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“Appropriate reward for efficient firms will accelerate the move towards Sustainable Manufacturing”
In conversation with Sustainability Outlook, Mr.Mahendra Singhi, Group CEO, Dalmia Cement Bharat Limited, shares his thoughts on the current progress and outlook of the Indian cement sector towards resource sustainability.
1. What is your view on the private sector action in tackling climate change, especially in light of the recently signed Paris agreement?
Indian companies are not fully aware about the 17 Sustainable Development Goals (SDGs). They have been adopted by 119 countries, and so I feel that it is our duty to adopt those goals and to work towards fulfilling them. Many companies are working on them, but indirectly. Indian businesses should make the goals integral to their work. If we work in a structured manner, our efforts will be well respected globally.
2. What is your outlook for the Indian cement sector with respect to resource sustainability?
I think broadly most of the companies in this sector are working towards resource sustainability and specifically energy efficiency. A good part in the cement sector is that there are various platforms by means of which companies are able to share and learn from each other. One such forum is Cement Sustainability Initiative (CSI). I am one of the co-chairs of CSI in India. Best practices from Indian and global cement companies are shared at this forum. It looks like India would continue its leadership in sustainability and energy efficiency practices from the global perspective.
3. Could you elaborate on some of the key interventions adopted by Dalmia Cements to ensure sustainable manufacturing?
We use the waste products of other industries like sludge from distilleries, fly ash from power plants, red mud from aluminium manufacturing and waste materials from automobile and pharmaceutical industries.
In the past we have been setting voluntary goals on energy efficiency, use of waste materials as a fuel source, carbon footprints. Our group has one of the lowest carbon footprints when compared to global cement manufacturing industries. More than 50% of our raw materials have been substituted by lead and fly ash. Similarly on alternate fuel, we have now broadly moved away from fossil fuels. We use petroleum coke instead of coal which is a waste product from refineries. We have made changes in the work plant and have trained our staff, so that our plants energy efficient in term of heat consumption and power consumption. This reduces the CO2 emissions as well as the cost. We work on consuming less minerals and producing more output.
One of our key goals is to become water positive by 2017.
By water positive we mean that we consume lesser water than what we can harvest. Two of our plants have already become water positive and by 2017 we expect that all our plants would be water positive. By being water positive, we are also able to serve the society. We have adopted the 17 Sustainable Development Goals (SDGs) and will be reporting on them from the next year.
4. Are there any specific barriers which need to be addressed for the sector as a whole in order to accelerate the move towards sustainable manufacturing?
In India, we have not been able to utilise various types of wastes like the developed countries. One of the major reasons is technology. The other reason is that the manufacturers in the developed world aren’t required to pay for the waste that they make use of as fuel. Whereas in India, the consumers, i.e cement companies have to pay to utilize the waste materials. Therefore, the reason it has not picked up considerably is that we have to buy fly ash or some other waste material instead of getting it for free. In countries like Switzerland, Spain and Sweden almost 60-80% alternate fuel being used. This is where we can improve upon.
Also the right kind of finance is a problem. Waste heat recovery or power generation facility from the waste hot gases of the cement plant is very capital intensive. Only a few Indian companies have been able to make use of this technology. If you put up a 1MW waste heat recovery based power plant then it may need Rs 11 -12 crores per MW instead of say Rs 4.5-5 crore per MW of thermal power plant. Moreover, concessional finance is also required for changing over from inefficient to efficient equipment like motors or gear boxes or converting mechanical equipment to electric operated equipment.
5. What is likely to continue to push the sector towards sustainable manufacturing?
Mechanisms wherein companies with good governance practices and sustainability ratings are rewarded by the equity investors as well as bankers, seems like a good step forward.
One of the key drivers would be to appropriately reward the efficient cement companies. PAT scheme is there but it doesn't look like it may be a big motivator. So far no concrete benefit is there for companies who have worked towards being more efficient - reducing their power or heat consumption. Second, is when it is voluntary to pay for the waste being used as fuel, alternate fuel usage would go up. Third, if investors start rewarding the sustainable cement companies. There are countries that have the green index in which companies are identified if they are more sustainable resulting in a higher weight-age.
Over the last 36 years, Mr. Singhi has played a prominent role in the growth and development of the country’s Cement sector. He is on the Board of Governors of the National Council for Cement & Building Materials, besides being a member of the Central Expert Technical Committee on the Cement Sector of the Bureau of Energy Efficiency.