Cement, Energy and Environment

24 Policy Pathway to Promoting Co-processing in the Indian Cement Industry Somnath Bhattacharjee Director Institute for Industrial Productivity India Ritu Bharadwaj Chief of Program Institute for Industrial Productivity India 1. Background The Indian cement industry has made significant improvements in its energy efficiency and productivity in the recent years. However, the use of Alternate Fuels and Raw Materials (AFRs) for cement manufacture, remains extremely low. At present, the extent of fossil fuel substitution, as defined by TSR (Thermal Substitution Rate), of the Indian cement industry is below 1%, while in some developed countries, this figure is as high as 60%. India which is the second largest producer of cement in the world after China, is likely to see its cement capacity of 350 Million Tonnes per annum (Mta) double over the next decade, resulting in a huge surge in coal demand. This demand for coal is projected to increase in the range of 63 –to 96 Million Tonnes (MT) during 2012 – 2017 as per the Planning Commission’s 12 th Plan Report on cement industry. The role of AFRs assumes great significance against this backdrop. Increasing TSR in cement industry offers not only huge opportunity for reducing fossil fuel usage but also in addressing the issue of local as well as global emissions. The time is right to launch a structured campaign for AFR, keeping in mind the following recent developments. i. Government of India has pledged to higher targets for emission intensity reduction in the Nationally Determined Contribution (NDC), which would translate in to greater push for manufacturing sectors like cement to reduce their emission intensity ii. Higher and more challenging targets to cement industry under second cycle of Perform Achieve and Trade (PAT) scheme implies that the industry will have to look at opportunities like AFR to achieve these targets. The GHG mitigation cost through AFR use is reasonable, and there is a significant replication potential across the entire cement industry in India. The other associated co-benefits include an effective and efficient means of managing urban and industrial waste, which is increasingly becoming a cause for major concern. The relatively low use of AFR is diagnosed is diagnosed to be due to a number of policy and regulatory bottlenecks along with technical and financial issues, which, in many cases, are interlinked. The policy makers need to make concerted effort to support the industry enhance the AFR use, along with providing an enabling regulatory environment that facilitates this transition. 2. Multi-stakeholder action to tap in to AFR potential In 2012, Institute for Industrial Productivity (IIP) launched a multi-stakeholder initiative in partnership with the Cement Manufacturers Association (CMA) aimed at ‘Increasing the TSR in the Indian cement industry by promoting the use of alternate fuels and raw materials.’ The initiative resulted in the stakeholder-designed ‘Implementable Action Plan’ with a vision to increase the TSR from the present level of less than 1% to 15% by 2020 by addressing the technical, policy, regulatory and financial barriers. This Action Plan report was an outcome of technical review, analysis and extensive interactions with key stakeholders. It is now recognized as a guiding document for India’s efforts in the use of AFR in the cement Industry. This initiative has made substantial progress since its inception by creating a critical mass of important stakeholders around this initiative, spreading awareness, developing innovative financing options but the key success has been in the area of addressing policy and regulatory hurdles and this article attempts to capture the process and the factors that made it successful. 3. Policy Impetus to promoting AFR Addressing the policy and regulatory barriers was the key to unlocking the AFR potential. This learning particularly became evident during a study tour of Indian industry delegation to UK. UK is already a world leader in TSR meeting more that 60 percent energy requirement in cement industry from