Is India taking the Climate Crisis seriously?
They say what is good for the business, is not good for the climate. But look where it has led us. India, today, faces the threat of increase in temperature by 1–2 degrees annually. This threat coupled with sustaining its rapid economic growth would be a challenge for India.
India’s CO2 emissions, measured per person, are very low — at only 1.8 tonnes — compared to the world average of 4.2 tonnes. But any number multiplied by India’s population makes that number bigger, right? This makes India the world’s third largest emitter of CO2 after China and the United States.
And these emissions have been growing over the past decade at 6% annually.
Though India is determined that its per capita emissions will at no point exceed that of developed countries, India is embarking on one of the fastest rural-to-urban transitions in human history, with 200 million more city dwellers expected by 2030, all using new buildings, roads and cars.
And to meet this requirement, India has a vast amount of energy-using infrastructure yet to be put in place. Whether India uses coal and oil, or clean green energy to put this infrastructure in place is going to help the world in a major way to combat climate change.
If this is so important for India what has India done so far to combat climate change?
Well, India did submit a plan in 2015 under the Paris Agreement and has set targets that will have to be achieved by 2030. India set three major goals to be achieved between 2020 and 2030 — increase the share of non-fossil fuels, to reduce the CO2 emission intensity of the economy and additional forest cover.
And to meet these target India would need to invest around $170 billion every year.
How much has been invested so far you ask?
A little over $19 billion every year, on an average, across sectors, majority of which came from the Private sector. And it’s important that Private sector contributes to this change. After all, they are responsible for more than 30% of India’s total greenhouse gas emissions.
Private sector also faces a commercial risk. According to a report, apart from increased heat waves and floods, India could have an impact up to 4.5% of its GDP annually at risk because of climate change. So, it’s not just for being socially responsible that they should be doing it for. A commitment to climate change would also help them mitigate this commercial risk.
And till date they’ve done a pretty good job. At present, India is the fifth country and the first developing economy with the maximum number of companies committing to Science Based Targets to meet the goal of Paris climate change agreement.
It is said that even if preventive measures are taken along the lines of those recommended by the Paris climate change agreement, India’s average annual temperatures are expected to rise by 1–2 degrees by 2050. Still, India’s corporate sector is playing a crucial role in the country’s commitment to reduce its emission intensity, especially after they joined hands with the Government to combat climate change.
Current government expenditure in India on adaptation to climate variability exceeds 2.6% of the GDP. Majority of which has been targeted towards the main source for greenhouse gas emission: coal.
India has the world’s third largest coal reserves, and its power generation is primarily dependent on burning coal. But the coal-based thermal power plants in India are the least efficient and therefore the most polluting in the world.
Since the current Government expenditure falls short, the Government has requested the industry leaders from steel, cement, power and pharmaceutical sectors to work with the government and to provide them with their own internal road maps, goals, targets, achievements on the climate change front.
From 2015 to 2018, energy investments in India grew at the fastest rate in the world. Renewable energy spending, for the first time, exceeded the investments in fossil-fuel based power generation projects.
The Indian government has very strong goals for increasing renewables capacity and has set a target of 175,000 megawatts renewable energy by 2022. At present, the total installed capacity of renewable energy across India is 88,793.43 megawatts, which is much lesser compared to the existing infrastructure in China or the US.
The Government has launched a National Solar Mission to increase the share of solar energy in the total energy mix, a National Mission for Green India to increase the forest cover.
The Carbon Tax on coal has been more than quadrupled.
Government has ensured that there are significant drops in the price of renewable energy in the last few years, with new record-low prices set this year for solar and wind. India is the cheapest Solar energy producer in the world. India is the only country where the cost of setting up solar PV projects between 2010 and 2018 have dropped dramatically by 80% compared to countries like China, France, Germany, India, Italy, Japan, the UK and the US.
From 2311 MW of wind power capacity in 2014–15, Government has increased the power capacity to 37670 MW of wind power energy till 2019–20. FDI in the renewable energy has gone up from $783 million in 2016–17 to $1.2 billion in 2017–18 and then to $1.4 billion in 2018–19.
The Government has Increased taxes on petrol on diesel as a step towards moving from carbon subsidization regime to carbon taxation. These increased taxes are expected to reduce India’s annual emission by 0.6%.
With India being a growing economy, power consumption is only going to rise, so adoption of alternate forms of energy is the ideal way forward to manage balance between economic growth and sustainable environment.
Another cause of climate change are vehicles, which are responsible for more than 27% of the pollution in India.
According to research by IQ AirVisual — of the world’s most 30 polluted cities, 22 are in India. Today, pollution levels in Europe and the US are significantly lower than the extreme readings that India has experienced in the past few years.
The government in the latest budget tried to evoke a strong sentiment for electric mobility. But India’s efforts to promote electric vehicles have been stymied by a lack of investment in manufacturing and infrastructure such as charging stations. Just 3,400 electric cars were sold in the world’s second-most populous nation during the last business year, compared to sales of 1.7 million conventional passenger cars.
Government then decided to offer $4.6 billion in incentives to companies setting up advanced battery manufacturing facilities in India.
The Indian Government has also started to reach out to other countries like Argentina, Bolivia and Chile to secure lithium cell mines Acquiring these mines would give India an access to a strategic mineral, which then can be used to manufacture batteries for electric vehicles locally. Reduced registration tax, exemption from road tolls are other incentives which are being offered.
Well established corporates have also invested heavily in this space as transformation towards electric will be far more sustainable.
And transition to Electric Vehicle would not only help combat climate change but would also slash India’s oil import bills by as much as $40 billion by 2030!
Boards of top companies in India have now set up committees to address climate risk. Many organizations have come together to co-operate on climate solutions.
Tata Steel, for example, has developed and designed a new technology called ‘HIsarna’, which is estimated to curb down at least 20% of CO2 emissions during steel production. Larsen & Toubro Infotech campuses in Powai and Bengaluru have entered into Power Purchase Agreements with renewable energy agencies for sourcing solar energy, reducing its per capita energy consumption.
Cement industry is clearly ahead of the pack. Emission intensity of the cement sector in India has decreased by about 22% since 2017 owing to the increase in the number of emission reduction initiatives taken over the years by Companies like Ambuja Cement, Dalmia Bharat and Shree Cement. If the cement industry were a country, it would be the third largest emitter in the world.
India now accounts for more than 16% of Clean Development Mechanism projects registered worldwide, next only to China.
After decades of concentrating on economic development, the Indian Government and Indian industries now understand the dangers posed to its own future due to climate change.
Indian Companies have been proactive when it comes down to emission reductions. Government, too, has supported them in multiple ways like incentivizing institutional investors, both foreign and domestic, incentivizing companies to set up the right infrastructure, reduction in tariffs on electricity sourced from renewable energy or implementing strategies that promote development while also serving specific climate change objectives.
Though we still have a lot of catching up to do to achieve our clean energy targets, I can say that India is taking the Climate Crisis seriously.
About the author: This post is written by CA Porus Navale and Rajendra Varma.
Findustry Insights
