NITI Aayog Reports on Green Transition in Cement, Aluminium and MSME Sectors

Syllabus: GS3/ Economy

Context

• NITI Aayog has released three reports outlining decarbonisation roadmaps for the cement, aluminum and MSME sectors.

Decarbonisation of Cement Sector

• Growth: Cement production is projected to increase from 391 million tonnes in 2023 to about 2,100 million tonnes by 2070, reflecting India’s infrastructure and urbanisation needs.
  • India is the world’s second‑largest cement producer after China, contributing about 13% of global annual cement output.
  • The sector contributes about 7% of India’s total greenhouse gas emissions.
• Decarbonisation Targets: The roadmap envisages reducing carbon intensity from 0.63 tCO₂e per tonne of cement at present to 0.09–0.13 tCO₂e per tonne by 2070.
• Key Decarbonisation Strategies:
  • Prioritising refuse-derived fuels (RDF) to reduce coal dependence.
  • Clinker substitution through greater use of supplementary cementitious materials.
  • Scaling up Carbon Capture, Utilisation and Storage (CCUS) for residual process emissions.
  • Effective implementation of the Carbon Credit Trading Scheme (CCTS) to incentivise low-carbon production.

Decarbonisation of Aluminium Sector

• Production Outlook: Aluminium production is projected to rise sharply from 4 million tonnes in 2023 to 37 million tonnes by 2070.
• Phased Decarbonisation Pathway: 
  • Short term: Transition to Renewable Energy–Round the Clock (RE-RTC) power and strengthening grid connectivity and reliability.
  • Medium term: Adoption of nuclear power to provide stable, low-carbon baseload electricity.
  • Long term: Integration of CCUS to address remaining emissions.

Decarbonisation of MSME Sector

• Economic Significance: MSMEs contribute nearly 30% of India’s GDP, employment to over 250 million people, and around 46% of India’s exports.
• The Roadmap for Green Transition of MSMEs is built around three key levers:
  • Deployment of energy-efficient equipment to reduce energy intensity.
  • Adoption of alternative fuels to cut fossil fuel dependence.
  • Integration of green electricity through renewable power procurement and self-generation.

Initiatives taken by India

• Udyam Registration & MSME Sustainable (ZED) Certification: Promote resource efficiency, energy efficiency and cleaner production practices among MSMEs.
• Perform, Achieve and Trade (PAT) Scheme: A flagship initiative under the National Mission for Enhanced Energy Efficiency, PAT targets energy-intensive industries like cement by setting specific energy consumption reduction targets.
• National Smart Grid Mission & Green Open Access Rules (2022): Facilitate renewable energy procurement, especially for energy-intensive industries and MSMEs.
• India’s Carbon Credit Trading Scheme (CCTS) creates a market for reducing emissions in heavy industries like cement and aluminum by setting mandatory intensity targets, rewarding overachievers with credits (CCCs) for trading, and encouraging innovation in low-carbon technology.

Challenges in Green Transition

• Hard-to-abate emissions: Cement process emissions from limestone calcination and electricity-intensive aluminium smelting limit mitigation through renewables alone.
• High capital costs: Technologies such as CCUS, RE-RTC power and nuclear integration require large upfront investments with long payback periods.
• Green finance constraints: MSMEs face limited access to affordable credit, weak balance sheets and high borrowing costs.
• Clean power availability: Lack of reliable round-the-clock renewable energy and grid constraints hinder deep decarbonisation.

Way Ahead

• Scaling green finance: Expand blended finance, credit guarantees and concessional lending, especially for MSMEs.
• Technology development and localisation: Accelerate domestic manufacturing of clean industrial technologies.
• Strengthening carbon markets: Ensure transparent and credible implementation of the Carbon Credit Trading Scheme.

Source: PIB