability Reporting (BRSR) framework, mandating comprehensive ESG disclosures for the top 1,000 listed companies.
Increasing Corporate Climate Commitments
Top Indian conglomerates initiate green transitions; Dalmia Cement and UltraTech heavily utilize Alternative Fuels and Raw Materials (AFR), while Tata Steel pilots CCUS technologies.
Fragmented Policy Framework
Unintegrated Schemes: Climate and industrial policies function in silos, imposing overlapping burdens like Renewable Purchase Obligations (RPOs) and CCTS that force firms to pay twice for reductions.
No Unified Roadmap: A lack of sector-specific technology adoption plans creates regulatory uncertainty, hindering the carbon market's impact.
Limited Sectoral Coverage
Focus on Large Industries: Climate mechanisms like PAT and the initial CCTS phases predominantly target large, designated industrial consumers, missing a massive segment of polluters.
MSMEs Remain Largely Outside Climate Frameworks: MSMEs lack the capital and technical capacity to establish rigorous Monitoring, Reporting, and Verification (MRV) systems, leaving them highly exposed to international carbon taxes like CBAM.
Weak Carbon Pricing Signals
Nascent Carbon Market: Historical Energy Saving Certificates (ESCerts) oversupply in the PAT scheme led to low prices that failed to drive investment. CCTS faces similar risks if initial baselines are weak.
Absence of Economy-Wide Pricing: Fragmented implicit taxes leave India without a unified, transparent, or internationally recognized carbon price signal.
Insufficient Climate Finance
Prohibitive Technology Costs: High capital requirements and long payback periods for CCUS and Hydrogen-DRI hinder adoption.
Capital Access Challenges: High borrowing costs and global risk-aversion limit climate finance; India currently funds 83% of mitigation through domestic sources.
Technology Constraints
High Costs of Carbon Capture
CCUS in India is nascent and expensive; individual firms cannot afford it without shared infrastructure like hubs.
Hydrogen Infrastructure Gaps
Adopting H-DRI for steel is hindered by a lack of massive green hydrogen storage and transport systems.
Dependence on Coal-Based Energy
India's steel and aluminium industries are structurally locked into high emission intensities due to a heavy reliance on coal-based blast furnaces (BF-BOF) and captive coal-fired power plants.
Competitiveness Concerns
The EU's CBAM threatens to raise the price of Indian steel exports by up to 90% by 2034, eroding market access and cost competitiveness in major export hubs.
Technology Transfer Barriers
Firms struggle to access proprietary Western decarbonization technologies due to high licensing costs and lack of localized R&D ecosystems.
Supply Chain Constraints
Transitioning to cleaner Electric Arc Furnaces (EAFs) or secondary aluminium production faces critical shortages of high-quality domestic scrap metal and collection infrastructure.
Infrastructure Gaps
Adopting renewable energy at an industrial scale encounters severe grid access limitations, transmission bottlenecks, and a lack of firm baseload storage solutions.
Industrial Decarbonisation Roadmap
Policymakers should integrate specific technology pathways (H-DRI, CCUS, clinker substitution) into sectoral plans with defined milestones.
Carbon Market Expansion
Advance the CCTS via auction-based allocations and Price and Supply Adjustment Mechanisms (PSAMs) to ensure stable, credible carbon pricing.
Optimizing the Green Hydrogen Ecosystem
The government should fast-track green hydrogen hubs and expand electrolyser production (target: 3,000 MW/year) to lower costs.
Integrating MSMEs into Climate Strategy
Subsidies and capacity-building must provide MSMEs with the MRV infrastructure needed to remain competitive under CBAM regulations.
Scaling Climate Finance
India must channel carbon market revenues into dedicated industrial decarbonisation innovation funds and leverage blended finance to de-risk capital-heavy pilot projects.
Promoting Low-Carbon Technologies
State support must scale up shared CCUS hubs in industrial clusters, incentivize inert anode technology in aluminium, and expand secondary recycling ecosystems.
Stronger Industry-Specific Transition Plans
Ministries (MoEFCC, MNRE, DPIIT) must break policy silos to align the CCTS with Production Linked Incentive (PLI) schemes, generating clear, differentiated benchmarks that explicitly reward early tech adopters.
Conclusion
India must urgently transform its patchy climate policies into a unified, technology-driven carbon market to protect export competitiveness against CBAM and successfully forge a low-carbon industrial future.
Source: THEHINDU
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PRACTICE QUESTION Q. "India's industrial climate strategy has achieved notable progress in energy efficiency but lacks a comprehensive framework for deep industrial decarbonisation." Critically Analyze. 250 Words |
India's industrial climate strategy is a multi-pronged regulatory and fiscal framework that combines mandatory energy efficiency targets, clean technology mandates, and market-based mechanisms to transition manufacturing sectors toward the national net-zero emissions goal by 2070.
The Perform, Achieve and Trade (PAT) Scheme is a market-based regulatory mechanism administered by the Bureau of Energy Efficiency (BEE) that assigns mandatory energy consumption reduction targets to energy-intensive industries, allowing those that exceed their targets to sell Energy Saving Certificates (ESCerts) to non-compliant entities.
Hard-to-abate sectors are heavy industrial sectors—such as iron and steel, cement, petrochemicals, and heavy-duty transport—where greenhouse gas emissions are inherently difficult to eliminate because fossil fuels are structurally integrated into high-heat chemical manufacturing processes.
India faces severe bottlenecks including the prohibitive capital costs of retrofitting legacy factories with green technologies, a lack of commercially viable zero-carbon alternatives for heavy manufacturing, and the critical need to balance aggressive emissions reduction with rapid, job-creating economic growth.
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