Powering the Planet Sustainably: Scaling Clean Energies in Oil-Dependent Markets

In an exclusive interview with Thiruamuthan, Correspondent at Industry Outlook, Vinayak, Ex-Director - Oil at Cairn Oil and Gas, discusses how India’s oil sector is navigating decarbonization amid rising net-zero pressure, focusing on strategies to reduce Scope 1 and 2 emissions through renewables, waste-to-power, and technology, while tackling Scope 3 with long-term plans, policy support, green hydrogen, CCUS, and increased transparency. Vinayak is a strategic oil & gas leader with expertise in EPC, operations, commercialization, and transformation. He has led $2B+ ventures across global upstream portfolios. 

India's oil sector faces pressure to align with net-zero goals. How is the sector addressing the Scope 1, 2 and 3 emissions with actionable strategies? 

The oil and gas sector is facing tremendous pressure in terms of decarbonization efforts, especially with global net-zero goals becoming more crucial. Scope 1 and 2 emissions are getting more attention, since these are more directly under a company’s control. Scope 1 covers things like flaring of hydrocarbons and equipment usage, whereas Scope 2 covers emissions from electricity consumption and similar renewable energy sources. In both public and private sector, companies are taking measures that include reducing flaring and switching to renewable power, with some targeting net-zero by 2030 or 2035. 

However, Scope 3 emissions are a different challenge. Since these involve the entire supply chain—suppliers, clients, and even end users—they’re much harder to control. As a result, many companies have limited commitments on Scope 3 reduction targets.

Two major strategies supporting reducing Scope 1 and 2 emissions are waste-to-power and enhanced oil recovery. The conversion of industrial waste to energy is increasingly finding its way in hard-to-abate sectors such as oil and gas or metals and mining. Besides, a tangible difference lies in the energy distribution, with a majority of companies opting for renewable energy over coal power or thermal energy. A major milestone for India having reached 50% of India’s installed electricity capacity through green energy.

Looking at the technology, which is also playing a key role in emissions reduction, especially in upstream sector. Time and again, discovering new fields is more emission-efficient than trying to fix old ones. Concurrently, companies need to accomplish a balance between environmental sustainability and energy security. Innovation in this area to minimize emissions also needs access to funding and collaboration between government, industry, and academia. 

Also Read: How Oil & Gas Companies are Transitioning to Renewable Energy Sources

Upstream oil and gas companies in India face decarburization pressure. Which technologies like electrification or hydrogen blending are prioritized to reduce emissions without impacting profitability or output? 

Reducing emissions in the upstream oil and gas sector without hurting profitability or output is challenging. No matter what we do, there will be some impact. But the important thing is to make emissions reduction a key part of one’s strategy. If decarburization is included in organizations’ annual, 3Y, and 5Y plans, it becomes easier to justify the costs or impact on profits. 

One way companies are addressing this by cutting down flaring as much as possible. They're also trying to replace gas-powered equipment by electrical driven ones powered by grid power on renewable energy. Tracking Methane emissions is another focus area, new tech using satellite images and algorithms now allows companies monitor and address their methane emissions frequently. For instance, there's one firm from Israel which is already engaged in this helping companies identify areas where methane levels are higher.  

Another big opportunity is green hydrogen. The downstream sector in India could cut 6.3 million metric tons of CO2 by 2035 by shifting to green hydrogen. Right now, refineries use about 2.7 metric tons of hydrogen, mostly from methane reform. If this gets replaced with green hydrogen, the impact could be huge. Blending green hydrogen into the city gas network is another area to watch, though cost remains a challenge.  

The government’s National Green Hydrogen Mission is a significant step from a policy standpoint, and both private and public companies are aligning their goals to it. India has usually been a follower in energy tech, but things are changing now, especially with new global partnerships, particularly with Middle East based NOCs.  

CCU receives policy support in India's energy roadmap. How feasible is its integration into oil and gas value chain and what challenges endure its scalability across the sector?  

Carbon capture and storage (CCS) has been talked about since the 1970s, and it's gaining more attention now. But for companies to take it seriously and not just see it as a cost centre on their P&L sheet, strong policy support is needed, especially in India. For exploration and production (E&P) companies, CCUS (carbon capture, utilization and storage) is very valuable. It lets them capture carbon dioxide from its operations, transport it, and then store it in identified underground reservoirs or basins. 

It’s slightly easier for E&P companies because some infrastructure such as drilled wells already exists and can be used to reinject CO2 back underground. When infrastructure is in place and CO₂ access is easy, costs are manageable. But if new infrastructure like fresh wells need to be drilled, then cost becomes a major concern, and oil and gas companies will have to look at the economics closely. 

Another interesting application of CO2 is enhanced oil recovery (EOR), usually injecting the gas underground to assist in increased oil and gas throughput. Paradoxically, the fact that CO2 would be used in producing more fossil fuel might look very strange, yet energy security for a growing economy remains a big challenge and the demand is not easing any time soon. 

If companies can reuse CO2 to enhance production, it serves both economic and environmental goals. Integration with other high-emission sectors like mining and metals could also help consolidate CO2 sources and reduce emissions effectively. 

India has witnessed extensive policy support, and many global and domestic companies are moving in this direction. With proper collaboration and infrastructure reuse, CCUS could be a great success for both the industry and the environment, especially in hard-to-abate sectors.

Hedging is an integral part of strategy for oil & gas companies. Whilst working on reducing emissions, companies are also hedging their existing portfolios. At the end of the day, shareholder driven companies have to ensure sustainable operations does not come at the cost of shareholder value and returns. 

Also Read: Digital Revolution in the Oil and Gas Sector: Embracing Industry-wide Digital Transformation

Oil companies in India explore renewables and green hydrogen. How far are these efforts reducing emissions versus serving existing portfolios?  

In India, most companies are still focused on Scope 1 and Scope 2 emissions. As the energy demand grows, oil and gas production continues, but so does the shift towards renewables. For example, if a facility required 100 MW of energy, 80% would be sourced from fossil fuel. However, in recent years the share of fossil fuel in the overall energy mix has reduced and replaced by green energy. 

Sustainability data is consistently reported by both public listed as well as private companies which outlines its efforts in reducing emissions, capturing CO2 in line with UN sustainable development goals. Level of transparency has improved across the sector which has helped raise investor confidence, enhance compliance and reduces climate change impact. 

India targets net zero by 2030, sorry, 2070. Given this, which enablers, policy, talent or innovation will most significantly impact decarbonization within the oil sector by 2040? 

There’s no clear winner—policy, talent, and innovation all play their part. That said, policy is the genesis; the right one can trigger faster innovation and empower talent. 2070 is too far out, but the government’s current push shows action is happening now and not left for the fag end of the target. Recent policy changes allow time to progress meaningfully toward net zero. 

Some oil and gas companies are even more ambitious with aggressive targets as early as 2030. However, if scope 1, 2, and 3 emissions are considered, the challenge becomes far more complex. Policy on carbon pricing will be crucial. Europe, for instance, is pushing ahead with CS3D, though applying that in India is difficult. In addition to policy, talent and innovation another key enabler is economics. With right quantity of these four ingredients net-zero may be achieved by 2070 but much needs to be done to speed up the process. That remains my belief.