A blueprint for India’s next energy transition: to electrify industrial heat
A policy analysis has identified electrification of industrial process heat as the next major phase of India's energy transition, following progress on power-sector renewables.
The analysis calls for a coordinated approach combining innovative financing mechanisms, workforce skilling, demonstration projects, and cluster-level planning to scale electric heating technologies in industry.
Industrial heat is highlighted as a large and currently under-addressed source of energy demand and emissions, distinct from electricity generation, which has seen faster decarbonization progress.
The approach is framed as strengthening India's manufacturing competitiveness alongside its climate commitments.
Industrial Process Heat and Its Share of Energy Demand
Industrial process heat refers to thermal energy used in manufacturing processes — such as steam generation, melting, drying, and curing — as distinct from electricity used for motors, lighting, or electronics. Globally and in India, a large share of industrial energy demand is for heat, most of it currently met by burning coal, furnace oil, or natural gas rather than electricity.
Key Details
- Industry is one of India's largest final-energy-consuming sectors, and a large share of that consumption is process heat rather than electricity
- Key energy-intensive sectors requiring high-temperature heat include cement, steel, chemicals, and glass; textiles, food processing, and other MSME-heavy sectors require low-to-medium temperature heat, which is more readily electrifiable using current technology
- Electrification options include industrial heat pumps (for low-to-medium temperatures), electric resistance heating and induction furnaces, and mechanical vapour recompression (MVR) systems for steam-based processes
The article's central argument — that India's "next" transition phase must target industrial heat — reflects the fact that power-sector renewable deployment addresses only part of energy-related emissions; heat represents a large, harder-to-abate segment requiring distinct technologies and policy tools.
Perform, Achieve and Trade (PAT) Scheme and its Successor, the Carbon Credit Trading Scheme (CCTS)
The PAT scheme, under the Energy Conservation Act, 2001, was India's first major market-based mechanism to drive energy efficiency in energy-intensive industries, mandating reductions in Specific Energy Consumption for "Designated Consumers" and allowing over-achievers to trade Energy Saving Certificates (ESCerts). It has since been succeeded for carbon-intensity regulation by the Carbon Credit Trading Scheme (CCTS).
Key Details
- PAT was launched in 2012 by the Bureau of Energy Efficiency (BEE) under the Ministry of Power; it currently covers sectors consuming an estimated 55-60% of India's total industrial energy use
- The Energy Conservation (Amendment) Act, 2022, inserted Section 14AA, enabling a domestic carbon market; the CCTS was notified by the Ministry of Power on 28 June 2023
- CCTS assigns greenhouse gas emission-intensity targets to obligated entities, who can trade Carbon Credit Certificates (CCCs) for compliance; coverage is being phased in for around 800 industrial units across nine sectors, including cement, aluminium, and textiles, starting from FY2025-26
Industrial heat electrification is a key lever by which obligated entities under both PAT/BEE energy-efficiency norms and the newer CCTS carbon market can lower their specific energy consumption and emission intensity, linking a technology-focused article to an established regulatory framework tested in Economy and Environment papers.
India's Net-Zero Target and Industrial Sector Emissions Trajectory
India has committed to achieving net-zero greenhouse gas emissions by 2070, announced as part of its enhanced climate pledges at COP26 (Glasgow, 2021), alongside interim 2030 targets under its Nationally Determined Contributions (NDCs).
Key Details
- India's updated NDC (2022) targets a 45% reduction in emissions intensity of GDP by 2030 (from 2005 levels) and 50% cumulative installed electric power capacity from non-fossil sources by 2030
- The industrial sector is projected to become one of India's largest sources of CO2 emissions by 2040 if current energy patterns continue, given rising manufacturing output
- Renewable capacity addition target: 500 GW of non-fossil capacity by 2030, which underpins the case for shifting industrial heat demand toward electricity (increasingly renewable-sourced) rather than fossil fuel combustion
Electrifying industrial heat is presented as necessary for India's industrial sector to align with its 2030 NDC and 2070 net-zero trajectory, since heat-related fossil fuel combustion is not addressed merely by decarbonizing electricity generation unless industrial demand also shifts to electricity.
- PAT scheme launched: 2012, implemented by BEE under the Energy Conservation Act, 2001
- PAT coverage: sectors accounting for approximately 55-60% of India's total industrial energy consumption
- Energy Conservation (Amendment) Act, 2022, in force from 1 January 2023; CCTS notified 28 June 2023 under Section 14AA
- CCTS phased coverage: approximately 800 industrial units across nine sectors from FY2025-26
- India's net-zero target: 2070 (announced at COP26, 2021)
- India's 2030 NDC targets: 45% reduction in emissions intensity of GDP (from 2005 levels); 50% non-fossil cumulative electric capacity
- India's renewable capacity addition target: 500 GW by 2030