IOC to invest over ₹2-lakh crore to become net zero emitter by 2046

State-run energy behemoth Indian Oil Corporation (IOC) on Thursday announced a more than ₹2-lakh crore investment plan leveraging clean energy technologies such as green hydrogen and CCUS to become a net zero emitter by 2046.

At present, the country’s leading refine and fuel retailer, which everyday serves 3.1 crore petrol and diesel customers and delivers 25 lakh LPG cylinders daily, produces around 21.5 million tonnes (mt) of CO2 equivalent (MTCO2e) per annum with refining and petrochemical operations being the major source of emissions.

IOC Chairman Shrikant Madhav Vaidya said, “I would like to underline that we already have a well-crafted blueprint in place, with a multi-pronged approach to take us gradually towards the Net Zero destination. We have envisaged that an investment of over ₹2-lakh crore will be required to achieve the target by the year 2046.”

Action plan

IOC will pursue hydrogen fuel, biofuels, renewables, carbon offsetting through ecosystem restoration and Carbon Capture Utilisation and Storage (CCUS), among others, Vaidya added.

“Our decarbonisation plan aims to mitigate both Scope 1 and Scope 2 emissions. The bulk of these emissions is due to direct fuel burning for deriving energy from heat, steam, electricity, and cooling, as required in operations. This constitutes Scope-1 emissions. The balance is due to electricity purchases from the grid or the Scope-2 emissions,” he explained.

The OMC plans to achieve two-thirds of emission reduction through energy efficiency, electrification and fuel replacement efforts while about a third of the total emission would be mitigated through options such as CCUS, nature based solutions and purchase of carbon credits.

Investment plan

Vaidya said the investment will be in a phased manner.

It is an investment, like any other capex investment, Vaidya said adding that it will also be a part of the firm’s investment plans because it is not just for greening, but it will also improve efficiencies. So it will add to the company’s bottomline. These are business decisions, but the focus is more towards the environment.

“If you look at the last graph we showed you, up to 2030, refining capacity additions will go on increasing. We are in 2022. So up to 2025, the overall CO2 emissions will go on increasing because of the new expansions coming in. Parallelly, all my energy efficiency initiatives will be undertaken and after 2030 is the landmark year when emissions will start decreasing,” he explained.

Green hydrogen

When asked about Green Hydrogen, Vaidya said the technology is already available. “If you see the whole ecosystem of green hydrogen, nearly 70-80 per cent of the total cost comes from renewable power. Green power costs today — at the generating places —are in the range of ₹1.95-2 per unit, but by the time it reaches the consumer, the prices go up due to a number of levies and charges,” he added.

The Union government has now come into the picture by which they may reduce the levies and charges. IOC has paired with L&T for manufacturing electrolysers.

“We are on the lookout for a proper technology partner who will be with us and he can be a couple of partners and it can be in alkaline electrolyzer, it can be the pen, so we are on the lookout for a good partner,” Vaidya added.

Hydrogen consumption obligation

When asked if there will be a hydrogen obligation target, Vaidya said, “There is a target that is likely to come. It has not yet firmed up. (It could be) 3 per cent or 5 per cent over a period of time. As I said, refiners and fertiliser units are one of the single largest consumers of hydrogen and unless we refiners step in, the volume of scale will never come and unless the volume comes, the cost will not go down.”

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