Indian Oil Corporation (IndianOil)

Indian Oil currently has no emissions reduction target. The company has disclosed a past target to reduce the emissions intensity of its oil refining, which it has achieved. To guide its low-carbon transition, Indian Oil should set emissions reduction targets aligned with its 1.5°C pathway for its scope 1 and 2 emissions and its scope 1, 2 and 3 emissions. The company should set both short-term targets to drive ongoing accountability for managing emissions and long-term targets to guide strategic decisions.

Indian Oil allocated only about 0.3% of its capital expenditure (CapEx) to renewable energy projects in 2019. The sectoral expectation for oil and gas companies is that they should invest 77% of CapEx in low-carbon projects to be aligned with a 1.5°C scenario. Indian Oil will need to significantly increase its CapEx in low-carbon business projects if it is to achieve its goal of transforming into an integrated energy company. Setting clear targets for CapEx in low-carbon projects, including renewables, will provide credibility to the company’s climate strategy.

Although Indian Oil discloses a significant amount of information on its research and development (R&D), it does not specify how much of its R&D expenditure is dedicated to low-carbon projects. The company should set and disclose targets to increase R&D expenditure towards low-carbon projects and to drive the transition to a low-carbon business model.

Indian Oil’s scope 1, 2 and 3 emissions intensity is estimated to have remained largely at the same level between 2014 and 2019. If this trend continues, the company will diverge further from its 1.5°C pathway, which requires the company to achieve an annual decrease of about 4% in its scope 1, 2 and 3 emissions intensity. The company’s sold product mix remains approximately 95% oil and 5% gas, with a negligible renewable electricity sales volume. Additionally, the company grew its sales of oil and gas between 2014 and 2019, with its absolute scope 1, 2 and 3 emissions increasing by about 17% over this period.

Indian Oil’s 2019-2020 sustainability report states that the company’s ‘long-term objective is to transform into a fully integrated energy company offering a basket of clean and green energy solutions’. The company has identified five strategic pillars to achieve this energy transition: greenhouse gas reductions, greener products, efficiency, partnerships, and research and development. However, it has not set any measurable targets. The company does not appear to have undertaken a climate scenario analysis yet. The company’s transition plan also lacks adequate financial information, such as details regarding its low-carbon capital expenditure (CapEx), sensitivity analysis and internal carbon pricing.

Indian Oil can add credibility to its transition strategy by setting out clear plans for expanding its low-carbon business. In 2019, the company had 168 megawatts (MW) of wind power and 59 MW of solar power generation capacity. The company has not disclosed if its renewable energy business is profitable or its plans to expand it. Indian Oil is also investing in three ethanol plants, each with the capacity to produce 100 kilolitres (KL) of biofuels per day, and is seeking to develop 0.6 million metric tonne per annum (MMTPA) of compressed biogas capacity. However, no clear timeline has been given for these plans.

Indian Oil’s long-term low carbon strategy is to transform into an integrated energy company offering green solutions. However, the company has no measurable commitments such as emission reduction targets or renewable capacity targets.

Indian Oil is seeking to reduce scope 1 and 2 emissions by increasing refining efficiency and developing renewable energy for its own consumption. It plans to set up three ethanol plants, each with the capacity to produce 100 kilolitres of biofuels per day.

In 2019, nearly 95% of the company’s sold energy came from oil and about 5% from gas. The company also has 168 MW of wind capacity and 59 MW of solar capacity. It is investing in research and development (R&D) in renewables, but has not disclosed what proportion of its R&D expenditure is dedicated to low-carbon and mitigation technologies.

Indian Oil has disclosed a past target to reduce the emissions intensity of its oil refining operations by 18% between 2014 and 2019, which it states it has achieved. The company’s scope 1, 2 and 3 emissions intensity was estimated to have seen no decline between 2014 and 2019.

Without quantified, timebound targets to reduce emissions and an increase in CapEx dedicated to low-carbon and mitigation technologies, Indian Oil’s low carbon strategy cannot be considered credible.