NITI Aayog Reports on Green Transition in Cement, Aluminium and MSME Sectors

The Cement Sector’s 7% Emission Contribution: NITI Aayog’s Green Transition Playbook

At 391 million tonnes in 2023, India’s cement production is gargantuan. By 2070, that figure is expected to balloon to 2,100 million tonnes, driven by pressing infrastructure and urbanisation demands. Yet, this growth comes with a staggering environmental cost: the sector currently contributes 7% of India’s total greenhouse gas (GHG) emissions. NITI Aayog’s latest decarbonisation roadmaps for the **cement, aluminium, and MSME sectors** aim to pivot these emissions-heavy industries to a sustainable trajectory. The challenge, however, lies in bridging the gap between ambitious reduction targets and daunting structural realities.

Emissions Target: Can the Cement Industry Achieve 80% Carbon Intensity Cuts?

The specific promise is striking — reducing carbon intensity from 0.63 to 0.09–0.13 tCO₂e per tonne of cement by 2070. Several key strategies underpin this long-term decarbonisation agenda: refuse-derived fuel (RDF) to displace coal, **clinker substitution** with supplementary cementitious materials, and the adoption of **Carbon Capture, Utilisation and Storage (CCUS)** technologies. On paper, this trajectory is transformative. But the baseline itself reveals why the road is arduous — much of India’s cement still relies heavily on clinker (responsible for 60% of the sector’s emissions). Innovations like CCUS also require prohibitively high capital investments. More immediately, the **Carbon Credit Trading Scheme (CCTS)** is envisioned as a pivotal market-driven tool to incentivise low-carbon production. Yet, carbon markets in India remain nascent, and implementation challenges abound. Such was the case with Europe’s Emissions Trading System (ETS), which initially floundered due to poor compliance monitoring and volatile credit prices. If India’s CCTS collapses under poor regulation, these incentives might dissipate long before 2070.

Aluminium: A Renewable Puzzle Yet to Be Solved

India’s aluminium production will grow nearly tenfold from the current **4 million tonnes (2023)** to a projected **37 million tonnes by 2070**, according to NITI Aayog. Consequently, addressing emissions from energy-intensive smelting becomes critical. The roadmap emphasises three phases: short-term renewables integration, medium-term nuclear power adoption, and long-term CCUS rollout. This phased decarbonisation appears structured, but several questions linger. Take the medium-term reliance on nuclear energy. Even countries such as **France**, with their advanced nuclear infrastructure, have seen growing public scrutiny and rising costs associated with continued reliance on atomic energy. Given India’s slow rollout of nuclear reactors — an ongoing issue with projects like the Jaitapur Nuclear Plant — pinning medium-term decarbonisation to this source seems overly optimistic. Furthermore, integrating **Renewable Energy-Round the Clock (RE-RTC)** power remains constrained not by intent but by gaps in **national grid reliability** and balancing infrastructure.

MSMEs: The Achilles’ Heel in Green Finance

The problem for MSMEs isn’t ambition but capacity. Nearly **30% of India’s GDP** is MSME-driven, with the sector employing over **250 million people** and contributing **46% of exports**. Yet, these enterprises struggle to adopt energy-efficient technology and alternative fuels due to limited access to affordable financing. High borrowing costs, weak balance sheets, and lack of technical know-how severely restrain green transitions. Indeed, the ZED (Zero Effect, Zero Defect) certification is a step forward, encouraging cleaner production, but uptake has been sluggish. Similarly, initiatives under the **Perform, Achieve and Trade (PAT) Scheme**, while valuable, have largely focused on larger players, leaving MSMEs out of meaningful decarbonisation efforts. Without expanded **blended finance**, concessional lending, and capacity-building programs, the sector will remain stuck in a high-cost fossil fuel dependency loop.

Focusing on the Unspoken Institutional Gaps

Two issues loom large across all three roadmaps: the absence of **industrial technology localisation** and underwhelming progress in **green electricity provisioning**. India still relies significantly on imported machinery for advanced solutions like CCUS, raising costs and creating implementation delays. Without a parallel focus on domestic R&D and **technology transfer agreements**, the roadmaps risk being impractically capital-intensive. Equally crucial is the structural limitation of **round-the-clock renewable energy** supply. For sectors like aluminium, where energy accounts for 40% of production costs, the lack of a dependable renewable grid renders green investments unviable. The **National Smart Grid Mission**, designed to modernise grid management, has shown only incremental progress nearly a decade after its launch.

Lessons from South Korea

A useful parallel exists in **South Korea’s industrial decarbonisation program**, particularly in its steel and petrochemicals sectors. South Korea established a **public-private Green Technology Initiative** backed by industry-wide R&D funding pools and export incentives for green products. Indian policymakers can take cues from their collaborative model — one that encourages integration across firms and public bodies — to ensure centrally funded research gains practical traction.

Rhetoric vs Reality: Time for Honest Policy Reckoning

For now, the NITI Aayog reports forecast sweeping transformation but rely too heavily on fiscal optimism and infrastructure overhauls that remain patchy at best. The **Perform, Achieve and Trade (PAT) Scheme**, heralded as a pioneering success for energy efficiency, has yet to demonstrate significant momentum at smaller scales. Similarly, the **Carbon Credit Trading Scheme**, while promising, will require stronger oversight mechanisms to ensure integrity in credit allocation. The elephant in the room remains political timing. Given its long-term horizon of 2070, these roadmaps risk becoming political placeholders — immune to accountability in the next decade. Without clear interim benchmarks, rival political dispensations could easily scale back commitments without consequence.

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