Introduction: India’s Energy Crossroads

India is the third-largest energy consumer in the world, and its hunger for energy is only growing. With increasing population, urbanisation, and industrialisation, demand for oil and gas will continue to climb.

But as demand grows, India targets net-zero emissions by 2070, an ambition on many levels. India’s total GHG emissions (ex-LULUCF) were ~2,959 MtCO₂e in 2020 according to the government’s BUR-4; the oil & gas sector contributes a material share of energy-sector emissions.

This blog explores whether the Indian oil and gas industry can decarbonise, what’s being done, and what barriers lie ahead.

The Heat Is On: Pressure to Decarbonise

The oil and gas industry globally is under increasing pressure to clean up its act — and India is no exception.

Global Climate Targets: By ratifying the Paris Agreement and committing to be a net-zero greenhouse gas emitter by 2070, India is going to have to make significant reductions to emissions [1].

Investor and Regulatory Pressure: Large investors and institutions are continuing to shift their investments to not sponsor carbon-heavy companies, and they are demanding that companies develop clear carbon emissions reduction roadmaps, along with meeting ESG compliance [2].

Public Expectations: The general public is becoming increasingly aware of air quality issues and climate impacts, and as such, has increasingly higher expectations for responsible corporate behavior. 

 

Operational Efficiency: Wasting less and being more energy efficient makes sense to be a better business — and lower emissions usually correlate with lower costs. 

The Decarbonization Playbook: How to Do It

To prepare for a low-carbon future, the oil and gas industry will need to adopt a range of strategies. Broadly, these can be grouped into two categories:

1. Operational Cleanup

  • Methane Leaks: Methane is 80x more potent than CO₂ in 20 years. Methane is a short-lived climate pollutant but significantly more potent than CO₂ in the near term. Mitigating leaks in infrastructure is an immediate, cost-effective opportunity for impact[3]
  • Energy Efficiency: Reducing energy use at extraction, refining, and distribution lead to lower emissions, and lower cost to the business.
  • Renewables in Operations: Use solar or wind to power extraction operations, the refinery, and the offices.
  • Carbon Capture & Storage (CCUS): Carbon capture and storage (CCUS) needed as an urgency in India, but most CCUS technologies require significant investment from industry stakeholders. High costs and lack of infrastructure readiness constrain the deployment of CCUS in India.

2. Change Products & Business Models

  • Green Fuels: Continue to invest in biofuels, green hydrogen, and ethanol blending.
  • Sustainable Chemicals: Commitment to continued movement toward low-emission petrochemicals.
  • Diversification: Some industry stakeholders are investing in wind, solar, EV charging infrastructure, and battery technologies.

India’s Unique Challenges: The Real Hurdles

Despite promising roadmaps, the path isn’t easy.

  • Soaring Demand: India’s energy needs are expected to double by 2040. Cutting oil use while meeting this demand is a major challenge. [1]
  • Outdated Infrastructure: Numerous refineries and pipelines are aged and were not engineered to accommodate clean technologies.
  • High Capital Costs: CCUS and green hydrogen are costly, with unclear short-term returns.
  • Skill Gaps: There’s a shortage of trained workers who can build and manage low-carbon systems.
  • Policy Uncertainty: While several policies exist, long-term clarity, incentives, and penalties are still evolving.

First Steps: Who’s Leading the Way?

Several Indian oil and gas giants have started experimenting with clean energy and decarbonization:

1. Indian Oil Corporation (IOC): 

Plans to produce green hydrogen and develop electric vehicle charging stations nationwide. IOCL has also made a commitment to achieve net-zero by 2046.

Sustainability Initiatives:

  • Investing in biofuels and ethanol-blended petrol
  • Expanding to green hydrogen production
  • Introducing energy-efficient refining processes [3]   

​​​​​​​2. ONGC: 

Investing in wind and solar farms and looking for partnership opportunities in CCUS. ONGC has published a decarbonisation roadmap and has set a target to achieve net-zero operational emissions (Scope 1 & 2) by 2038, supported by major investments in renewables, green hydrogen and flaring-reduction measures.

Sustainability Initiatives:

  • Carbon emissions reduction commitment
  • Expanding into offshore wind energy
  • Investment in the research and development of carbon capture technology

3. Reliance Industries: 

Has announced net-zero emission goals by 2035 and is investing significantly in solar, hydrogen, and bioenergy. Reliance's net-zero carbon emissions target by 2035 positions it as one of the largest Oil & Gas Companies with sustainability in India.

Sustainability Initiatives:

  • ₹75,000 crore investment in renewable energy
  • Gigafactories for solar and hydrogen fuel cells
  • Carbon Capture and Storage (CCS) technology [4].

4. HPCL and BPCL: 

Making headway on ethanol blending and green energy transition. Bharat Petroleum Corporation Limited (BPCL) is employing sustainability-based tactics, including biofuels, green hydrogen, and energy-efficient refining processes. BPCL is working toward being net-zero by 2040, and the company has taken bold steps to decarbonise. HPCL has been embedding sustainability into its business practices. The company continues to invest in solar and wind projects, improved efficiencies at refineries, and increased biofuel production.

Sustainability Initiatives:

  • Introduction of ethanol-blended petrol
  • Hydrogen fuel infrastructure
  • Energy-efficient refinery processes 
  • Investment in solar and wind energy projects
  • Increase in biodiesel production capacity

These are early moves, but they show the sector is aware of the shift.

The Road Ahead: What Comes Next?

There is no single pathway to decarbonising the oil and gas sector. A combination of technologies, operational strategies, and long-term planning will be required.

  • Policy Certainty: Stronger and longer-term government signals will help unlock private investment.
  • Technology Transfer & Collaboration: Global best practices and joint ventures can bring in innovation.
  • Green Financing: Dedicated funds, green bonds, and incentives can ease the financial burden.
  • Skilling the Workforce: Retraining workers and engineers is essential for long-term success.

Closing Remarks: India's Tough Yet Achievable Journey

Decarbonising the oil and gas industry presents significant challenges. It involves high capital costs, complex technologies, and policy considerations. However, if India is to meet its climate commitments, progress in this sector will be essential.

Encouragingly, momentum is building. With the right policy support, investment, and leadership, the sector can play a meaningful role in India's low-carbon transition.

References

  1. TERI, Roadmap to India 2030 Decarbonization Target. https://www.teriin.org/sites/default/files/files/Roadmap-to-India-2030-Decarbonization-Target.pdf
  2. McKinsey, Decarbonising India. https://www.mckinsey.com/capabilities/sustainability/our-insights/decarbonising-india-charting-a-pathway-for-sustainable-growth
     
  3. EAI, What Are Indian Oil & Gas Companies Doing for Decarbonization. https://www.eai.in/blog/2023/05/what-are-the-indian-oil-gas-companies-doing-for-decarbonization.html
     
  4. IBEF, Key Opportunities for Low-Carbon Transition in Oil and Gas Sector. https://www.ibef.org/blogs/key-opportunities-for-low-carbon-transition-in-the-oil-and-gas-sector-in-india
  5. Inventiva  https://www.inventiva.co.in/trends/top-10-best-indian-oil-gas-companies/
  6. India’s Progress Towards Climate Resilience  https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2092311&utm_source=chatgpt.com