India’s next industrial shift: electrons over molecules

Industrial competitiveness is increasingly determined by access to clean, reliable electricity (electrons) rather than direct combustion of fuels (molecules).

Nations that shift faster from molecules to electrons gain:

• Export competitiveness

• Supply-chain advantage

• Capital inflows and jobs

• Lower emissions and fuel-price resilience

Fuels combusted directly for heat or motion

Examples:

• Coal

• Oil

• Gas

• LPG

• Biofuels

Used in:

• Engines

• Boilers

• Furnaces

Limitations:

• Low efficiency

• High emissions

• Exposure to global fuel price shocks

Energy delivered through the electric grid

Increasingly sourced from renewables

Advantages:

• Higher automation

• Better process control

• Easier decarbonisation

• Enables digitalisation of industry

Electric motors:

• Convert over 90% of input energy into useful work

Internal combustion engines:

• Convert less than 35%

Implication:

• Even small increases in electrification displace disproportionately large amounts of fossil fuel

• Electrification is more impactful than raw energy substitution suggests

Nearly 50% of industrial energy comes from electricity (2024)

Also has the highest share of green electrons

Actively redesigning industry to be grid-powered

Industrial electrification: ~25%

Green electrons: ~7%

Remains molecule-dominated

Vulnerable to fuel price volatility and carbon-based trade barriers

Industrial electrification: ~12%

Lower than China, higher quality gap in green electricity

China, U.S., EU:

• Around one-third electrification

Key difference:

Not just expanding renewables, but restructuring industrial energy use

Ensures:

• Reliable power for factories

• Rising share of clean electricity

Outcome:

• Stronger export competitiveness in markets scrutinising carbon intensity

• Greater resilience to energy shocks

Build the grid first, then redesign industry around electricity

China’s shift is policy-driven and investment-led, not accidental

Power generation capacity

Ultra-high-voltage (UHV) transmission

Flexible substations

Grid-scale energy storage

Structural tilt toward electrons across industrial sectors

Reliable, scalable, and increasingly green power for factories

Electric Arc Furnace (EAF) steel production:

• 2010: ~44 million tonnes

• 2024: ~106 million tonnes

Share of total steel output: ~15%

Drivers:

• Scrap recycling policies

• Preferential electricity tariffs

Significance:

• Lower emissions

• Easier electrification and decarbonisation

Electrification achieved in:

• Grinding mills

• Material handling systems

Adoption of:

• Digital process controls

Waste Heat Recovery (WHR):

• Contribution: ~30–35 kWh per tonne of cement

Limitation:

• Calcination emissions unavoidable

Policy response:

• Carbon Capture, Utilisation and Storage (CCUS) pilots

Grid capacity doubled in the last decade

Global leader in annual solar power additions

Industrial electricity share: ~25%

Green electrons in final energy: ~7–8%

Current EAF share: ~30%

Comparison:

• United States: ~70%

Required actions:

• Improve scrap collection and recycling

• Standardisation of scrap

• Scrap trading platforms

Policy push:

• Renewable-linked EAF incentives

Strategic context:

• EU Carbon Border Adjustment Mechanism (CBAM) targeting steel exports

Immediate focus:

• Electrified kiln pilots

• Large-scale waste heat recovery

Medium-term:

• CCUS hubs

Target:

• 20% reduction in molecule use per tonne this decade

Present situation:

• Dependence on coal boilers and diesel gensets

Transition requirements:

• Concessional finance for:

  • Electric boilers

  • Induction furnaces

• Pooled renewable power purchase agreements (PPAs)

• Technical and capacity-building support

Must be integrated into:

• New industrial clusters

Benefits:

• Reduced power wastage

• Demand-response capability

• Auditable carbon data demanded by global buyers

Manufacturing advantage now depends on:

• Extent of electrification

• Carbon intensity of electricity used

China: ~31%

United States: ~32%

European Union: ~34%

China:

• Nearly 50% of industrial energy electrified

• Higher share of green electrons than peers

Strategy:

• Deliberate channelling of electricity into manufacturing

Outcome:

• Durable manufacturing competitiveness

• Advantage in carbon-conscious global markets

Exposure to:

• Carbon Border Adjustment Mechanism (CBAM) penalties

• Loss of export markets

Continued dependence on:

• Fossil-fuel-based industrial processes

• Imported energy

Rapid scaling of green electrons can:

• Strengthen export competitiveness

• Attract global capital

• Integrate India into low-carbon supply chains

From:

• Megawatts (MW) of renewable capacity added

To:

• Megawatt-hours (MWh) of clean electricity actually used by industry

India’s EAF share (~30%) is lower than the U.S., but higher than China’s share.

Scrap systems are critical to expanding EAF production.

The phrase “green electrons versus grey electrons” has appeared in recent discussions on industrial competitiveness, decarbonisation, and export-linked climate policies.

It emphasises that:

• Mere electrification of industry is insufficient.

• What matters is the carbon intensity of electricity used.

Green electrons:

• Electricity generated from renewable or low-carbon sources (solar, wind, hydro, nuclear).

Grey electrons:

• Electricity generated from fossil fuels (coal, oil, gas).