New Delhi:Axis Capital’s study of carbon benchmarking and mitigation measures in India Inc. released today reveals strong commitment and pockets of impressive progress despite the rocky road. The flurry of action follows India’s pledge to a net-zero emission target by 2070, committed at COP26 in Paris in November 2021.
Regulations regarding emissions are evolving in India and even while the carbon credit market opens locally and matures globally, analysts begin the long vigil to 2070 and Axis Capital’s Amit Murarka advises investors to do likewise.
Ambitious de-carbonization targets make carbon credits a currency to watch. Flagging FY26 when activity in carbon credit activity begins as India launches its Carbon Credit Trading Scheme (CCTS). This target will underpin the CCTS scheme and its benchmark rubric of greenhouse gas emission targets for energy-intensive sectors like cement, steel, aluminum, and petrochemicals.
Carbon credits, amassed by companies that beat their targets, will become available to firms that fall short. The report adds that carbon credit purchases will impact profit and loss accounts, compelling companies to tread carefully.
The cement sector in India is ahead of global peers with early targets. Indian cement companies have a lower carbon footprint of 0.56 t of CO2 per ton of cement production as against the global average of 0.61. This is on account of better blending ratios. Cement companies like Dalmia and ACC lead the pack, with CO2/t of only 0.46 and 0.47, respectively. While all the major Indian cement companies have committed to achieving net-zero emissions by 2050; Dalmia aims to do so by 2040.
The metals sector, on the contrary, is lagging behind global peers but aiming high; expect onerous, aggressive progress. Indian metal companies depend highly on coal-based energy for production, giving them a larger carbon footprint than their global peers. Indian steel companies emit 2.5 t of CO2 per ton of crude steel as against a global average of 1.9 t.
Similarly, India’s aluminum sector emits 18 t of CO2/t as against the global average of 14 t. Private-sector steel companies have committed to net-zero emission targets by 2050, which is ambitious and 20 years ahead of official targets.
Oil & Gas sector is relatively insulated due to lower direct emissions. Oil & Gas companies have relatively smaller carbon footprints, going by direct emissions though indirect emissions are significant. An impact on consumer demand is expected in the long term, as greener products like electric vehicles gain traction.
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