Informing Net Zero Industrial Pathways

Overview & Synopsis

Designing effective Net Zero industrial pathways requires a comprehensive understanding of the key drivers of emissions. To gain such an understanding, this study proposes a novel approach to estimating and monitoring industrial CO2 emissions, designed to enable policymakers to focus Net Zero industrial pathways on industrial activities with the highest emissions while safeguarding export competitiveness. This study contributes to the existing literature on emission estimation by introducing a bottom-up approach that utilizes firm-level data to assess emission profiles at state and sectoral levels. It mines data from India’s Annual Survey of Industry for 2022/23 and 2019/20 to estimate scope 1 and scope 2 CO2 emissions as well as process emissions from industrial firms at a granular level. It also identifies the share of micro, small, and medium-sized enterprises (MSMEs), high-emission sectors, emission sources, and highly emitting states. The new methodology is more precise than top-down estimates and is replicable in other countries where similar data is available. Initial work on the report led to a follow-up analysis of technological and financing solutions for selected industrial clusters of MSMEs. The study also provides recommendations on how to improve the scope and quality of data collection in the Annual Survey of Industry.