Corporate India Lagging Behind In RE Adoption: Report

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India’s leading companies are dragging their feet when it comes to meeting the country’s ambitious renewable energy and decarbonisation goals, according to analysis by think tank Climate Risk Horizons (CRH).

The industrial sector accounts for more than half of India’s energy consumption, making corporate action essential to the government’s decarbonisation efforts. In a report titled Slow to Switch, CRH scrutinised 33 companies across seven industries, five of which are large energy consumers (Cement, Steel, Aluminium, Textiles, and Fertilisers), the other two being Information Technology and Fast-Moving Consumer Goods.

The report uses publicly available data collected from companies’ annual and sustainability reports to assess their decarbonisation efforts as of FY 2023. The analysis reveals a massive gap between companies’ renewable energy commitments and actions, showing that only around 5% of the annual electricity consumption of the assessed companies is sourced from renewables (solar and wind).

All but one of the companies analysed (ArcelorMittal/Nippon Steel) have reported their energy consumption from various sources. Several have made ambitious commitments as members of global renewable energy alliances, however, almost none are actually on track to achieve their goals.

For example, the report said steel companies such as JSW, Jindal, Tata Steel and ArcelorMittal/Nippon Steel are currently meeting a tiny fraction (less than 0.05% on average) of their energy from renewable sources. It also said that textile companies such as Trident, Welspun, Arvind and Shahi have set targets in line with the Paris Agreement, but, on average, less than 3% of their energy  consumption comes from renewable electricity. “Cement companies including majors such as Ultratech, ACC and Ambuja have all set targets to reduce emissions in line with the Paris Agreement, yet the share of renewable energy in their overall energy consumption was only 2.5%. In the FMCG sector, Godrej, ITC and Britannia stand out for their low RE utilisation, in contrast to Nestle and Hindustan Unilever, which fare the best in terms of translating renewable energy commitments into actions,” the report said.

It also added that while the information technology industry emerges as the overall top performer, the fertiliser industry lags behind with the poorest score. “Shifting to renewable energy is essential for energy security at the company level and for the Indian economy as a whole. While a few large companies have started to take steps in this direction, a lot more needs to be done, and a lot quicker, if India is to meet its decarbonisation targets,” said Vishnu Teja, lead author of the report.

Large electricity consumers are bound to meet 30% of their overall electricity consumption from renewable sources, but on average only 5% of electricity consumed by the analysed companies is met from renewable electricity. The report highlights the significant potential of the heavy industry sector to drive decarbonisation in the Indian electricity system. The companies analysed have an
annual electricity consumption of over 169 BU (Billion Units), which is more than double the electricity consumption of a state like Andhra Pradesh or West Bengal. However, less than five percent of this consumption currently comes from renewable sources.

“India Inc needs to step up and start investing for an energy secure future. The country’s RE and decarbonisation targets will not be met without active support from large corporate players. With green energy open access regulations now in place, companies should be signing Power Purchase Agreements to ensure that 100% of their electricity comes from renewable energy by 2030,” said Ashish Fernandes, CEO of Climate Risk Horizons and co-author of the report.