The takeover of the Holcim stake in Ambuja Cements and ACC is an opportunity for the Adanis to deploy breakthrough technologies and raise the bar in the cement sector globally
India’s cement industry is among the few low-carbon leaders globally which have successfully tapped low-hanging fruits like energy and resource efficiency. Powered by its renewables portfolio and more recent forays in green hydrogen, the Adani group is aspiring to be a global green business conglomerate. The buyout of the Holcim Group’s stake in Ambuja Cements and ACC Limited is an opportunity to achieve decarbonization of the cement sector for India to achieve targets of reduction of the carbon intensity of the economy to below 45 per cent by 2030 and net-zero by 2070.
A hard to abate sector, cement production emits approximately 8 per cent of the world’s anthropogenic CO2 emissions. As the world’s second-largest producer of cement, India’s share stands at 8% of the world’s installed capacity. The good news is India’s cement sector has done better than the rest of the world in reducing emissions. A recent Reserve Bank of India (RBI) Bulletin notes, “The domestic cement industry of India has made a remarkable progress of reducing CO2 emission levels by about 36 per cent from 1.12t/t to 0.719t/t of cement produced between 1996 and 2017.”
Commenting upon the deal, Gautam Adani, Chairman, Adani Group, announced: "With Holcim's global leadership in sustainability, we are acquiring some of the most efficient building materials operations in India, powered with clean technologies like heat recovery systems.”
The Holcim Group is amongst the front runners globally in pursuing CO2 emission reduction targets with the help of automation and artificial intelligence, ECOPact concrete green solution and carbon capture and usage or storage (CCUS), which has been quoted even by the RBI as “the most effective approach to decarbonize the cement industry”.
Bhaskar Natarajan, Director of Programmes – Alliance for an Energy-Efficient Economy (AEEE), says, “The narrative around CCS/CCUS technology has been gaining momentum in the Indian and global contexts.” He adds, “In India however, this technology is far from becoming mainstream, but the Government of India and the Indian cement industry are trying to better understand the techno-economic feasibility and scalability of this technology in the Indian context.”
The Holcim Group is committed to reduce CO2 intensity for all scopes to more than 20 per cent on a baseline of 2018 and has set a 2050 net-zero target for Scope 1+2 emissions with a 90% reduction target for Scope 3 emissions over 2020 to be validated by the Science Based Targets initiative (SBTi). Scope 1 emissions are direct emissions, Scope 2 emissions are indirect emissions, and Scope 3 are all indirect emissions from the value chain of the reporting company.
It is only natural that Ambuja Cements and ACC, too, have their own targets. Ambuja Cements is committed to reducing emissions by 21 per cent per ton of cementitious materials, including Scope 1 GHG emissions by 20 per cent per ton and Scope 2 GHG emissions by 43 per cent per ton by 2030 from a 2020 base year. ACC is committed to reducing Scope 1 GHG emissions 21.3 per cent per ton of cementitious material and Scope 2 GHG emissions 48.4 per cent per ton of cementitious material by 2030 from a 2018 base year. Targets of both the companies include biogenic emissions and removals from bioenergy feedstocks, according to SBTi. Launched by the CDP (formerly the Carbon Disclosure Project), United Nations Global Compact, World Resources Institute, and the World Wide Fund for Nature (WWF), SBTi rallies companies to set science-based emission targets.
Talking about the acquisitions in his announcement, Adani added, “We recognize that Ambuja and ACC operations are energy-intensive and therefore when combined with our renewable power generation capabilities we gain a big head start in the decarbonization journey that is a must for Indian industry."
The Adanis are committed to making their ports-to-power business conglomerate carbon negative by 2025. A signatory to CDP, Task Force on Climate-Related Financial Disclosures (TCFD), and SBTi, the group is rated by agencies like MSCI, Sustainalytics, Dow Jones Sustainability Index (DJSI), and CSRHub. The group is also committed to achieving the UN’s Sustainable Development Goals by 2025.
It will have to be seen how the Adani Group uses the opportunity of being the second biggest producer the cement in the country to become number one in taking the sector further on the low-carbon pathway. As Suresh Kotla, Director, Business & Investors, Climate Catalyst, which works towards accelerating action on climate change, says, “The key question is how will the Indian cement industry continue its decarbonization journey towards near-zero emissions, while India is still urbanizing and industrializing. This presents a challenge and an opportunity for the Adani Group to develop a long-term growth strategy with a net-zero strategy built into it.”