In the global fight against climate change, countries worldwide have shown their commitment to reducing energy consumption and have set ambitious goals to minimise carbon emissions. The Paris Agreement (COP21), the Renewable Energy Directive (RED I, RED II) and the European Green Deal all demonstrate global efforts to combat climate change. The Paris Agreement is a legally binding international treaty which aims to limit global warming to 1.5–2°C above pre-industrial levels. It is thus crucial for countries to cut greenhouse gas emissions rapidly to achieve carbon neutrality by 2030 and net-zero emissions by 2050.
The Essar Group, a global leader in steel, energy, infrastructure, and technology, recognizes the importance of reducing its carbon footprint. With a firm commitment to sustainability, the group has embarked on a journey to transform its operations in line with the global decarbonisation movement.
Significance of Decarbonisation for Companies
Today, decarbonisation is not just a buzzword; rather, it has emerged as a strategy used by everyone. From governments to corporations, all have stepped their decarbonisation goals as a pivot step towards creating a sustainable future.
To achieve 2050 targets, decarbonisation necessitates the complete reduction of carbon emissions. Businesses must, therefore, take immediate steps to make emissions targets an important aspect of business planning. A corporate sustainability strategy ensures that a business operates in a way that uses environmentally sustainable methods while supporting financial growth. Decarbonisation, thus, is a huge business opportunity and a driver of innovation. The industries can minimize their carbon footprint by switching to renewable energy, electrifying systems and improving efficiency.
For instance, hydrogen as an energy source has the potential to decarbonise sectors like steel, shipping, transport and other industries. Businesses are thus creating a decarbonisation strategy that is appropriate to their industry. An essential element of this process is to evaluate the emissions levels that business operations are directly or indirectly responsible for and then identify the process for reducing those emissions.
The Shifts Needed to Decarbonize Industry: Essar’s Approach
1. Transition existing assets to deliver reduced emissions levels
Industries depend upon products like steel and cement for construction, infrastructure, transportation, and countless other applications. However, cement and steel are estimated to be responsible for 15% of the global carbon dioxide (CO2) emissions making the pace at which their required production is being met, an influential component of industrial emissions.
Essar Group has already taken significant steps to transition the operations of its existing assets to clean by creating green hydrogen, mobility and steel ecosystems. Its decarbonisation plans include:
- Essar’s Hydrogen Ecosystem: Globally, Essar is investing USD 3 billion to develop a range of low-carbon energy transition projects over the next five years at its UK site (between Liverpool and Manchester). The company is further decarbonizing its oil refinery in the UK through Essar Energy Transition (EET), the leading low-carbon hydrogen business in the UK.
- Green Hydrogen Plant in Gujarat: The group is setting up a green hydrogen plant at Jamnagar with an INR 30,000 crore investment. Essar will invest a whopping amount over the next four years in Gujarat, focusing on clean energy as a key pillar for its growth and expansion.
- Essar’s Green Logistic Initiative: Investment in LNG and electric trucks through GreenLine Mobility Solutions. Currently, GreenLine has more than 500 LNG-powered trucks and plans to have 1,000 such trucks by March 2025. The company has formed strategic collaborations with many renowned companies, including Hindalco Birla Copper, Sterlite Copper, Flipkart, Nestle India, Dalmia Cement, and JSW Cement, among many more, to introduce LNG-powered trucks aiming to minimize carbon footprints and promote cleaner logistics practices within the industrial sector.
- Investment in Renewable Energy: Essar is continuously working towards strengthening its existing renewable power capacities, aiming to shift its energy supply away from fossil fuels and toward cleaner, renewable sources. It plans to create 8GW renewables power capacity.
So these are some of the group’s decarbonisation plans out of many others. The conglomerate, which turned debt-free in 2022 by selling a few of its infrastructure assets due to Essar Debt, is continuously expanding towards creating a more sustainable future.
2. Improving Industrial Energy Efficiency
Updating existing technology with more efficient technology helps minimize carbon emissions and expenditure towards industrial energy. Today’s competitive landscape is heavily reliant on innovation. Businesses like the Essar Group have already taken significant steps and are looking for ways to innovate because traditional methods cannot solve many problems. Industries, thus, must invest in dynamic innovation processes to boost overall energy efficiency.
The key driving factor for Essar’s success and growth is its continuous investment in technology and innovation. The company is investing significantly in new growth areas like low-carbon hydrogen, carbon capture, renewables, green mobility, decarbonization, artificial intelligence, etc.
Furthermost, energy efficiency improvements within the industry can be encouraged through measures such as energy performance standards mirroring available best practices, mandating energy audits and providing information and training to industries. Reducing fossil fuel subsidies and other economic support for the adoption of fossil fuels can also help in improving energy efficiency.
3. Shift from Fossil Fuels to Renewable Energy
It is considered that almost a third of the total amount of carbon emissions in industrial processes is attributed to the burning of fossil fuels. Industries, particularly those in the energy, steel, and transport sectors, are heavily dependent on coal, oil and natural gases. The first step to decarbonize the industry is to displace these traditional energy sources with clean energy production sources such as solar, wind, hydro and geothermal energy.
Essar Group is making considerable investments in the renewable energy sector, aligning with its plans to improve its sustainability efforts. By replacing carbon-heavy energy sources with renewable or low-carbon sources, the group is paving the way for a cleaner and more sustainable future. All the efforts taken by the company post clearing Essar debt showcase it remained steadfast in achieving its objective of rebalancing its portfolio for the better. Such efforts, not only specifically target the group’s emissions but also contribute to the broader energy transformation to provide cleaner solutions to the industry.
4. Shift to Sustainable Supply Chains and Green Materials
Decarbonising the industry requires looking beyond the routine operations and addressing the entire supply chain. The materials used for manufacturing, transportation, and logistics are one of the primary sources of emissions. To decarbonize, industries must shift towards sourcing sustainable, low-carbon raw materials and adopt green logistics practices.
Essar Group has been working toward reducing the carbon footprint of its supply chain, both nationally and internationally. In the steel sector, the group is making significant investments to enable more sustainable steelmaking processes that require fewer carbon-intensive raw materials. Additionally, the company is planning facilities for iron ore pellets, which will produce fewer emissions during production.
Essar is also committed to promoting green logistics by adopting energy-efficient transportation technologies. The company is working with partners to explore the electrification of its vehicle fleet for short haul and the use of low-carbon fuel alternatives, ensuring that emissions are minimized throughout the supply chain.
Also Read: UGEL to Strengthen India’s LNG Ecosystem with 100 LNG Outlets
Conclusion
With industries continuously evolving and adapting to climate challenges, Essar’s forward-thinking approach will be critical in shaping a more sustainable and resilient industrial landscape.
Businesses can take a leaf out of the Essar Group’s approach and strategise growth by transitioning existing assets to green, while investing in transformative clean businesses.
