#13 - Behind Reliance zero carbon pledge

What we know and what it means

#13 - Behind Reliance zero carbon pledge

Hello and welcome to this week’s edition of Lights On, a newsletter that brings you the key stories and exclusive intel on energy and climate change in South Asia.

The mythical ‘net zero’

  • Last week, Indian multinational Reliance Industries Limited announced an ambitious net zero target by 2035
  • I look into the details (or lack of thereof) to establish what this label really means

The race to net zero carbon is on in India. Last week, the government owned Indian Railways and the oil and telecom multinational Reliance Industries Limited (RIL) announced their plans to achieve carbon neutrality by 2030 and 2035.

In his annual address, Reliance chairman Mukesh Ambani announced a new energy strategy for the company, which will involve replacing transportation fuels with hydrogen and building fuel cells as part of an ‘optimal mix’ of clean sources.

Aerial view of Mumbai - Image credit: Pikist

Reliance’s announcement was met with particular excitement because:

“when a giant like RIL lists down technologies like electrolysers [to produce hydrogen], or carbon capture as a means to achieve net carbon neutral status, that is a positive input for the researchers in the area”, an expert told me.

The hope is that big statements from big businesses will help scale up and commercialise innovative solutions. Hydrogen is one example: experts say it’s where India can truly become a global leader.

But these targets are as inspiring as they are elusive.

What does ‘net zero’ even mean for a company that extracts, imports and refines fossil fuels and plans to continue to do so for the foreseeable future? Ambani’s briefing doesn’t really answer the question, Reliance’s annual report has just a tiny paragraph mentioning various technologies with no timeline for implementation (page 77), and a spokesperson said that those nuggets are all the company can disclose for now.

What do they mean?

Based on what little we know, we can infer that Reliance intends to decarbonise its own refineries and exploration processes over time, introducing technologies such as batteries, algae farming and carbon capture and storage to offset emissions, and ramping up the use of clean energy sources.

Reliance’s industrial activities emit a lot of CO2 and produce hydrogen that at the moment is useless, but could one day become fuel. Carbon dioxide and other gases could be trapped and turned into useful chemicals as part of the company’s circular economy.

Whatever pollution cannot be trapped and put back in the system can be offset through tree plantation, industrial developers reason. Reliance has some of the country’s biggest mango orchards, for example, and according to its most recent sustainability report it has planted 20 million saplings in the ‘green belt’ it created around its plants.

Tree plantation is sanctioned by India as a way of creating carbon sinks and offsetting emissions from heavy industries - it’s even included in its Paris Agreement pledge. But in reality, when a forest is razed to make space for construction, its biodiversity cannot be restored through artificial plantations, and while trees can block some of the particle pollution from a factory’s chimneys, they suck up very little carbon. For example, “If in a thermal power plant they could mitigate 0.5 to 1 percent [of what that plant emits], that is [considered] more than enough,” Avinash Jain, a researcher with the Tropical Forest Research Institute told me for this story.

The real emission budget

But the real problem with ‘net zero’ targets is that they are meaningless when they come embedded in a high-emission supply chain.

Rajat Agrawal, a professor of industrial management at IIT Roorkee, said that ultimately the petrochemicals that Reliance is producing are going to be burned by car engines, and will emit comparatively much more than what the company will save through solar and carbon capture. If you plot a supply chain as moving from point A to Z, he explains, it’s up to you to decide how much of that long process you take into account. “Let's say you are only talking about one refinery, maybe you can say that that is carbon neutral, but then if you look at the step before or after, they may generate a lot of carbon. It’s just very subjective.”

but it also imports a lot of crude from places like the UAE

We agree on the answer.

And once the oil is processed and the petrol is distributed across the country, people can do what they want with it, including using it in inefficient engines or even cutting it with kerosene, a practice rife in smaller Indian towns, according to Agrawal.

Doing something about it is not impossible. Companies could strike partnerships with carmakers to install sensors that would the driver when their tank is filled with substandard fuel, Agrawal says. The same way, they could enter voluntary agreements with suppliers of raw materials to adhere to certain sustainability standards. But without policies to incentivise the establishment of clean supply chains, this would come at a cost that no private company is prepared to shoulder. Even the adoption of hydrogen and battery technologies that Reliance is proposing will depend on whether prices will fall in the next few years.

Ultimately, a sustainable supply chain is the only way to reduce emissions, but it’s also the most difficult process to work on because it doesn’t have any legal standing, and therefore it cannot be regulated. For now, Agrawal says, it’s just an academic term.

The celebrated ‘net zero’ target may have some practical impacts. It nudges markets by inspiring confidence in low carbon solutions, and down the line it may stave off a certain amount of pollutants from air, soil and water. But the systemic transformation needed to build a carbon neutral society cannot be achieved by single industries without a set of policies that enable cooperation. In this respect, a generic net zero carbon pledge, particularly one as vague and detail-light as the one proposed by Reliance, is little more than smoke and mirrors.

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