Goal 7: Affordable and Clean Energy

INTRODUCTION:

The objective of this sustainability goal is simple and straightforward, to provide easy access to sustainable, reliable and cheap energy to the masses. In recent times the access to energy has increased, and the use of fossil fuels has had a visible impact on the climate across the world. It has become one of the most pressing challenges across the world with several countries (including India) taking steps to provide cleaner energy, as mentioned in the subsequent discussion. Businesses need to play a significant part to achieve this goal as we move forward. They have been incrementally adopted cleaner sources of energy, primarily solar energy as it helps them save cost, but they still have a long way to go.

Despite all of this, around 1 in 5 people don’t have access to energy [1]. As the demand for energy rises further, it will require us to keep the share of renewable energy high while fulfilling this demand for affordable energy. We are aware of renewable forms of energy like solar, wind, water and earth’s heat and over the years plenty of research has gone into them to bring their prices close to the levels of traditional energy resources. The task now is to adopt them on a large scale and ensure that cost-effective standards are adopted so that we can provide universal access to affordable, sustainable energy by 2030 [2].

RELEVANCE OF SDG IN INDIA:

A country can never achieve growth or development without sustainable access to energy to its citizens. And as far as India is concerned, we need to ensure that the energy needs are fulfilled in a cleaner way to control the pollution levels that ail almost every major city in the country. In early 2018, the government declared that under the Saubhagya scheme India has achieved 100% electrification of the villages and by mid-2019 almost 99.93% of the “willing” households had been electrified [3]. Most states claim 24x7 supply to urban households, but most do not have any mention of rural households signalling to the fact that despite the wire lines reaching the homes, there is no guarantee of electricity flowing through them. Only unions territories claim to provide 24x7 power to rural households as well. Another dubious claim is that of “willing” and “unwilling households”. For example, in UP, only 60% of the initial target of electrifying 1.2 crore households has been achieved, citing that the rest of the households were “unwilling” [4].

Now looking at the clean energy part of it. India has made substantial strides in this department and has set some lofty goals to achieve in the long run. India will be well-positioned to meet the requirements of the Paris climate pact. We have set a target of achieving 175 GW of electricity from renewable energy sources out of which 100 GW is supposed to be generated as solar energy, 60 GW of wind energy and 10 GW of biomass [5]. The government claims that they are well on track to achieve the target as we have already reached 83 GW of energy from clean sources and 29 GW in under installation. This amounts to a total of 112 GW, 30 GW which is underbidding as of now and the remaining is being planned. India has also formed, in partnership with France, the international solar alliance (ISA). Apart from that, India is already the cheapest producer of solar electricity in the world which is going to push its ambitions further and help achieve the target of clean energy although concerns remain on the “Energy for all” part of it [6]. 

BUSINESS IMPLICATION AND RESPONSE:

Businesses which invest in renewable energy will benefit greatly from the numerous opportunities that come with the energy transition such as cost savings, increasing efficiencies and appealing to conscientious people. Companies are also realizing that a total transition cannot be made by one single firm and thus are collaborating with their suppliers, customers and even competitors for long term sustainability. Initiatives such as RE100 (100% renewable energy), EP100 (Energy productivity) and EV100 (Electric Transport) have seen a recent increase in the number of companies complying. [7]

Also, incorporating sustainable methods of energy generation at this stage allows businesses to combat disruptions due to other pressing issues such as climate change, a dearth of non- renewable resources and any government regulations that might dissuade their current energy decisions. This, in turn, has resulted in companies adapting to newer technologies, shifting from traditional coal-powered plants to solar-powered energy sources, hydroelectric power plants and waste heat recovery systems to generate power.

The cost of producing solar power has come down drastically since 2009, so much so that it is now cheaper to produce a unit of solar power compared to a unit of energy from coal. [7] Solar, wind, hydropower plants also require more workforce than fossil fuel industries; thus, it would help generate more employment and help the economy. These power plants also help improve the quality of air, water etc. and reduce GHG emissions, thus improving quality of life for the community around them. [8]

The uses of such sources of energy come with an added cost. In recent times, going green is a PR strategy for companies and help them gain visibility in the market. But there is also growing concern and awareness regarding climatic changes and their impact on humankind. Even the investors have now shifted the focus from profit to more sustainable ways. Many companies and governments are also trying to accommodate the cost on the environment in their financial statements through concepts like shadow carbon pricing. 

Many international companies have taken initiatives towards creating awareness and helping the transition towards clean energy. Samsung has launched an app called ‘Samsung Global Goals’ in association with UNDP for galaxy users where people can read about the sustainability goals and also donate. This app aims at utilizing technology to make people aware of one of the most important global concerns. It has also mentioned in its sustainability report that by 2020, 100% of its energy requirements in China, USA and Europe will be met through renewable sources of energy. [10]

Colgate Palmolive has pledged to decrease its GHG emissions from manufacturing by 25% compared to 2002. It is also targeting to fulfil 25% of its energy requirements from renewable sources of energy. [11] GE is also working aggressively to incorporate greater use of renewable sources of energy. It has designed a jet engine GE9X which will emit 45% less smog and 10% less CO2. Also, Haliade-X Offshore Wind Turbine will produce 45% more energy than the conventional wind turbines [12] Hindalco on the other hand, has put around INR 153 crore to procure machines which use less energy than the conventional ones. [13] P&G is also aiming at reducing truck transportation by 25% per unit of production. Along with that, it has also reduced its energy consumption per unit product by 20% and plan on operating its plants with 30% renewable energy by 2030. It is also working meticulously towards replacing raw material derived from petroleum with more energy-efficient resources.[14]

In India, however, many companies find it hard to take initiatives in renewable energy. Top companies spend on different CSR activities such as education, sanitation, etc. but not clean energy. One reason for companies shying away from CSR in clean energy is that there is some technical knowledge required for understanding the implications and workings of renewable energy generation plants. Government policies and provisions might help in this area. [9]

ANALYSIS:

As the latest reports indicate, the world is falling behind in reaching the set targets. The International Energy Agency (IEA) has developed two scenarios for benchmarking progress: the New Policies Scenario and the Sustainable Development Scenario. New Policies Scenario takes into consideration the current policies and concludes that the targets set by SDG7 will not be achieved by 2030. On the other hand, the Sustainable Development Scenario develops a scenario in which the energy targets could be achieved. [15]

Individually, the targets for different areas of SDG7 bring us to the following conclusion:

1. While a substantial amount of progress has been made in providing access to electricity, the world at large does not seem to be on the track to achieve the targets by 2030. While the annual global rate of furthering access has been about 0.8 percentage points and several countries would reach full access by 2030, the people deprived of access to full electricity would be in Sub-Saharan Africa with IEA projecting that 89% of electricity deprived people would be living in this region. Asia is expected to have the fastest progress. The efforts by India to provide electricity to every village and its aim to provide 24/7 reliable access to electricity to every household by 2020 is reflected in these projections. [15]

2. Similarly, access to clean cooking displays a trend short of what is required to reach the targets. Under the new policies scenario, while the population cooking with inefficient fuels would reduce by 2030, 26% of the population would still be using polluting fuels. While in India, schemes like Pradhan Mantri Ujjwala Yojana (PMUY) have been developed to promote the use of LPG targeting low-income households, 500 million people are still projected to be using the traditional biomass for cooking. [15]

3. The evaluation of renewables is difficult because of no numbers being attached to it. The New Policies Scenario projects the modern use of renewables to be only about 15% by 2030, while the Sustainable Development Scenario projects a figure of 22%. A strong policy support is needed coupled with reduction in costs of solar photovoltaic and wind technology to increase renewable electricity deployment. [15]

4. The energy efficiency improvements between 2017 and 2030 are expected to grow at an average rate of 2.4% per year as opposed to the 3.5% per year requirement for the scenario where the energy efficiency potential is maximum. Hence, a large part of the efficiency potential will remain untapped and would fall short in achieving the 2030 target. [15]

PATH AHEAD:

Electricity is a basic necessity for everyday life. The national governments must be proactive in ensuring that it is available, accessible and affordable to every individual. Very robust policymaking needs to go into achieving this objective.

As we have started to notice the perils of pollution primarily caused by the usage of conventional sources of energy, the dedicated focus needs to be shifted towards generating and consuming clean energy. All the stakeholders have to be engaged for this, including governments, municipalities, private corporations, state-run businesses, and finally the end-users. 

We have come a long way since the introduction of the concept of renewable energy. Governments and the general public are recognizing the need for adopting renewable energy and slowly reducing the dependence on the renewable sources of energy. The discussions around this topic have intensified. However, the pace needs to be accelerated. Removing complete dependence on conventional sources like Coal is highly unlikely as the energy generated by the renewable sources is highly fluctuating in nature. The fulfilment of the baseload demand can only be done through conventional non-renewable energy sources. For mitigating this component, enough investments must be made in the energy storage technology, which is still in the developing stages, and hence consumption of electricity must be done simultaneously with the production. Storage technology is currently inefficient or expensive, which hinders the adoption of renewables on a mass scale. [16]

Besides, generating more electricity, efforts must also be put in utilizing the electricity at an efficient rate. Energy-efficient appliances, waste heat recovery technologies in blast furnaces, regenerative technologies in public transport, are some of the ways through which this can be achieved. Efficiently using electricity and incentivizing this behaviour will help in ensuring that everyone has access to electricity at an affordable price. Globally, the ratio of energy used per unit of GDP fell at a pace of 2.8% in 2015, which still falls short of the 2.6% needed to meet the SDG7 target by 2030. [17] This issue needs to be tackled to meet our goal, and that should be the target going ahead.

Citations:

1. Goal 7: Affordable and clean energy. (2019). Retrieved 5 December 2019, from https://www.sdgfund.org/goal-7-affordable-and-clean-energy
2. Why Sustainable Development Goals should be in your business plan. (2019). Retrieved 5 December 2019, from https://www.ey.com/en_gl/assurance/why-sustainable-development-goals-should-be-in-your-business-plan
3. Bhaskar, U. (2019). 26.02 million households get electricity connections under Saubhagya scheme. Retrieved 5 December 2019, from https://www.livemint.com/politics/policy/26-02-million-households-get-electricity-connections-under-saubhagya-scheme-1554018490695.html
4. Is 100% electrification another myth before polls?. (2019). Retrieved 5 December 2019, from https://www.downtoearth.org.in/news/energy/is-100-electrification-another-myth-before-polls--62653
5. Renewable energy in India. (2019). Retrieved 5 December 2019, from https://en.wikipedia.org/wiki/Renewable_energy_in_India
6. How India in a short period of time has become the cheapest producer of solar power. (2019). Retrieved 5 December 2019, from https://economictimes.indiatimes.com/small-biz/productline/power-generation/how-india-in-a-short-period-of-time-has-become-the-cheapest-producer-of-solar-power/articleshow/70325301.cms?from=mdr 
7. SDG 7: How business is acting as a market shift for renewable energy - The Climate Group Blog. (2019). Retrieved 5 December 2019, from https://www.edie.net/blog/SDG-7-How-business-is-acting-as-a-market-shift-for-renewable-energy/6098653
8. SDG 7: How business is acting as a market shift for renewable energy - The Climate Group Blog. (2019). Retrieved 5 December 2019, from https://www.edie.net/blog/SDG-7-How-business-is-acting-as-a-market-shift-for-renewable-energy/6098653
9. Rajappa, A. (2019). How low CSR in the clean energy sector is hurting India. Retrieved 5 December 2019, from https://yourstory.com/2018/01/low-csr-clean-energy
10. https://www.samsung.com/us/smg/content/dam/s7/home/aboutsamsung/sustainability/report-and-policy/sustainability_report_10242019/Sustainability_report_2018_en.pdf
11. https://www.colgatepalmolive.com/content/dam/cp-sites/corporate/corporate/en_us/corp/locale-assets/pdf/Colgate_CorporateSocialResponsibility_SustainabilityReport_2017.pdf
12. Sustainability | GE Sustainability. (2019). Retrieved 5 December 2019, from https://www.ge.com/sustainability/
13. https://sustainability.adityabirla.com/pdf/reportspdf/hindalco-sustainability-report-fy19.pdf
14. (2019). Retrieved 5 December 2019, from https://www.pg.com/citizenship2018/index.html#/Environmental-Sustainability
15. Anon, (2019). [online] Available at: https://www.pg.com/citizenship2018/index.html#/Environmental-Sustainability [Accessed 3 Dec. 2019].
16. Chooseenergy.com. (2019). [online] Available at: https://www.chooseenergy.com/news/article/what-is-the-future-of-renewable-energy/ [Accessed 5 Dec. 2019]
17. World Bank. (2019). Progress on Global Energy Goals Slow, but Strong Gains in Countries Show Promise. [online] Available at: https://www.worldbank.org/en/news/press-release/2018/05/02/sustainable-development-goal-sdg-7-global-progress-report [Accessed 5 Dec. 2019].

Authored by: Ashish Gangal, Niharika Nath, Nivedita Singh, Sajal Garg, Shaurya Sharma, Silpa P.S. 
Section: Group 7, Section B, PGDM (BM), 2019-21 Batch.