Indian industry can meet the 2020 emission intensity reduction target set by the government with its business as usual (BAU) approach, but will find it difficult and costly to do more, says a new report. The government has voluntarily committed to cut emission intensity of the GDP by 20-25% by 2020 on a baseline of 2005.

Under its business as usual (BAU) scenario, industry is likely to cut emissions by 20% by 2030, thereby avoiding emission of 700 million tonne of CO2 annually. In a low-carbon scenario, it can cut emissions by another 10%, but at high cost, says Challenge of the New Balance by the Centre for Science and Environment (CSE), a Delhi-based NGO.

For example, the power, steel and cement sectors are estimated to require an investment of $300 billion under a low-carbon scenario.

While BAU would be pursued by the industry to improve energy efficiency in view of rising energy costs, a low-carbon approach could result from any new emission reduction commitments made by the government. The report based on the study of six sectors? power, steel, cement, aluminium, paper and pulp, and fertilisers?which accounted for more than 60% of the country?s carbon dioxide emissions in 2008-09.

Releasing the report, CSE director Sunita Narain said, ??These findings must be seen in the backdrop of global climate negotiations. India must demand an equitous agreement because the cost of transition to a low-carbon economy is going to be high after low-hanging fruit have been targeted. Rich countries must recognise their historical responsibility and pay us for mitigation.??

The report in its sector-wise analysis highlights their emission reduction potential and the way forward. Study author Chandra Bhushan added, ??While the power, paper and pulp, and cement sectors offer the biggest potential to cut emissions, aluminium and fertiliser industries offer less scope for improvement because they are already amongst the world?s most efficient industries.??

The power sector is the biggest emitter of CO2 in the country with a high potential for emission reduction. It’s possible to reduce emission intensity by 18% by 2030 in BAU scenario and 35% by 2030 in a low-carbon scenario.

Similarly, the paper and pulp sector can reduce emission intensity by 30% by 2030 by using wastepaper and market pulp for raw material. Emission intensity can be reduced by 40% by 2030 if old plants are replaced with energy efficient plants in a low-carbon scenario.

Though the cement sector is already using the latest technology and blending material, it can reduce its emission intensity by 25% by 2030 in BAU and 35% in a low-carbon scenario by producing more blended cement.

It?s more challenging for the fertiliser and aluminium industries. Since the fertiliser sector lacks technology options at this stage, it can resort to change feedstock from naptha to natural gas, thereby reducing 2 mt of CO2 emissions by 2020.

At the other end is the steel sector, which is getting locked in high emissions bubble because it is shifting from blast furnace route to sponge iron.

Similarly, 80% of aluminium industries are already using the best smelting technology. The only option they have at this stage is to shift to more efficient on-site power generation and 30% renewables, which would help them reduce emission intensity while continuing to grow.