Q: Could you describe Dastur Energy’s core mission and how it is contributing to global energy transition goals?
Atanu Mukherjee: Dastur Energy’s core mission is to create a world of affordable energy abundance and essential materials, consumed with minimal or zero carbon footprint. This vision aligns with critical global energy transition goals, addressing the growing energy demands over the next 10, 15, or even 30 years, particularly in rapidly expanding economies like India. To achieve this, Dastur Energy focuses on ensuring energy security and abundance at an affordable cost while prioritizing sustainability. The company emphasizes minimizing carbon emissions in energy production and industrial sectors such as steel, plastics, petrochemicals, electricity generation, and fuels.
Dastur Energy designs systems that integrate cutting-edge technology, engineering solutions, policy frameworks, and economic insights. These systems help industries transition toward sustainable practices with an emphasis on rapid implementation at scale.
While Dastur Energy operates globally, its primary focus is on regions with high energy demands, such as India, the Middle East, and North America. The company is also engineering innovative solutions like combining captured CO2 with clean hydrogen to produce methanol, transforming the fuel, chemicals, and polymers value chain. A combination of CCUS (Carbon Capture, Utilization, and Storage), alternative fuels, and new production technologies will enable a transformative shift in hard-to-abate industries over the coming decades.
Q: Industries like steel, petrochemicals, and plastics are some of the hardest to decarbonize. What are the most effective carbon management strategies for these sectors, and how is the company supporting these transitions?
Atanu Mukherjee: Industries such as steel, petrochemicals, and plastics are challenging to decarbonize due to their reliance on industrial processes that inherently produce high emissions. Dastur Energy leverages its 70 years of institutional expertise in sectors like steel, power, cement, and petrochemicals to address these challenges effectively.
Dastur Energy’s approach is based on a deep understanding of these industries? production characteristics, cost structures, and economic dynamics. This knowledge enables the development of tailored decarbonisation strategies that balance sustainability with affordability. The company emphasises three core strategies for carbon management in hard-toabate sectors:
Carbon Capture, Utilisation, and Storage (CCUS): CCUS is a critical solution for these industries, as it allows for the capture of carbon dioxide emissions from production processes. The captured CO₂ can either be utilised in smaller-scale applications, such as the production of chemicals or stored permanently underground for sequestration. This approach ensures that industries can continue operating without retiring.
Energy and Process Efficiency Improvements: Enhancing energy efficiency and production processes is an ongoing strategy for reducing emissions. Incremental improvements in efficiency can substantially lower carbon footprints while maintaining production levels. Dastur Energy actively works to identify and implement these opportunities across various industries.
Technological Substitution and Alternative Pathways: Developing and adopting alternative production technologies with lower or zero emissions is a long-term strategy. For instance, hydrogen-based steelmaking and electrification of certain processes, such as cracking in petrochemical production, hold promise. However, these technologies are still in the early stages, with challenges related to cost structures, scalability, and access to green hydrogen.
Dastur Energy is also exploring innovative solutions like combining captured CO₂ with hydrogen to produce chemicals such as methanol. A combination of these three strategies—CCUS, efficiency improvements, and the adoption of alternative technologies—will enable a transformative shift in hard-to-abate industries over the coming decades.
“India’s energy future depends on creating an integrated energy system that balances renewable energy with other power sources like hydro, gas, and coal while maintaining reliability, affordability, and minimal carbon emissions.”
Q: Dastur Energy recently collaborated with NITI Aayog on drafting India’s CCUS policy framework. What are the key highlights of this framework?
Atanu Mukherjee: India’s economic growth will be driven by infrastructure development and industries such as steel, plastics, fertilizers, and chemicals. Recognizing the carbon-intensive nature of these industries, Dastur Energy collaborated with NITI Aayog to draft a comprehensive CCUS policy framework to support India’s decarbonization goals.
This proposed policy framework focuses on several key pillars to enable effective carbon management:
Cost-Effective Carbon Capture, Storage, and Utilisation: The policy emphasises mechanisms to support industries in capturing CO₂ at minimal cost, storing it efficiently, and converting it into value-added products. This includes introducing production incentives—such as providing financial credits or subsidies per ton of CO₂ captured and stored—to encourage adoption across industries.
Viability Gap Funding for Initial Projects: To kickstart commercial-scale CCUS projects, particularly in hard-to-abate sectors like steel and petrochemicals, the framework proposes.Initial capital support through government funding. This approach aims to bridge the financial gap for early adopters and demonstrate the viability of CCUS technologies.
Innovative Financing Mechanisms: Financing large-scale CCUS projects is a critical challenge. The framework recommends creating a Carbon Capture Finance Corporation, which would pool resources from international green bonds, sovereign bonds, and the existing coal cess (currently INR 400 per ton). This vehicle would ensure budget-neutral operations while funding incentives and projects to drive carbon management.
Market-Driven Carbon Pricing: Over time, the framework envisions the development of robust carbon markets, allowing market forces to determine carbon pricing. This would help establish sustainable incentive structures for CCUS adoption and align with global best practices.
Technology Adoption and Indigenisation: The policy highlights the importance of technology transfer to accelerate the adoption of advanced CCUS solutions. Over time, these technologies can be indigenised, enabling cost-efficient manufacturing and integration into India’s industrial ecosystem.
Mapping and Leveraging CO₂ Storage Capacity: India has significant potential for CO₂ storage, both onshore and offshore, particularly in regions like Gujarat, the Cambay Basin, Krishna Godavari Basin, Haldia offshore, and the Deccan peninsula. However, detailed characterisation of these storage sites is essential to identify cost-effective options. The policy proposes developing carbon capture hubs and clusters around these storage locations to enable affordable and reliable CO₂ capture, transportation, and sequestration.
Q: It is important to balance renewable energy with other power sources like hydro, gas, and clean coal. What policies or steps can India take to ensure a resilient and integrated energy system?
Atanu Mukherjee: India’s energy future depends on creating an integrated energy system that balances renewable energy with other power sources like hydro, gas, coal, nuclear, and alternative fuels while maintaining reliability, affordability, and minimal carbon emissions. While renewable energy sources like solar and wind are vital, their intermittent and variable nature requires careful planning and integration.
The following steps and policy measures can ensure an effective energy system:
Balancing Renewable Energy with Dispatchable Sources: Renewable energy alone cannot meet the need for 24/7 power due to its dependency on weather and time of day. To ensure a steady supply of electricity, India must integrate renew…
Balancing Renewable Energy with Dispatchable Sources:
Renewable energy alone cannot meet the need for 24/7 power due to its dependency on weather and time of day. To ensure a steady supply of electricity, India must integrate renewables with dispatchable power sources, such as:
- Gas-based power plants
- Hydropower and pumped hydro storage
- Coal-based power plants with carbon capture technologies
- Emerging technologies like methanol and hydrogen turbines
- Cost-effective small modular nuclear reactors
- Long-duration energy storage through low-carbon hydrogen reservoirs, pumped hydro storage, and low-cost grid-scale batteries
Strengthening Grid Infrastructure:
Developing a robust grid infrastructure is critical to integrating and managing power from diverse sources. Investments in grid expansion, modernization, and flexibility are essential to support the fluctuating nature of renewables. The grid must be affordable and capable of delivering uninterrupted power to end users.
Implementing Demand-side Management:
Encouraging demand-response mechanisms will optimize energy use and reduce peak load stress. A time-of-use-based tariff can incentivize consumers to shift energy usage to off-peak hours. Real-time pricing and trading markets will enable efficient allocation and sourcing of power from various sources.
Developing Power Trading Markets:
Wholesale and real-time trading markets should be expanded to ensure optimal utilization of power resources.
Flexible Power Purchase Agreements (PPAs):
Enable cost-effective and efficient use of power from multiple generation sources.
Policy Focus on Reliable and Affordable Clean Power:
The primary goal must be to deliver 24/7 clean power that is reliable, affordable, and emits minimal CO₂. Rather than focusing solely on renewable capacity targets, policies should emphasize the overall cost and reliability of power delivered to consumers.
Comprehensive Clean Power Strategy:
India’s clean energy future requires a holistic approach that combines renewable energy generation, integration with dispatchable sources for reliability, investments in grid infrastructure and modernization, market mechanisms for efficient power trading, and demand-side management for optimized energy use.
To achieve an integrated energy system, India must balance renewable energy with other power sources, supported by robust policies and investments.
Q: How can India effectively build infrastructure that supports both blue and green hydrogen production, transport, and storage, ensuring a seamless shift over time?
Atanu Mukherjee: To effectively build infrastructure that supports both blue and green hydrogen production, India needs to adopt a phased and balanced approach, considering both the economic challenges and the technological realities of hydrogen production. While the vision of transitioning entirely to green hydrogen is appealing, it is currently constrained by significant cost barriers. The cost of producing green hydrogen, which relies on electrolyzers and renewable energy, ranges from USD 4 to USD 7 per kilogram. This is significantly higher compared to blue hydrogen, which can be produced from coal gasification with carbon capture, utilization, and storage (CCUS) at approximately USD 1 to USD 2 per kilogram. Similarly, grey hydrogen produced from natural gas is more economical at around USD 1.20 per kilogram. These cost differences make it clear that a full-scale shift to green hydrogen is not immediately viable.
Given these realities, India must prioritize creating a demand-supply cycle for hydrogen while leveraging its existing resources. The country’s abundant coal reserves present a practical opportunity to scale blue hydrogen production. By using coal gasification with CCUS, India can produce low-cost hydrogen while addressing emissions concerns. This approach allows for the generation of affordable hydrogen that industrial needs at large scale and foster demand in sectors such as petrochemicals, steel, fertilizers and heavy transport. Encouraging the use of blue hydrogen in these areas will create a foundation for hydrogen adoption at scale and help kickstart the hydrogen economy.
However, hydrogen production alone is not sufficient. Transportation and storage infrastructure are critical components that need immediate attention. The costs associated with delivering hydrogen from production sites to end users can be significant. To address this, India should invest in pipelines and storage systems to facilitate efficient and large-scale hydrogen movement through hydrogen corridors that serve industrial clusters. Drawing inspiration from models like the Gulf Coast hydrogen infrastructure in the United States, a government-backed initiative could take the lead in building and managing this network. This would ensure that blue hydrogen can be transported and delivered cost-effectively, supporting large-scale adoption.
In the longer term, as technology evolves, India can work toward reducing the cost of green hydrogen production. This will involve scaling renewable energy capacity, improving electrolyzer efficiency, and fostering technological advancements. Over time, green hydrogen can compete more effectively with blue hydrogen, creating a mixed hydrogen economy that is both clean and affordable.
Ultimately, the focus should not be on choosing between blue or green hydrogen but on creating a clean hydrogen ecosystem that is affordable, scalable, and sustainable.