Net Zero Carbon by 2050 or sooner
Climate change poses a grave risk to society, and it is the responsibility of all global actors to commit to decarbonise themselves at an urgent pace. We support the Paris Agreement to limit long-term global average temperature rise to well below 2oC and to pursue efforts to limit warming to 1.5oC. We welcome the Government of India’s decision to make India a net zero carbon economy by 2070.
We have set ourselves carbon reduction targets that are in alignment with these national and international goals. Through a well-considered strategy to improve our energy and process efficiency together with a diversification of our energy mix across all operations, we intend to meet our goal of Net Zero Carbon by 2050 or sooner.
Key material issues
Climate change and decarbonisation
SDGs impacted
Sub-goals7.2: By 2030, increase substantially the share of renewable energy in
the global energy mix
12.2: By 2030, achieve the sustainable management and efficient use
of natural resources
13.2: Integrate climate change measures into national policies,
strategies and planning
FY2022 was a watershed year for Vedanta’s decarbonisation ambitions. We significantly ramped up our ambition and our preparation to decarbonise our business. In a prelude to COP26, Vedanta announced its commitment to become a net zero carbon organisation by 2050 or sooner. This target, alongside our 2030 GHG reduction commitment in in support of the 2oC Science Based Target Initiative (SBTi) scenario.
We also conducted an in-depth climate risk assessment and scenario analysis to comprehensively understand the risks and opportunities posed by climate change to our business. The findings of these studies are being used as inputs for our carbon strategy and roadmap to achieve Net Zero status by 2050. For the first time, we completed the task of inventorising our Scope 3 emissions and concluded discussions on setting an Internal Carbon Price.
With this, the stage is set for the Company to deliver on its commitment.
Targets
REDUCTION IN ABSOLUTE GHG EMISSIONS BY 2030 FROM A FY2021 BASELINE
MW RE RTC (EQUIVALENT) BY 2025; 2.5 GW RE RTC (EQUIVALENT) BY 2030
INTENSITY REDUCTION IN METALS AND MINING SEGMENT FROM A FY2021 BASELINE
OF ENERGY SAVINGS BY 2025
Our 10 Net Zero commitments
More details about Vedanta’s climate strategy can be found in our FY2022 TCFD Report.
In line with TCFD recommendations1 in FY2022, we undertook a comprehensive study to understand the impact of climate change on the business under different scenarios. This climate risk assessment sought to identify physical and transition-related climate risks and formulate strategies to enhance our resilience. This assessment also covered the socio-economic vulnerability of communities around our operations and the identified climate changerelated adaptation interventions.
Our physical risk assessment considered two scenarios based on IPCC Representative Concentration Pathways (RCPs):
Exposure, hazard, sensitivity and adaptive capacity assessments were conducted, for both the short-term (2039) and long-term (2059) scenarios. Assessing the asset value exposed to physical risks, helps us in informed decision-making and taking appropriate mitigation actions.
Exposure of BUs to Physical Risks
We anticipate that until 2040, under the RCP 4.5 scenario, 11% - 34.5% of the asset value is at risk from climate-related events if we do not undertake any adaptive or resilience measures.
Transitioning to a lower-carbon economy requires extensive changes in policies, regulations, technologies and markets to address mitigation and adaptation requirements related to climate change. Depending on these changes, transition risks may pose varying levels of financial and reputational risks to our organisation.
To assess the impact of transition risks on our business, we used five NGFS (Network for Greening the Financial System) reference scenarios covering three aspects of its scenario matrix including orderly, disorderly, and hot house world.
The five scenarios used for Vedanta’s transition risk analysis
Our portfolio could be broadly understood as spread across 4 types, with the Thermal, Oil and Gas at the highest transition risk as there is carbon in the product and currently with RE it can be easily substituted. The least transition risk is to our aluminium, copper, zinc business except through its processing.
We anticipate transition risks to remain low in the near term (until 2035), however we are monitoring emerging regulations such as the Cross Border Adjusted Mechanism (CBAM) in Europe that could potentially increase our risk exposure due to decreased market access, given our current operating scenario.
Decarbonisation Strategy
Net Zero Carbon by 2050 or sooner is an ambitious (albeit essential) commitment for a business that is currently predominantly powered by coal-based energy. To deliver on our goal, we have taken intermediate targets that will serve as milestones in this journey.
By FY2025, our metals businesses, which represent more than 75% of our current GHG emissions, would have reduced their GHG intensity by 20% from a FY2021 baseline. An intensity-based target is essential in the short term because it will help drive improvements at a stage in our business when we plan to expand our operations. Based on current projections, we anticipate our absolute GHG emissions to peak between FY2025 and FY2027.
By 2030, we intend to reduce our absolute GHG emissions by 25% from a FY2021 baseline. To do so, we have developed a comprehensive net zero roadmap at each of our BUs. The roadmap focuses on governance structures, technology interventions and continuous monitoring of our progress.
A broad outline of this roadmap is presented in the table below:
Net-Zero Roadmap | Policy and Governance | Risk Management | Targets and Metrics |
---|---|---|---|
Short Term (1-4 years) | |||
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Medium Term (4-10 years) | |||
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Long Term (10+ years) | |||
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To make an orderly transition to a net zero carbon organisation, we plan to use six key levers for decarbonisation:
Vedanta will adopt an Internal Carbon Price for our businesses from the second half of FY2023. We will be using a shadow price of US$15/tCO2e (`1,125/tCO2e) for capex projects greater than US`50 million or for those projects whose absolute GHG emissions are greater than 0.5 million TCO2e.
In FY2022, Vedanta put in place several programmes that will help decarbonise our operations. Our efforts were not limited to merely mitigating our impact, but also sought to realise opportunities that will help position the Company as a leading low-carbon, green metal producer.
Vedanta launches its first line of green metal products
Our approach to decarbonisation is not limited to minimising our carbon footprint. In FY2022, we forayed into developing low-carbon products for the industry. Our Aluminium business launched ‘Restora’ and ‘Restora Ultra’ – green product lines for the metal, and thus joining an elite league of global players. The GHG intensity of these metals is significantly below global standards for lowcarbon aluminium.
We became the first Indian aluminium manufacturer to make products using low-carbon aluminium under the Restora name. Restora, as its name suggests, is a part of our initiatives to restore the ecological balance and aid in the transition to a low-carbon future. Minerals and metals will be extremely important in this transformation.
Restora’s GHG emission intensity, which is produced using renewable energy, is almost half the global standard of 4 tCO2e per tonne of aluminium produced. Restora Ultra has almost no carbon footprint since it is made from aluminium that is reclaimed from dross, a by-product of the production of aluminium.
Our Aluminum business used over 2 billion units of renewable energy in 2021 to create the first batch of Restora, making it India’s largest industrial consumer of renewable energy.
The introduction of Restora is indicative of the opportunities that exist as we decarbonise our processes. Restora gives our customers, who are now more aware than ever of the origins of the products they consume, a distinct competitive advantage through environmentally-friendly aluminium products. We have teamed up with Runaya Refining, one of India’s rapidly expanding manufacturing start-ups devoted to developing cutting-edge solutions for the resources sector, to manufacture Restora Ultra.
Global standard
OF METAL
Restora
OF METAL
Restora Ultra
OF METAL
Switching to Green Power
In FY2022, Vedanta Aluminium became the largest consumer of green energy in India when it purchased 2 billion units of green power on Indian Energy Exchange Limited (IEX).
Further strengthening our commitment to decarbonise our energy mix, we have signed a Power Distribution Agreement to bring 580 MW of RE RTC (eq) online by FY2024.
A break-up of this 580 MW is as follows:
AT BALCO
AT VAL-JHARSUGUDA
AT HZL
Vedanta is the largest industrial consumer of renewable energy
Our Aluminium business, India’s largest producer of aluminium and value-added products, also became the largest procurer of RE on India’s power exchanges – IEX and Power Exchange India Limited (PXIL). The ~2 billion units of RE was for the aluminium smelter at the Jharsuguda unit, which is now India’s largest RE buyer on Green Term Ahead Market (G-TAM) platform at IEX. This purchase also helped reduce 1.5 million TCO2e of GHG emissions. Our subsidiary, Bharat Aluminium Company (BALCO), led the RE trading session, procuring around 59% of the traded RE certificates (RECs) in November 2021 alone, and a total of over 2,861,700 RECs during the year.
Mr. Rahul SharmaCEO – Aluminium Business, Vedanta Limited
Fuel Switch Programmes
Fuel switch is another key lever of our decarbonisation strategy. We have several programmes underway to reduce the carbon load of our processes.
Biomass firing
We are committed to using 5% biomass in our thermal power plants. We are already using biomass in the following way:
OF BIOMASS USED IN HZL
Pilot programmes underway at BALCO,
VAL-Jharsuguda, VAL-Lanjigarh
Natural gas
We have initiated a partnership between VAL-Lanjigarh and GAIL to supply natural gas for calciner, substituting coal use, which will potentially decrease plant GHG intensity by 10%.
Electric mobility
We are committed to decarbonise 100% of our LMV fleet by 2030 and 75% of the mining fleet by 2035. Our achievements so far:
DEPLOYED AT HZL
DEPLOYED AT ESL
HZL has also signed an MoU with Sandvik AB to introduce battery-powered loaders and trucks in underground mining. It is set to introduce Sandvik’s battery-electric TH550B trucks and LH518B loaders in underground mines to reduce carbon emissions and make mine operations more environmentally friendly.
Electric forklift fleets
Vedanta Aluminium business has signed an agreement with Gemini Equipment and Rentals Private Limited (GEAR) India, to deploy one of the largest fleets of lithiumion battery-powered electric forklifts, becoming the first in Indian aluminium industry to undertake such an initiative. VAL has purchased 23 e-forklifts at its aluminium smelter in Jharsuguda, Odisha. Substituting diesel-fuelled forklifts with this green fleet will reduce diesel consumption by more than 2.5 lakh litres annually, thereby ensuring GHG (greenhouse gas) emission savings of nearly 690 tCO2e.
Energy efficiency measures
Energy efficiency measures remain the predominant way to reduce GHG emissions across our business. More than 160 projects were implemented across all BUs, resulting in more than 3.8 million GJ of energy savings.
The top 10 projects were responsible for more than 67% of our energy savings.
Business Unit | Top 10 Energy/GHG Savings Initiatives | Energy Savings (GJ) | Avoided emissions |
---|---|---|---|
VAL- J Metal | Addition of 332 pots with 100% graphitised cathode | 11,15,339 | 6,62,201 TCO2e for FY2022 |
HZL | Chanderiya CPP Unit 2 Turbine Revamping | 4,06,555 | |
BALCO Metal | Conversion of 120 pots with 100% graphitised cathode | 303,581 | |
HZL | Chanderiya CPP Unit 3 Turbine Revamping | 2,94,453 | |
VAL-J IPP | Unit 3 condenser cleaning & air ingress rectification | 2,82,861 | |
TSPL | Improved Unit 3 HPT performance | 2,41,953 | |
HZL | Chanderiya CPP Unit 1 Turbine Revamping | 2,10,380 | |
HZL | Dariba CPP Unit-2 Turbine Revamping | 79,610 | |
VAL- J Metal | Unit 6 CT fills replacement | 66,848 | |
HZL | Dariba CPP Unit-1 Turbine Revamping | 65,363 | |
Total (all projects combined) | 3,797,436 |
GHG emissions and energy consumption
Performance trends
GHG emissions
In FY2022, the total Scope 1 and Scope 2 emissions from our operations was 62.83 million metric tonnes CO2e, a slight increase of 4.2% from the previous year.
GHG emissions (tCO2e) | FY2022 | FY2021 | FY2020 | FY2019 |
---|---|---|---|---|
Scope 1 (direct) | 59,486,747 | 58,936,259 | 57,482,868 | 54,964,436 |
Scope 2 (indirect) | 3,342,745 | 1,312,818 | 1,864,711 | 3,506,187 |
Total | 62,829,492 | 60,249,077 | 59,347,579 | 58,470,623 |
We calculate and report Greenhouse Gas (GHG) inventory i.e. Scope 1 (process emissions and other direct emissions) and Scope 2 (purchased electricity) as defined under the World Business Council for Sustainable Development (WBCSD) and World Resource Institute (WRI) GHG Protocol.
In FY2022, we completed our first assessment of our Scope 3 emissions. The Scope 3 accounting was prepared based on the GHG Protocol’s Scope 3 Value-Chain Accounting and Reporting Standard. For Oil & Gas and Steel sectors, sector specific standards were used. To determine, which of the 15 upstream and downstream categories were relevant for our business, we conducted a materiality assessment that used the following criteria of significant - magnitude, influence, stakeholder interest, sector guidance and risks.
The following categories are applicable for Vedanta’s Scope 3 emissions:
Category | Applicability | Remarks |
---|---|---|
Category – 1 – Purchased Goods & Services | The Category 1 is material and emissions are estimated for all BUs | The category is applicable to all Business units and all major material consumption (raw material) is accounted |
Category 3 – Fuel & Energy Related | The Category 3 is material and emissions are estimated for all the business units | - |
Category 4 – Upstream Transport | The category 4 is material and emissions are estimated for all the business units | - |
Category 5 – Waste Generated in Operations | The category 5 is not material, but emissions are estimated for major waste processing. Also transport emission (which is optional to report in Category 5) associated with Waste transport is also estimated. | Across BUs – Waste such as fly ash, SPL, red mud, etc. are reprocessed and used as alternate raw material/fuel in other industries. The emissions related to transporting waste have been estimated, however as these wastes substitute the use of fossil fuels or other raw material, these emissions are not estimated for recycling/coprocessing |
Category 6 – Business Travel | The category is not material and emissions are estimated for business units | - |
Category 7 – Employee Commute | The category is not material and emissions are estimated for business units | The emissions reporting under this category is not comprehensive as many of the BUs are not having the data in required format to estimate the emissions. However, data gaps will be addressed in subsequent inventory and comprehensive reporting will be targeted under the category. But the current gaps will not have significant impact on the inventory |
Category 9 – Downstream Transport | The category 9 is material and emissions are estimated for all the business units | - |
Category 10 – Processing of Sold Products | The category 10 is material for – Oil & Gas sector, steel sector and VZI which produces intermediate products (Crude Oil, Natural Gas, Copper and Zinc Concentrates and pig iron) which would require further processing downstream. | For Alumina business this category would be applicable,
but as all alumina produced is consumed within
same Group companies the emissions for alumina
to Aluminium conversion is not reported under this
category. For other businesses - this category would not be applicable as the final products are either used directly with minimum or no further processing. |
Category 11 – Use of Sold Products | The emissions are material and estimated for Oil & Gas business and Coke production Value Added Business | The category 11 is applicable to the Oil & Gas and Value-Added Business (VAB) of Vedanta Group. The emissions from processing of crude and further use of refined products are estimated for Oil & Gas business and Coke usage (as reducing agent) is estimated for VAB business. |
Scope 3 emissions account for ~35% of our overall GHG emissions in FY2022
Scope 3 - Inventory Group
Total Scope 3 Emissions (million t CO2e) | FY2021 | FY2022^ |
---|---|---|
Categorization | ||
Scope 3 - Upstream | 7.23 | 7.71 |
Scope 3 - Downstream | 28.98 | 26.49 |
Total | 36.20 | 34.19 |
Scope 3 - Inventory Group (Category wise) | ||
Sources of Scope 3 Emissions (million t CO2e) | 2020-21 | 2021-22 |
Category 1 - Purchased Goods & Services | 4.16 | 4.98 |
Category 2 - Capital Goods | Not Applicable | Not Applicable |
Category 3 - Fuel & Energy Related | 2.15 | 2.53 |
Category 4 - Upstream Transportation | 0.46 | 0.19 |
Category 5 - Waste Generated in Operations/td> | 0.45 | - |
Category 6 - Business Travel | 0 | - |
Category 7 - Employee Commute | 0.01 | - |
Category 8 - Leased Assets | Not Applicable | Not Applicable |
Category 9 - Downstream Transport | 0.23 | 0.49 |
Category 10 - Processing of Sold Products | 1.00 | 1.53 |
Category 11 - Use of Sold Products | 25.16 | 24.47 |
Crude Oil | 22.3 | 21.63 |
Natural Gas | 2.63 | 2.47 |
Coke | 0.23 | 0.26 |
Credit due to Slag Recycling/Reuse | (0.43) | (0.34) |
Category 12 - End of Life Treatment of Sold Product | Not Applicable | Not Applicable |
Category 13 - Downstream Leased Assets | Not Applicable | Not Applicable |
Category 14- Franchises | Not Applicable | Not Applicable |
Category 15 – Investments | Not Applicable | Not Applicable |
^- FY2022 data is unassured
GHG emission intensity
Since 2012, we have reduced the GHG intensity of our operations by 21%, which has resulted in ~14 million TCO2e of avoided emissions. In FY2022, we revised our GHG emissions intensity targets. Our new goal is to reduce the GHG emissions intensity of our metals businesses by 20% by FY2025 from a FY2021 baseline.
Towards this goal, we have reduced the GHG emissions intensity by 4.8% in FY2022.
FY2021 | FY2022 | |||||
---|---|---|---|---|---|---|
Production (MMT) | Emissions intensity (TCO2e/T of Metal) | Absolute Emissions (MTCO2e) | Production (MMT) | Emissions intensity (TCO2e/T of Metal) | Absolute Emissions (MTCO2e) | |
Aluminium | 3.817 | 9.440 | 36.034 | 4.238 | 8.881 | 37.636 |
Steel | 1.286 | 2.296 | 2.952 | 1.370 | 1.878 | 2.573 |
Iron Ore Business | 0.593 | 2.819 | 1.670 | 0.789 | 2.579 | 2.035 |
FACOR | 0.068 | 6.403 | 0.438 | 0.075 | 6.164 | 0.464 |
Zinc International | 0.315 | 0.693 | 0.218 | 0.223 | 1.078 | 0.240 |
Zinc India | 0.978 | 5.002 | 4.890 | 0.968 | 4.980 | 4.819 |
Copper India | 0.118 | 0.891 | 0.105 | 0.132 | 0.763 | 0.101 |
Total | 7.175 | 6.454 | 46.308 | 7.794 | 6.141 | 47.868 |
Note: Scope 1 and Scope 2 are considered for calculation
GHG intensity for overall GHG intensity TCO2/INR Mn
GHG emission intensity (tCO2e/INR Mn) | FY2022 | FY2021 | FY2020 | FY2019 |
---|---|---|---|---|
Scope 1 | 45.39 | 60.61 | 69.13 | 60.64 |
Scope 2 | 2.55 | 1.35 | 2.24 | 3.86 |
Total | 47.94 | 61.95 | 71.37 | 64.50 |
2 The credit due to slag (applicable for Iron & Steel) has been highlighted in overall Scope 3 inventory but are considered as avoided emissions and thus not adjusted in overall inventory.
Direct and indirect energy consumption
Our energy consumption increased marginally by 7.5% in FY2022.
Energy consumption (million GJ) | FY2022 | FY2021 | FY2020 | FY2019 |
---|---|---|---|---|
Direct | 531.88 | 515.67 | 518.17 | 483.90 |
Indirect | 32.09 | 8.75 | 7.80 | 62.76 |
Total | 563.68 | 524.51 | 525.97 | 546.67 |
Renewable and non-renewable energy consumption
In FY2022, we significantly increased the share of renewable energy in our energy mix from 67 MW in the previous fiscal to 465 MW in FY2022. The purchase of RE by the aluminium sector drove this rise in consumption.
Energy Consumption (million GJ) | FY2022 | FY2021 | FY2020 | FY2019 |
---|---|---|---|---|
Renewable | 14.62 | 2.13 | 0.60 | 0.27 |
Non-renewable | 549.35 | 522.39 | 525.37 | 546.40 |
Total | 563.98 | 524.51 | 525.97 | 546.67 |
Energy Breakup | Direct | Indirect | Grand Total | |||
---|---|---|---|---|---|---|
FY2022 | Renewable | Non- Renewable | Renewable | Non- Renewable | ||
Energy Consumption (million GJ) | 1.12 | 530.76 | 13.51 | 18.58 | 563.98 |