SDG-7: Affordable and Clean Energy

The Brundtland Report “Our Common Future” in 1987 (World Commission on Environment and Development, 1987) set the tone for changing sustainability and sustainable development transitioned from being a scientific idea to a political vision. As politics and businesses are highly intertwined matters, business houses started pushing this concept down from their top management to the end of the corporate chain.

Hedging is an important aspect of businesses to control future risk variables. Business houses with a vision found a safety net against future risks of the ill effects of unsustainable growth. Sustainability had finally arrived as this was now being driven from the corporate levels into the value chains as well as families through their employees.

There is a sudden need to grow sustainably now without relying entirely on government policies and international conferences to provide direction. Greta Thunberg, a 16-year-old Swedish climate change activist openly questioned the veracity of the claims made by business houses in their practices at the September 2019 edition of the United Nations Competition Summer of Solutions, receiving thundering applause from delegates from all over the world to her emotionally laden words, “How Dare You?”

This shows the level of engagement sustainable practices is having among the citizens of the world. As per the Climate Week in New York City, it has been established that there is a dire need for social entrepreneurship as well among the youth to facilitate the achievement of these climate change goals.

Ventures like Wikilimo are striving to meet this deficit in targets. Anurag Saha Roy, the 25-years old founder of Wikilimo from India, stated in the finals of the United Nations Competition Summer of Solutions:

“Ongoing climate action efforts are focused mostly on mitigating the damage done by humans. We also need to prepare for a future where climate change is a reality by developing technologies to support climate-resilient agriculture, housing, and industries”.

Wikilimo leverages quantum mechanics to manufacture accurate sensors that measure gravity to map the impact of business activities and climate change on the world’s oceans.

Having established the current need and relevance, this article will explore the measures of engagement “Sustainable Development Goals” has been having in India and the world. Post relevance in India, we shall be introspecting on the business implications of Sustainable Development and the various business schemes launched by behemoths across industries.

Relevance of the SDGs to India & steps taken by govt to meet the goals of the SDG:

India is projected to be a significant contributor to the worldwide rise in demand for energy resources, around 25% of the total. Energy access is a massive economic opportunity for India wherein some estimates put it at $48 bn. per year by 2030. It is very likely that India, home to around 200 million unelectrified homes, would be able to deliver the Sustainable Development Goal 7 (SDG7) - a universal access to affordable, modern, sustainable and reliable energy by 2030.  In light of such commitments, India needs to pull up its socks and make the most out of several initiatives by the government and other international organisations. Without the help of the states and the private sector, it is impossible for India to achieve the desired DRE(Decentralised renewable energy) scale needed to achieve this goal.

India produces renewable energy to the tune of around ~35% of its total energy requirements and only ~45% of the population has access to clean cooking, the rest thrives on traditional means like biomass stoves which causes air pollution claiming one million premature lives every year in the country. The energy efficiency is 4.5 (MJ as per 2011 PPI$) of India as compared to the global average of 5.27. From this place to the goal set forth by 2030, it’s a tall ask. However, the picture is not completely dark. There are several initiatives which have been taken to improve the prevailing conditions and strive towards the goal set by 2030.

From 86% of the population having access to electricity in 2017 beginning to 93% at the end of 2018, India is seeing rapid expansion in terms of hunger for energy and its various forms. The rural population has seen an unusual growth in the consumption of energy, the change is very likely to be post-implementation of the Prime Minister’s Saubhagya Scheme by promising $5.2 bn. to help states to reach there wherein it was planned to electrify all households in India by Dec 2018 which as of now has not been completely fulfilled. The Indian Government’s National Solar Mission is playing an important role in providing renewable sources of energy. World Bank’s grant of $625 mn. has helped a lot to set up solar farms across the country. Pradhan Mantri’s Ujjwala Scheme to provide gas connections to all rural households in India has so far reached a count of 8 million which is a big step towards affordable energy. From here, we need to take it to the next step to reach our committed goal by 2030.

Business Implications & Corresponding Initiatives:

After the Industrial Revolution, fossil fuels have helped many people to rise above poverty and helped societies to advance in many sectors like education, health, living conditions, etc. But in today’s time, we can’t take the risk of damaging the environment further by continuing the usage of non-renewable fossil fuels.

Right now, fossil fuels dominate the power sector. However, it is expected that their share of energy generation market to decline from 68 percent in 2011 to 57 percent in 2035. According to BP (British multinational oil and gas company), the world’s primary source of power will be renewable sources of energy within two decades. The company further commented that solar, wind and other renewable sources would account for about 30% of the entire world’s supply of electricity.

The worldwide renewable energy market was having a value of $928.0 billion in 2017 and is expected to have a value of $1,512.3 billion by the year 2025, thus having a CAGR of 6.1% from 2018 to 2025.  It is projected that India will be one of the significant contributors to rising global energy demand, around one-fourth of the total.

The government of India has ambitious green targets due to which this sector has become quite lucrative for both domestic as well as foreign investors. According to India Brand Equity Foundation, in the next four years, the renewable energy sector is expected to attract investments of up to $80 billion. Many key players are using strategies like acquisition, partnership, product launch, collaboration, and business expansion to remain competitive in the market. BLP Energy Private Limited, a subsidiary of Enel, won the first-ever renewable energy tender in India and is expected to invest $290 billion in the construction of the wind farm. The wind farm will be generating approximately 700 GWh of renewable energy every year.

The renewable energy market is classified into wind power, bioenergy, hydroelectric power, geothermal energy, and solar energy. While solar energy is expected to grow at the highest growth rate, the hydroelectric power segment is expected to dominate the market.

Johnson & Johnson

This healthcare company has a 33-year long history of being committed to Energy Leadership. It was in 1986 that it established its formal energy management program. Since building two 3-megawatt wind turbines in Ireland in 2014, it has added two more turbines totalling to 12 megawatts. J&J has also entered into a power purchase agreement for a 100-megawatt wind farm which will help replace 60% of their current electricity consumption in the United States.

Nestle

According to Nestle’s 2018 Progress Report on creating shared values, the company recognises how climate change is a global phenomenon affecting farmers and all those who supply to the company. Thus, Nestle is committed to buying renewable electricity and has already succeeded in implementing this 100% in France since 2018 avoiding 9,67,000 tonnes of CO2-eq.

General Electric

This company claims that sustainability is not just an initiative or part of CSR for them, rather it is what forms a crucial aspect of their core business strategy. According to their 2016 Sustainability Report, they invested $2.7 billion in cleaner technology solutions across fossil fuels, renewables and the grid. They have achieved innovations in this arena through their grid-parity wind power and 65% efficient, combined cycle gas power plants. Not restricted themselves to innovation in energy, they have also used automation and IT through their Predix operating platform to reduce energy by applying energy management data insights.

Amazon

This widely known company does a lot to align its operations with several of UN specified Sustainable Development Goals (SDGs) and SDG 7 happens to be one of the 4 major SDGs which the company focuses on. As quoted by Kara Hurst, Amazon’s Worldwide Director of Sustainability, “Investing in renewable energy is a win-win-win-win – it's right for our customers, our communities, our business, and our planet.” The company’s Wind Farm Texas, an array of 300-foot-tall white turbines is a reflection of this ideology which is contributing to more than 1 million megawatt hours of clean energy to the grid every year. Not only this but Amazon has invested in several wind and solar projects across the US (having launched 18 already) which are expected to generate clean energy that would be sufficient to power more than 330,000 houses every year.

Analysis and Suggested Path:

Though clean and affordable energy is the future goal that every country, government, and organization is working for, there are certain caveats to do this as well. Scientists have warned that our growing energy needs may be difficult to keep up with the rapid transition to renewables. This transition requires a tremendous amount of extraction of metal ores and rare-earth minerals, which can come at the expense of ecological and social costs. While trying to meet the goals of Affordable and Clean Energy, we also need to consider other goals being affected.

Recently (2018), World Bank released a report that specified a rough estimate of minerals and metals that will be needed by 2050. To produce seven terawatts of electricity by 2050, and to ensure zero emissions, around 4.8 billion tons of iron, 162 million tons of aluminum, and 34 million tons of copper will have to be extracted, which is a staggering number! Since wind energy is expected to capture a major segment of renewable energy by 2030 in European countries, the extraction of neodymium, which is an essential element in wind turbines, is expected to rise by nearly 35% over current levels. Even the extraction of silver, which is the main component of solar panels, is bound to triple in the next decade. Sustainable resource use under SDG 12: Responsible consumption and production will be deeply affected by the activities.

Though we need renewable energy to cater to zero emissions and to reduce the carbon footprint, the concern here is not that minerals are going to be exhausted, but it is with the perennial issue of over-extraction. Mining activities have been a bane for our environment, with it being the primary reason for deforestation, leading to the collapse of ecology and biodiversity loss. Our goal of protecting natural habitat and biodiversity under SDG 15: Life on Land also takes back seat in the pursuit of fulfilling our energy needs. The Brazilian president, Jair Bolsonaro, is planning to develop nuclear and hydroelectric power in the Amazon Basin, thereby giving more leeway to mining activities in that area, which was one of the primary reasons for the rainforest fire. Hence the focus should not only be on universal access to energy, but also on finding a sustainable way to do so. The target of doubling the energy efficiency becomes even more crucial now. For that to happen, there must be equal progress in Industry, Innovation and Infrastructure, SDG 9. To help the developing nations, there should be enhanced international aid to build a resilient infrastructure. This will not only provide clean energy to the areas devoid of it, but also help in economic growth of those areas and decent work opportunities, thereby catering to SDG 8. With clean and accessible energy in developing nations , people will be able to eat better, use technology in agriculture to increase their productivity and inch closer to ending hunger at a global level.

Having said that , renewable sources of energy are essentials for a clean environment, like electricity generation, as per current standard norms, which is one of the significant contributors to air pollution. Renewable energy sources do not produce CO2 and other climate change triggering pollutants. In some cases, renewable energy is more reliable than traditional forms. One such example is the electricity grid. If the grid is run by photovoltaics(PV), it ensures a continuous supply of electricity, without the possibility of a breakdown.

The Indian government is doing its share towards adopting clean energy by allowing FDI up to 100% in the renewable energy sector. A new Hydropower policy has also been set up for a ten-year window, from 2018-28, with its focus towards the growth of hydro projects in the country.

Hence, it is clear that energy should not only be renewable, but should be sustainable. If production of renewable energy ends up costing more energy than it produces during its lifetime, then we should rethink our strategy and come up with improved methods of producing energy.

References:

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