IOCL to invest $25 billion to become carbon neutral by 2046

Carbon neutrality is the new in-thing and it is not just the big private sector companies that are talking about going net-zero carbon. Even government owned IOCL has laid out aggressive plans. It will invest close to Rs2 trillion or about $25 billion to reach the net-zero carbon emission target by 2046. That is still a long time away, but the fact that the state owned fossil fuel companies are thinking on these lines is highly appreciable. India, as a country, is planning to be carbon neutral level only by 2070, so IOCL is ahead of the curve.

It is not just a statement of intent, but IOCL also has a game plan in place with a multi-pronged approach to net zero destination. A net zero situation is when the company is able to offset the negative impact that its business is having on the environment and with global warming staring us on the face, there is not much of a choice now. In fact, being carbon neutral or moving towards carbon neutral is not only attractive for investors but even stock markets tend to assign a higher weight to companies with a responsible green future plan. 

IOC is the largest refiner in India with a capacity of 70 million tonne per annum (MTPA). Most of the greenhouse gas (GHG) emission predominantly emanate from the company’s refining operations. In fact, as per the last analysis done, the total emissions of the refining business stands at  21.5 million metric tonne of carbon dioxide equivalent (MMTCO2e) per annum. Fossil fuels are, by default, environment depleting, which is why the Modi government has assigned such a major thrust to green energy.

Typically, a company like IOC has Source 1 emissions and Source 2 emissions in its business model. For instance, in the case of IOC, the Scope 1 emissions come from the processes like direct fuel burning for deriving energy from heat, steam, electricity and cooling and are a core part of the operations. This accounts for 96% of the total emissions. The Scope 2 emissions account for just about 4% of the emissions and are largely on account of sourcing electricity from the grid, rather than generating it in-house through green sources.

Here is how the plan will roll out for IOCL. It will achieve two-thirds of its emission reduction through energy efficiency, electrification and fuel replacement efforts. These are organic approaches. The other one-third of the total emission would be mitigated through inorganic options like carbon capture utilisation and storage (CCUS), nature-based solutions and purchase of carbon credits. On any average day, about 3.10 crore customers buy fuels from IOC’s retail outlets daily and it delivers 25 lakh cooking gas cylinders every day.