Refinery sector must balance energy security with net-zero push
2-minute summary
At 'The Hindu Sustainability Summit 2026', industry experts from India's refining and petrochemical sectors discussed the complex dual imperative of maintaining energy security while accelerating the transition to net-zero emissions. Given India's heavy import dependence for crude oil and vulnerability to geopolitical supply chain shocks, panellists emphasized that fossil fuels will remain central for at least the next two decades. Consequently, the transition must be viewed as an evolutionary shift to low-carbon systems rather than an abrupt phase-out. Key strategies discussed included improving energy efficiency, adopting digitalisation, scaling up green hydrogen, producing Sustainable Aviation Fuel (SAF) from feedstocks like used cooking oil, and navigating the upcoming compliance-driven Carbon Credit Trading Scheme (CCTS). However, major challenges persist, including the high cost and commercial viability of green hydrogen, the intermittent nature of renewables clashing with continuous refinery operations, and the infrastructure bottlenecks in supply chains.
Why it's in the news
Industry leaders at The Hindu Sustainability Summit 2026 deliberated upon the pathways for India's refineries to transition from 'Fossils to Net Zero' while safeguarding national energy security amidst geopolitical disruptions.
Facts to remember
- India is the world's third-largest energy consumer and crude oil importer, relying on imports for over 85% of its petroleum requirements.
- The Carbon Credit Trading Scheme (CCTS) transitions energy efficiency from voluntary targets to a compliance-driven carbon trading mechanism for Indian industries, including refineries.
- The National Green Hydrogen Mission aims to make India a global hub for production, usage, and export of green hydrogen, impacting decarbonisation efforts in refineries and heavy industries.
Background and context
India is the world's third-largest energy consumer and crude oil importer, relying on imports for over 85% of its petroleum requirements. As a rapidly growing economy, balancing surging energy demand with international commitments made at COP conferences—such as achieving net-zero emissions by 2070—presents a monumental challenge. Public sector undertakings (PSUs) like CPCL and MRPL, along with private entities, are increasingly incorporating environmental, social, and governance (ESG) metrics, energy efficiency mandates, and regulatory mechanisms like the Carbon Credit Trading Scheme (CCTS) to green their operations. The push for green hydrogen and sustainable aviation fuels (SAF) forms a cornerstone of India's long-term decarbonisation strategy.
Government schemes
- National Green Hydrogen Mission — Aims to make India a global hub for production, usage, and export of green hydrogen, directly impacting decarbonisation efforts in refineries and heavy industries.
- Carbon Credit Trading Scheme (CCTS) — Transitions energy efficiency from voluntary targets to a compliance-driven carbon trading mechanism for Indian industries, including refineries.
Previous UPSC questions on this theme
- Mains GS-3 2026 — Explain the key challenges for India's energy security. What measures do you suggest for ensuring energy security along with economic growth and sustainability?
Mains practice: Balancing energy security with net-zero emissions is a tightrope walk for developing economies like India. Discuss the challenges faced by India's refining sector in this green transition.
Introduction
India, as the world's third-largest energy consumer with over 85% import dependency for crude oil, faces the complex dual challenge of ensuring uninterrupted energy supplies for its growing economy while meeting its ambitious net-zero commitments by 2070.
Challenges in the Refinery Sector
• Geopolitical Vulnerabilities: Global conflicts and shipping route disruptions expose import-dependent nations to severe supply shocks, necessitating crude diversification rather than abrupt phase-outs of fossil fuels.
• Operational Constraints: Refineries require continuous, stable feed flows. The inherent intermittency of renewable energy sources poses operational risks without robust, large-scale energy storage solutions.
• High Costs of Green Alternatives: Technologies like green hydrogen are currently constrained by high electrolyser manufacturing costs, expensive renewable power, and nascent supply ecosystems.
• Scope 3 Emissions: While refineries can target Scope 1 and 2 emissions through energy efficiency and digitalisation, Scope 3 emissions depend entirely on downstream consumer sectors like transport.
• Feedstock Bottlenecks: Initiatives like Sustainable Aviation Fuel (SAF) face hurdles in collecting adequate quantities of feedstock, such as used cooking oil, and meeting stringent international certifications.
Conclusion
The transition must be viewed as an evolutionary shift from high-carbon to low-carbon systems. Integrating mechanisms like the Carbon Credit Trading Scheme (CCTS) with robust domestic manufacturing and technological innovation will be critical to achieving sustainable energy security.
Prelims practice questions
Q1. Consider the following statements regarding the emissions associated with industrial refining operations: 1. Scope 1 emissions cover indirect emissions associated with purchased electricity used by the refinery. 2. Scope 2 emissions cover direct emissions generated from operational activities within the refinery boundaries. Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Answer: D. Statement 1 is incorrect because Scope 1 covers direct emissions from owned or controlled sources (refinery operations), while Scope 2 covers indirect emissions from the generation of purchased electricity. Statement 2 has reversed these definitions.
Q2. The Carbon Credit Trading Scheme (CCTS) in India, which shifts energy efficiency towards a compliance-driven mechanism for heavy industries, operates primarily to establish:
- Mandatory public equity dilution for oil and gas PSUs
- Fixed international tariff barriers on crude oil imports
- Universal subsidies for residential solar power installations
- Prescribed emissions-intensity targets against established baselines for industries
Answer: D. Under schemes like CCTS, industries are given prescribed emissions-intensity targets for specific compliance periods measured against a baseline determined by operating parameters, encouraging carbon trading and efficiency.
Q3. Sustainable Aviation Fuel (SAF), which is increasingly being developed by refineries, can utilize which of the following as a feedstock?
- Synthetic rare-earth elements
- Crude coal-tar derivatives
- Used cooking oil
- Primary nuclear waste
Answer: C. Refineries are exploring sustainable aviation fuel (SAF) production using feedstocks such as used cooking oil, though collection scale and certification remain key challenges.
Revision flashcards
- What does Scope 1 emission cover in a refinery context? Direct emissions from operations owned or controlled directly by the refinery.
- What does Scope 2 emission cover? Indirect emissions associated with the generation of purchased electricity consumed by the facility.
- Why is integrating renewable energy challenging for refineries? Refineries require continuous and stable feed flows, whereas renewable energy sources (like solar and wind) are intermittent.
- What primary feedstock is being utilized to develop indigenous Sustainable Aviation Fuel (SAF) in India? Used cooking oil.
- What shift does the Carbon Credit Trading Scheme introduce for industries like refineries? It shifts energy efficiency from a largely voluntary exercise to a compliance-driven mechanism with prescribed emissions-intensity targets.