Macrotech

Developers Ltd.
Net Zero Strategy
PwC
November 2023
Agenda

1. Introduction 03
2. Carbon Inventory 07
3. Scope 1,2 reduction initiatives 10
4. Scope 3 reduction initiatives 17
5. Internal Carbon Pricing 42

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Introduction
Overview of Different Scopes of Emissions
Scope 1 Scope 3
All direct emissions from the activities NF3 CO2 CH4 N2O HFCs PFCs SF6
All other indirect emissions from activities
of an organization or under their control. of an organization, occurring from sources that
Includes fuel combustion on site such as Scope 1 they do not own or control the emissions of.
gas boilers, fleet vehicles, and air- Direct
Scope 3 Scope 3 These are often the greatest share of the carbon
conditioning leaks. Indirect
Scope 2 Indirect footprint, covering emissions associated with
Indirect procurement, transport and distribution,
product use, and product end of life.
Scope 2
Indirect emissions from electricity These also can be the most challenging to
purchased and used by the organization. address.
Emissions are created during the Purchased
electricity, Leased
production of the energy and eventually steam, assets
Company
facilities
Transport and
Distribution
used by the organization. heating and
cooling for
own use

Company Processing of
Employee
vehicles sold products
commuting

Purchased goods Capital Fuel and Transport and Waste from Business Use of sold End-of-life treatment Leased assets Franchises Investments
and services goods Energy Distribution operations travel product of sold products

Upstream activities Company Downstream activities 4

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SBTi Targets by Macrotech Developers Ltd.
Following are the targets taken by Macrotech Developers Ltd.
Target ID Target Coverage Target
Scope 1, 2 Macrotech Developers Ltd. commits to reduce absolute Scope-1,2 GHG emissions by 98% by 2027
LT ABS 1
Net Zero from a FY-2022 base year.

Scope 3 Macrotech Developers Ltd. commits to reduce Scope-3 GHG emissions 51.6% per Sq.m. by 2030
INT 2
Near Term from a FY-2022 base year.

Scope 3 Macrotech Developers Ltd. commits to reduce Scope-3 GHG emissions 97.9% per sq.m. by 2050
LT INT 1
Net Zero from a FY-2022 base year.

Macrotech Developers Limited commits to increase annual sourcing of renewable electricity from
O1 Renewable Electricity
19% in FY2022 to 100% by 2027.

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Targets and Initiatives by Peers
Peer • Target Key Initiatives
Mahindra • Mahindra Lifespace Developers Ltd., commits to reduce absolute • Mahindra Lifespaces ensures development of energy efficient
Lifespaces scope 1 and 2 GHG emissions 63% by 2033 from a 2018 base year. buildings (green buildings) on site with total minimum required
• Mahindra Lifespace Developers Ltd., commits to reduce absolute operational savings of 25% against conventional structures, LED
scope 3 GHG emissions 20% by 2033 from a 2018 base year. Street Lighting is 50% more efficient than conventional metal halide
lamps and installation of Solar PV rooftops at operations and
retrofitting of lighting fixtures.
Stockland • Stockland commits to reducing Scope 1 and 2 emissions target and • Stockland is taking initaitives to utilize lower-carbon materials and
Net zero scope 1 & 2 by 2025 and Scope 3 emissions intensity halved tenants powered by renewable energy, delivering a high-quality,
by 2030 sustainable portfolio to hace green building excellence, converting
exisitng assets into electric properties and converting tenancies into
100% renewble energy .
VINCI • VINCI Construction commits to reduce scope 1 and 2 GHG emissions • VINCI is commited to increasing the use of renewable energies
Construction by 40% by 2030 vs 2018 and develop solutions to reduce their (25% of electricity consumed in 2021), especially by installing
customer emissions (scope 3). photovoltaic power plants to generate power for use on site.
• Auditing energy efficiency of buildings and stepping up thermal
renovation, temperature regulation, and eco-design.
JLL • Near-Term Targets JLL commits to reduce absolute scope 1, 2 and 3 • JLL is commited to increasing energy-efficiency measures in both
Infrastructure GHG emissions 51% by 2030 from a 2018 base year. new and existing buildings.
• Long-Term Targets JLL commits to reduce absolute scope 1, 2, and 3 • Switch to electric, low emission and alternative fuel vehicles.
GHG emissions 95% by 2040 from a 2018 base year. • Use renewable energy in offices; buy renewable energy certificates
when there is no direct supply.

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Carbon Inventory
Emission Inventory
Scope Category Emissions (tCO2e) % of Total Emissions
1 Diesel Consumption 166 >0.1%
1 Vehicle Fuel Consumption 57 >0.1%
1 Use of Refrigerants 911 0.1%
1 Total Scope-1 1,134 0.14%
2 Purchased Electricity 14,277 1.79%
1+2 Total Scope 1+2 15,411 1.93%
3 Purchased Goods 228,339 28.62%
3 Fuel and Energy 4,463 0.56%
3 Upstream Transportation and Distribution 1,283 0.16%
3 Business Travel 209 0.03%
3 Employee Commute 1,821 0.23%
3 Use of Sold Products 539,213 67.59%
3 Downstream Leased Assets 5,166 0.65%
3 Total Scope 3 780,497 97.83%
1+2+3 Total Emissions (Scope 1,2,3) 797,789 100%

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Emission Projection
• It is expected that the Business will grow at a CAGR of 17% from FY2022. Emissions at BAU scenario will
follow the same trend. However, commitment to SBTi will transcend MDL to achieve the ambition of Net
Zero.

Scope 1, 2 Scope 3
• Considering BAU scenario, with CAGR projections the combined Scope- • Considering BAU scenario, with CAGR projections the Scope-3
1,2 emissions are supposed to reach to levels of 33790 tCO2e by FY emission intensity is supposed to be at level of 0.86 tCO2e/Sq.m of are
2027 developed by FY 2050.
• By committing to SBTi Net Zero targets, the leftover Scope-1,2 emissions • By committing to SBTi Net Zero targets, the Scope intensity should be
should be 257 tCO2e by FY 2027 0.0266 tCO2e/ Sq.m by FY 2050

Emission Scenario (Scope 1,2) Emission Intensity Scenario (Scope 3)

1

Emission Intensity (tCO2e/sq.m)

33,790 0.9
28,880
24,684 0.8
21,097
tCO2e

18,032 0.7
15,411.8 0.6
12,381 9,350 6,319 0.5
3,288 0.4
257
0.3
2022 2023 2024 202 2026 2027 0.2
0.1
0

2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
Projected Emissions Emission Scenario for Netzero Emission Intensity (SBTi) tCO2e/Sq.m
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Scope 1,2
Emission Reduction
Initiatives
Scope 1,2 Carbon Reduction
• Following are the various initiatives that can be taken for achieving the Net Zero target
Total Cost Total Savings
(Capex+ Opex) Ease of
Initiatives Till FY 2027 Implementation constraints
(Till FY 2027) Implementation
Crore INR (Crore INR)

Scope 1
Purchase of High-quality carbon credits - Carbon credit prices are subject to High
0.171
fluctuation in market prices
Use of Low GWP Refrigerants - Medium
Electrification of Fleet 0.5 - High

Scope 2
1. Solar or Wind Energy Procurement through Regulatory authorities do not permit direct Medium
9.192 10.03 3
Open Access (31 MW) RE procurement above certain limit.
Any of the below option can be selected
Procurement of Green Tariffs is additional High
2a. Procurement of Green Tariffs3 3.19 - cost burden.
(This is cumulative cost)
Green Tariffs to be procured every year.
Procurement of I-REC is additional cost Medium
2b. Procurement of I-Rec5 1.94 - burden.
(This is cumulative cost)
I-REC to be procured every year.
1. Cost of Carbon credit is considered on conservative side as 8.5 $/Ton . Carbon credits to be procured every year after the target year for maintaining the Net Zero.
2. The investment is computed for group captive mode of open access. The cost per MW under group captive is 0.43 Crore INR/MW
3. Per unit saving of 1 INR/kWh is assumed for solar OA and 2 INR/kWh for Solar rooftop.
4. Cost of green tariffs is 0.66 INR/kWh
5. Cost of I-REC is considered as 0.40 INR/kWh.I-Recs to procured every year
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Roadmap for Scope 1,2
• The roadmap for scope 1,2 is mentioned below.
• The company is targeting to achieve Net Zero by FY 27.

FY 2024 FY 2025 FY 2026 FY 2027

1 Stage I 2 Stage II 3 Stage III 4 Stage IV

• Installation of 1.49 MW of solar roof • Installation of 1.49 MW of solar roof • Installation of 1.46 MW of solar roof • Installation of 0.69 MW of solar roof top.
top. top. top. • Solar PPA for 6.49 MW
• Solar PPA for 4.09 MW • Procurement of Carbon credits for Scope
• Solar PPA for 1.49 MW • Solar PPA for 4.60 MW
• Procurement of Green Tariffs/I-rec 1
• Policy - Commitment to only buy air • Procurement of Green Tariffs/I-rec
conditioners with R-290 refrigerant. • Procurement of EV (Nexon, XUV
• Procurement of Green Tariffs/I-rec 400
• Procurement of Green Tariffs/I-rec
• Setting up the ICP

Description FY 24 FY 25 FY 26 FY 27
Total Investment Required (Cr. INR) 2.58 3.91 3.05 3.6
Total Savings (Cr. INR) 0.74 1.88 3.05 4.36
Carbon reduction achieved (tCO2e) 18,012 20,231 22,723 28,011

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Scope 1 -Decarbonizing MDL’s Fugitive Emissions

• Current situation – Split AC in most officess with R-22 and R410a refrigerant, that
have very high GWP of 1760, 1923 respectively.

• Replacement of higher capacity split AC at later stage as they become available in

India

Refrigerant R-22 R-410a R-32 R-290

GWP 1760 1923 677 0

Leapfrogging from R-22 technology directly to R-290

Strategy: Gradual shift to R-290

• Commitment to procure only environment friendly air conditioners operating on R-290
refrigerant.
• Commitment to replace current low capacity (≤1.5 TR) air conditioners with those operating
on R-290 refrigerant.
• Commitment to start replacing current higher capacity (≥ 1.5 TR) air conditioners with those
operating on R-290 refrigerant from 2025-26.
• Leadership - Commitment to only lease spaces fitted with air conditioners operating on R-290
from 2028. (Market signal to adopt R-290)

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Scope 1- Decarbonizing MDL’s owned transportation
MDL can procure Mahindra XUV 400, Tata Nexon EV Prime

Future Procurement–
Capacity addition every 3-4 years. Vehicles to be EVs only
Greening of grid due to renewable energy capacity addition to decrease future emissions • MDL to transition to Electric Vehicles
• Overall greening of grid would result in significant reduction of
emissions from the company owned vehicles
• A small range (Ex Tata Nexon) EV
• average emission reduction of 64%
• 90% lower OPEX (INR/Km)
• A medium range vehicle (Mahindra XUV Electric)
• emission reduction of around 63%
• 90% lesser OPEX (INR/Km)
Transition to • CAPEX :
Clean Fuel • Small EV Car : INR 17 Lac
• Mid Sized Vehicle: 20 Lacs
• Car EV Fast Charging station- 4 Lacs
• Bike EV Charging station – 0.76 Lacs
• OPEX :
• Charging Cost – 0.43 Lacs
• Small Sized EV Maintenance : 0.07 Lacs
Strategy: Shift to Electric Vehicles • Mid Sized EV Maintenance : 0.1 Lacs

• Commitment to shift to Electric vehicles

• Commitment to purchase only Electric vehicles for future demand

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Scope 1-Carbon Credits

Carbon Credits About Carbon Credits

• Carbon offsets are measurable, verifiable emission reductions from

certified climate action projects.
• Scope 1 emissions contribute to around 0.14% of total emissions. • These projects reduce, remove or avoid greenhouse gas (GHG) emissions
and can also bring a host of positive co-benefits, e.g., empowering
• For such small quantum of emission, MDL can consider the procurement of
carbon credits as an option for emission offsets. communities, protecting ecosystems, restoring forests or reducing reliance
on fossil fuels
• Carbon credits are to be procured in FY 2027 and so on.
• They can be used to compensate for an organisation’s emissions by
• The cost of carbon credits in FY 2027 will be 0.17 Crore INR. cancelling out emissions somewhere else
• The residual scope 1 emissions in FY 2027 will be 2,488 tCO2e. • Projects must adhere to a rigorous set of criteria to pass verification by
third-party agencies and a review by a panel of experts at leading carbon
offset standards e.g., Verra or Gold Standard

• After an organization or an individual buys a carbon offset, it is

permanently retired so it can't be reused

Details of Carbon credits are mentioned in annexure

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Scope 2-RE Procurement Strategy
• MDL will gradually reduce the dependency on green tariffs and increase the size of On site and off site generation.
• This will include installation of 4.76 MW of solar roof top, 16.6 MW of solar open access and procurement of remaining 10% units by
Green Tariffs

Description UoM FY 22 FY 23 FY 24 FY 25 FY 26 FY 27
Grid Emission Factor kgCO2e/kWh 0.79 0.76 0.73 0.70 0.67 0.6
Total Electricity demand kWh/Year 18,072,152 21,144,418 24,738,969 28,944,593 33,865,174 39,622,254
Solar Roof Top Units kWh/Year 2,473,897 4,341,689 6,773,035 7,924,451
Total Capacity Required MW 1.49 1.12 1.46 0.69
Investment Cr.INR 0.64 0.48 0.63 0.30
Savings Cr.INR 0.49 0.87 1.35 1.58
Solar OA Units kWh/Year 2,473,897 10,130,608 16,932,587 27,735,578
Total Capacity Required MW 1.49 4.60 4.09 6.49
Investment Crore INR 0.64 1.97 1.75 2.78
Savings Cr. INR 0.25 1.01 1.69 2.77
Green Tariffs Units kWh/Year 19,791,175 14,472,297 10,159,552 3,962,225
Cost of Green Tariffs Cr INR 1.31 0.96 0.67 0.26
Total Investment
Cr. INR 1.28 2.45 2.38 3.08
(W/o considering cost of Green Tariffs)
Total Savings Cr. INR 0.74 1.88 3.05 4.36

Details of RE procurement are mentioned in annexure

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Scope 3
Emissions Reduction
Initiatives
Scope 3 Carbon Emission Reduction
Following are the various initiatives that can be taken for achieving the Net Zero target in Scope 3
Ease of
Scope 3 Category Initiatives Implementation Constraint
Implementation
Purchased Goods and
Reduction in embodied carbon in various materials Availability and cost of the material can be a constraint Medium
Services
RE procurement to be increased and T&D emission
Fuel and Energy Emissions from T&D losses will reduce due to renewable energy High
factor for grid to reduce
Upstream Transport Electrification of material transport It will take time for electrification of transport Low
Policy level initiative for preferring public transport High
Business Travel Tie up with Fleet management companies for cleaner trips Medium
Tie up with airlines for green fuel or cleaner trips It will have cost impact for tie-up for greener fuels Low
Employee Commute Adopt EV fleet for company provided associate commute Low
Metro/Train passes to employees It will be a cost impact to the organization High
Provide star rated equipment (AC, geyser, motors, etc.)
Availability of technology and cost can be constraints Medium
Procurement of Ultra efficient equipment
Use of Sold Product Implement passive design measures such as natural ventilation, envelope Site specific design to be made to implement the
High
shading and insulation, maximization of green cover, cool roofs initiatives for Passive Design
Customer Awareness High
Collaborating with downstream players with industrial symbiosis and circularity in
Medium
the system.
Downstream leased
Providing Ultra efficient Equipment Availability of technology and cost can be constraints Medium
assets
Facility wise analysis for feasibility of rooftop/Open
Energy transition for Down Stream Assets Medium
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Roadmap for Scope 3
• The roadmap for scope 3 is mentioned below.
• As per the norms of SBTi, after every 5 years company must recalculate the baseline and realign the strategy in line
with the Net Zero target
Category FY 2024-27 FY 28-32

• Green Procurement policy • Procurement from selected vendors

Purchased Goods and
• Supplier benchmarking on emissions • Applying ICP in procurement decision
Services
• Setting targets for suppliers for Emission reduction • Supplier incentivization for greener products
Fuel and Energy • Procurement of RE • 100% procurement of RE
Upstream Transport • Mapping of supplier specific emissions for upstream transport • Tie up with the vendors with EVs in material transport
• Tie up with travel partners for real time monitoring of travel • Tie-up with airlines for sustainable Aviation fuel.
emissions • Adoption of 100% EV fleet.
Business Travel
• Travel policy inline with emission reduction targets
• Adoption of EV fleet for commute
Employee Commute • Metro/Local train passes to employees • Loan for EVs for employees.
• Procurement of Ultra efficient equipment • Provision for providing 100% RE to the new construction
• Energy efficiency in HVAC systems projects
• Customer Awareness campaign • Focusing on energy efficient equipment procurement.
Use of Sold Product • Energy efficiency in lighting system
• Installation of Solar water heaters
• Provision of Solar roof tops
• Providing EV charging stations
• High performance facade • Facilities with 100% RE procurement.
• High efficiency equipment • Focusing on energy efficient equipment procurement
Downstream leased assets
• Tenant awareness
• Switching to renewable energy for the remaining demand
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Utilizing Internal Carbon Pricing in Business Decisions

Capex Projects New Capex Projects – Ex Waste Heat Recovery

Projects

Procurement Decisions – Normal Purchases Comparison between 2 vendors for an energy

efficient equipment

Evaluating multiple bids – based on emission

Procurement – Bid Processes intensity of the products (by different vendors)

Business Creating Cleantech Fund – for future

For New Expansion projects, ICP can be used to
create cleantech fund, which can be used for
investments
Decisions cleantech procurement

Example – Identifying better waste disposal facilities,

Operations decisions deploying EVs for employee travel

Penalizing or awarding business based on their

Internal Fee on Business emission mitigation

Awarding employees who reduce emissions (scope 3)

Remuneration by adopting better practices – example award
employees which use EVs

For more details of ICP, click here

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4.1
Purchased Goods & Services
Sustainable Procurement Roadmap
• Embodied carbon (Upfront carbon) contributes to around 15%-30% of lifecycle emissions
• Sustainable procurement policy and implementation will transcend the organization to low embodied carbon
material procurement.
• The sustainable procurement roadmap is mentioned below-

Step-1
• Conducting LCA Cycle Step-5
analysis of Building • Procurement of
• Identification of the We are sustainable Material.
material with high here Step-3 • Accounting the
embodied carbon. • Focus on Circular Step-4 reduction in carbon
Economy. • Supplier Assessment emissions.
Reduce- Reuse- for Low Carbon
Recycle practices Step-6
• Geo mapping of the • Involving suppliers in • Continuous
suppliers the process of Net improvement in the
Step-2 Zero reduction of carbon
• Drafting a policy for emissions.
sustainable
procurement

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Sustainable Procurement Policy & Benefits
Benefits
Renewable
Energy Adoption
Reducing
Reducing carbon emissions waste Lower carbon
generated in emission
1 products
operations
Preserving Natural Resources 8 2

Improving competitiveness of eco-friendly products Alternative

Fuels for Lower
mobile & 7 3 ozone
stationary depleting
Increased Efficiency combustion substances

Reduced environmental impacts 6 4

Sustainable 5 Energy and

Improved brand Image Building water efficient
materials
Made with
recycled or
biobased products

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Embedding Policy in Procurement Process
Actively engage Supplier Ongoing
with key questionnaires updating of
suppliers based to gather GHG supplier
on your supplier emission and emission
engagement sustainability tracking and
approach information engagement

Gather supplier Embedding of GHG Continue

feedback and emissions calculation monitoring,
use insights to and emission measuring and
inform your reduction targets into reporting
strategy on an RFPs and
ongoing basis procurement criteria

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Driving Emission Reduction through Supplier Decarbonization

• Conduct an exercise to understand the emission hotspots

1

• Review existing suppliers decarbonization commitment

2

• Segment the suppliers based on chosen criteria of Persistent

3

Evolve incentivization strategy as progress is

• Prioritize suppliers based on decarbonization impact to Persistent made and gaps are identified
4

• Match incentivization levers to selected supplier segments

5

• Develop rollout plan for supplier decarbonization incentives

6

• Embed in Business-as-Usual operating model.

7
Source: WBCSD Report Reaching net zero: incentives for
supply chain decarbonization
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Driving Emission Reduction through Supplier Decarbonization

• Prepare a questionnaire and collect the information about

supplier emissions and what initiatives are taken by them.
• Conduct an exercise to understand the emission hotspots
1
• If suppliers having decarbonization commitment, then review
• Review existing suppliers decarbonization commitment and suggest a way forward
2

• Segment the suppliers based on chosen criteria of

3 Persistent • Based on the above information categorize the suppliers in
three different categories
• Prioritize suppliers based on decarbonization impact to
4 Persistent • Prioritize considering total carbon emissions (abatement potential),
supplier ambition (likelihood to engage or existing capabilities
• Match incentivization levers to selected supplier segments (need for support).
5

• Develop rollout plan for supplier decarbonization incentives

• Incentivize based on strength of existing relationships, supplier
6 culture, spend category, decarbonization maturity and
anticipated return-on-investment
• Embed in Business-as-Usual operating model
7
• Develop plan with collection and tracking of emission reduction
progress

• Integrate the carbon metrics into supplier selection and

contracting processes to ensure changes are sustained
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Incentives for Decarbonizing Suppliers
Building Capability Lever Description Rewarding Progress Lever Description
Public recognition & Offering public exposure as a reward for suppliers that have Pay for performance Organizations can work with suppliers to establish certain
co-branding met certain emissions reduction targets. reduction thresholds, which would trigger financial rewards
when reached.
Upskilling Organizations can invest in upskilling suppliers’ capabilities
for supply chain decarbonization. Beneficial terms Organizations can offer suppliers preferential payment terms or
financing rates based on carbon reduction targets, disclosure
Sharing learning Buyers can share carbon reduction learnings with suppliers, and progress.
& resources so that they can benefit from existing R&D. This is alongside Higher product prices Buyers can incentivize change through accepting a premium for
suppliers sharing learnings and resources with other alternative products and services that offer lower carbon
suppliers (where open collaboration can be encouraged). emissions when compared to competitors or existing offerings.
Longer term Investing in initiatives that support suppliers to decarbonize in
Peer benchmarking By collating carbon emissions-related information across the
Investments the longer term provides financial support and reassurances,
supply chain, organizations can show suppliers how they
and helps build trusted buyer-supplier relationships, given
perform in relation to their peers.
extended longevity.

Leveraging Lever Description Enforcing Lever Description

Procurement Performance
Carbon reduction Organizations can include clauses that translate carbon Carbon pricing Carbon pricing directly applies a cost to carbon emissions. This
clauses reporting requirements and targets into specific performance shifts the accountability for emissions towards the suppliers.
management criteria, against which the supplier is formally
assessed.
Financial penalties Related to the lever of carbon reduction clauses, organizations
Decarbonization In the pre-tender phase, organizations can introduce core can include the prospect of financial penalties if these agreed
criteria in Procurement selection criteria that assess suppliers against their targets or milestones are not met.
commitment to reducing carbon emissions.
Mandatory carbon Encouraging or mandating reporting on carbon emissions Contract termination If suppliers do not meet the decarbonization requirements
reporting within the supply chain. written into their contract, a buyer can reserve the right to
terminate the agreement.

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Incentives for Decarbonizing Suppliers
Reward
Levers in this category initiate Levers in this category,
more continuous learning and financially
engagement approach. recognize supplier progress
● Public recognition ● Pay for
towards decarbonization
& co-branding performance
● Beneficial goals.
● Upskilling payment terms
●Higher product
● Sharing learnings prices
& resources
Non-financial

● Longer term
● Peer

Financial
investments
benchmarking

●Carbon
● Carbon reduction pricing
clauses
●Decarbonization
criteria in procurement
Levers in this category focus ● Financial Levers in this category is to
on embedding penalties impose monetary payments
●Mandate carbon
decarbonization as a result of inaction or
reporting ● Contract
commitments into underperformance.
termination
procurement processes.

Leveraging Enforcing
Penalty
procurement performance
Source: WBCSD Report Reaching net zero: incentives for supply chain decarbonization

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Checklist for Supplier specific Emission Information
First step
Establish well documented data collection
and management processes (including
identifying data owners and controls)

Supplier Category

Fourth step Second step Category 1 Category 2 Category 3

(No Targets but Emission (No Targets & No
Have an Set up templates (Emission Targets)
data available) Emission data)
assurance plan in or systems to
place that will meet collect data
ensure data is consistently. Recurring Recurring Recurring
valid and accurate Address gaps and
challenge Non-recurring Non-recurring Non-recurring

Third step
Put systems in place that support the business
to analyze emissions data on a more
granular level (e.g.- breaking down travel data
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PwC 29
Targets taken by Supply Chain Partners
Target achievement by vendors will directly benefit MDL in reduction of embodied carbon in use of raw
materials. The list of vendors with emission reduction target is mentioned below-

% Reduction in % Reduction in
Raw Material Vendor Base Year Target Year SBTi Validation
Scope 1 Scope 2

Cement Ambuja Cement 2020 2030 20% per ton 43% per ton ✓
Cement J K Cement 2020 2030 20.4% per ton 44.7% per ton ✓
Cement Shree Cement 2019 2030 12.7% per ton 27.1% per ton ✓
Cement Ultratech Cements FY 2017 FY 2032 27% per ton 69% per ton ✓
Steel
Mahindra Sanyo
Special Steels
2016 2030 35% per ton ✓
Steel Tata Steel Carbon Neutral by 2045 
Paint Indigo Paints Net Zero by 2050 
Paint Asian Paints FY 14 FY 22 51% 38% 
Glass Saint Gobain Net Zero by 2050 ✓
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Initiatives under implementation Reducing the consumption
These are various initiatives under implementation for reducing the emissions for PG&S

Contribution
Initiatives Component Reduction by 2027
(kgCo2e/sqm.)
• Greener concrete mixes
• Use of GGBS
Cement/Concrete 185 45%
• Use of LC3 cement
• Use of geopolymer concrete
• Use of recycled aluminum
• Reduce the use of aluminum and test and
Glass and aluminum 89 22%
implement alternatives
• Use high recycled content glass
• Higher usage of recycled steel
• Zero wastage of steel
Steel 25 6%
• Use of alternatives like GFRP rebars in suitable
applications, etc..

• Use of lower embodied carbon products Paint 24 6%

• Use of lower embodied carbon products Tiles 20 5%

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4.2
Business Travel
Business Travel Decarbonization
1 Analysing Business Travel Emissions 2 Travel / Business Policy (green travel policy)

• MDL should start capturing emissions for every business travel individually • MDL should create a travel policy that considers environmental aspects into
• Most of the flights give flight specific emissions MDL should negotiate the considerations while ensuring employee well being during travel
travel partner to provide emissions for every travel (air travel) • Promote Policy among employees
• While calculating business travel specific emissions – emissions should be • Monitor Travel behaviour
computed directly from emissions shared by travel partner (accurate results) • Engage employees for feedback and suggestions for policy improvement
• Presently business travel emissions are as follows - • Engage with travel partner in terms of selecting flights, stay options etc..

Emissions
Mode of Transport
(tCO2e) 3 Green Travel Policy
Flight - BUSINESS class 15
Flight -ECONOMY class 191 • Virtual First Policy – Develop a policy wherein MDL takes a virtual first policy
for all internal and client delivery work
Flight -PREMIUM ECONOMY class 4
• Book Direct flights instead of flights with layover; more stops means more
Bus 1 take-offs and landings – resulting in higher CO2 emissions
Total 210
• While booking flights – prefer airlines which show lower carbon footprint
• Prefer economy seats over business class seats; economy seats have lower
emissions compared to business travel seats, MDL to look at creating
following rules
❑ Trips less than 4 hours to be taken as economy
❑ Only trips greater than 8 hours to be considered for business class
❑ Travel that takes during the day (4-8 hours) to be considered only for
economy, only nigh travel to be considered for business class
• Reduce 1- 2 days travel; instead, group meetings together to reduce
frequent travels
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Business Travel Decarbonization
Clean Skies for Tomorrow Initiative (CST) Emissions In setting for by buying SAF

1 Estimate emissions required for travel

• CST initiative started in the year 2019 and is a global, cross value chain coalition which is targeting 2 Buy equivalent amount of SAF
that the global aviation sector achieves net zero by 2050 by accelerating Sustainable Aviation Fuel
Supply (and use) by 2030
• The Coalition brings in Airlines, Airports , SAF producers, Corporate buyers (support to CST 3 SAF delivered to the airlines of your choice
programme), OEMs and Institutes and researchers who support the technology development
• Signatory – India specific Airlines: SpiceJet, Vistara Receive SAF certificates (can be used from
4
• Signatory – International Airlines: Delta, United, Etihad, Qatar Airlines, British Airways, Emirates, insetting emissions
Lufthansa, Qantas, Air Canada etc.. Presently cost of SAF is almost 200 -300%
• IT companies signatory to SAF – Accenture, Google, Salesforce, Microsoft, Infosys, Wipro 5
more than normal aviation fuel
• The CST India community has set a goal of transporting 100 million passengers on SAF on a 10%
blend by 2030 Insetting Vs Offsetting
• SAF when compared to normal aviation fuel reduces the emissions by up to 80%
• Cost Impact per PAX travel could be negligible, rough estimates indicate a cost increase of USD 1.8
In insetting, the SAF is a direct solution to reduce the
for a typical domestic flight
in-sector emissions from aviation. Carbon offsets
• The blending of 10% SAF could result in an overall emission reduction of 6 - 8%
means compensation for emissions through buying
carbon credits from projects that reduce GHG
emissions in other sectors.
Ref: Clean Sky for Tomorrow , World Economic Forum

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4.3
Employee Commute
Decarbonizing Employee Commute
Emission reduction through Subsidized Metro/ Train pass Emission reduction through incentivized EV car loans

• Considering the existing emission scenario, emissions due to 4-wheeler • Green Car Loan - MDL to subsidize 1% interest rate on loans.
(owned or cab) contribute to around 52%. • The change in interest rate can take place next year based on interest
• These emissions can be reduced by providing the Metro/Train passes to of employee
employees and providing the EV from the nearest station to the office. • The loan terms can be considered as below –
• This will promote use of public transport and there by reduction in the a. Max Loan amount – Rs. 12 Lacs
emissions. b. Max interest rate – 10%
c. No. of years – 5

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Decarbonizing Employee Commute

1 Emission reduction through Company provided EV bus 2 EV Cab fleet via vendor

• MDL to lease / partner with EV bus provider. • MDL can provide EV cab facilities to its employees.
• These EVs can be used for business travel purposes as well as for pick • Advantages – Employees preferring working from office over WFH,
up and drop of the employees from nearest Metro/Train station. reduced emissions, Zero Capex - no asset ownership required.
• Operational Cost - Rs. 12.5 per km • Examples-
• Each trip will have up to 15 employees (Utilization factor – 40% of ❑ Wipro – EV fleet in Bengaluru and Hyderabad
capacity) ❑ SE2 – Lithium partnership

3 Subsidized Metro/Suburban train Pass 4 Incentivization to buy EV

• MDL can provide subsidized metro card to shift employees to public • MDL can tie-up with banks to provide subsidized loans to its
transportation. employees, for buying EVs.
• Advantage – Asset lite model, No dependence on vendors, limited • Advantage – Low/No cost, as bank may be willing to provide facility to
liabilities improve customer acquisition.
• 5% discount on corporate pass available in few cities • Examples-
❑ HSBC partnership with Tata Motors for employees in corporate
sector.

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4.4
Use of Sold Products
Decarbonizing Use of Sold Products
Emissions due to ‘Use of Sold Products’ contribute to around 69% of total scope 3 emissions. Hence, it
becomes essential to reduce the emissions to achieve Net Zero targets.

Initiative Actions can be taken

Providing efficient Equipment • Provide star rated equipment (AC, geyser, motors, etc.)

Passive design features • Implement passive design measures such as natural ventilation, envelope shading and insulation,
maximization of green cover, cool roofs

Customer awareness • Do the following for customer awareness

• Promote star rates equipment purchase by customers
• Share performance data backed information to promote energy efficiency at the users end
• Enable access to energy efficient equipment OEMs to retrofit/new equipment promotion at the
developments

Renewable transition • Renewable transition

❑ Solar hot water on terrace
❑ Solar PV on terrace
❑ Enable offsite connectivity solar projects for customers

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Improvements in HVAC Systems
Contributors to EPI EPI forecasts (kWh/Sq.m)- HVAC Systems

HVAC System 20
16 14 12 11.3 10.6 10
Contributors to EPI 20 5 20 Lighting and Common
Area
Others FY 24 FY 25 FY 26 FY 27 FY 28 FY 29 FY 30
Under MDL’s EPI (kWh/Sq.m)
operational control

Initiatives for HVAC System

Initiatives Energy Savings Estimated CAPEX Payback Period Set up Time
Can be done in a
Controllers like AC energy savers which are mobile devices that can
~USD 150 / 1000 very small lead time
be connected to the existing split Acs – for conference rooms etc.. 25%-30% of AC power < 1 year
sqft.. – 2-3 hours of
where split ACs are being used
installation work
Company can explore the possibility of installing 5-star inverter ACs ~ USD 50 per 1000 2 -3 hours per
25%-30% of AC power 3-4 years
in all facilities sq ft. installation
Applicable only for
New purchase equipments (refrigerator/microwave) should be 5 star 15%-20% between 3 and new installations. 2 -3 hours per
rated 5 star Retrofit payback installation
will not be possible
Ceiling fans in can be replaced with Brushless DC (BLDC) fan. (if 2-3 hours per
50% of fan power ~USD 15 /sqft < 2 year
any) installation
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Improvements in Lighting and Other Systems

Model for
Initiatives Energy Savings Payback Period Set up Time
implementation

~ 25 -30% w.r.t to
Can be done in small Green Buildings, Self
Installation of Energy Efficient Lighting conventional ~ 1.5 years
lead time financed
lightings

~ 5 – 10% in lighting Can be done online

Installation of Smart lighting systems – occupancy controller etc.. ~ 1 year Self financed
systems without any stoppage

ESCOs or Self
~ 30 – 50% savings financed or
Installation of Energy Efficient BLDC fans in place of existing
w.r.t conventional ~ 2.5 years 2-3 days collaboration with
conventional AHU fans
Fans owner and other
tenants

Energy Efficiency in Chiller Systems*

1. Energy Efficient Chillers
2. Energy Efficient Cooling towers Setup time could be
Collaboration with
3. Temperature Optimization ~ 15 – 20% savings high depending upon
~ 3 – 5years building owner, other
4. Replacement of metal blades to FRP blades in fans in HVAC system the equipment
tenants
(evaporator, condenser and Cooling tower fans) standby availability
* This option needs more evaluation and would vary from site to site;
this would need a very details analysis in terms of a energy audit

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Annexure
5.1
Renewable Energy
Transition options for RE

Evaluation Parameters

RE PROCUREMENT ROUTES

Economics

Risks

Reliability of
supply

OPEX CAPEX Operational

flexibility
Sign PPA

Ease of
Implementation

Future market and

Third party owned regulations
Captive Group Captive Deferred Capex
asset

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Third Party Open Access
• Complete asset in the
Structure
books of the developer
Third party generator • 70:30 debt to equity ratio • The RE asset will be owned by a third party. The
consumer(s) will have no stake in the asset
• They enter a PPA for the sale of power. All open access
charges are applicable in this structure.

Pros
• No investment needed by the consumer. Only a per unit
cost of power will have to be paid
• Generator can be chosen from large number of
PPA 1

PPA 2

PPA 3
competitors based on tariff

Cons
• All open access charges are applicable in this mode
(Some relief is provided for OA charges for RE sources)
C&I consumer 1 C&I consumer 2 C&I consumer 3
• No control on the operations of the asset

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Group Captive mode

• Part asset will be owned by Structure

RE generation asset
Investor
• Minimum 26% of Equity by • An outside third party will be the major shareholder of the
consumer asset. However, the GC consumers will also hold a stake
• Maximum 74% of Equity by in the asset as per group captive norms
Investor • Power will be consumed in proportion to equity invested by
• Complete debt on the books each GC consumer
of investor

Pros

• Minimal equity to be invested by the consumer

• Cheaper power available as CSS is waived off

GC consumer 1 GC consumer 2 GC consumer 3 • Majority Investment risk is borne by third party

Cons

• Co-ordination will be required to maintain the collective

26% equity stake and consumption proportionality
• 26% of collective equity by all the GC consumers
requirement among all consumers
• Minimum 51% collective consumption
• Minimum control of asset
• Equity to be proportional to consumption for each individual consumer
• Minimum realisation of returns on investment
• No CSS and additional surcharge.

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Deferred Capex mode

• Debt and Equity will be Structure

raised by Developer RE generation asset
• Asset will be on the • The developer/ investor will invest the entire cost of the
books of the consumer project through a combination of debt and equity, however,
the asset will be in the name of the consumer
• Consumer will pay the investment cost in the form of
annuity for a period of 15 years

Pros
• No upfront investment required by the consumer
• Good control on the asset and operations
C&I consumer
• Cheaper power available as CSS is waived off

Cons
• The EPC contract price (The investment) will be collected from the consumer • Annuity paid can be unviable and costlier to implement
than a pure captive/group captive mode
in the form of annuity
• Very few developers provide this option of implementation
• Payment done through an Escrow account

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Captive & Group Captive Overview

• Captive - A captive solar power plant refers to a solar power plant that has been implemented by a company for
Godrej
its own captive consumption. That is, the power generated by the solar power plant is consumed entirely by the Aditya Birla Apollo Tyres
Cipla Industries
Group Ltd.
developing company itself. Ltd.
•
Group Captive - A group captive scheme is where someone develops a power plant for the collective use of UltraTech
HPCL
Mahalaxmi Mahindra &
Cement TMT Mahindra
multiple commercial consumers. The consumers should have at least a 26 per cent equity and has to consume
at least 51 per cent of the produced power.
INOX Air
Asahi India
Products
The existing provisions and proposed amendments for Group captives are as follows:

• First rule of a group captive power plant: The group captive users should hold more than 26% of the
ownership corresponding the group captive units. As per the latest proposed amendment to the Electricity Rules
2005, ownership shall not be limited to voting rights - it shall include proportionate paid up equity capital with full Key Group Captive Generators in India
rights.
OPGS Sai Wardha
• Implication of Proposed amendment – Equity shares would need to be issued to the individual shareholders. Power Pvt. Tata Power Power
Ltd. Generation
• Second rule of a group captive power plant: The group captive users should consume more than 51% of the
energy generated from the group captive generation units in the proportion of their shares in the ownership of Awarpur
Reliance
the power plant within a variation not exceeding 10% . The latest proposed amendment to the Electricity Rules Cement
Energy Ltd.
works
2005, extends the applicability of proportionality.

• Implications: The applicability of the Proportionality Test has been widened to cover a larger group.

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Various modes of RE procurement (Captive vs non-captive)
Captive (Capex) Captive/ Group Captive (Opex) Non-captive third party purchase

• Accelerated Depreciation Benefit – lower tax outlay • Low initial investment outlay (~ 8 % of • No investment or capital outlay in the project
in the initial years Project Cost) • To pay cost of power on per unit basis
• Exemption of Cross Subsidy Surcharge and • Exemption of Cross Subsidy Surcharge and • Entire assets is owned by the Third Party with no
Additional Subsidy Surcharge – lower landed cost of Additional Subsidy Surcharge – lower tariffs stake of company in the assets
power vis-à-vis discom tariffs and vendor tariffs vis-à-vis discom tariffs and vendor tariffs • Arrangement of debt towards the project is made
Benefits
• Ownership of Asset with life of ~ 25 years – Assured • Entire contribution in form of equity. No debt by the Third party. With no debt on the books of
supply at landed tariff for 25 years on the books of the company company
• No legal/contractual obligation for minimum • Dealings with only 1 counterparty with no • Option to choose the generators (i.e. Third Party)
consumption of generated power – More operational construction related risks to be borne based on tariff
flexibility • Easy exit option (via sale of shares)

• High initial investment outlay (100% of Project Cost)

• Tenor for PPAs, minimum is 15 years and
with debt (70% of Project Cost) on the books of the
• PPAs are generally for 3 to 5 years for maximum is 25 years. But there are few cases in
company/SPV
Thermal and 10 years for solar/wind. Hence which few players are ready for 5 years of tenor
• Dealings with multiple parties/multiple contracts may
no long term certainty on tariffs • All open access charges are applicable i.e. Cross
be required (EPC, O&M)
• Legal/Contractual obligation to consume Subsidy Surcharge, Additional Subsidy
Risks/ • Generally, land to be secured by the owner.
power in proportion to equity contribution – Surcharge and any other charges (if any) needs
Challenges • Affected by other construction related risks (Entire
Any deviation would lead to applicability of to be paid
risk cannot be passed to the EPC player)
CSS and ASS which would increase the • Contractual obligation for minimum consumption
• Banking charges and losses to be incurred as per
landed tariff by > than INR 1 per unit (would of generated power
banking regulation
vary from state to state) • No control on the operations, since Third party
• Structuring of transaction critical for exploring exit
will manage the same.
options (exit via sale of asset)

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Various modes of RE procurement (Off-grid vs grid-connected)

Off-grid Grid-connected using open access

In off- grid system, the consumer is not connected to any utility In grid connected system, the power system (solar, wind, hybrid
power grid, since they use storage method to store the generated etc..) is connected to the utility’s power grid i.e. connected to
Way it works energy. either state transmission utility (STU) or central transmission utility
(CTU)
• Negligible Transmission & Distribution (T&D) charges for not • No investment required from the company in setting up T&D
using the T&D network provided at state level or central level network apart from the generating assets (if any) as the T&D
• It facilitate independent & sustainable electricity generation and network is given by utilities for supply of power
beneficial for the places that have frequent power outages • Any excess power generated is sent to utility and the company
• It can store power from the generation and utilize the stored can be compensated towards the same (based on banking
Benefits power whenever it is required norms of that particular state)
• In case of shortfall in power generation, the company can get
the additional units from the grid by making the payment
• No requirement to purchase/lease the land and get the
approval/clearances
• Need to acquire land to set-up the off-grid system (i.e. battery • T&D network will not be available at the remote place where
storage or any other storage) and also to obtain various the generating assets (if any) is there, necessary support lines
approvals/clearances and/or equipment is required to connect with the grid
Risks/ Challenges • Higher investment to setting-up off-grid system as it involves to • T&D charges on each unit needs to be paid to utilities for using
have storage facility, inverter, other necessary equipment’s the network of the utilities
apart from the power generating assets (if any) • Loss of energy can happen at the time of unavailability of grid
or any power outages

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5.1.2
RE Options
Preferred options – 1. RE + Discom Supply

MDL
Key Considerations
• The first option is to source maximum possible power from a RE
source (solar/wind/hybrid) and get the balance from the State
26% Project
PPA for Discom
Equity under
supply of group captive • In all the possible models, a 26% ownership is suggested (under a
Power structure group captive structure) for Lupin and the balance 74% coming
from the RE developer and the debt component can be funded by a
separate bank/funding institution
RE SPV Project Debt Component
Discom Supply (Solar/Wind//Hy • Based on the banking requirements applicable in respective states*
brid) (in which the plant located) to adjust the peak surplus or deficit in
the peak duration itself, the estimated maximum consumption that
• Supply from a discom can be met from the RE source is mentioned in the report.
connection
Balance 74% Equity *The financial consideration for the same has been further discussed in the
report.

Lending
RE Holding Institution
Company

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Possible options – 2. RE + Markets

MDL
Power Exchange Key Considerations
(GTAM) • Getting the sizing right to meet the consumption profile
– Typical combination for meeting 85% PLF round the clock
26% Project supply – Generation from the RE plant as 70-80% and rest
PPA for Equity under
Balance power from GTAM market (instead of grid supply as provided in first
supply of captive
procurement option)
RTC Power structure
• Managing open access connectivity shall be important
• Regulatory charges – Cross subsidy charges shall be applicable
RE SPV Project Debt Component for the power consumed from GTAM market. However,
Trading company Additional surcharge shall be exempted
(Solar/Wind/Hybrid)
• Setup of a trading company will require license applications with
Internal the CERC which may be done by the RE developer itself.
PPA • Specialized teams may be required for purchasing and
Balance 74% Equity scheduling power at the right price

Lending Institution
RE Holding
Company

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Market Instruments - IREC

Mechanism
RE Project Developer
• MDL to procure the Renewable Purchase Certificates from the international
market
• This implies to the procuring the power at a premium over the electricity
I-REC procurement
Premium for I-Rec landed tariff

Pros
MDL
• The rates of I-Rec can be fixed for as long as 8 years.
• Presently the cost of I-REC varies from 0.2-0.4 INR/kWh.

Procurement of
Bills Payment Cons
Electricity

• Every year I-RECs are to be procured

DISCOM • No cost savings for I-REC

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Purchase of Renewable Energy Certificates (RECs)
• Renewable Energy Certificates (RECs) provide a way to go 100% renewable, as a corporation pays for renewable energy that gets added to the grid to use and
takes credit for that energy.
• If Sonata wants to go 100% renewable, they can purchase enough RECs to cover every megawatt hour of energy that is currently being purchased from a non-
RE source.

Parameter Local RECs I-RECs Local RECs

REC denomination 1 MWh (with multiplier) 1MWh (no multiplier) • The ceiling price of a solar REC came down from USD
215/MWh in 2010-12 to under USD 30/MWh in 2017-21.
Categories Solar RECs and Non-Solar RECs Solar and Non-Solar
• The traded price has come down by more than 90%, from
Issuance Grid – India Accredited by 3rd party issuers about USD 121/MWh in 2011 to about USD 13/MWh in
2023.
Validity 1,095 days after issuance i.e., 3 years
• REC price of non-solar, which started at a lower cap of
USD 19/MWh, has also come down by about 30%, to USD
Trading Platform Power exchanges only Over the counter
13/MWh, during the same period.
DISCOMs, Open access, Captive
Buyers Voluntary buyers International RECs (I-RECs)
consumers, Voluntary buyers
Single transfer through power • I-REC prices are significantly lower than the local REC
Transfer type exchanges only, repetitive trade of the Single transfer only prices.
same certificate is not possible • In 2022, the price of I-RECs that originated from India
ranged between USD 0.7/MWh and USD 1.7/MWh,
Banking Not Allowed
whereas local RECs are priced about 10 times the value
Price Guarantee Through ‘Floor’ Price (Minimum Price) of I-RECs in India, at about USD 13/MWh.

Penalty for Non- Key features:

‘Forbearance’ Price (Maximum Price)
compliance Inexpensive, fast, and relatively easy to purchase

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Revenue Sharing Mechanisms- VPPA
It is an agreement between a renewable energy generator and a buyer that allows the buyer to procure the Energy Attribute Certificates (EACs) or Renewable
Energy Certificates (RECs) associated with the electricity generated by the renewable project.
How VPPA work

Financial Considerations Sale of Electricity Environmental Benefits

• VPPAs involve medium to long-term contracts • The buyer can claim the environmental benefits,
• Brown electricity produced by the renewable
between the renewable energy generator and such as renewable energy usage or reduced
project is sold in the merchant market.
the buyer. emissions, corresponding to the purchased EACs.
• The buyer purchases the associated EACs or
• VPPAs often provide predetermined-price • By purchasing the EACs or environmental
environmental attributes, separate from the
arrangements, which can protect the buyer attributes, the buyer can claim the environmental
physical electricity.
from volatile energy prices. benefits of the renewable energy generation

• I-RECs are the internationally accepted EACs that conveys information about
the production of a unit of electricity, such as where the electricity was
produced, the capacity of the production facility, and the energy source.

Why enter VPPA instead of purchasing I-RECs directly from the market?

• Even though I-RECs are currently available in market at INR 0.30-0.40 per unit, they are
still subject to demand risk and price volatility.
• Considering the increasing need to achieve 100% RE of the MNCs, it is pertinent to
mitigate price risk and supply risk of I-RECs by entering into VPPA.

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Revenue Sharing Mechanisms- VPPA

RE Project Developer Mechanism

• MDL to set up a trading company which will trade the RECs and electricity.
Premium for I-Rec • Trading entity will keep the I-REC for Lupin and will sell the electricity as brown
I-REC procurement
electricity in the open market.
• A base price of the electricity will be fixed. The profit and losses above-below
base prices will be shared amongst the developers and Lupin based on the
Sell of Electricity
Trading License mutual agreement.
• Organizations with Revenue Sharing Mechanisms– Sunsure, Cleantech , etc..
I-REC for MDL
Pros

• No Capital Investment is required.

MDL • The risk related to market volatility is reduced
• Low regulatory risk involved
Procurement of
Bills Payment Electricity Cons

• Trading License is essential for this mode of RE

• Market Volatility risk lies with this mechanism
DISCOM

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5.1.3
Open Access Regulations
Green Tariffs
Applicability:
• The Commission determined Green Power Tariff for the consumers opting for meeting its 100% of power requirement through RE sources in the Case
No. 134 of 2020 dated 22 March 2021, which is stipulated as Rs 0.66 per kWh for Maharashtra as per the conditions and methodology specified under
said Order.
• Such Green Power Tariff would be in addition to regular tariff approved in MYT Order.
Option for gradual transition to RE:
• The Commission has allowed the consumer the choice to opt for RE purchase in the steps of 25%. Accordingly, the Commission introduced the rating to
be given by Distribution Licensee at the end of the financial year along with the electricity bill for the month of March specifying the percentage of
power purchased from RE sources from his total consumption and rating as given below:

% of RE Purchase Opted Rating

>50% to 75% Semi-Green
>75% to 100% Green

Issues with Green Tariff:

• As per the Tariff Order for MSEDCL by Maharashtra Electricity Regulator on 31 March 2023, the distribution utilities would be able to claim the green
electricity provided to the consumers towards its own RPO obligations. This will prevent Persistent from claiming the green attribute of the RE based
electricity, because the green attribute cannot be claimed by multiple entities.
• Green Tariff is associated with extra cost per unit of INR 0.66/unit. Therefore, there is no likelihood of any savings.

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 Green Open Access Rules, 2022 have been notified by MoP
New rules enable simplified procedure, faster approval, uniform banking, voluntary purchase of RE power by C&I consumers, applicability of
OA charges for green power.

The salient features of the Rules are as under:

1. Commercial and Industrial consumers are allowed to purchase green power on voluntarily basis.
2. Captive Consumers can take power under Green Open Access with no minimum limitation.
3. DISCOM Consumers can demand for supply of Green power to them (through Green Tariffs).
4. The Green Open access is allowed to any consumer and the limit of Open Access Transaction has been reduced from 1 MW to 100 kW for green energy.
5. Rule provide certainty on open access charges and keep cap on increasing of cross-subsidy surcharge as well as the removal of additional surcharge.
6. Approval to open access application be granted in 15 days or else it will be deemed to have been approved subject to fulfilment of technical requirements. It will be through a
national portal.
7. Determination of green tariff shall be determined separately by the Appropriate Commission, which shall comprise of the APPC, CSS, if any, and service charges covering the
prudent cost of the distribution licensee for providing the green energy to the consumers.
8. Banking of surplus green energy with the distribution licensee mandated.
9. There shall be a uniform renewable purchase obligation, on all obligated entities in area of a distribution licensees. It has also included the Green Hydrogen/Green Ammonia for
fulfilment of its RPO.
10. Additional surcharge shall not be applicable if green energy is utilized for production of green hydrogen and green ammonia.
11. The Cross-subsidy surcharge shall be as per the provisions of tariff policy notified by the Central Government under the Act :
• Provided that the cross-subsidy surcharge for Green Energy Open Access Consumer purchasing green energy, from a generating plant using renewable energy sources, shall not
be increased, during twelve years from the date of operating of the generating plant using renewable energy sources, by more than fifty percent of the surcharge fixed for the year in
which open access is granted;
• The cross-subsidy surcharge payable by a consumer shall be such as to meet the current level of cross subsidy within the area of supply of the distribution licensee.

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Maharashtra Open Access Rules
Maharashtra
This is the most important overarching regulation along with the amendments related to open access in Maharashtra. It consists of the end to end process of
how to avail open access. It contains the following:
• Provisions for Open Access – Eligibility, Application Procedure and approval
• Types of Open Access charge and Applicability – Transmission Charges, Scheduling and system operation charges, Wheeling Charges, Cross subsidy
surcharge, Additional Surcharge, etc..
• Applicable Open Access Losses - Transmission loss, Distribution loss
• Banking of Conventional and RE power – banking slots, charges and settlement mechanism
• Connectivity Aspects – Application Procedure, Wheeling Agreement, Timelines
• Commercial Matters and other aspects –Billing, Excess consumption, Curtailment, etc.

Banking Rules Maharashtra-

Banking of energy shall be permitted only on monthly basis.

Provided that the credit for banked energy shall not be permitted to be carried forward to subsequent months and the credit for energy banked during the month shall be
adjusted during the same month as per the energy injected in the respective Time of Day (‘TOD’) slots determined by the Commission in its Orders determining the Tariffs of
the Distribution Licensees ;
Provided further that the energy banked during peak TOD slots may also be drawn during off-peak TOD slots, but the energy banked during off-peak TOD slots may not be
drawn during peak TOD slots.
Illustration : Energy banked during :
· Night off-peak TOD slot (2200 hrs – 0600 hrs) may only be drawn in the same TOD slot
· Off-peak TOD slot (0600 hrs – 0900 hrs & 1200 hrs – 1800 hrs) may be drawn in the same TOD slot and also during Night off-peak TOD slot
(However, the energy banked during night off-peak and off peak shall not be drawn during morning peak and evening peak)
· Morning peak TOD slot (0900 hrs – 1200 hrs) may be drawn in the same TOD slot and also during Off-peak and Night off-peak TOD slots
· Evening peak TOD slot (1800 hrs – 2200 hrs) may be drawn in the same TOD slot and also during Off-peak and Night off-peak TOD slots”

Banking charges shall be adjusted in kind @ 2% of the energy banked.

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5.1.4
Technology Analysis
Risk Assessment from Solar/Wind Generation (1/2)
Most risks in Renewable (Solar/Wind) procurement can be addressed by ensuring dealings with credible and experienced players and with
careful drafting of contract
Risk Description Probability Impact Probable Mitigation Plan

• Securing Open Access etc.. approvals to be the

• Risk due to uncertainties in Tamil Nadu regulations responsibility of the developer
Construction Risk and delays in construction period beyond stipulated Medium Medium • Assurance from the developer to compensate for the
time frame leading to opportunity losses delay by paying the difference between GRID tariff and
RE tariff for the period of delay
• Contract with reputed player and verify the asset for
• Quality of generation depends upon quality of the
quality products being installed at the project site
Technology Risk modules/wind turbines, exceedance probability, Low Low
• Assurance from the seller through a minimum
invertor and supporting infra selection
guaranteed supply clause
• Factors such as solar radiation, wind flow, • Ensure site assessment for key parameters like wind
Climate/ seasonality, cloud cover in the region play a very speed, solar irradiation, cloud cover, etc..
Medium Low
Weather Risk important role in amount of units generated • Assurance from the seller through a minimum
throughout the project life cycle guaranteed supply clause
• Risk affecting the credibility of the project • Vendor assessment to ensure the seller has experience
developer, for example, risks related to with operational project
Vendor Risk Low Medium
management personnel, financial solidity and • Suitable clauses related to events of default and
technical ability to execute on plans termination payments to be incorporated in PPA
• Vendor assessment to ensure the seller has experience
• Risk of unscheduled plant closure/reduced
with operational project
Operational Risk generation due to the lack of resources, equipment Low Low
• No pass through of additional costs apart from the
damages, increase in operating cost
decided tariffs

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Risk Assessment from Solar/Wind Generation (2/2)
Most risks in Renewable (Solar/Wind) procurement can be addressed by ensuring dealings with credible and experienced
players and with careful drafting of contract

Risk Description Probability Impact Probable Mitigation Plan

• Risk of decrease in industrial tariffs offered by • Assessment of optimum capacity required to be tied-
the discoms, opportunity cost of tying up with a up
Market Risk Low Medium
source at cheaper tariffs such as exchange • Termination clauses in the PPA to be linked to discom
market etc.. tariffs

• Termination clauses in the PPA to be linked to net

• Risk of a change in policies that may affect net
applicable tariff to the offtaker. If the same increases
applicable tariffs, e.g., levy of O/A
over the then present discom charges, offtaker to
charges/losses, changes in levels of tax,
Regulatory Risk Medium High terminate without any payment
change in banking arrangement mechanism
• Vendor due diligence and ensure all related
• Risk of vendor not getting necessary approvals
agreements (like OA approvals, WBA, PPA, SHA) to
and agreements timely
be in place

• Careful drafting of contracts especially the exit clauses

• Risks associated managing multiple contracts,
- upholding the best interests of Lupin
Legal/ their clauses and alignment of the same with
Low Medium • Procure from single vendor, whether wind or solar, to
Contractual Risk the Shareholding agreement
minimize beneficiaries to contract and associated
• Long term commitment via contracts
complications

• Meeting proportionality test (matching equity

Group Captive • Procure from vendor which has set-up plant
with consumption) Medium Medium
mode Risk exclusively for Lupin
• Accounting risks

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5.2
Carbon Offsets
What is Carbon Offsetting ?
A carbon offset is a reduction in emissions of carbon dioxide made in order to compensate for emissions made
elsewhere.

“
• Carbon offsets are measurable, verifiable emission reductions from certified climate
action projects.

• These projects reduce, remove or avoid greenhouse gas (GHG) emissions and can also
bring a host of positive co-benefits, e.g., empowering communities, protecting
ecosystems, restoring forests or reducing reliance on fossil fuels
Companies and the investment community are
• They can be used to compensate for an organisation’s emissions by cancelling out increasingly focused on supporting the transition to a
emissions somewhere else
net zero economy and developing credible transition
• Projects must adhere to a rigorous set of criteria to pass verification by third-party plans. To achieve net zero, they will need to
agencies and a review by a panel of experts at leading carbon offset standards e.g., Verra decarbonize, and many will need to offset some
or Gold Standard emissions as part of the transition.”
• After an organization or an individual buys a carbon offset, it is permanently retired so it
can't be reused - Mark Carney
Task Force on Scaling
Voluntary Carbon Markets

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Carbon offset project types are categorized in key 8 project categories..
Project Category Project Type Project Category Project Type
Biogas Transportation - private (cars/trucks)
Biomass/biochar
Geothermal Transportation Transportation - public (bikes/public transit)
Renewable Large hydro Other - Transportation
Energy Run-of-river hydro
Landfill methane
Solar
Wind Waste Disposal Wastewater methane
Other - Renewable Energy Other - Waste Disposal
Energy efficiency - community-focused (targeting
individuals, communities, etc..) Nitric Acid
Energy Energy efficiency - industrial-focused (targeting
Efficiency/Fuel corporations) Ozone-depleting substances (Article 5)
Switching Fuel switching Chemical
Processes/ Ozone-depleting substances (US based)
Waste heat recovery Industrial
Other - Energy Efficiency/Fuel Switching Manufacturing Carbon capture and storage
Afforestation/reforestation Coal mine methane
Agro-forestry
Avoided conversion Other - Chemical Processes/Industrial Manufacturing
Improved forest management Fertilizer - N20
Forestry and REDD - Avoided planned deforestation
Land Use REDD - Avoided unplanned deforestation Grassland/rangeland management
Soil carbon Livestock methane
Urban forestry
Agriculture No-till/low-till agriculture
Wetland restoration/management
Other - Forestry and land use Rice cultivation/management
Clean cookstove distribution Sustainable agricultural land management
Household Water purification device distribution
Devices Other - Agriculture
Other - Household Devices

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5.2.1
Carbon credit mechanism
Types of carbon crediting mechanisms and market segments
Sources of Supply

Regional, national, and

Independent Crediting
International crediting mechanisms subnational crediting
mechanisms
mechanisms
e.g., California Compliance Offset
e.g. CDM, Art 6.4 e.g., VCS, Gold Standard
Program

International Domestic compliance Voluntary carbon

Results-based finance
compliance markets markets market
Market Segment

Credit purchases aimed at

Credit purchases aimed at Credit purchases as public Credit purchases aimed at
helping countries meet their
complying with obligations policy tool for incentivizing meeting voluntary targets or
NDCs and airlines comply
under carbon taxes, ETS mitigation commitments
with CORSIA

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Types of carbon credits
Certified emissions reduction (CER): Emission units (or credits) created through a
regulatory framework with the purpose of offsetting a project’s emissions.
Carbon Credits
CDM: Joint Implementation (JI):
Under the Clean Development Under Joint Implementation,
Mechanism, emission-reduction countries with commitments under
projects in developing countries can the Kyoto Protocol are eligible to
earn certified emission reduction transfer and/or acquire emission
Certified Emissions Voluntarily Emissions credits. These saleable credits can reduction units (ERUs) and use
Reduction (CER) Reduction (VER) be used by industrialized countries them to meet part of their emission
to meet a part of their emission reduction target.
reduction targets under the Kyoto
Protocol.
• Carbon credits can be traded on both private and public
markets. Current rules of trading allow the international
transfer of credits.
Voluntary emissions reduction (VER): A carbon offset that is exchanged in the
• The prices of credits are primarily driven by the levels over-the-counter or voluntary market for credits.
of supply and demand in the markets. Due to the
differences in the supply and demand in different
countries, the prices of the credits fluctuate.

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Types of Carbon Credits From 2015 –
2021 avoidance
have driven the
There are 2 major types of categories in which carbon credits can be voluntary carbon
market trend
divided:
Avoidance

From 2015 –
• These basically result in avoidance of CO2 generation. These include 2021 > 80% were
Renewable energy , Energy Efficiency, Avoided deforestation etc.. of avoidance type
• These credits play a key role in limiting the build-up of greenhouse gases
(GHGs) in the atmosphere by limiting or offsetting new emissions.
• Since 2015, they have accounted for more than 80% of the market and
are expected to continue representing around 65% of the market by 2030.

Removal
Removal market
gaining fast
• These are the once which remove CO2 from atmosphere. These include
momentum
Nature based solutions like forestation and some tech-based solutions like
BECCS , DAC.
• Removals directly lower the concentration of carbon in the atmosphere by
removing historical emissions.
• These credits have accounted for less than 20% of the market since 2015, Expected to reach
but are expected to grow to 35% by 2030 driven by maturing technologies 35 % of overall
and methods, improving affordability, and net-zero requirements market share

Ref – Shell BCG

Report
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Carbon credit markets are growing rapidly, led by voluntary market
activity
Voluntary Carbon Market Size by Project Category and average carbon
credits pricing, (2019 - 31 August 2021)

Volume (MTCO2e) Price per ton (USD)

7 140
• Demand has increased for all credit types, but especially Nature
6 120 Based Solutions and project with co-benefits aligned to Sustainable
Development Goals witnessed higher prices.
Price USD/tCO2e

MtCO2e demand
5 100

4 80 • Prices for voluntary carbon credits vary considerably according to

the project type, its age (vintage), the size of the transaction and
3 60
the standard (e.g., Verra, Gold Standard, CAR or ACR) to which it
2 40 is accredited.
1 20 • Prices can range from under $1/tCO2e for older projects with
0 0 fewer verifiable co-benefits, to over $11.6/tCO2e for projects with
unique features and specific co-benefits, such as biodiversity and
Agriculture
EE/Fuel switching

Transportation

Industrial Manufacturing
Renewable energy
Forestry and land use

Waste disposal

Household devices
support for indigenous people.
• The figure shows a summary of average prices in 2021 for credits
projects in Forestry and land use, renewable energy, energy
efficiency and other NBS/waste disposal, transportation and
household devices.

Source: Ecosystem Marketplace, accessed on 09 August 2022

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5.2.2
Process to get Carbon Credits
The voluntary carbon credit value chain participants characterized by
their role in the system..
Structure of Voluntary Carbon market

• Voluntary Carbon credit

Project design documentation markets are characteristics
by large numbers of buyers
Issuance and sellers.
Standards
Project developers Credits • Credits are administered by
(GS, VCS, etc..) Validation and schemes and are sold
Verification through market
intermediaries.
• Most credits are linked to
Market Specific supply projects.
Intermediaries Transaction
• Third party auditing provides
verification and validation.

Offsetting
End buyers/
Offsets
Reseller

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Verified Carbon Standard (VCS) – Registration process

Get your PD
Choose the VCS validated by Apply for
methodology for independent Implementation of verification
your carbon offset experts at the project approval with
project Control Union activities Verra

1 2 3 4 5 6 7 8
Lay out your plans Register your Get the amount of Carbon
for reducing validated emission reductions credits are
emissions in the carbon offset verified by independent issued by
project description project with experts at Control Verra and
Verra Union may be sold

Typical costs associated with the project registration process*

• Account opening fees (INR 1.5 lacs) • Validation (~7 lacs)

• Registration fees (INR 10 to 15 lacs) • Carbon issuance fees (may vary as per registry.
For VCS: INR 20 per VER)
• Verification of carbon reductions by project (INR 3
to 3.5 lacs) • Brokerage (if any) (on percentage basis)
*Costs presented are approximate, and indicative for VCS process, which may change as per time, project, and any other carbon markets (e.g., Gold Standard or CDM, etc..)

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PwC 75
How the buy & sell transactions takes place..

Key Stakeholders

Client Buyer
• The potential buyers are being identified at this stage.

01 Buyer Identification, Finalization

•
•
Depending on the indicative unit price (higher/lower), the buyer is finalised.
The contracting is of two types: forward contracting and spot contracting
& Contracting • The contracting is finalized by signing the ERPA (Emission Reduction Purchase
Agreement)

• The accumulated carbon credits from the seller’s registry account are transferred to
the buyer's registry account after signing the ERPA.
02 Transfer of Carbon Credits • The transfer timeline is ideally 24-48 hours from the time of signing ERP and the registry
account is updated after 48 hours.
• Once the credits are transferred, the buyer transfers the funds to the seller after
deducting the transaction charges.

• The fund transfer from the buyers account to seller's account ideally takes 7-10 working
03 Fund Transfer days.
• Once the carbon credits are transferred, the block of transferred credits are retired from
the registry

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5.3
Internal
Carbon Pricing
Role of ICP in Net Zero Transition
ICP’s role in Net Zero Strategy
Modelling Identifying Developing
emissions under mitigation

1
carbon offset Internal Carbon Price play an
different business opportunities and strategy and
growth scenarios assessing important role in execution
facilitating
technical, carbon market of net zero strategy
economic and transactions
regulatory Internal carbon pricing gives

2
feasibility
them an incentive to shift
investments to low-carbon
alternatives
Internal Carbon Pricing can

Estimating
GHG
Aligning
emission
reduction targets
Developing
marginal
abatement
Finalizing
implementation
3 become an integral part of
industry’s climate risk
mitigation strategy
with Science roadmaps, ICP can be used by

4
emissions curves and
using
Based Target
roadmap for
processes and companies to prepare for
globally
setting approach
Net Zero target
governance future policy regulations
accepted mechanisms restricting carbon emissions
achievement
standards

Net Zero Transformation

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PwC 78
Understanding Internal Carbon Pricing…

• Internal Carbon Pricing (ICP) allows companies to put a monetary value on

green house gases emissions within their own operations or supply chain
operations
• ICP is usually beyond regulatory requirements and is voluntary in nature
• ICP can take several forms for example companies can set a price per
metric ton of CO2e and apply to all its operations, Alternatively company can
set carbon budgets or emission target for each business unit and charge a
fee for exceeding the targets
• ICP can then be used to make investment decisions for various climate
actions and carbon mitigation technologies. These can also be used to
purchase carbon credits or fund carbon offset projects
• ICP allows companies to make informed decisions and help them
understand the financial implications of their GHG emissions
• ICP allows companies to manage their climate related risks, such as
regulatory changes, market fluctuations and reputational damage
• ICP showcases companies' commitment to sustainability and influence
positively their investors, customers and employees

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Types of Internal Carbon Pricing
The UN Economic and Social Commission for Asia and the Pacific (UNESCAP) outlines four
broad categories of ICP.

Shadow Pricing Implicit Pricing Internal Carbon Tax/ Fee Internal Trading
• Hypothetical Cost • An implicit carbon price is • An internal carbon tax/fee Mechanism
assigned to each ton of an ex-post measure is a fee per tonne of • In these different business
CO2 calculated based on the carbon dioxide (tCO2) units are put with a cap on
emissions abatement imposed on organization- their emissions, if the
• This is an estimate of
achieved by an existing wide emissions business units exceed the
future cost of emissions
project(s) and the cost emissions, they must buy
which may happen due to • This revenue stream which
associated with the same emission allowances from
policy and regulatory is outcome of emissions by
changes • This could either be from the organization fund other units
projects (EE, RE) future emission reduction • This is similar to emission
• This supports companies
completed by projects or it projects cap and trade system
in long term business
could be from cost of followed by several
planning and investment
offsets purchased by countries – like EU ETS,
strategies
companies California ETS etc..

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Recent Trends in ICP

Companies disclosing the risk of carbon

100.0%
pricing mechanisms that will impact their
direct operations or supply chain
1312 90.0%

80.0%
Of those 1,312 companies (55%) also
disclose they are currently subject to
727 carbon pricing regulation or expect to be
70.0%
within three years
60.0%
50.8%
351 Of those 727 companies (48%) are 50.0%
currently implementing an internal
price on carbon 40.0%

30.0%
19.3%
196 20.0% 15.0%
Additional companies (27%) plan to put an 8.6%
internal price on carbon within two years 10.0% 6.8%
2.0%
0.0%
Shadow Implicit Internal Offsets Other Internal
Price Price Fee Trading
Companies Evaluating / Considering Internal
Carbon Pricing Types of Internal Carbon Pricing adopted by
Companies
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Recent Trends in Internal Carbon Pricing…
Company Price in INR Price in $ Type of ICP Used
Sector wise adoption of ICP in India ACC 2545 33.1 Implicit price; shadow price
others Adani Green Energy 800 10.4 Shadow price
ITES Ambuja Cements 2246 29.2 Implicit price
Arvind Ltd 192.3 2.5 Shadow price
Cement
Creative Group of Industries private private private
Metals
Dalmia Bharat Ltd 846 11 Shadow price
Chemicals Dr. Reddy's Laboratories 937 12.2 Implicit price

Transportation equipment Godrej Agrovet 740 9.6 Shadow price

Godrej Consumer Products Limited 750 9.8 Shadow price
Food and Beverages
Godrej Industries 745 9.7 Shadow price
0% 5% 10% 15% 20% HCL Technologies 2464 32 Implicit price
Hero MotoCorp Ltd private private private
Hindustan Zinc 1451 18.86 Implicit price
Infosys Limited 1096 14.25 Implicit price
JSW Cement Limited 1566 20.36 Shadow price

Types of ICP adopted by companies Coverage of Emissions while JSW Energy 750 9.75 Shadow price

formulating ICP JSW Steel Ltd. 1500 19.5 Shadow price

Shadow Price Mahindra & Mahindra 1509 19.63 internal fee
Mahindra Sanyo Special Steel Pvt. Ltd 752 9.78 Implicit price
6% 3% Implicit Price Mindtree Ltd private private private
6% Oriental Aromatics Ltd private private private
Internal Fee
10% Shree Cement 3045 39.59 Shadow price

48% Tata Chemicals 1538 20 Shadow price

Implicit Price; Internal
Fee Tata Consultancy Services 1131 14.7 Implicit price; shadow price
Implicit Price; Shadow Tata Consumer Products Ltd 315 4.1 Implicit price; offsets
26% Price Tata Metallics Ltd 1154 15 Shadow price
Implicit Price; Offsets Tata Power CO 1180 15.34 internal fee
Scope 1 Scope 1&2 Scope 1,2&3 Tata Steel 97-2720 12.67-35.36 Implicit price; shadow price
Tech Mahindra 692 9 Implicit price; Internal fee
Ultratech Cement 750 9.75 Shadow price
Net Zero Strategy - Macrotech Developers Ltd. Wipro 3855 50 November 2023
Shadow price
PwC 82
Four Dimensions Approach to Internal Carbon Pricing
Height : Carbon Price
Level

Dimension ICP Parameter Best Practice to ICP Approach

Rise to a carbon price capable of changing

Height Price per ton of CO2
decisions in line with the ICP objectives

Coverage of GHG Grow to cover all GHG emissions hotspots in

Width Emissions the entire value chain that can be influenced

ICP involvement in
Become increasingly influential to have a
Depth company’s overall Time : Development
material impact on business decisions Journey
decision making

Be evaluated regularly to bring the

Development of above
Time company’s business strategy in line with a
3 dimensions over time
low-carbon economy
Width : GHG Emissions Depth : Business
Coverage Influence

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PwC 83
Factors impacting ICP calculation..
There are multiple factors which are considered while computing ICP for organization.

Social Cost of Carbon Energy Efficiency Projects

• The Social Cost of Carbon is an estimate of the • Cost of Carbon Abatement due to past energy
economic expenses or losses incurred when an extra efficiency projects
ton of carbon dioxide is released into the atmosphere • Complete lifecycle savings to be considered for the
• India has one of the highest social cost of carbon investments made
Energy
Team is high
Efficiency
performing
Projects
Advanced Technologies Past Renewable Energy Projects
• Future cost of advanced technologies like Hydrogen , • Cost of Carbon Abatement due to past Renewable
Carbon capture and storage, Fuel Cells, Energy Scope is Energy projects
Storage Benefits Internal Carbon realistic • Complete lifecycle savings to be considered for the
• Factoring this is important to ensure that ICP is are realised Pricing and both CAPEX and OPEX costs
compatible to tackle a sudden increase in costs due to managed
advanced technologies

Markets
Carbon RE Market Based Instruments
Carbon Offsets Offsets
based
• Purchasing Carbon Offsets from Voluntary Markets instruments • RE purchase from grid like GTAM, GDAM etc.
• Implementing Carbon offset projects – Afforestation, • Impact of purchasing REC’s, IRECs
cookstove projects, biogas projects etc.. Other Market Based Instruments
• ESCERTS
• Coal Cess (regulatory requirements)

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Thank you

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