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India’s net zero ambitions: The economic rebalancing

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The year 2050 is not far off while the enormous challenge of reducing carbon emissions stares at not only the developed nations, but developing nations as well. This is a rebalancing that encompasses several transitions in the economy from financial investments in the right technology and infrastructure interfaces, industrial and social transitions as well. While the need for financial investments is of paramount importance, one cannot ignore the deep impacts of de-carbonising the economy on people and livelihood of a large proportion of the population; the skills and expertise to cope with the future needs of a de-carbonised economy must be attended to right away.

The EU gives us some direction as they were the early starters, between 1990 and 2017, EU reduced Carbon emission by 22 per cent, while the GDP increased by 58 per cent thus decoupling greenhouse gas emissions from the economic growth. This came from large scale electrification of the energy system coupled with deployment of renewables decarbonisng energy supply and significantly reduce dependency on other third country suppliers. The improvement of energy efficiency and industrial modernization followed suit, where waste reduction and recycling took center stage.

We can take examples from two of the most energy intensive industries, cement and aluminum and the progress in the last two decades has been significant. Take Germany or Poland and the shift started from landfill laws, that became more and more stringent thus bringing in enormous focus on recycling. Take municipal waste and one would see that entire municipal waste got recycled and both these countries do not use any fossil fuels in their cement kilns. The industrial waste heat is recycled into household electrification and heating needs and very large industrial complex could be built closer to the towns because it helped to significantly reduce wastes in all forms, especially energy that could be diverted to household use, while municipal wastes could be used as fuel in the industrial heating.

Recycling of waste is all pervasive in all advanced economies of Europe thus bringing in the ten level hierarchy of progress ending with Refuse (not producing stuff) and going down the order as follows: rethink, reduce, re-use, repair, refurbish, remanufacture, repurpose, recycle and recover.

Decarbonising the transport sector by using alternative means of transport, connected and automated driving combined with the roll-out of electric vehicles and enhanced use of alternative fuels has started to give rich dividends as the Transport emissions form 24 per cent of all emissions and is a tall order. For a large economy like India the waste factor and inefficiencies of logistics alone takes away the bulk of the carbonisation needs, building efficient infrastructure and sharing the infrastructure efficiently are as important as working on electrification of mobility.

Most modern cities in Europe have moved their public transportation systems from fossil fuels completely and per capita emission has reduced by leaps and bounds as the shift from individual vehicles to public vehicles is at the root of the puzzle. Zurich for example has not increased its private car parking space for almost the last decade, thus restricting the number of vehicles that can enter the city at any point of time.

But reaping first mover benefits by modernising existing installations and investing in new carbon neutral and circular economy compatible technologies and systems will need routing of financial investments into several buckets that will put pressures on the existing expansion plans of several fossil fuel consuming industries, habits, systems and habitats. The investments have to be carefully planned in transportation infrastructure and systems, energy transition to renewable and smart grid solutions (transmission and distribution landscape) including storage systems and in smart cities that automatically create the network of carbon emission neutral solutions to everything.

This calls for investments on a massive scale as solar, wind and all renewable energy cannot be directly injected into the grid without proper storage systems in place that will be able to match supply with demand at every instant; without these the rise of renewable energy solutions will be severely limited. Connected systems that are interoperable and building on a smart network is at the core of the EU success stories.

Turning to the creation of new jobs, the focus must shift to resource allocation in efficient land, water and air usage and for sustainable agriculture, forestry and marine systems. EU has made dramatic progress here and the emission reduction in agriculture and in construction has been brought about by transitions to new technologies creating jobs.

Circular economy for a country like India must start with alternate employment opportunities for those who are currently employed in the non-renewable sectors of the economy and the puzzle can only be solved if the new skills of the circular economy can be worked on right from the schools. Here more than the investments, the intent to decouple existing economic growth drivers from carbon dependence is itself an arduous task.

ABOUT THE AUTHOR:

Procyon Mukherjee is an ex-Chief Procurement Officer at LafargeHolcim India.

Concrete

Lokesh Lays Stone For Rs 31 Billion Cement Unit In Kadapa

Line-2 expansion to make Kadapa a major cement hub

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Andhra Pradesh Education and IT Minister Nara Lokesh on Wednesday laid the foundation stone for the Line-2 expansion of Dalmia Bharat Cement at Chinnakomerla village in Mylavaram Mandal in Kadapa district. The project carries an investment of Rs 31 billion (bn) and is slated for completion by the third quarter of the financial year 2028. The expansion is intended to boost industrial growth and employment generation across the Rayalaseema region.

Once commissioned, the Kadapa facility will become Dalmia Bharat’s largest integrated cement manufacturing ecosystem in southern India, creating over 1,000 direct and indirect jobs and opening new business avenues for regional micro, small and medium enterprises and transport operators. Lokesh said the expansion signalled growing corporate confidence in the state and reflected the practical ease of doing business that secured repeat investment.

He placed the project within the government’s wider economic targets and recalled the Yuvagalam padayatra commitment to generate two million (mn) jobs within five years, noting that the state would cultivate talent while industry created opportunities. Lokesh highlighted Andhra Pradesh’s competitive pursuit of major manufacturing accounts, mentioning past successes and a personal initiative to engage global investors when persuading them to anchor expansion in the state.

The plant will leverage Kadapa’s abundant limestone reserves to scale production and sustainability. Clinker capacity is planned to rise from two point five million tonnes per annum (mn tpa) to six point one mn tpa, while overall cement output will increase from three point six mn tpa to nine point six mn tpa. The unit is designed to operate on over eighty per cent renewable energy and deploy waste heat recovery, zero liquid discharge, water recycling and advanced AI systems to optimise efficiency. Industries Minister TG Bharat, BC Welfare Minister S. Savitha and Jammalamadugu MLA C. Adinarayana Reddy attended the ceremony.

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Cement Prices to Stay Flat in Q2 FY27 as Costs Squeeze Margins

HDFC Securities warns monsoon slowdown and higher fuel costs

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HDFC Securities has said the cement industry is unlikely to register a sequential increase in prices in Q2 FY27 as monsoon-related demand moderation coincides with rising fuel and packaging costs that will squeeze margins. The brokerage observed that price gains remained modest, with increases of two to three per cent quarter-on-quarter across regions, and noted subdued offtake in May with improvement in June as a delayed monsoon supported construction activity. The brokerage added that modest pricing gains so far have been insufficient to offset the input cost escalation.

The report stated that input cost pressures intensified in Q1 FY27 owing to the West Asia conflict, which pushed up coal and pet coke prices and is expected to keep fuel costs elevated, with a likely peak in Q2 FY27. It assessed that total variable costs, including packing, could rise by around Rs 150 per t quarter-on-quarter and that lower offtake and seasonal operating deleverage could further raise operating expenditure by about Rs 50 per t quarter-on-quarter.

Overall, cement prices were estimated to remain flat in Q2 FY27 as monsoon-led demand weakness offsets limited upside in realisation, and rising fuel costs alongside seasonal deleverage were expected to compress industry margins by over Rs 100 per t quarter-on-quarter to below Rs 880 per t. The brokerage indicated that the combined impact of energy inflation and higher packing expenditure would be the principal drivers of margin contraction in the near term. HDFC Securities projected a recovery in margins in H2 FY27 should the West Asia turmoil subside and energy and packing costs cool off.

The brokerage expressed optimism on long-term demand fundamentals and said improving realisation together with an anticipated cost cool-off should support a margin rebound from H2 FY27 onward, underpinning favourable industry prospects over the medium term. Its outlook rests on monsoon normalisation and a decline in imported fuel prices in the second half of the fiscal year.

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Dalmia Bharat Begins Rs 31 Bn Green Cement Unit in Kadapa

New Andhra Pradesh plant to add 9.6 MTPA cement capacity by FY28

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Dalmia Bharat Limited recently laid the foundation stone for its second manufacturing unit at Kadapa in Andhra Pradesh. The company will invest Rs 31 billion in developing the next-generation integrated cement manufacturing facility.
The foundation-laying ceremony was attended by Nara Lokesh, Andhra Pradesh Minister for Information Technology, Electronics and Communications, Real-Time Governance and Human Resources Development, along with Puneet Dalmia, Managing Director and Chief Executive Officer, Dalmia Bharat, senior government officials and company representatives.
Scheduled to be commissioned by the third quarter of FY28, the Kadapa unit will become Dalmia Bharat’s largest integrated manufacturing facility in southern India. It will have a clinker production capacity of 6.1 million tonnes per annum and a cement manufacturing capacity of 9.6 million tonnes per annum.
The facility is designed to produce what the company describes as one of the world’s greenest cements. It is also expected to generate approximately 1,000 direct and indirect employment opportunities while supporting local MSMEs, transporters, contractors and service providers.
Lokesh said the investment reflected Dalmia Bharat’s confidence in Andhra Pradesh and aligned with the state’s objective of promoting sustainable industrialisation, job creation and technology-led economic growth.
Puneet Dalmia said the project represented the company’s long-term vision of developing low-carbon cement manufacturing assets. He added that the facility would establish new benchmarks in operational efficiency and sustainability while supporting India’s infrastructure and environmental goals.
Dalmia Bharat will also expand its regional community development programmes in education, healthcare, skill development and welfare through its DIKSHa and Gram Parivartan initiatives.
The company currently has an installed cement manufacturing capacity of 54.7 million tonnes across 19 manufacturing units in 12 states. It is also the first cement company globally to commit to the RE100, EP100 and EV100 initiatives.

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