InvestorQ : Can you tell me about IOCL’s green energy plans in the next few years?
Aditi Sharma made post

Can you tell me about IOCL’s green energy plans in the next few years?

Mahima Roy answered.
1 month ago

Today, most of the large private sector companies are working towards becoming carbon neutral over the next 20-25 years. However, it is not just the private sector, but even some of the major PSU companies like NTPC and IOCL have aggressive plans to become carbon neutral. Now IOCL has outlined its plans to invest close to Rs2 trillion ($25 billion) to attain net-zero carbon emission status by 2046. That is still way quicker than India’s perspective plan to go fully carbon neutral by the year 2070.

A net zero situation represents a condition wherein the company is able to offset the negative impact that its business is having on the environment. This trend is inevitable at a time when global warming is hitting us hard from all sides. In the last few years, it has been observed that moving towards carbon neutral status is not only attractive for investors but even stock markets assign a higher valuation to companies with a clear green path. So, the initiatives of IOCL are well timed from the market perspective too.

To give a picture of how big the problem of emissions for IOC, it is the largest refiner in India with capacity of 70 million tonne per annum (MTPA). Refining is greenhouse gas extensive and is responsible for most of the environmental damage. The IOC refining business emits a total of 21.5 million metric tonne of carbon dioxide equivalent (MMTCO2e) per year. These emissions are classified into Source 1 and Source 2. While the former comes from fuel burning and cooling, the latter typically comes from sourcing electricity from the grid.

Form an implementation perspective, how does IOC plan to go about its job? It will achieve two-thirds emission reduction via more fundamental steps including energy efficiency, electrification and fuel replacement. The other one-third of the total emission will be reduced largely through options like carbon capture utilisation and storage (CCUS) and purchase of carbon credits. For companies like IOC, a green future is not just a luxury but almost a necessity at a time when the pressure on emissions reduction is rising.