Group 6_B | SDG 7: Affordable and Clean Energy

Introduction to SDG 7

Energy and access to it in terms of quantity, quality and price is a key differentiator for the wealth, economy and prosperity between nations and its citizens. With ever-increasing global population, energy demands have risen manifold over the last few decades. Even though the world is producing and consuming more energy than ever before, 789 million people are deprived of access to electricity and 2.8 billion people still lack access to clean cooking. Hence, the United Nations has set for a global push for last mile access to affordable and clean energy.

Sustainable Development Goal 7 (SDG 7) is ‘Affordable and Clean Energy’ and aims to ‘ensure access to affordable, reliable, sustainable & modern energy for all’ by 2030. The importance of energy can be understood with food, a basic human need. For 2.8 billion people without access to cooking fuel, skill development, education and proper health are distant dreams.

SDG 7 goes beyond just providing access to energy. It emphasises on ‘clean’ and ‘affordable’ energy. There is a focus on renewable energy (<20% of global energy) since these are better than the abundantly used non-renewable sources such as crude and coal (>80% of global energy). Without clean energy, our future looks bleak as non-renewable energy contributes about 60% of greenhouse gases. The clean energy must be affordable so that it can be available to people around the world. Over the past years, there is a drop in production rates along with increased R&D in wind, solar, tidal, biomass and other clean energy sources. The fulfilment of SDG 7 is also extremely critical to achieve other SDGs like SDG11 (Sustainable Cities and Communities) and SDG13 (Climate Action).

Relevance of the SDG to India

The Indian energy sector or the consumption has been to the tune of 35~37 Exajoules annual in the past 2 years and the nation is the third largest consumer in the world followed by China and the US. A meaty ~70% of the same is served by sources like coal and oil. Although this comprises of many forms of energy like electricity, nuclear, solar, heat etc. we would lay emphasis on electricity and understand it in more detail. In terms of contribution of clean and renewable sources of energy for electricity, India is at 34%, higher than the global average of 17.5% but way behind some of the smaller economies like Brazil and Nigeria. There has been a decline in the contribution from 60% in 1990s to ~34% in 2018.

The projections for the country are that its consumption will go up to 120 exajoules by 2050, but concern has been the decline in the share of clean and renewable energy sources. If we try analysing, the major reasons can be attributed to the higher growth aspirations for the economy fuelled by short term investment, cost of energy being relatively higher (for example the cost of Solar energy turned out to be approx. Rs 8 per Kwh as compared to coal Rs 7 per Kwh till 2019), accessibility (although the wind energy was cheaper alternative but getting the same harnessed was a challenge) and enough policy level impetus by the governments.

With awareness and the rankings in SDG7 government are taking a multi fold approach to tackle the problem. Reducing the dependency of conventional sources, at the same time investments and alliances for long term capacity building. Some examples are:

a) Policy level: Introduction of FAME policy framework for Electric vehicles adoption for the ecosystem and committing investments.

b) Sino Indian Partnership: Which aims at sharing of means with the close neighbour China to utilize the synergy of scalable solutions they build.

c) Strategic distribution: Government aims to cover the 15% accessibility deficit to electricity in rural areas by means of setting up capacity from the available sources of wind, solar, biomass and hydro to reduce the transmission costs and losses, in total aiming for 175GW energy from renewable sources. Also, this would keep the cost for consumption low.

Business Implications & Responses

As per the United Nations Global Compact 2016 CEO Survey, only 59% of companies reported that they can accurately quantify the value of their sustainability initiatives. The Business for 2030 initiative draws attention to the tremendous opportunity for the private sector to demonstrate their role in achieving the goal of clean and affordable energy.

Modern society has been dependent on reliable and affordable energy services to function and develop. From medicine & education to agriculture, infrastructure, communications, and high-technology - the sheer scale of energy reliance calls for a shift from the historically inexpensive and energy-dense fossil fuels to newer and cleaner means. This move is one of the quickest ways to reorient development along a more sustainable trajectory.

Businesses have been called upon to invest in renewable energy resources, prioritize energy-efficient practices, and adopting clean energy technologies and infrastructure. Also, with investment in R&D, businesses are expected to innovate and pioneer new technologies that can help them become the centre of climate change solutions. In addition to increased corporate reputation, investing in renewable energy guards against volatile fossil fuel prices and ensures a consistent supply of energy for years to come.

Bajaj Auto

Bajaj Auto promotes installation of solar panels at major vendor locations. In FY 2019-20, 34 of their vendors installed 9 MW (cumulative 30 MW) roof top solar projects generating green power and reducing greenhouse gas emissions. Bajaj Auto achieved 9.19% reduction in power consumption and installed energy efficient Screw Compressor to reduce electrical consumption by 7.5% at their plant in Waluj.

Mondelez International

In the year 2020, Mondelez specifically made advancements towards environmental sustainability by reducing absolute CO2 emissions from manufacturing by 10%. They developed environmentally sustainable wheat production practices through their Harmony sustainable wheat program across Europe, achieving a 20 percent reduction in pesticide use.

Boston Consulting Group

Boston Consulting Group (BCG) understands the seriousness of the climate crisis and recognizes the urgent need to reduce global emissions to 0 by 2050. BCG worked on 350+ climate and environment projects with more than 250 organizations in 2019 and invested in facilitating $300 million in climate and environment consulting projects. They obtained a 15% reduction in carbon emissions and supported 11 climate-mitigation carbon-offset projects worldwide to maintain carbon neutral company certification.

Citi Group

Citi is building upon a long track record of sustainable finance commitments by establishing a new five-year $250 Billion Environmental Finance Goal to accelerate the transition to a low-carbon economy. They have added additional criteria on the circular economy, sustainable agriculture, and land use and have also consolidated elements of emerging frameworks, such as the EU Taxonomy.

Microsoft

Microsoft has pledged to make itself net-carbon negative by 2030. It has taken a step forward and by 2050, has pledged to remove all the carbon it has emitted since its inception. They plan on achieving this by increasing their percentage use of renewable energy to 60% by early 2020s, an increased internal carbon fee from its 2012 levels, and a new $1 billion climate innovation fund to accelerate global development of carbon reduction, capture and removal technologies. They’ve already implemented a shift to 1100 MWs of renewable energy across 9 of their locations.

Amazon

The e-commerce giant is working on its aim to have 100% renewable energy-based operations by 2025 as part of their larger plan of becoming zero carbon by 2040. Already the company has capacity of generating 2900MWs of the same across 90 plants in world, with 6 in India itself. The modes chosen by them are across wind and solar energy. Even with their flywheel concept they can push emphasis on the sustainable development to their sellers. One of their biggest sellers Cloudtail in India is already working on responsible e-waste management and recycling.

Analysis

The SDG 7 of Clean and Affordable Energy is further bifurcated into three broad categorical goals of access to the electricity and clean cooking energy (SDG 7.1), renewables (SDG 7.2) and energy efficiency (SDG 7.3).

We have analysed the progress towards these goals based on the data provided by the International Energy Agency (IEA), which is the main data source for tracking the official progress towards the SDG targets set for SDG 7.1, SDG 7.2 and SDG 7.3.

The data analysis is presented here separately for access to electricity, access to clean cooking energy, modern renewables and energy intensity

There was a drop in number of people with no access to electricity for past 6 years before 2019. The number in 2019 with no access to electricity was 770 which was a record low. However, due to the pandemic, this trend seems to have reversed and is set to increase in 2020 in sub-Saharan Africa. This pandemic has pushed countries farther away from achieving the goal of universal access by 2030. As per reports, in developing Asia 96% people had access to electricity in 2019 compared to 67% in 2000. In India, the Saubhagya Scheme launched in 2017 led to 99% of the population having access to electricity by 2019.

The number of people with no access to clean cooking facilities was 2.9 billion in 2010 which has declined to 2.6 billion as of 2018. These people still use solid biomass, kerosene or coal as their primary cooking fuel. Although declining, but the rate is very slow and the pandemic might reverse the trends. In Developing Asia, itself almost 65% population is without access to clean cooking facilities. However, as per the latest reports more than 670 million people have gained access to these facilities since 2010. As of the 2018, the access rates in India and China were 49% and 71% respectively. Between 2010 and 2015, the number of people using traditional facilities has reduced by 10 percentage points in India, with more and more people switching to LPG. The government has also added 80 million free LPG connections since 2015. Various other countries are also trying to adopt cleaner facilities as per their national context.

As of 2018, modern renewables accounted for 11% of the total final energy consumption and is expected to reach 15% as of 2030. However, as per IEA’s Sustainable Development Scenario, the target was 23% by 2030. Nevertheless, there has been significant growth in the usage of modern renewables compared to traditional energy sources.

There had been significant energy intensity improvements globally in the early part of the decade. However, in 2017 there was a 1.7% improvement in energy intensity which was the second consecutive year of slowing improvements. It was predicted that in 2018 this rate would be even lower at 1.2%. The target for SDG 7.3 is to achieve 2.6% improvements in annual energy intensity. The current rate has further slowed down because of the ongoing pandemic. As per current policies in the Stated Policies Scenarios, this rate of improvement is targeted to reach 2.4% by 2030.

Suggested path

We have tried to suggest the path forward going by the framework set by the IEA for analysis which tells what our position will be if we carry out the way we are (the Stated Policies Scenario-STEPS), and how we need to proceed in order to successfully achieve our SDG targets (the Sustainable Development Scenario-SDS).

In order to combat the risk of progress reversal towards access to electricity that we face due to pandemic, strong policy support along with international cooperation will be needed. This scenario requires around $35 billion to be spent annually from 2021 to 2030 on generation and electricity networks through smart and efficient integrated delivery programmes, and making full use of decentralised solutions. The uncertainties arising from the COVID crisis would hinder progress by reducing the ability of households to pay for energy services, and hence mobilising financial institutions and donors is critical to ensuring that the energy access progress continues.

Governments and donors need to put access at the heart of recovery plans and programmes in order to achieve universal access to cleaner cooking facilities by 2030. Realizing a dramatic acceleration of 2.8 billion people gaining cleaner cooking access for the first time over this period, requires clear ambitions and effective programmes that support affordable solutions for the poorest of households and the development of efficient infrastructure. Provision of LPG and improved cookstoves along with alternative fuels for cooking, such as biogas or bioethanol could help accelerate the progress depending on local circumstances. Other innovative technologies currently being explored that need to promoted for future use include electric pressure cookers powered by solar PV and a battery, and renewable LPG which would provide locally produced sustainable energy source in certain specific areas.

For achieving the target objectives of SDG 7.2, a tremendous increase in the use of renewable energy is warranted. The fraction of modern renewables in total final energy consumption needs to be increased at more than twice the rate which is being observed since 2000, to reach 23% by 2030. Increases in electricity generation from renewables, led by wind and solar PV, need to account for 60% of the increase in the use of renewable energy, with generation from renewables, overtaking coal by 2023, to supply 49% of electricity in 2030. Direct use of bioenergy for heat and transport should be at least 30% of the increase in renewable energy while solar thermal and geothermal together should account for 10%.

Lastly but most importantly, there is required a switch to electric vehicles for transport, improvements in efficiency across industrial sectors and stringent building energy codes for both new and existing buildings, including the electrification of building heating.

Sustainability reports of SIP companies

Mondelez: 2019_MDLZ_Snacking_Made_Right_Summary.pdf

Boston Consulting Group: https://www.bcg.com/publications/2020/making-a-difference-2019-annual-sustainability-report

Citibank: https://www.citigroup.com/citi/sustainability/

Bajaj Auto: https://www.bajajauto.com/-/media/bajaj-auto/Investors/Annual-Reports/BAL_BRR_2019-20_INDI.ashx

Cloudtail: https://www.cloudtail.in/e-waste-policy.php

Microsoft: https://blogs.microsoft.com/wp-content/uploads/prod/sites/5/2018/04/MSFT.Map_.Final_3_28_18.pdf

References

1. https://in.one.un.org/page/sustainable-development-goals/sdg-7/

2. https://www.undp.org/content/undp/en/home/sustainable-development-goals/goal-7-affordable-and-clean-energy.html

3. https://unstats.un.org/sdgs/report/2020/goal-07/

4. https://www.statista.com.xlrij.remotexs.in/statistics/263455/primary-energy-consumption-of-selected-countries/