Sustainable Development
INTRODUCTION
Sustainable
Development as defined by the Brundtland Commission in 1987 ‘is
development that meets the needs of the present without compromising the
ability of future generations to meet their own needs’.
This implies that economic growth and development have to be guided by the
compulsion of sustainability, because none of us has the luxury, any longer, of
ignoring the economic as well as the environmental threat, that a
fast-deteriorating ecosystem poses to our fragile planet. None of us is immune
to the reality of climate change, ecological degradation, depletion of the
ozone layer and contamination of our freshwater.
SUSTAINABLE
ECONOMIC GROWTH
Environment is
a public good that is rival and non-excludable. It is not owned by any one
individual, and one person’s consumption affects its quality available for
others. Several economic activities generate negative externalities through the
environment. Pricing natural resources properly, making pollution more costly
and removing fossil fuel subsidies should be good for preservation of
environment, and for
sustaining growth in the long run.
Better
regulation can help protect human health and environment, support green
technologies, and boost green private investment and jobs. This section first makes
a business case for sustainable development, and then deals with financial and
non-monetary incentives.
A
Business Model for Sustainable Development
The World
Business Council for Sustainable Development (WBCSD) has defined eco-efficiency
as follows:
‘Eco-efficiency is
achieved by the delivery of competitively priced goods and services that
satisfy human needs and bring quality of life, while progressively reducing
ecological impacts and resource intensity throughout the life-cycle, to a level
at least in line with the earth’s carrying capacity.’
Similar to the
concept of eco-efficiency, but so far less explored in corporate sustainability
is the concept of socio-efficiency, that is, the relation between a firm’s
value added and its social impact. While it can be assumed that corporate
impact on environment is usually
negative, this may not be true for the social impact. Depending on the type of
socio-efficiency, one can either try to minimize the negative social impact, or
maximize the positive social impact while pursuing the value-added activity.
Both eco-efficiency and socio-efficiency promote economic sustainability of the
businesses in the long run.
Financial
Incentives
1.Environmental
Taxes
Coal Cess is a
good example of environment tax imposed by Government of India in recent times,
whose proceeds are channelled to the National Clean Energy Fund. Some benefits
of environment taxation are enumerated below:
• They provide
incentives for measures that protect the environment, and deter actions that
lead to environmental damage.
• Economic
instruments such as taxes can enable environmental goals to be achieved at the
lowest cost, and in the most efficient way.
• By
internalizing environmental costs into prices, they help signal the structural
economic changes needed to move to a more sustainable economy.
• They can
encourage innovation and development of new technology.
• The revenue
raised by environmental taxes can be used to reduce the level of other taxes.
This could help reduce distortions, while raising the efficiency with which
resources are used in the economy.
2.Subsidies
–disel
3.Funds and
Technology Transfers
Compensatory
Afforestation Fund is an innovative mechanism for attracting additional
resources to the forestry sector. Money is collected for compensatory afforestation
from user agencies in lieu of the land granted for non-forestry purpose,
presently at the rate of `0.8 million per hectare.
Another fund,
the National Gene Fund, has been established, which will be used to build
capacity at Panchayat level for in situ conservation of genetic diversity of
indigenous crop varieties. The Twelfth Plan should facilitate such initiatives.
4.Certificates
and Obligations
4.15. The
mounting pressure on conventional energy sources has made energy conservation a
focus area for the Government. The Perform, Achieve and Trade (PAT) scheme is
an example of a certificate based trading scheme promoting energy efficiency.
Similarly,
Renewable Energy Certificate (REC) mechanism is a market-based instrument
introduced to promote renewable energy, and facilitate renewable purchase
obligations, which legally mandate a percentage of electricity to be procured
by distribution companies from renewable energy sources.
REC mechanism aims
to address the mismatch between availability of renewable energy resources in a
State and the requirement of the obligated entities to meet their renewable
purchase obligations.
Non-monetary
Incentives
Non-monetary
incentives are policy instruments that typically do not have a monetary value, but
definitely have a financial impact that promotes sustainability. These
incentives can be used as a bargaining tool by the Government to encourage
conservation of resources in
an economy. Activities such as those encouraging judicious use of water,
planting trees, car pooling and avoiding use of plastic bags can be rewarded so
that it encourages the practice, and acts as an example for others. Through the
initiation of innovative policies and awards, the Government can provide
recognition, which will encourage sustainable development amongst the citizens
and the firms.
Setting
an Agenda for Sustainable Development
A number of
national strategies and policies, which inculcate the principle of
sustainability, have already been put into place. The National Environmental
Policy (NEP), 2006 articulates that only such development is sustainable which
respects ecological constraints and the imperatives of social justice.
The National Agricultural Policy (NAP) focuses
on sustainable development of agriculture, by promoting technically sound,
economically viable, environmentally non-degrading and socially acceptable use
of the country’s natural resources.
The National
Electricity Policy (NEP) underscores the use of renewable sources of energy, as
does the Integrated Energy Policy (IEP) of 2010. The National Urban Sanitation
Policy, 2008 seeks to generate awareness, eliminate open defecation, promote integrated
citywide sanitation, safe disposal and efficient operation of all sanitary
installations.
However, we
need to tackle upfront the looming water crisis, made worse by the supply of
free water and electricity; and the health and environmental hazards posed by
excessive use of very cheap nitrogenous fertiliser.
Some
important perspectives for achieving sustainable development in our country are
listed below:
Greenhouse Gas
Emissions
It is estimated that India’s per capita
emission in 2031 will still be lower than the global per capita emission in
2005 (in 2031, India’s per capita GHG
emissions will be under 4 tonnes of Carbon Dioxide equivalent (CO2eq.) which is
lower than the global per capita emission of 4.22 tonnes of CO2eq. in 2005).
Even then India has taken upon itself the voluntary target of reducing the emission
intensity of its GDP by 20–25 per cent, over the 2005 levels, by 2020.
Sustainable
Agriculture Development
The major thrust of the agricultural
development programmes is on improving the efficiency of use of scarce natural
resources, namely, land, water and energy. This can be achieved through
improved productivity, which in turn will improve the welfare of farmers and agricultural labour,
and help eradicate rural poverty. Conservation of land resources can promote a
sound land use, matching the land capabilities
with development alternatives. Pricing water and electricity appropriately will
help recharge the depleting aquifers. Shifting urea to a nutrientbased subsidy
regime is also the need of the hour, which cannot be neglected any longer.
Industrial
Development and Urbanisation
Industry plays a critical role in technology innovations,
which are crucial for economic and social
development of the country. It is also important to facilitate diffusion and
transfer of environmentally sound technologies and management techniques, which
are a key element of any sustainable development strategy.
A major environmental concern in urbanizing India
relates to high levels of water pollution due to poor waste disposal,
inadequate sewerage and drainage, and improper disposal of industrial
effluents. The dumping of solid waste in low-lying areas contributes to both land
and groundwater pollution. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM)
needs a more focused approach over the Twelfth Plan period so that we resolve
these issues at the earliest.
Eco-Industrial
Hubs
An eco-industrial park (EIP) or estate is a
community of manufacturing and service businesses located together on a common
property. Member businesses seek enhanced environmental, economic and social
performance through collaboration in managing environmental and resource
issues. By working together, the community of businesses seeks a collective
benefit that is greater than the sum of individual benefits each company would
realise by only optimizing its individual performance.
The goal of an
EIP is to improve the economic performance of the participating companies while
minimizing their environmental impacts. Components of this approach include
green design of the park infrastructure (new or retrofitted); cleaner production;
prevention of pollution; energy efficiency and inter-company partnering. An EIP
also seeks benefits for neighbouring communities to assure the net impact of
its development is positive. In particular,
we should consider converting our Special Economic Zones (SEZ) and townships
along the
Mumbai–Delhi Industrial Corridor into Ecoindustrial hubs as outlined above.
Sustainable
Management of Himalayan Ecosystem and Western Ghats
The Hill Area Development Programme (HADP) and
the Western Ghats Development Programme (WGDP) need to be continued in the Twelfth Plan
with renewed vigour so that natural resources of these fragile areas can be
preserved and used in a more sustainable manner. These programmes also need to
be continued because most of the hill areas lack infrastructure, particularly
roads, power, educational institutions and health care centres. These areas
deserve high priority under the flagship programmes, particularly Sarva Shiksha Abhiyan (SSA)
and the National Health Mission (NHM). It has also been observed that many
nationwide programmes are not suitable for hilly areas, for example, wages
should be higher than the wages prescribed under wage employment programmes.
This also holds true for the norms set out for some other programmes, as
settlements are often small hamlets, which do not qualify for coverage or are
too expensive to cover. Local solutions and people’s participation in
decision-making need to be encouraged. The ecological and biodiversity issues
should be dealt with on high priority. The programme should therefore have a
twofold objective of preserving ecological balance and
creating sustainable livelihood opportunities for the local communities.
Further, most of these areas lack political power and consequently adequate
funding. The highly fragile and backward pockets of the Western Ghats should be
allocated more funds by the respective State Governments.
Coastal Zone
Management
The Coastal Regulation Zone notification regulates
activities based on vulnerability of coastal areas to human activity. Coastal
areas are currently classified into four categories (CZ 1 to 4) with different levels
of permissivity for development activities.
Category 1
includes ecologically sensitive areas, category 4 includes islands, while
categories 2 and 3 permit construction activities based on vulnerability.
The Swaminathan
Committee has recommended that local circumstances and vulnerabilities should
be the basis of coastal zone management and regulations. For this purpose,
scientific and local information should be used in preparation of environmental plans for
coastal areas. Conservation of life forms (and their habitats such as nesting/
spawning sites), and integration of their environment with human well-being is
important. Participation of civil society and local fishing/coastal communities
in the coastal zone management committees should be ensured for building a
better consensus for coastal zone environment regulation issues.
Public Participation
for Sustainable Development
The engagement of multi-stakeholder platforms
such as Green Rating for Integrated Habitat Assessment (GRIHA), Joint Forest
Management (JFM), women empowerment under Integrated Infrastructure Development
(IID), National Knowledge Network (NKN) and Waste Minimization Circles (WMC)
have led to innovations in the areas of poverty eradication, green city
development initiatives, entrepreneurship development, empowerment of women and
management of forest and water resources.
Common-pool natural
resources must be managed rationally to improve availability and to ensure
equity in access and benefit-sharing. At the local level, strengthening democratic
institutions will lead to better and more sustained management of natural
resources.
Biodiversity
and ecosystem services are freely available public goods and all of humankind,
particularly the poor, depend on them for their livelihood.
Environmental
education and awareness programmes can be used to influence economic behaviour
and encourage the formation of voluntary agreements between firms and local
authorities/ communities. Public disclosure of information on polluting
activities of industries can promote environmental/ green labelling of
products, which can create pressure in the market to manufacture environment-
friendly
products. The GoI launched the eco-labelling scheme known as Ecomark in 1991
for easy identification of environment-friendly products. The Ecomark label is
awarded to consumer goods which meet the specified environmental criteria and
the quality requirements of Indian Standards.
LOW
CARBON STRATEGIES FOR INCLUSIVE GROWTH
The
Expert Group has identified twelve focus areas for the Twelfth Plan:
Box
4.1
Twelve
Focus Areas for the Twelfth Plan
1. Advanced
Coal Technologies
2.
National Wind Energy Mission
3.
National Solar Mission
4.
Technology Improvement in Iron and Steel Industry
5.
Technology Improvement in Cement Industry
6.
Energy Efficiency Programmes in the Industry
7.
Vehicle Fuel Efficiency Programme
8.
Improving the Efficiency of Freight Transport
9.
Better Urban Public and Non-motorized Transport
10.
Lighting, Labelling and Super-efficient Equipment Programme
11.
Faster Adoption of Green Building Codes
12.
Improving the Stock of Forest and Tree Cover Co-benefits
Framework
The focus areas
identified by the Expert Group are discussed sector-wise below:
Power
1.Advanced
Coal Technologies
It has already been announced that 50 per cent
of the Twelfth Plan target and the coal-based capacity addition in the
Thirteenth Plan would be through super-critical units, which reduce the use of coal
per unit of electricity produced. Super-critical (SC) power plants, which
operate at steam conditions 560o C/250 bars, can achieve a heat rate of 2235
kCal/kWh as against a heat rate of 2450 kCal/ kWh for sub-critical power
plants. The specific CO2 emission for super-critical plants is 0.83 kg/kWh as against
0.93 kg/kWh for sub-critical plants. Supercritical technology is
now mature and is only marginally more expensive than sub-critical power plants.
Determined efforts are needed to achieve these results,
and prioritisation of coal linkages will be necessary to incentivise adoption
of super-critical technology.
t is also
necessary to invest in research and development of ultra-supercritical (USC)
units. These operate at USC steam conditions (620° C/300
bars) and can achieve a much lower heat rate of 1986 kCal/kWh, while the
specific CO2 emissions are only 0.74 kg/kWh. This technology also requires the
development of special materials that can withstand high temperatures and
pressures.
Coal
gasification provides opportunities for higher efficiency. However, Indian
coal has very high ash content and initial results suggest that efficiency gain
over sub-critical units is only marginal. Underground coal gasification is an
important technology since it enables utilisation of deep coal deposits, which
cannot be mined using conventional means or because they are located in
environmentally fragile regions. It
also allows the possibility of in situ carbon capture. Given India’s coal
shortage, there should be greater research in this technology, including execution
of a few pilot projects.
Another
potentially promising technology is coal bed methane and it may be desirable to
undertake some pilot action in this regard.
Wind
Power
Recent technological innovations, including raising
the height of the tower, could make wind a major renewable source of power
generation for India and we could safely target a wind capacity addition of
30000 MW by 2020. However, wind potential is unevenly distributed across the
country; only Karnataka, Tamil Nadu, Andhra Pradesh, Maharashtra and Gujarat
have significant potential. Therefore, realisation of wind potential requires
careful regional level planning and coordination.
Wind power has significant seasonal and even intra-day
variations. Therefore, setting targets for wind power capacity addition,
without making a careful assessment of the capacity of the regional grid to
balance its intermittency with alternative sources, may lead to a situation,
where either the wind generation cannot be utilised, or when the wind suddenly dies
down, the loss of generation could impact grid stability and operation. Wind
capacity addition needs to be complemented by other energy sources, which have
a quick ramp-up time. There are several possible options to handle this
intermittency—pumped storage hydro, open-cycle gas turbines, compressed air and high
power density batteries. Till recently, these were not considered necessary
since total wind capacity was only about 13000 MW. However, if wind power has
to reach 100000 MW and more, the balancing issues will be critical. These
variations are a result of technical factors associated with the wind resource,
as well as non-technical factors including land policy among others. It will
become increasingly necessary to
address these factors, if the resource potential of wind energy is to be
realised.
To summarise,
achieving ambitious wind generation targets requires careful coordination
between multiple Central and State agencies, particularly transmission and
distribution utilities, financial institutions and so on. We need to set up a
National Wind Energy Mission, similar to the National Solar Mission for effective
formulation and implementation of policies both at the National and State
levels.
The objectives
of the Mission should also include, but not be limited to the following:
• Incentivising
the industry to invest in indigenous design and manufacture of turbines suited
for India’s low wind speed regimes. Presently, Indian wind farms use turbines
that are designed for global markets.
• Land tenure
policies that will encourage mixed land use for wind generation and agriculture
(without having to pay commercial rents that will increase
the cost of wind power). These powers must be delegated to the local
sub-divisional officer.
• The bidding
models currently being pursued need to be revisited, so that farmers, wherever
willing, are able to benefit from mixed land use and a costplus approach can be
used to determine feed-in tariffs provided it is done through an independent regulator.
• Mechanisms
for using the National Clean Energy Fund (NCEF) to finance development of local
grids by state distribution companies that will help evacuate wind power and
solve the load curve problems on the supply side.
• Prioritise
the development of pumped hydro storage, which may be suitable for
complementing wind power.
• Invest in
R&D in energy storage options that can provide backup for longer durations,
like compressed air and high power density batteries among others.
India also has considerable off-shore wind potential,
particularly in Tamil Nadu and Andhra Pradesh. It is also important to
undertake studies to examine the economic viability and risks associated with
off-shore wind in the Indian conditions.
Solar Power
The Jawaharlal Nehru National Solar Mission (JNNSM)
envisages grid parity for solar power by 2022 and sets an ambitious target of
setting up 20000 MW for solar power with phased scale-up of capacity, coupled
with technological innovation. Solar photovoltaic and solar thermal are each
expected to contribute 50 per cent of the above target, in addition to a 2000
MW target for off-grid solar power. The Government has
facilitated generous financial incentives for grid-connected solar plants in
the form of feed-in tariffs valid for 25 years. The Government has also
incentivized state-level utilities to accelerate solar capacity addition by
mandating a three per cent solar power target by 2022 (under the National Tariff
Policy) and by providing opportunity for additional revenue streams through
instruments such as Renewable
Energy Certificates (RECs).
Solar
photovoltaic technologies have several advantages: they can provide distributed
power, enable quick capacity addition and work with diffused solar radiation.
Solar thermal technologies are conducive for utility-scale power generation, and
have the advantage of energy storage and hybridization with biomass/gas to
achieve greater capacity-utilisation. This can be used to provide base load
power. However, solar thermal technologies only work on direct beam radiation
and utility-scale plants require large amount of land and water, which could be
potential impediments in scaling it up.
Amongst all the
power generation sources, solar presents a unique opportunity for inclusive
growth by providing clean off-grid electricity to the rural communities.
The NSM has
targeted 2000 MW of off-grid solar power by 2022. Current guidelines limit a
solar micro-grid to 100 kW per site and provide a capital subsidy of 30 per
cent. The concept of micro-grid, even though attractive, has so far not been
effective in augmenting rural power generation. This is mainly because the
developers have found it difficult to get reasonable returns on their
investments and they are
unable to
collect adequate revenues to cover operating expenses despite the initial
capital subsidy.
Since the
capital subsidy mechanism is not sufficient to incentivise developers to take
the risk of setting up micro-grids, there is a need to examine other options given that rural electricity
supply causes loss to the power utilities and it could take several years
before reliable grid power reaches all the villages. First, there is a need for
relaxing the cap on total and site-based project capacity. This could help
rural industrial consumers who have high load requirements, but are constrained
by guideline restrictions. Second, there is merit in providing a generation-based
incentive, similar to that provided for grid-connected systems. This would make
the off-grid solar projects bankable and assure the developers of steady
revenue stream.
The rapidly growing telecom sector provides an
excellent synergy for augmenting solar power in rural areas. At present there
are close to 0.2 million telecom towers and about 40 per cent of these are in
the rural areas. This number is expected to double in the next few years. The
electricity supply being erratic in the rural areas, most of them rely on
diesel for back-up power. Rural micro-grids can not only
be used to meet
the requirements of the telecom towers, but also to provide power to the rural
communities for lighting and irrigation water pumping.
Currently,
several national and state level agencies are involved with implementation of
solar power projects, and it is difficult to coordinate and align their
efforts. The solar industry is likely to attract large investments in the
coming decade, and it is important that a single nodal agency is made
responsible for the overall monitoring and implementation of the JNNSM.
The off-grid and even grid-connected solar power
projects under National Solar Mission have taken a long time for financial
closure. This is because of the
reluctance of local banks to provide financing, due to lack of stability of
policies and possibility of default by the utilities. The government should
immediately classify solar power projects as ‘priority lending’ so that banks
start giving it due importance in their credit plans.
Further discussion is needed in designing the institutional
structures for ownership and operation of decentralised off-grid solar power
systems. For example, enabling local panchayats with a stake in ownership could
ensure local maintenance and operation, as also community-ownership leading to improved
payment collection. An alternative model would be to have entrepreneurs bid for
setting up
of a cluster of
such plants in a contiguous area, and then maintain and operate them on cluster
basis.
In order to
encourage indigenous manufacturing of components used in solar power
generation, GoI has mandated for all the projects allotted in 2010–11 that 100
per cent PV modules should be manufactured in India. It has been further mandated
that from 2011–12 onwards, 100 per cent of cells used in indigenous modules
should be manufactured in India. There is a need
to review these policies.
Crystalline
silicon and thin films are the two proven technologies for solar photovoltaic
systems. Of these, crystalline silicon dominates the global market; however, there
is considerable interest in thin-film systems, given the potential for lower
costs. The global manufacturing capacity is several times that of India, and
several institutions around the world are pursuing cutting-edge research
leading to a rapid decrease in solar cell costs. India needs easy access to the
best available global technology to ensure rapid adoption of solar power. At
the same time, developing domestic industry for manufacturing solar cells is important.
The manufacturing policy should strike a balance between these two objectives,
and mandate a more gradual indigenisation of cell and module manufacture. The
following steps need to be taken:
1. Our customs
duty structure should not be inverted along solar industry’s value chain (basic
and intermediate inputs should not attract higher tariffs
than finished products).
2. The
electricity tariff policy of the Government should be neutral to the type of
solar technology being deployed in the approved projects.
3. Export
subsidies (explicit and implicit) available to foreign manufacturers must be
matched by tariff/domestic policy to the extent it provides a level playing
field to the domestic solar manufacturers.
3. R&D
efforts for indigenous manufacturers should be incentivised by permitting them to
compete with government laboratories for research
funding through the budgetary sources.
Nuclear and hydro power are
also important for emissions reduction, but they face some critical challenges,
which are briefly summarised below:
Nuclear power is considered an important source
for low carbon and base-load power generation. India has ambitious plans in
nuclear power through a combination of Light Water Reactors, Heavy Water Reactors
and Fast Breeder Reactors.
However, global
concerns regarding safety of nuclear power following the Fukushima nuclear
accident in 2011 have slowed down nuclear power capacity addition. Future
growth will require addressing public concerns about safety of nuclear power,
and consensus-building at the national and local levels. It is unlikely that
large nuclear capacity could be added over the Twelfth Plan period.
Accelerated development of hydro-power potential
is critical for our economy. Apart from the need to harness the country’s water
resources for irrigation and flood control, the motivation for accelerated development
of hydro power is two-fold: first, it is required for
meeting India’s peak power demand; and second, it is vital for large-scale
integration of solar and wind capacity into the grid. Storage hydro power has a
multiplier effect in facilitating renewable energy as it provides the
flexibility necessary to respond to fluctuations caused by intermittent sources
of renewable power, particularly wind and solar. Prioritised development of
this resource, along with close
monitoring of a few carefully selected hydro-projects is important during the
Twelfth and the Thirteenth Five Year Plans.
Industry
Industrial Energy
Consumption Overview
In 2007, the industrial use of energy in India
stood at 150 million tonnes of oil equivalent (Mtoe), accounting for 38 per
cent of the country’s total energy use. Though India is the fourth largest
consumer of global industrial energy, surpassed only by China, the United
States and Russia, its share is only 5 per cent of the total. In 2007, total
final energy use in industry across the globe amounted to 3,019 Mtoe
leading to
direct emissions2 of 7.6 gigatonnes of CO2 (Gt CO2) and indirect emissions3 of
3.9 GtCO2. Analysis by International Energy Agency (IEA) suggests that the
industry worldwide needs to reduce its direct emissions by about 24 per cent of
the 2007 levels to halve global emissions, from the 2005 levels, by 2050.
Policy Measures
IRON N STEEL
From a policy
planning perspective, there are a number of measures that could provide the
pathway for reduction of emissions intensity in the iron and steel sector:
1. A shift in
the process mix of the iron and steel sector towards more efficient processes
2. Diffusion of
energy efficient technologies into the sub-processes of various process routes
mentioned above
3. Waste heat
recovery systems for moisture reduction and power generation
4. Utilization
of renewable energy in specific process/ plant/colony applications
5. Increased
use of waste as alternate fuels
6. Increased
scrap utilisation
7. Improving
quality of coke and coal before its use in the industry
8. Low carbon
captive power generation
Cement Sector
India is the
second largest cement producer in the world, second only to China.
Policy Measures
From a policy
planning perspective, there are a number of measures that could provide the
pathways for further reduction in emissions intensity in the cement sector:
1. Diffusion of
energy-efficient technologies in various sub processes of cement manufacture.
2. Waste heat
recovery systems for moisture reduction in coal and raw materials and for power
generation.
3. Utilisation
of renewable energy in specific process/ plant/colony applications.
4. Increased
use of waste as alternate fuels, rationalizing the various policies that
regulate this activity.
5. Increased
blending using fly ash from thermal power plants and granulated blast furnace
slag from steel plants, and the increased use of composite cements.
6. Improving
quality of coke and coal before its use in the industry.
7. Low carbon
captive power generation.
8. Increase of
blended cements in the public procurement process.
PAT Mechanism
Overview
Perform-Achieve-Trade (PAT) is a marketbased mechanism
under the National Mission for Enhanced Energy Efficiency (NMEEE), under the Prime
Minister’s National Action Plan for Climate Change (NAPCC). The aim of PAT, as
mandated by NMEEE, is to improve cost-effectiveness and enhance energy
efficiency in energy-intensive large industries through certification of energy
savings, which could be traded. The Ministry of Power (MoP) has in March 2007
notified industrial units and other establishments consuming energy more than
the prescribed threshold in nine industrial sectors, namely Thermal Power
Plants, Iron & Steel, Cement, Pulp and Paper, Textiles, Fertiliser,
Chloralkali, Aluminium and
Railways. The industries notified are referred to as Designated Consumers (DCs).
The PAT scheme is an energy intensity type of cap-and-trade
scheme as it does not place an absolute cap on the total energy consumption in
the industry. Some people argue that a simpler alternative for achieving energy
efficiency and for mobilizing finances with greater certainty, would be to implement
a carbon tax scheme. Both approaches have their own advantages and
disadvantages. These are compared in
the section below. Cap-and-Trade vs Carbon Tax Cap-and-trade programmes are often designed to
achieve greater reductions over time, so the cap may be lowered in subsequent
years to enable market participants achieve emission reductions gradually.
To achieve
compliance with the capped emission level, market participants are allocated
allowances to emit (1 tonne per allowance) with the total number of allowances
summing to the level of the cap.
Market
participants can purchase allowances from other participants to cover excess
emissions, or sell allowances, if they reduce emissions below their allocation.
Such trading increases economic efficiency.
A carbon tax is
an alternative to a cap-andtrade . It can be given other names like cess,
surcharge and levy among others. Although
both policies
generate a carbon price signal, there is a fundamental difference in the way in
which the level of carbon price signal is determined under the two regimes. A
carbon tax fixes the price of carbon and allows the quantity of emissions to
adjust in response to the level of
tax. In contrast, a cap-and-trade system fixes the quantity of aggregate
emissions, and allows the price of CO2 emissions to adjust to ensure the
emissions cap is met.14 UK’s Climate Change Levy (CCL) and Australia’s Clean
Energy Package are examples of carbon tax. Foundations of a
New Policy Initiative for the Indian Industry .
The existing
National Mission on Enhanced Energy Efficiency NMEEE has been designed to deal
with energy efficiency and emission reduction
issues of a relatively small number of large industries, which contribute
significantly to emissions.
Many of the
provisions of NMEEE such as strong baseline, monitoring & verification,
penalty and trading mechanisms are not easily extendable to a large number of
small and medium units. Some recent studies15 have emphasised the need for developing
a strong framework for increasing awareness and facilitating upgradation of
technology in small and medium enterprises.
India is experimenting with both cap-andtrade in
the form of the PAT scheme and a carbon tax in the form of a cess on coal (`50
per tonne). Both are in early stages of implementation. While the capand- trade
mechanisms have a greater certainty in emissions reduction, as a tool for
financing they face greater uncertainty. Carbon tax mechanisms, on the other
hand, can provide greater certainty as a source
of financing,
while uncertainty on emissions reduction can be brought down by using energy or
emission intensity benchmarks.
While the PAT
should continue to evolve, it would be useful to envisage a combined Energy Efficiency
Package—consisting of the PAT scheme and an Energy Conservation Fund, to be
implemented by a unified Central Government agency, namely the Bureau of Energy
Efficiency (BEE). The legal provision for this already exists in the Energy Conservation
Act 2001, wherein under Section 13, the BEE is empowered to levy fees for
services provided for promoting efficient use of energy and it conservation.
These services, like capacity building, preparation of detailed project reports
and finance for adoption of energy-efficient technologies, are particularly
important for non-PAT industrial units, which are smaller in size and cannot
arrange such help on their own.
Unlike the coal cess which is deposited in the
Government account, the energy efficiency fee will be deposited in the Central
Energy Conservation Fund managed by the BEE (Section 20 of the Energy Conservation
Act). The collections from the fee could be supplemented by international
funding, as well as block grants from the Central Government through the NCEF.
Cap-and-Trade
|
Carbon Tax
|
1. It sets a steadily declining ceiling
on carbon emissions, and by creating a
market that rewards companies for slashing CO2 (corporations
that reduce emissions below their allotment can
sell them on
the open market), it uses the free enterprise system to
achieve emissions reduction.
|
Uncertainty
about how much will it reduce carbon emissions.
However, tax
linked to benchmarks of energy or emissions intensity can
help improve certainty with respect to mitigation.
|
2. It does not provide cost certainty
as price of permits fluctuates and could be
highly volatile in the spot market.
|
Carbon tax
provides cost certainty by setting a clear price on carbon
emissions for many years ahead.
|
3. It needs a market monitoring agency
to examine issues such as rent seeking,
cornering the market and so on.
|
It is simple
to understand and implement.
|
4. The design leaves out many small and
medium organizations (who together
may release significant portion of the emissions).
|
Carbon tax
covers the entire economy, including automobiles, households
and other units impossible to reach in a cap-andtrade.
|
5. The revenues are likely to be
bargained away well before the first trade ever
takes place.
|
Carbon tax raises
a clear amount of revenue, which can be used for
targeted purposes or rebated to the public.
|
6. It can be more easily manipulated to
allow additional emissions; if the
permits become too pricey, regulators would likely sell or distribute
more permits to keep the price ‘reasonable’.
|
The chances
of manipulation are remote. The structure of the tax does not
allow periodic regulator intervention.
|
7. The long-term signals from
cap-and-trade are less powerful, and the
behavioural changes (for example, choice of the type of power plant)
could turn out to be far fewer.
|
Clear signals
and impetus for behavioural changes.
|
8. Political pressures could lead to
different allocations of
allowances,
which affect distribution, but not environmental
effectiveness
and cost-effectiveness
|
Political
pressures could lead to exemptions of sectors and
firms, which
reduces environmental effectiveness and drives
up costs.
|
9. It will be a difficult process to
adopt different international allowances
and make it at par with the domestic allowance.
|
Carbon-taxing
nations can easily offset import price
differences
with a ‘border tax adjustment’.
|
10. The setting of the price (in an open
market) could be very opaque.
|
The process
is more transparent and trustworthy.
|
11. One of the immediate consequences is
the design of financial and legal
instruments
|
This directly
rewards innovation in engineering
|
Transport
Vehicle Fuel
Efficiency Programme
The number of
motor vehicles in India has been growing at about 10 per cent per annum,
whilepassenger and freight activity by road increased 15 and 6 per cent per
annum respectively between 2001–02 and 2005–06, the last year for which data is
available.16 In turn, the fuel consumption has also increased, with petrol and
diesel consumption increasing 10 and 8 percent respectively over the Eleventh
Plan period. GHG emissions from the transport sector have also grown at 4.5 per
cent per anum between 1994 and 2007.17 Therefore, in addition to
ensuring that automobiles pay for their full externalities such as congestion,
pollution and reduced safety, India needs to urgently introduce fuel efficiency
norms for the automobile industry to address both energy and
environmentchallenges.
Countries such
as the US, Canada, Japan and the EU have already enacted such fuel economy
legislations.
Framework of Fuel
Efficiency Norms
Fuel efficiency norms can be defined within a ‘standards
and labelling’ framework. Vehicle labeling is a demand side measure to enable
consumers to take an informed decision while purchasing a vehicle, whereas fuel
efficiency standards are supply side measures for manufacturers to adhere to.
Vehicle Labelling
Vehicles should
carry prominent labels similar to those made popular by the appliance labeling scheme
introduced by the BEE. These labels should give the
consumer sufficient information about the relative efficiency of the vehicle to
enable him to make an informed choice. It must contain the following:
• The fuel
efficiency of the vehicle (in litres/100 km) as determined by an approved test
mechanism.
• Its star
rating, on a 1 to 5 scale, as compared to other vehicles of the same type and
in the same (weight) category.
• A pointer on
a band indicating the fuel efficiency position of this vehicle among all vehicles
of the same category.
Fuel Efficiency
Standards
Given the
relatively smaller size of the average Indian vehicle, the Indian vehicle fleet
is among the most fuel-efficient in the world. The fuel efficiency standards
should ensure that this characteristic of Indian vehicles is encouraged and
preserved. Some measures are suggested below:
• The standards
should be applicable to all vehicles sold in India—whether manufactured
domestically or imported.
• Ambitious
efficiency improvement programmes, such as Japan’s ’top runner’ programme
define efficiency standards based on the best performers in the industry.
However, given the efficiency levels of the Indian fleet; Indian standards may
be derived considering the average efficiency of the global vehicle fleet of a
given type, the best performer and the average efficiency of Indian fleet.
• The standards
must ensure that Indian vehicles retain their global fuel efficiency advantage
and remain among the most fuel-efficient in their class. It should be noted that
the average efficiency of passenger cars in India improved by 3 per cent per
annum between 2006–07 and 2009–10, in spite of an increase of 2 per cent per
annum in average kerb weight of cars sold in that period. This is comparable to
the rate of efficiency improvement proposed in the European Union and South
Korea.
• There has
been a tendency for vehicles to get heavier without a corresponding increase in
capacity, as seen in the 2 per cent per annum increase in average kerb weight
of cars sold in India. This is not a desirable trend as it leads to increased
fuel consumption without additional benefits. Therefore, standards must contain
an explicit disincentive against up-weighting of vehicles. This can be achieved
by making the standards not linear, but a sub-linear function of the vehicle
weight. In the sub-linear case, the permitted fuel efficiency loss for a given
increase in vehicle weight is lower at a higher weight as compared to the
permitted loss at lower weight levels.
• The BEE has
already proposed a fuel efficiency scheme for passenger cars, and sought
feedback on the scheme at a public consultation held on 1 November 2011. Given
the rapid rate of growth of vehicles in the country, this process needs to be expedited.
Some suggestions on further course of action are as follows:
– BEE is in the
process of publishing an alternative proposal based on the inputs received.
This should be followed by another round of public consultations to ensure that
significant concerns are addressed. It should then notify the norms, say, by
September 2012.
– Consumption
of diesel by heavy commercial vehicles (buses and trucks) is considerably more
than the fuel consumption of cars and two
wheelers. Therefore, norms must be defined for these vehicles also at the
earliest—
– Two wheelers
account for about 70 per cent of the vehicle sales as well as vehicle fleet in the
country. Therefore, norms must soon be defined for
them also.
– The
definition of fuel efficiency norms must not only be expedited, but also be based
on public consultations with all stakeholders including the
citizens groups and the automobile industry.
– A clear-cut
policy should be put into place for encouraging electric vehicles, including
facilities for recharging.
Improving the
Efficiency of Freight Transport
Increasing the
Share of Rail Freight in India
Improving the
Efficiency of Road Freight
Water-Borne
Freight
Improving Urban
Public and Non-Motorized Transport
The important points to note are:
1. Only 4 per
cent of the total passenger transport activity is by private automobiles in
cities, but they contribute about 20 per cent of passenger transport emissions.
2. Air
transport supports only 0.4 per cent of total passenger transport, but
contributes 15 per cent to emissions from it.
3. Rail
supports 11 per cent of passenger activity, and contributes just 5 per cent of
the passenger transport emissions.
4.
Non-motorized transport supports 4 per cent of passenger transport activity in
the country without causing any emissions at all.
4.99. The way
forward therefore is to promote public and non-motorized transport in cities,
and rail for intercity passenger travel, while discouraging the use of private
vehicles in cities, as well as intercity transport by air. This will have
important co-benefits, such as:
1. Making
mobility more inclusive as the promoted modes are typically more affordable.
2. Improving
the country’s energy security.
3. Reduce air
pollution in the country’s cities, towns and villages.
4. Reducing
congestion on our city roads.
5. Improving
road safety since studies show that public transport modes have lower per
passengerkm fatality rates than private transport modes.
We should focus
on policy instruments to encourage greater use of public and non-motorized
transport in India’s cities and towns, while discouraging the use of private
motor vehicles.
Supporting Public
Transport
Urban Planning and
Governance
Lighting,
Labelling and Super-efficient Equipment Programme
Over the
Eleventh Plan period, the standards and labelling programme of the Bureau of Energy
Efficiency BEE has enabled consumers to identify and
purchase more energy-efficient appliances.
They have been
made mandatory for four appliances, namely, frost-free refrigerators, room air
conditioners, tube lights and distribution transformers
In the area of lighting, a major shift has
taken place during the last 10 years due to large scale replacement of
incandescent bulbs by Compact Fluorescent Lamps (CFLs), which consume only 20 per
cent as much electricity as incandescent bulbs to produce the same amount of
light. During 2011–12, the sales of CFLs in India exceeded 300 million; a 15
times increase as compared to the sales in 2002.
The Bachat Lamp
Yojana (BLY) provided an innovative business model to sell CFLs to households
at the same price as incandescent bulbs, the balance being recovered as carbon
credits. However, a sharp decline in the price of carbon credits has
effectively made this business model
non-viable.
At the same
time, the emergence of solid state lighting, based on Light Emitting Diode
(LED), presents an opportunity for another quantum jump in lighting energy
efficiency. LED-based lighting appliances (bulbs and tube-lights) are
‘super-efficient lights’ in as much as they use only half as much electricity as
fluorescent devices (CFLs and tube lights) to produce the same amount of light.
However, their price is still
much higher than those of CFLs;
During the
Twelfth Plan period, enhanced procurement of LED bulbs and LED tube lights
could create the sales volume necessary to bring down prices to
levels where large scale penetration of LED lights in India would become a
reality.
In a similar
manner, ‘super-efficient fans’, which use half as much electricity as
conventional fans, could be of great help in reducing electricity demand from
this widely used appliance in the country.
During the
Twelfth Plan period, the Super- Efficient Equipment Programme (SEEP) for
superefficient fans, LED bulbs and tube lights, seeks to
incentivize the
sale of these products to increase their volumes and bring down their prices
for large-scale adoption. This ‘virtuous cycle’ could be jump-started though
provision of a financial incentive for each super-efficient fan or light that
is sold, that would help lower the price for end-consumers and enhance sales Volume. This will provide confidence to manufacturers to invest in the
development, manufacture and marketing of these products, which would otherwise
find limited markets because of their higher
price.
Green Building Codes
Energy
consumption in buildings offers a large scope for improving efficiency. The
potential to reduce energy consumption through improvement in efficiency of
appliances and equipment is already accounted for above. However, apart from this,
buildings can be made more energy efficient by designs that reduce the need for
lighting, heating, ventilation and air conditioning. We concentrate on savings in
energy intensity that can be realized over and above what is possible through
improvement in appliances and equipment.
The residential
and commercial buildings account for 29 per cent of the total electricity
consumption and this is rising at a rate of 8 per cent per annum (CWF, 2010). Significant
part of this goes into heating, cooling and lighting
Energy
Conservation Building Code
Energy Conservation Building Codes, formally launched
in May 2007, specifies the energy performance requirements of commercial
buildings in India. ECBC has been developed by the BEE under the provisions of
the Energy Conservation Act, 2001. The code is applicable to all commercial
buildings having a connected electrical load of 100 kW or more (or a contract
demand of 120kVA or more).
The purpose of
this code is to provide minimum requirements for the energy-efficient design and
construction of buildings. The code is presently in the voluntary phase of
implementation and is expected to become mandatory during the Twelfth Plan.
However, some States have already moved ahead and notified it within their
jurisdiction. The BEE is the primary body responsible for implementing the
ECBC; and it works towards policy formulation as well as technical support for
the development of these codes and standards, as well as in supporting compliance
tools and procedures.
Green Building
Rating Systems
One of the
major green building rating systems currently operating in India is the Indian
Green Building Council (IGBC) programme. The ratings depend on a number of
factors including energy consumption.
The large
percentage of buildings (95 percent) that do not comply with ECBC/ASHRAE codes,
and the large savings that some of the rated buildings have achieved, indicate
a large potential for energy savings in the building sector.
Forest and Tree
Cover
Enhancing forest and tree cover mitigates
climate change by absorbing CO2 from the atmosphere and turning it into
biomass. This section attempts to bring out the present and the future
potential that forestry sector of India can offer in mitigating the climate
change, by directly increasing the forest and tree carbon sink on one hand, and
by promoting efficiency of fuel-wood use, replacement of energy intensive
building and household products with wood substitutes on the other
Strategy proposed to realize enhanced
potential of forestry sector in mitigation and adaptation should therefore be
two pronged—first, focus on actions that promote carbon sequestration; and second,
focus on actions that improve and enhance ecosystem goods and services. Some
options in the forestry sector for saving, maintaining and increasing forest
carbon stocks are enumerated below:
• Conservation
and Sustainable Management of Forests:
– Conservation
and sustainable management of protected areas.
– Sustainable
management of native forests.
– Natural
forests and
– Dissemination
of improved and efficient woodburning cook-stoves.
•
Afforestation:
– National
Mission for a Green India.
– Agro-forestry
practices including pulpwood plantations.
– Energy
plantations, that is use of forestry products as bioenergy to replace fossil
fuel.
• Wood Products
Use Management:
– Initiate part
replacement of energy intensive building materials like cement, iron and steel with
lumber.
– Initiate part
replacement of office and domestic furniture made with metals by commercial wood
based furniture.
Our present
initiatives like National Afforestation Programme (NAP), together with
programmes in sectors like agriculture and rural development, are adding or
improving about 1 mha of forest and tree cover annually in our country. This combined
with the accretion of biomass in our managed forests, protected areas and in
tree cover outside the government forests, the total carbon service at present
has been estimated at 138 mt CO2eq every year.27 The cost of this
business-as-usual reforestation and afforestation activities is estimated at
about `5,000 crore annually.
National Mission for a Green India:
The Mission is
still being finalized, but the realistic aim would to double the present
reforestation and afforestation efforts to about 2 mha of forest and tree cover
annually. Over a ten-year period, this could increase or improve the quality of
forest and tree cover over 20 mha of land area;
which includes regeneration of 4.0 mha of degraded forests, improving canopy
cover over 2.0 mha of moderately dense forests, restoration of 2.0 mha of
degraded scrub/grasslands, and agroforestry over another 2.0 mha of
degraded/fallow agriculture lands, in addition to eco-restoration of mangroves
and wetlands.
The Green India
Mission also proposes to improve the fuel-wood use efficiency (through the
improved cook-stoves initiative) in 10 million rural
households. It must also lay emphasis on liberalization of felling and transit
rules for identified commercial species so that, on one hand, farmers get the
right incentives to undertake agro-forestry in a big way, on the other,
harvested wood products can replace building materials in house construction, while
metal and plastic based furniture can be replaced with wood based substitutes.
the Green India
Mission would help neutralize an additional 1.5 per cent of India’s GHG
emissions annually, bringing the total GHG removal by India’s forests to 6 per
cent by 2020.
Waste
Disposal in PPP Mode
The
state of solid waste management in Kanpur was no different from most other
Indian cities until only a few years ago. Kanpur
Nagar Nigam (KNN) had the responsibility for collecting, transporting and
disposing of the solid waste generated in the
city, estimated at about 1500 tonnes per day.
In
June 2008, KNN gave a BOOT (build, own, operate, transfer) contract for
processing, disposing, collection and transportation
of solid waste to A2Z Infrastructure, a private company, which was selected
through a process of competitive bidding.
Land (46 acres) was given free on a long lease of 30 years for the project. The
plant to process 1500 tonnes per day capacity
of solid waste was set up with a tipping platform, a pre-segregation unit, a
composting unit, an RDF (Refuse Derived Fuel)
unit, a plastic segregating unit, a briquette manufacturing unit, and a secured
landfill in place. Of the total project cost
of `110
crore, `56.6 crore came from JNNURM and the rest from the private
partner.
Door-to-door
collection of garbage is being done in bins attached to rickshaws by
safaimitras using hand gloves and protective masks.
The garbage is compressed while being transported. Garbage transport vehicle is
equipped with Global Positioning System
(GPS) and every incidence of the compactor halt to collect garbage is monitored
and recorded. Rag-pickers have been given
the opportunity of starting a new life. Some of the former rag-pickers (130, to
be precise) now earn a regular salary as
safaimitras, sport a bank ATM card, enjoy social security and health benefits,
and their young kids have started going to
schools. The
garbage is taken to a central site where it is sorted, segregated, transformed
into a number of products of value, for example,
premium quality compost, refuse derived fuel (RDF), interlocking tiles from
construction debris for use in footpath paving,
and so on. Kanpur Waste Management Plant is the largest producer of compost
from organic waste. The plant is not able
to meet the growing demand for organic fertiliser. In
2010, A2Z Infrastructure, the private company, set up a waste-to-energy plant,
creating the largest integrated project in
solid waste management in Asia, which produces 15 MW of electricity, using RDF
produced in house. The plant has been
registered with United Nations Framework Convention on Climate Change (UNFCCC)
for carbon credits claiming certified
carbon reductions achieved by Clean Development Mechanism (CDM) projects under
the Kyoto protocol. The KNN
received best city award (JNNURM) for improvement in solid waste management
from Prime Minister in 2011. Dr. Isher
Judge Ahluwalia—a leading columnist after her visit and discussion published
this article in print and electronic media which
is widely acclaimed. Ahmedabad and Surat Municipal Corporations have also set
up integrated Municipal Solid Waste collection
and disposal mechanism. In the Twelfth Five Year Plan, every attempt will be
made to replicate the similar model in
maximum number of cities in the country.
Suggested
Re-organisation of the National
Action
Plan for Climate Change
A)
NATIONAL MISSIONS
1.
National Solar Mission
2.
National Wind Energy Mission
3.
The Energy Efficiency Mission
4.
Sustainable Habitat Mission
5.
Sustainable Agriculture Mission
6.
Mission on Sustainable Himalayan Eco-systems
7.
National Mission for a Green India
B)
POLICY THRUST AREAS
1.
Advanced Coal Technologies
2.
Energy Efficiency Improvements in Major Industries
3.
Solid Waste Management Systems in Towns and Cities
4.
Treatment of all Sewage before Release into the Water Bodies
5. Improved
Urban Public Transport
6.
Dedicated Freight Corridors along Major Routes
7.
Climate Related Research through Scientific Departments
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