Beruflich Dokumente
Kultur Dokumente
Growth in India
TITLE Low Carbon Industrial Growth In India
AUTHORS Priyanka Kochhar (Sr. Programme Manager, ADaRSH), Sachin Kumar (Fellow, TERI BCSD),
Akshima Tejas Ghate (Fellow, TERI BCSD)
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Dr R K Pachauri
Director-General, TERI
FOREWORD
I am pleased to share with you YES BANK's Knowledge Report titled “Low Carbon Industrial
Growth in India”.
Natural resources depletion has put pressure on Countries and Industries to transform the way
business conducts itself. Industrial revolution, population growth, heightened use of fossil fuels
like petrol, coal, natural gas, and deforestation have resulted in high green house gas emissions,
thus leading to a global warming situation.
Multiple international organizations and Governments are working towards various frameworks on
climate change, policies to reduce green house gas emission and mitigation programs that would
contain the climate change situation.
In India too, there is a growing focus on energy and resource efficiency across all major industries.
The Government of India has taken significant steps towards promoting green economic growth.
Mechanisms such as National Action Plan for Climate Change, Government sponsored regulatory
control, standards and quasi-fiscal measures indirectly encouraging clean technology uptake to the
National Clean Energy Fund, facilitating clean energy and technology are steps in this direction.
Bureau of Energy Efficiency, (BEE) energy emissions cap and trade market mechanism - “Perform,
Achieve & Trade” (PAT) applicable to nine most energy intensive sectors to trade energy saving
certificates (ECerts), is targeted towards enhancing cost effectiveness and energy efficiency
improvement in energy intensive large industries and facilities.
Further, in order to encourage the financial sector to finance energy services companies (ESCOs)
led energy efficiency projects, the BEE has also instituted partial risk guarantees, subsidized loans
and a private equity fund.
However, there is a need for a comprehensive policy roadmap towards technology adoption and
indigenization wherein the financial sector and the Government of India can play interdependent
roles to develop critical and enabling policy environment, and facilitate organizations towards Low
Carbon technologies.
The financial sector fuels the economy through capital infusion and has a responsible role. We
have always believed that it can potentially play a significant role through innovative financing and
collaborate with government agencies, civil society organizations and multi lateral funding
agencies to co-develop and implement low carbon financing products and trigger a process of
clean technology integration within the country.
This Knowledge Report focuses on the industry-wide changes expected in the developing world
and transformations that are essential from a carbon saving point of view, sustainability of
businesses and the role of the financial sector in facilitating organizations to adapt low carbon
technologies into their strategy.
While there remain some on-the-ground implementation challenges for the widespread uptake of
the new Low Carbon technologies, YES BANK and TERI, our knowledge partner for this report are
of the view that this low carbon revolution in Indian industrial sectors like Power, Steel & Cement
would open up significant business avenues, and corresponding financing opportunities. At the
same time, it will also address the critical issues of India's long term energy security, and the
reduction of environmental impact ascertained to burning fossil fuels.
This Report brings out insights on technologies that can create tremendous reduction in the
overall carbon output of Indian industry thus taking India to the forefront of green manufacturing.
While currently the penetration of such technologies is limited to a small percentage of new
plants, technology improvements in energy efficient technologies, heat & raw material recovery,
and renewable energy usage are evolving techniques in the business landscape. Large
manufacturing units are already investing in adoption of such technologies, and are scaling
manufacturing capacities. The Indian cement industry for example has already taken a lead, and is
amongst one of the most carbon efficient cement industries in the world.
Environmental concerns and rising price of fossil fuels in the international market have
precipitated into an energy security challenge for India. Low carbon technologies provide the best
step forward for Indian industry.
I firmly believe that the contents of this Knowledge Report, “Low Carbon Industrial Growth in
India” will provide important insights to policy makers and Indian Industry in achieving a smooth
transition to Low Carbon technologies, thus ensuring India's long term environment sustainability.
Thank You.
Sincerely,
Rana Kapoor
Managing Director and CEO
Executive Summary
The contemporary industrial growth model equates high fossil fuel consumption with high growth;
with carbon emissions as a byproduct. However, these emissions now threaten our fragile
ecosystem and raise a question over this model. Thankfully, there are technologies that can break
this linkage and realize high growth without high fossil fuel usage and high carbon emissions. This
study illustrates some of these technologies, the hurdles they face in adoption and the potential
way forward to develop a Low Carbon based growth model for India.
The paper investigates low carbon technology based development models across three major
carbon emitting industries: Steel, Power and Cement. A concerted effort to reduce carbon
intensity across these sectors will deliver maximum reduction in carbon emissions. There are
industrial units that are adopting these technologies and delivering substantial reductions in
emissions. A striking example is the Indian cement industry that is among one of the most carbon
efficient cement industries in the world due to adoption of Low Carbon technologies.
However, the path to low carbon economy in India has its own set of challenges. The paper
presents these issues and the steps that policy makers, financial institutions and industry can
adopt to help overcome these challenges.
Technologies that can create significant carbon and resource reduction are often not well known.
This paper tries to address this gap by identifying the best available low carbon technologies.
Most of these technologies require institutional and financial support for mainstreaming. The paper
highlights key central and state policies that can provide the needed institutional and financial
support, and also critically analyzes the short comings of these schemes. It also identifies
prominent financing options that can be explored to channel resources to low carbon
technologies: Government sponsored funds, low interest lending, partial project risk guarantees
and co-equity investments being some prominent examples.
Perhaps the biggest change needed for the transformation is a new industry mindset. The industry
needs to focus on the long term results provided by Low Carbon technologies. These technologies
not only create an efficient and low cost manufacturing platform for the company, but also allow
the company to differentiate its green products in the already crowded market space. The paper
presents some of such success stories that we hope will help convince the industry to embrace
the transition.
Contents
MESSAGE
FOREWORD
Executive Summary
Transport .........................................................................................................58
9 Conclusion ............................................................................................................65
11 Bibliography .........................................................................................................73
1
Low carbon Growth-
Demystified
Low carbon Growth - Demystified
T
he growth of economies today, generally, pertains to high
industrial growth and modern luxuries dependent on high usage
of coal and other fossil fuels, inadvertently leading to high carbon
emissions. The Low Carbon growth is a novel concept that challenges
this linkage, and promotes economic development based on industrial
A Low-Carbon energy efficiency and low carbon technologies, thus aiming to reduce
Economy (LCE) is an the carbon-footprint and sustain economic growth in an ecologically
economy that adopts sustainable model. A Low-Carbon Economy (LCE) is an economy that
the Low Carbon
adopts the Low Carbon Growth path and minimizes the release of
Growth path and
greenhouse gases (GHG) without compromising on the development.
minimizes the release
of greenhouse gases Governments and businesses have been making significant strides to
(GHG) without research and develop a carbon positive way forward driven by long term
compromising on the resource saving and immediate cost reduction. Some typical examples
development include:
objectives of the
country ü
The reduction of emissions by increasing efficiencies in current
processes
ü
The absorption of carbon using artificial techniques to reduce the
carbon level
ü
Carbon/Energy Efficiency trading through various global and local
trading schemes
ü
Cutting edge Clean and disruptive technology financing at R&D
and implementation levels
2000 1935
BAU
1533
1500
LC
1000
570
500
0
2010-11
2020-21
2030-31
2016-17
2026-27
2012-13
2022-23
2014-15
2024-25
2008-09
2018-19
2028-29
Climate Change
T
his paper focuses on the industries with high carbon footprint.
Achieving big carbon reduction in these industries will provide the
biggest savings in carbon output for the country as a whole as
biggest impact can be achieved by targeting the largest carbon
contributors. A focus on high growth high emission industries will allow
the industry to maintain high growth rates while adopting a lower
Focus on high growth, carbon path and thus achieve lower emissions in a future ready
high emission environment. The industries selected are:
industries will allow
1. Iron & Steel
them to maintain
robust growth rates 2. Electricity and Power
while adopting a low
3. Cement
carbon path
The forthcoming sections cover the details of these industries and their
environmental impact.
Iron & steel industry emits around 117 million ton of CO2 equivalent in
Power sector is the 2007 which accounts for 28.4% of total industry emissions and 6.2% of
largest contributor to
the total emissions from all sectors in India. Although the industry has
the total GHG
emissions with around
improved in terms of the total contribution from 7.2% in 1994 to 6.2% of
719 million ton of CO2 total emission of India it remains one of the largest contributors of GHG
emitted per annum emissions (INCCA, 2010)
Cement
The cement industry in India is second largest in the world after China
with a total installed capacity of 307.6 MT (IBEF, 2012). China (with an
Cement is a major GHG emitter with around 130 million ton of CO2
equivalent in 2007. It has also increased its contribution to India’s total
GHG emissions from 4.9% in 1994 to 6.8% in 2007 of total GHG
emissions. At current emission intensity, cement is bound to remain a
major contributor to GHG emissions (INCCA, 2010).
T
he Indian growth story supported by its increasing young
population not only requires new jobs and increased economic
activity but also requires higher standards of living with improved
consumption patterns. The youth is not only getting paid more but also
spending a larger amount with respect to the previous generation
(Farrell, et al., 2007). Boosted by the domestic demand the industries
are poised to go for multifold increase in their production capacities. The
Indian industry has only saving grace is the dependence of Indian economy on the less
built plants that can carbon intensive service sector for its GDP growth.
compete with global
efficiency standards, India is also an energy starved country which imports most of its oil &
but such instances are gas requirement. India has one of the largest deposits of coal in the
an exception rather world, but it’s not of high quality (Coking coal is just 11.5% of total
than the rule reserves) (Ministry of Coal, 2012). This keeps the energy prices very
high and forces the industries to become energy efficient. Technology
comes to the rescue of the industry which has to produce at the lowest
cost. The technologies not only reduce the resources required but also
reduce the overall environmental impact of the product and hence the
GHG emissions.
In ideal scenario the industry should adopt these technologies as Indian
industries have been pioneers in building the most efficient industries.
But these instances are not very frequent. For e.g. the carbon intensity
of the power sector in India is much higher than the US and Europe
(CARMA ) (Exhibit 7).
800
2004
600
2009
400
200
The SEC (specific energy consumption) of the Indian Iron & Steel Sector
Iron-ore is expected to (ISS) has improved dramatically from about 32 GJ/tcs in 2000-2001 to
remain the mainstay of 27.3 GJ/tcs in 2008-09(LBNL 2009). However, the SEC values in Indian
crude steel production plants compare rather poorly against the SEC values in countries like
in India, while
Japan (23.3 GJ/tcs - 2004), US (20.1 GJ/tcs - 2001), EU (15 GJ/tcs -
developed economies
2002) & China (25.6 GJ/tcs - 2001) (CSE 2010). The emissions intensity
produce around half of
their steel from of steel production in India was estimated at 2.21 MT CO2-eq/tcs in
recycled activities 2007 (Planning Commission, May 2011 ).
Exhibit 8: Energy conservation options for Indian Iron and Steel Industry
Multi-slit burners in Total heat input for ignition Working in BSP, RSP and
ignition furnace will reduce by about 30% BSL.
as compared to
conventional burner
Coke making Coal moisture control Reduction of moisture
process (CMCP) content from 7- 8 % to 4-
6% can result in savings
of about 1GJ/tcs
Coke dry 0.8-1.2 GJ/t of coke (steam - Applicable only with blast
quenching generation at 480 °C and furnace route of steel
60 bar, at initial stage 0.4 making;- Tata Steel has
GJ/t of coke or 0.2GJ/tcs) already installed CDQ with
the help of NEDO to
improve COBs;
- BSP, RSP & ISP is also in
process of installing CDQ;
- About 90 to 95% of
Indian plants yet to adopt
this technology.
Adoption of top pressure 0.4-0.6 GJ/tcs (for 15 MW Working in BSP, RSP, BSL
recovery turbine (TRT) turbine to generate 40-60 and ISP
kWh/tHM)
Use of Hot Stove Waste 0.3 GJ/t pig iron Working in BSP, RSP, BSL
Heat Recovery in and ISP
existing/ new BF
Pulverized Coal Injection 0.7-0.77 GJ/tHM Working in BSP, DSP and
(PCI) in existing/ new BF RSP
Bled basic oxygen furnace 1 GJ/tcs Working in BSP, DSP, RSP
Steel making
(BOF) gas and Waste and BSL
Heat Recovery
Oxy-fuel burners in electric 0.5 GJ/tcs Applicable to both old and
arc furnace (EAF) new EAF based steel
melting operations
Scrap pre-heating with EAF 0.6 GJ/tcs
Rolling and Walking Beam Furnace 0.59 GJ/t throughput BSP and BSL are in
Finishing (reduction in electricity process of installing this
consumption by 25% technology (2012-13).
per ton)
Some of the technological options that could make the Indian Iron and
steel sector more competitive are highlighted in Exhibit 9 (Ministry of
Steel, September 2011)
Coke making • Installing Stamp Charging & PBCC • Tata Steel Limited and SAIL has installed stamp charging
(partial briquetting of coal charge), &PBCC.
• Tall COB (coke –oven batteries) • SAIL, RINL and Neelachal Ispat have installed 7 m tall COBs,
Bhushan Steel is in the process of setting up a 7.60 m tall
COB, the tallest in the country (2012-13).
SCOPE21 (Super coke oven for Developed by Nippon Steel, Japan and offers more flexibility in
productivity and environment terms of coal resource quality and provide reductions in energy
enhancement towards 21st century) & emissions intensity of the coke making process.
DAPS (Dry cleaned and agglomerated The DAPS is a new coal pretreatment process for coke making
pre-compaction system) to enhance coke strength and suppress dust level to improve
the environment friendliness of coke making by drying coal,
separating fine coal from lump coal and forming the fine coal
into agglomerate.
Iron making HISMELT process The salient feature of the process is moderate to high degree
(70% & above) of post combustion. The technology is still at
demonstration stage.
Thermal power plants are the backbone of the Indian power sector
contributing more than 66% of the total power generated in India of
The distribution of which 57% is contributed only by coal fired power plants. India enjoys
various sources of one of the largest coal reserves of the world making it the cheapest
power is highly skewed source of power in the long run at current technologies.
towards Coal based
Power plants.
Super Critical & Ultra – Super Critical Power plants
Removing the bias
would require major
policy changes
The new technology of super heating water generates higher
efficiencies up to 42% in net higher heating value (HHV) (Bhushan,
2010). The technology incentives are clear from government of India
CCS technologies (ABELLERA, et al., 2011) are not one of the most cost
efficient technologies in reducing emissions from the power sector. Still,
CCS technologies can be incorporated in both coal and gas fired power
plants. It increases the cost of power marginally and provides an
effective alternative to costlier solar and off shore wind.
Nuclear Power
Nuclear power may not be the most carbon efficient, but it gives an
excellent middle ground where it reduces up to 80% of emission and is
only twice in efficient as a solar PV and produces power at a much lower
cost (DoAE, 2011), (2012). Nuclear power contributes only around 2.5%
Renewable Energy
Renewables are a potential way forward for India. The Hydel and Wind
power have ramped up drastically in India, but the real potential lies in
Solar and biomass (MNRE, 2012). The daily average solar energy incident
over India varies from 4 to 7 kWh/m2 with about 1500–2000 sunshine
hours per year (depending upon location), which is far more than current
total energy consumption making solar energy as one of the best
potential sources of energy to be harnessed.
The major hindrance in the adoption of solar PV and Solar water heating
technologies is the huge initial cost of establishment and faith in the
technology; though the solar economy is on the move and many
entrepreneurs are taking advantage of the subsidies provided by
Along with solar power Ministry of New and Renewable Energy (MNRE)
has identified are (MNRE):
25
20
15
10
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Smart grids provide the solution since a smart grid applies sensing,
measurement and control devices to capture information from power
generation, transmission & distribution and consumption components of
the grid. A smart grid switches demand with high load, peak & off peak
hours and matches the demand based on supply. It can also integrate
different sources of the power grid, renewable, battery etc. and manage
their output based on their requirement. Smart grids can help cut down
transmission and distribution losses making more power available to
consumers and reducing the per capita carbon emissions.
Cement
Cement production is done in a 4 step process which includes crushing,
blending, clinkerization and finally grinding and mixing. Forming clinker
involves maximum usage of energy. The Indian cement industry today is
by and large comparable to the best in the world in respect of quality
The smart grid standards, fuel & power consumption, environmental norms for new
implementation can cement plants, use of the latest technology and capacity. Presently,
have an immediate
about 97% of the total capacity in the industry is based on modern and
impact on transmission
environment-friendly dry process technology, and about 50% of the
and distribution losses
and, increase power capacity has been built in the last ten years. The industry’s weighted
availability to the user average energy consumption is estimated to be about 725 kcal/kg
clinker thermal energy and 80 kWh/t cement electrical energy. The best
thermal and electrical energy consumption presently achieved by the
Using latest technologies (IEA, 2009) in newer plants not only improves
efficiencies but also reduces carbon impact of the current process.
Savings on a per unit basis range from 0.2-3.5 GJ/tonne clinker with
thermal efficiency and to around 40 kWh/t cement from electrical
efficiency.
0 0
Due to high temperature (800 C to 1600-1700 C) and wide spectrum of
residence time up to 3 minutes and the biggest advantage of complete
absorption of ash in the complex cement compounds, cement kilns are
best suited to use a different kind of waste, which would otherwise be
burnt in incinerators, land-filled or improperly destroyed, as AFR.
However, the use of alternate fuel is nearly zero (on average 0.6% of
thermal energy across the country) as compared to the global average
of about 4%. In some countries, the average use is as high as 30%.
Typical wastes that can be used as AFR include industrial wastes, sorted
municipal solid waste, discarded tyre and tyre chips, expired consumer
goods, waste oil and solvents, effluent treatment sludge, biomass etc.
Clinker substitution
Future technologies
Addition of mineralisers to raw material entering the kiln can reduce the
clinkerisation temperature by about 500C without compromising the
clinker quality. The selection and use of mineralisers is dependent upon
factors such as compatibility with raw materials, desired reaction
effects, economic viability etc.
Geopolymer cement
During the past few years, TERI has carried out energy audits of few
large cement plants in the country and had identified potential energy
saving areas respective to each plant. Major energy saving options
recommended by TERI through energy audits for two such Indian
cement plants that were engaged in production of OPC, PPC and export
of cement are presented in this section. Both the plants have captive
power plants and were using coal as the main fuel input. The average
specific energy consumption for one plant was about 850 kCal/kg, and
for another it was about 892 kCal/kg.
S. No Major energy saving option Estimate investment (in INR lakhs) Energy Saving
1 Replacement of kiln inlet pneumatic 25.0 2 k Cal/kg-clinker
seal with graphite seal
2 Installing variable speed drive for 60 about 13 lakh kWh per
boiler feed water pumps annum
3 Installation of Roto scale for 50.0 2 k Cal/kg-clinker
coal firing
4 Operation of cooling tower fans 20.0 about 5 lakh kWh per
at lower speed annum
5 Feeding of pre ground material 27.0 3 kWh/tonne
(100% VRM) product to cement mill
6 Installation of screw compressors 90.0 about 12 lakh kWh
instead of reciprocating compressors per annum
7 Replacement of HT motor of flash 25.0 about 4.5 lakh kWh per
dryer by LT motor with VVVFD annum
T
he low carbon growth is the potential best solution available for
the long term sustainability of the country’s economy, but it is
also the most unaffordable one. The major roadblocks are:
Any new technology has definite rate of adoption which is very slow to
start with and picks up gradually overtime. This is also directed by the
100
75
Market share %
50
25
0
Innovators Early Early Late Laggards
2.5% Adopters Majority Majority 16%
13.5 % 34 % 34%
Source: Everett Rogers, Diffusion of Innovations, 1962(Blue line denotes the time variance with
new customers and yellow indicates the population)
Cost of technology
Energy efficiency measures are the best low hanging fruits when it
comes to reducing carbon emissions and are also low cost with respect
to changing the equipment. The ESCO model (India Carbon outlook) of
financing is an excellent way to provide finance for energy efficiency
initiatives. But the major challenge remains in assessing the efficiency
as it gets lost in the normal accounting procedures. There is always a
difference between the efficiency promised by the vendor and realized
Energy efficiency at the location. The problem also lies in the handling of the energy
technologies are efficiency measures in current accounting procedures where the clarity
usually dubbed as
in handling savings is absent. The concerns for the financiers lie in the
'trivial' even though
these can provide
credibility of the technology providing the promised returns and lessee
immediate returns paying the promised where the realized varies.
T
he Government of India appears committed to reducing carbon
emissions and has declared a voluntary reduction in carbon
intensity of up to 25% over 2005 levels by 2025. The government
has taken many policy initiatives under the central plan of National
Action Plan for Climate Change (NAPCC). Apart from the NAPCC, the
government has also focused on individual sectors e.g. emphasis on
The Government of
supercritical and ultra-supercritical power plants for all future power
India is taking various
plants in India. Technology support is also arranged from developed
measures like NAPCC,
RPO, PAT to tackle nations by the government for the Indian companies.
climate change
National Action Plan for Climate Change (NAPCC)
The NAPCC has 8 core pillars (National Missions) that represent multi-
pronged, long-term and integrated strategies to achieve the said goals in
the context of climate change and sustainable development. Exhibit 15
explains the various missions.
State Initiatives
Apart from the overall initiative from the central government, the state
governments have also put up plans (Exhibit 16) to boost solar and other
renewable energy initiatives
North-Eastern States, For each of the 100 numbers of Scheme of extending 90% http://pib.nic.in/newsite
Sikkim, J&K, Himachal solar charging stations per subsidy subject to a /erelease.aspx?relid=8
Pradesh, Uttarakhand and district having module capacity maximum of INR 1,35,000/- 3277
Jharkhand of 300 Wp for charging 50
lanterns and 10 mobiles in all the
LWE affected districts
The genesis of the PAT mechanism flows out of the provision of the
Energy Conservation Act, 2001. The Ministry of Power (MoP) has
notified industrial units and other establishments consuming energy
more than the threshold as Designated Consumers (DCs). These DCs
account for 25% of the national gross domestic product (GDP) and
about 45% of commercial energy use in India. The details of DCs
relevant to PAT mechanism are presented in Exhibit 17.
Energy efficiency improvement targets fixed for each sector under PAT
mechanism are “unit specific”. Each unit (DC) is mandated to reduce its
Specific Energy Consumption (SEC) by a certain value, based on its
current SEC (or baseline SEC) within the sectoral bandwidth. BEE has
arrived at these sectoral bandwidths through the baseline studies of
each sector. The total energy saving targets of 8 sectors covered under
first PAT cycle is 6.686 million tonnes of oil equivalent (mtoe).The units
have to achieve the target during the first commitment period ending in
2015.When a unit achieve and surpass the target, it can sell its excess
savings in the form of Energy Savings Certificates (ESCerts), and if a
unit fails to achieve its targets, it is mandated to purchase the
appropriate number of ESCerts to “meet” its energy savings targets.
Each certificate will be unique tradable commodity which will be traded
in two exchanges namely, Indian Energy Exchange (IEX) and Power
Exchange of India (PXIL).
India has announced a levy a clean energy cess on coal, at the rate of
INR 50(~1 USD) per ton of both domestic and imported coal in June
2010. The money will go into National Clean Energy Fund (MoEF, 2010)
that will be used to fund research, innovative projects in clean energy
Carbon cess can
technologies, and environmental remedial programs. This initiative
potentially create a further reduces the monetary gap between a clean fuel and a polluting
level playing field fuel.
between renewable
and non renewable A Brief Analysis of Initiatives
energy sources
Integration of all major initiatives of the government under one umbrella
of NAPCC has put the focus back on the topic of climate change. The
overall action plan pans across various ministries. The sub division into
3000.0
2500.0
RECs(in'000)
2000.0
1500.0
1000.0
500.0
0.0
Dec,11
Jan,12
Feb,12
Mar,12
Apr,12
May,12
Jun,12
Jul,12
Aug,12
Sep,12
Oct,12
Nov,12
Dec,12
Jan,13
Feb,13
Mar,13
Apr,13
May,13
June,13
Jul,13
Aug,13
The labeling program has worked well and marketers are using the star
ratings as a differentiating point for the product as being high tech and
low electricity bill. The sales of high consumption items like air
conditioner, refrigerator, etc for domestic and boilers for commercial are
increasingly being adopted.
T
he financial sector holds the key to the development of any
economy. It has the financial prowess and power to channel the
money available in the economy in the right directions. This
makes the sector the biggest enabler after the government in an
economy. The Reserve Bank of India, the regulator of banks in India,
issues guidelines with respect to priority sector lending by the financial
sector and these guidelines have been the major driver of funds to the
weaker sections of the economy. The same is used by the RBI to
channel the flow of funds to a particular sector. Apart from priority
sector banks finance projects based on their own understanding of
markets and risks. And each proposal is analyzed on the basis of
historical risk that a particular sector or a particular company faces. New
technology is always considered as high risk investments by the banks.
New technologies not only pose risks of default but also provide
opportunities of new business avenues for the financial institution. New
technologies provide better returns to the entrepreneur and in turn
better repayments for the bank. It also provides future growth
opportunity as against the mature technologies. To reap the full benefits
A comprehensive risk
of growing technologies the financial institutions (FIs) should work
assessment of the
current business
towards eliminating the roadblocks and act as enablers of new and
practices against the growing businesses.
climate and natural
resource impact can Natural Capital as a tool
provide a much better
understanding of Financial sector should extend its arm to understand the risks
overall risks associated with new low carbon technologies. The risks should be
associated with the mitigation of climate change risk. The new initiative
of Natural Capital declaration taken by financial institutions (FIs) at
Rio +20 is a step in the right direction. The financial sector plays a crucial
Investors
Senior
buy or underwrite
debt
Special entity
in form of
Sponsor (s) PROJECT Project Bond
EIB
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The Government of India has been rolling out many initiatives under the
various missions of NAPCC including financial guarantees, subsidies,
and priority sector support. These initiatives have been gaining ground
across, but the uptake is not very good because the large FIs have not
come up with robust products to support the cause. The government
subsidies are not utilized fully, and only small and local FIs are utilizing
the opportunity. This makes the percolation of schemes to the
customers even more difficult as the critical mass is not achieved. The
major cause of this gap between the incentive provided, and actual
results are the lack of incentives for the large FIs to look at this highly
risky sector.
T
he government of India has taken various steps including NAPCC
to meet its carbon reduction target. But still there are some
bottlenecks especially in terms of implementation of the policies
and clarity of the guidelines.
The fund can also be used to garner extra resources from public and
private sector by channelizing this fund as partial guarantees to existing
and new environment and green dedicated funds/ bonds. This will help
multiply the effect that the government creates in this sector. Along
with the higher impact it will also shift the burden of implementation off
governments’ shoulder to the fund owners. This will also improve
accountability on the projects.
NCEF should also take cues from the aggregation of all national plans
under one head i.e. NAPCC and work as a common fund to support all
the causes. It is very essential to channel resources in a concerted
manner. This helps keep track on investments in a particular sector,
increases accountability, and measure the impact. NCEF should act as a
common fund which can be used to fund all the missions which gets
funding from the government budget allocations and from carbon cess
like instruments.
Fossil fuels consume India spends a lot in subsidizing fossil fuels and grid electricity for
most of India's subsidy consumption, and the amount has been increasing over the years to
budget and low carbon around USD 39 billion (Exhibit 20) for the year 2011 (IEA). This not only
technologies need a consumes a big proportion of countries resources but also makes the
reduction in subsidies
new and renewable energy options less attractive to the already
to compete with
subsidized fossil fuels. The higher subsidy on fossil fuels entails higher
prevalent technologies
consumption and in turn higher subsidies for the next year. The
government should reduce the subsidy on fossil fuels and provide the
necessary incentives to the new energy sector.
Source: (IEA)
It’s not only that the policy should be framed in consultation with all the
banks, it is also important to make the banks accountable for the
feedback given by them. Banks should be cajoled to offer products that
bridge the gap between the consumer requirements and government
policy incentives. This will not only offer better service but also create a
larger ecosystem for low carbon development of the economy.
T
he BEE & Government of India have taken prudent steps to
identify Power, Steel and Cement sectors as designated
consumers in the PAT scheme and have assigned a cap on their
emissions. But achieving a Low Carbon Economy in India should look
beyond the designated consumers and also focus on other highly
emitting sectors. In this section, we take a brief look at two such
Transport and
sectors – Transport and Buildings and the possible approach that these
Buildings are other
sectors might consider adopting.
major sectors that
need to be targeted to
achieve the goal of low Transport
carbon growth
The transport sector forms an integral part of the economy, ensuring
smooth flow of goods and passengers to keep the wheel of the
economy moving. The major modes of transport in India include
railways, roadways, airways and coastal shipping. Although the railways
alone carried 8.22 million passengers over 1,047 billion passenger
kilometers, and 969 million tonnes of freight over 669 billion tonne
kilometers in 2011-12 (Ministry of Railways, 2012) it was only a fraction
of the total traffic in the country. As of 2011, the railways are estimated
to have only about 13 and 38% of the total passenger and freight traffic
shares respectively (TERI 2013). The remaining shares are largely moved
by the roadways, and less than one percent on air and water.
Efficiency improvement
Given its large share of total mobility in India, the road transport sector
generates the highest volumes of overall emissions. It is estimated that
road transport generated about 87% of the transport sector emissions
(INCCA, 2010); of this heavy commercial vehicles constituted the largest
share. Given that the industrial sector mostly uses commercial vehicles
for its mobility, efficiency improvements in commercial vehicle engine
technologies will make the largest difference in reduction of overall
emissions from the transport used by the industrial sector.
Fuel choices
Although petroleum sources will continue to dominate the fuel mix for
the transport sector as a whole, it is important to move towards cleaner
fuels for a low carbon scenario. There is a need therefore to promote
and use CNG and other forms of natural gas and supplement petroleum
with bio-diesel wherever possible. In addition to this, increasing the use
of electricity in the railways while changing the source of power from
coal fired power plants to renewables and nuclear would help in
reducing overall emissions (TERI 2009).
700000
Others
600000 Traction & Railways
Commercial
500000 Domestic
Agriculture
400000
Indusrtry
300000
200000
100000
0
19 1
20 1
20 2
p)
20 3
09 9
20 4
20 8
6
19 6
20 6
20 6
20 5
20 7
20 0(p
-0
-7
-8
-8
-7
-0
-0
-0
-0
-0
-8
-9
-0
-0
1(
0-
00
01
70
80
90
75
07
02
08
03
85
95
05
04
06
--1
-1
19
19
19
19
10
20
This fast paced growth of the Indian building stock is likely to result in an
enormous demand for energy in the near future.
Others
6%
Refrigeration
Evaporative
13% Lighting 28%
Industry Cooler 4%
39%
TV 4%
Agriculture
19% Others
Fans 34%
10%
(Source: Energy Statistics 2012, (Source: BEE, Figure taken from the Interim Report
Central Statistics Office, MOSPI) of the Expert Group on Low Carbon Strategies for
Inclusive Growth, Planning Commission,
Government of India)
Higher household Higher income will result in increase in the disposable income of the
incomes can households, resulting in increased spending. Growing income will lead
potentially translate to increase in ownership of home appliances and therefore increase in
into an increase in air fuel demand. With reference to the year 2011, by 2021 the electricity
conditioner usage consumption by heating/ cooling appliances and by lighting will grow by
180% and 80% respectively.
Lighting 25%
Internal
loads
15%
Others
HVAC 55% 5%
Residential buildings
Commercial Sector
Way forward
T
he Working group I contribution to the IPCC Fifth Assessment
Report (AR5) has reiterated the fact that the average
temperatures across the location have been highest in the last 30
years (1983 -2012) in a period of last 1400 years. The report also
concludes with high certainty that the temperatures will keep on
increasing in the coming years. These results are a reminder of the fact
that increasing carbon dioxide concentration in the atmosphere is
leading to global climatic changes. As we move towards higher
economic development, we should be prudent enough of our impacts
on the environment.
India is one of the largest and fastest growing economies of the world
and the growth path that it has to choose cannot be the one with carbon
output equivalent to that of the developed nations.
Buildings and Transport are the other two sectors that should be looked
into from a strategic perspective to achieve a Low Carbon economy.
Although segregated in their production and consumption, these
sectors pose a huge carbon impact on India's total carbon emissions
and provide for various opportunities of abatement.
1. “Emerging Energy-saving and CO2 emission reducing technologies in the Iron and
Steel Industry: Worldwide" [Report] / auth. (ISI) Lawrence Berkeley National Laboratory
(LBNL) and Fraunhofer Institute for Systems and Innovation Research. - January 2013.
2. “Low Carbon Strategies for Inclusive Growth" [Report] / auth. Planning Commission
Govt. of India. - May 2011 .
3. A 2020 Low Carbon Economy: A Knowledge Economy Programme Report [Report] /
auth. Levy Charles. - [s.l.] : The Work Foundation, 2010 June.
4. A Roadmap For Research & Development and Technology for Indian Iron and Steel
Industry [Report] / auth. Ministry of Steel Govt. of India. - September 2011 .
5. About Standards and Labelling Program [Online] / auth. BEE // Bureau of Energy
Efficiency. - December 2012. -
http://www.beeindia.in/schemes/standard_and_labeling%20-%20Copy.php.
6. ADB Provides Credit Lines [Online] / auth. ADB // Asian Development Bank. - March 29,
2012. - Decemeber 2012. - http://www.adb.org/news/india/adb-provides-credit-line-
finance-renewable-energy-and-energy-efficiency-projects-india.
7. All India Regionwise Generating Installed capacity [Online] / auth. CEA // Central
Electricity Authority. - July 2013. - September 2013. -
http://www.cea.nic.in/reports/monthly/inst_capacity/jul13.pdf.
8. An Evaluation of India's National Action Plan on Climate Change [Report] / auth.
Byravan S and Rajan S C. - [s.l.] : IFMR Research & IIT Madras, 2012.
9. An overview of Steel Sector [Online] / auth. Ministry of Steel // Ministry of Steel. - July
27, 2012. - December 2012. - http://steel.nic.in/overview.htm.
10. Analysis of existing thermal comfort and energy performance of typical housing
units and proposed measures to enhance thermal comfort and energy efficiency
[Report] / auth. TERI. - [s.l.] : National Housing Bank, 2010.
11. Annual Report [Online] / auth. MNRE // Ministry of new and Renewable Energy. - 2012. -
December 2012. - http://mnre.gov.in/file-manager/annual-report/2011-
2012/EN/content.htm.
12. Annual Report 2012-13 [Report] / auth. Ministry of Steel Govt. of India. - 2013.
13. Application-oriented research [Online] / auth. Fraunhofer Institute // Fraunhofer Institute.
- December 2012. - http://www.fraunhofer.de/en/research-topics.html.
14. Business Responsibility Reports [Report] / auth. SEBI. - [s.l.] : Securities Exchage Board
of India Circular, 2012.
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With a vision to create a synergy for the corporate sector as a whole to move towards
sustainability, TERI-BCSD (Business Council for Sustainable Development) India was set up by
The Energy and Resources Institute (TERI) in 2001. It has now evolved into a strong industry
body, with membership from diverse sectors, including public sector undertakings,
multinationals, and private companies from across India. They work towards evangelizing
business sustainability through industry specific initiatives that provide a platform for
knowledge, learning and encourage sharing of best practices. It is also the Indian partner of the
WBCSD (World Business Council for Sustainable Development), Geneva. TERI-BCSD India
member company representatives identify, conceptualize and implement projects in
partnership with researchers at TERI and the structure of the business council reflects this
partnership. TERI provides research and implementation support to the business council and
acts as the permanent technical resource for various theme specific action oriented projects,
knowledge papers, seminars and capacity building workshops. Membership is by invitation
only. For more information please visit www.teriin.org/bcsd
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