sectoral economic costs and benefits of ghg mitigation - IPCC

Energy Intensive Industries
Costs and Benefits of CO 2 Mitigation in Energy Intensive
Industries of India
Somnath Bhattacharjee
Introduction
The use of commercial energy in India has increased ten folds in fifty years since independence,
and was 248 million tonnes of oil equivalent (mtoe) for the year 1996/97. An analysis of the
share of commercial energy use by different sectors indicate that the industry is the most
dominant sector, accounting for more than half of the total commercial energy use in the country.
A pie chart showing the importance of different end users in terms of their commercial energy
share is shown in figure 1. In general, the Indian industry is highly energy intensive and the
energy efficiency is well below that of other industrialized countries and presents an ideal case
where substantial reduction in CO 2 emissions is possible through rational use of energy.
Figure 1 Share of commercial energy consumption by different sectors
Industry (including
feed stocks)
51.4
Others
Agriculture
5.2
9.0
12.1
22.3
Transport
Household
It is estimated that 5 to 10% energy saving is possible simply by better housekeeping measures.
Another 10-15% is possible with small investments like low cost retrofits, use of energy efficient
devices and controls etc. The quantum of saving is much higher if high cost measures like major
retrofit, process modifications etc. are considered. Efforts to promote energy conservation by
such industries could lead to substantial reduction of operating cost, making them more
competitive globally, and at the same time have pronounced positive effect on CO 2 abatement.
An analysis of the industrial energy-use pattern further reveals that around 65–70 % of the total
energy consumption is accounted for by seven sectors namely, (1) cement, (2) pulp and paper,
(3) fertilizer, (4) iron and steel, (5) textiles, (6) aluminium, and (7) refinery, therefore, making
them ideal candidates for intervention.
In addition to the above energy intensive sectors, which are largely medium to big industries,
another important segment is the small-scale industry sector. The small-scale sector occupies a
position of prominence in the Indian economy. It contributes to more than 50% of industrial
production in value addition terms, one third of the total export and employs the largest
manpower next to agriculture. Unfortunately, in spite of the high growth rate on one hand, this
end-use sector is also experiencing growing industrial sickness. The reasons for this range from
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