India’s major cement companies are accelerating their transition towards renewable and green power, with green power capacity expected to rise by nearly 50% to 5.8–6.0 GW by March 2028, from around 4.0 GW as of March 2026, according to rating agency ICRA.
The capacity expansion is expected to be supported by investments of around Rs. 12,000–13,000 crore over the next two years. ICRA estimates that the additional green power capacity could generate annual savings of Rs. 6,200–6,700 crore, translating into an attractive payback period of around 1.8–2.2 years.
Green Power Emerges as Key Cement Decarbonisation Lever
The cement industry remains one of the most emission-intensive industrial sectors, prompting major producers to establish net-zero emission roadmaps over the next 15–20 years.
According to ICRA, the calcination process contributes around 57–60% of total cement-sector emissions, while fuel combustion accounts for 27–30% and electricity consumption contributes 10–13%. This makes a multi-pronged approach essential for reducing the industry’s carbon footprint.
Cement manufacturers are therefore increasing their adoption of green power, blended cement, alternative fuels and clinker-efficiency improvements. Beyond sustainability targets, the shift towards green energy is also being driven by the need to reduce exposure to fuel-price volatility and improve cost competitiveness.
“The highly energy-intensive nature of cement manufacturing, coupled with persistent fuel price volatility and supply-side risks, is driving the sector’s transition towards green power,” said Anupama Reddy, Vice President and Group Head, Corporate Ratings, ICRA.
She added that green energy is among the most commercially attractive decarbonisation pathways for cement producers, offering both emissions reductions and cost savings.
25% Green Power Replacement Could Reduce Costs
ICRA estimates that every 5% increase in green power replacement can reduce power and fuel costs by Rs. 15–16 per tonne.
At a 25% green power replacement level, cement manufacturers could potentially achieve cost savings of Rs. 75–80 per tonne, supporting an estimated 140–160 basis point expansion in operating margins.
ICRA’s analysis covers seven major cement companies — UltraTech Cement, Shree Cement, ACC, Ambuja Cements, Birla Corporation, Dalmia Bharat and The Ramco Cements. Together, these companies accounted for around 65% of India’s installed cement capacity as of March 2026.
CCUS Adoption Likely to Remain Gradual
The industry is also evaluating advanced decarbonisation technologies, including carbon capture, utilisation and storage (CCUS).
The Government of India has proposed an outlay of Rs. 20,000 crore over five years to support CCUS deployment across key sectors, including cement.
However, ICRA expects large-scale commercial adoption of CCUS to remain gradual because of high implementation costs, significant energy requirements for carbon capture and processing, and limited carbon dioxide transportation and storage infrastructure.
Alternative Fuels Offer Further Decarbonisation Potential
Blended cement is expected to remain an important emissions-reduction lever, although its adoption is likely to increase gradually because of application-specific requirements and customer preferences.
ICRA also highlighted the significant potential to increase the industry’s use of alternative fuels. India’s thermal substitution rate (TSR) of around 6% remains well below global benchmarks.
Major cement companies are targeting TSR levels of 10–15% over the next three to five years, which could help reduce emissions while improving profitability through greater use of biomass, municipal waste and industrial waste.
Green Financing to Support Energy Transition
Green financing is also emerging as an important enabler of the cement industry’s decarbonisation investments.
Although adoption remains at an early stage in India, some leading cement manufacturers have accessed sustainability-linked bonds and loans to finance renewable power projects, waste heat recovery systems and other sustainability-focused initiatives.
With significant capital expenditure planned for energy-transition projects, ICRA expects green financing to become an increasingly important funding avenue for cement companies in the coming years.
