Group2_A | SDG 7: Affordable, clean and Energy

Developments and Sustainability exposures - Determining the feasibility of SDG 7 in India

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The goal of affordable and clean energy envisions universal access to modern energy services, improving energy efficiency, increasing the share of renewable sources in total energy production, fostering innovative developments in the cleantech arena, and finally catalyzing the corresponding international cooperation achieves such objectives by 2030.

Change in Electricity generation by sources (Figure 1)

The global scenario indicates the ill effects of Covid-19, which have been reversing the trend for energy accessibility. It is estimated that around 100 million people with electricity connections can be pushed back to more inefficient mechanisms. However, generational energy sources are witnessing dimensional transformation, with the share of renewables rising rapidly (Figure1). Clean energy investments are expected to fall 8%, while energy demand is expected to fall 7% in 2020 with faster recovery, indicating a multiplier effect on carbon emissions. This also impacts the indicator of energy efficiency, which is heavily dependent on utility infrastructure and clean energy assets. Energy efficiency monitoring requires data reliability, whilst the majority chunk of energy use is not covered by the stated policies. The positive side of energy efficiency shows that TPES/GDP or the total primary energy supply per unit of GDP has decreased by 35% in the period 1990-2017, although there are some geographical variations (Figure2).

TPES and GDP for the period 1990-2017(Figure 2)

In the Indian context, energy accessibility has improved significantly in the previous decade. Since 2014 there have been electrification drives in rural and remotest parts of the country. India achieved 100% electrification in the year 2019 under the Saubhagya scheme, where 2,52,51,880 homes were connected to the grid (Figure 3). With respect to clean cooking, the campaign by the present-day government led to 1 crore people willingly giving up LPG subsidy, and there have been 80 million additions in LPG connections till Sep 2019 under Ujjwala Yojana. But still, 90% of non-poor household LPG bills do get subsidized.

Energy subsidies and taxes play a role in ensuring distributional justice. Schemes like PAHAL, which fits under direct benefit transfer of LPG subsidies, have helped the government save $8.8bn and led to the addition of 247 million LPG consumers. Aadhar linking smoothed the implementation. Support programs for universal electricity access like Deen Dayal Upadhyay Gram Jyoti Yojana for provision of budgetary support to rural electricity needs. In 2018, the government achieved the milestone of electrifying 100% of villages (10% of households and public services infrastructure are connected to the national grid). Under national electricity policy, the government subsidies the electricity cost to agriculture and the citizens in the BPL category (feeder separation of agriculture ensured to avoid overcompensation of agriculture under two schemes).

The most important pre-requisite to ensure energy accessibility and affordability remain the financial health and the solvency of the power/energy sector. There are 67 Discoms owned by the state who are facing serious leverage distress, and consequently, the present-day dispensation came up with the UDAY scheme, whereby states agreed to convert 75% of DISCOM debts into state govt bonds. Efforts to reflect of cost of electricity supply in tariff after removal of cross-subsidies in the case of DISCOM have caused price rationalization and a positive impact on DISCOM’s financial health. Around $60 billion debt was transferred to the state, losses have been staked, and considerable transparency and efficiency improvements are expected through the launch of the PRAAPTI platform. SHAKTI scheme for auctioning coal supply contracts rationalized coal prices and independent sampling of coal used to check plant efficiency are amongst some measures that ensure fair energy allocation and use efficiency.

Following up to the Energy efficiency parameter, which is guided by the sustainable development objectives as a part of the National Action Plan on Climate Change and all flagship programs on energy efficiency are a part of the National Mission on Enhanced Energy Efficiency. Bureau of Energy Efficiency formed under the Energy Conservation Act deals with policies and strategies related to energy efficiency. Due to energy efficiency measures since 2000, India avoided 15% more energy use till 2018. It has helped achieve economic efficiency along with limiting emissions of GHG’s under NDC (Nationally Determined Contribution to reduce 30-35% GHG emissions by 2030 from 2005 levels at Paris Agreement).

BEE strategies and plans for energy efficiency targets are; PAT (Perform Action and Trade) sets energy saving targets, and in the first cycle of PAT (ended in 2014-15), 478 Industries were notified (like aluminum, cement, textiles, etc.) to achieve mandated reduction in their SEC’s (Specific Energy Consumption) by 4.05%, it resulted in a reduction of 31mn tonnes of CO2 emissions or 8.67Mtoe in energy savings well above the target 6.686Mtoe. The units that failed to meet the target could buy Energy Saving Certificates (basic credits) from ones who exceeded the targets. Similar initiatives and programs like MTEE (Market Transformation for Energy Efficiency), Energy Efficiency Financing Platform to finance energy-efficient investments. There’s a venture capital setup (VCFEE) under FEEED(Framework for Energy Efficient Economic Development), which provides 15% equity for energy-efficient technologies in the development of govt, commercial buildings, and other residential projects and a fund to give guarantees on loans taken by organizations for energy-efficient implementations.

Some energy efficiency initiatives across Industry, developments, and achievements

₹1 billion worth Escerts traded in PAT cycle 1
₹261 billion investments in energy-efficient technologies in PAT cycle 1
Emission intensity reduction by 21% from 2005-2014
National Energy Policy by Niti Aayog and BEE draft plan for the period 2017-31 to induce energy savings up to 86.9-129 Mtoe by 2031
Updation of Energy Conservation Building Code for commercial buildings (min 25% energy saving, more than 35% savings “ECBC plus,” more than 50% “Super ECBC” plus”)
An awareness campaign for appliances like setting 24 degree Celsius for air conditioner, standards and labeling for appliances and equipment, market-based programs
EESL (Energy Efficient Services Company) promoted the Ujjala scheme, which led to 350 million lamps replaced by LED. Energy savings of 45.5TWh
Demand-side management by providing BEE 5 star rated pump sets to the agricultural sector, EESL estimates 4.3TwH/year savings
BS-VI roll-out, published fuel efficiency standards for commercial duty vehicles being one of the first countries in the world (Aug 2017)
Adoption of EV’s whose efficiency is estimated to be above 60%. Under the National Electric Mobility Mission Plan, govt aims for 30% of new auto sales to be EV. E-mobility plan to be lead by EESL to create EV demand.
18605 km broad gauge electrification of railways, the estimated reduction in oil dependence by 3.1mn barrels a day by leveraging rail
Installation of 1456961 smart meters to date has lead to a 36% reduction in Aggregate Technical and commercial losses in power distribution

These are set of some nonexhaustive policy measures, initiatives, and strategies that are aimed at improving energy efficiency commitments and emission intensity reduction under the climate action plan and Paris Agreement. These have been integrated into some flagship programs fostering urbanization and innovation like Smart Cities, Atal Innovation Mission, Make in India, etc. Still, there needs to be extraction of full market potential through investments, which is estimated at $10-35 bn per year, while currently, it is $150mn excluding EESL. Public sector efficiency projects account for just 1%, and total energy savings nationally is estimated at 20%.

The strategy of international collaboration in energy efficiency has been pursued aggressively in energy efficiency to ensure smooth tech transfer and leverage its expertise in smart grids, biofuels, etc. (it leads to smart grid innovation challenges). India has collaborative partnerships with the United Kingdom on energy efficiency, with Sweden and Japan on technology transfer for iron and steel production.

Private investments in Renewables and cleantech investments have been growing, especially in the transport (EV) and solar segment (Representation in the figure below). Especially the auto companies, which spent around $900 mn on alternative fuel technologies. There are instances of PPP models in the development of biofuels as a sustainable alternative with efforts from DBT and IOCL. India is also leveraging international collaboration for the same purpose; the contribution of $27 million for hosting and setting up of International Solar Alliance till 2021, Indo-US joint clean energy R&D in smart grids and energy storage, and BioEnergy Total Collaboration Programme with the focus being bioenergy, ocean energy, and fusion power. Clean energy research and development expenditure in the three years cumulative have been $747 crores from 2015-2018 (breakup in the figure).

The share of renewables in India’s TFC in 2018 stood at 28.8%, the major reason being traditional biomass for cooking. Renewables contribution to electricity generated was 17.2%. Share of modern renewables that exclude traditional biomass, since it’s a major source of indoor air pollution, stood at 9.8% of TFC. The share of renewables in TPES dropped to 23% in 2017, But the government has included capacity addition milestones for modern renewables up to 175GW (currently expected additional 225GW) by 2022(100 GW solar, 60GW Wind, 10GW bioenergy, 5GW hydro). In 2019 India had an installed capacity of 80GW, and in FY 2020, an installation target of 450GW. However, projections by IEA show that the share of modern renewables shall rise to 13% of TFC by 2030 in India’s stated policies and would meet the goals of SDG 7 as per the sustainability scenarios.

Some renewables policy initiatives across Industry, developments, and achievements;

Renewable Purchase Obligations, the requirement for Discom renewables share increased from 17-22%.
Renewable Energy Certificates, traded on similar lines (2011) of other environmental credits to help power companies manage their obligations. Largely underutilized market due to compliance issues.
Launch of Hydro Power Obligations in March 2019
Competitive solar and wind auctions under fixed tariffs, as done with thermal power transmission (Sterlite Power, IndiGrid(Sterlite trust) operate under this model in thermal electricity)
The levelised cost of electricity has been falling for solar energy due to technological improvements and economies of scale, as seen in the auctions (Figure below).
CCEA approved $6.5 billion rooftop solar support to farmers by 2022
Adoption of off-grid distribution mechanisms through solar under DDUGJY
Green energy corridors program to improve renewable transmission infra, with 19000 MVA installed substation capacity
Green window fund by IREDA, NBFC under MNRE (₹700 crores) to fund renewables project

Battery storage is essential for renewables to source as a proper alternative to fossils. With off-grid solar systems, it is absolutely essential to have battery technologies such as Lithium for unencumbered power supply. It is expected by IEA that India would account for 60GW of the total 220GW global battery storage capacity. It is essential for the transition to cleantech, i.e., EV’s and according to Niti Aayog, India shall need 50Gwh of capacity for the next 2.5 years Renewables and EV target. National mission on Transformative Mobility and Battery Storage has set a five-year program to make India competitive and export-oriented in large battery manufacturing.

Given all these parametric evaluations of SDG 7, it is expected that the stated policies shall converge with the goals. Given the collinearity between SDG 3 and SDG 7, through renewable dependence, GHG emissions shall decrease. Whether it is in sync with the Paris Agreement or not is to be seen.

Kotak AMC

Launched ESG opportunities fund (NFO), focus on sustainable investing. Companies screened based on corporate governance, environmental contributions, and social awareness scores.
Minimizing carbon footprint, most work like Demat operations, depository slips settlement can be done online.

Asian Paints

It launched the NEW program to minimize its environmental impact.
Forty-two million units of electricity consumed in FY19-20 from renewable sources.
Nine hundred sixty-nine million liters of water replenished in FY19-20.

ITC

41% of the total energy consumed by ITC is sourced from renewable sources
Pioneered the ‘Green Buildings’ movement in India with all ITC hotels are LEED platinum-certified.
ITC is targeting a 50% reduction in specific emissions and a 30% reduction in specific energy consumption by 2030.

Bain & Company

Bain has reduced specific direct emissions by 68% and has a plan to achieve a 90% reduction by 2040
Some of the practices include energy-efficient workspaces, recycling, and reduced paper usage.

Aditya Birla Group

Hindalco is the highest energy utilizer in Aditya Birla Group and was able to reduce the consumption by 12% and reduce the greenhouse emission by 10% in 2020.
Birla Carbon has achieved 45% of its 2030 sustainability goal of reducing its direct emission by 21% against its 2005 baseline.

Amazon

Amazon is reducing single-use plastic, removing more than 9 million bags in 2020 alone from its device packaging. Its aim is to make devices that are 100% curbside recyclable and plastic-free by 2023.
Amazon is constructing new wind and solar farms to generate renewable energy equal to the power used by the Echo system of a consumer.
Coming soon to the Alexa app, consumers can monitor and control the energy used by compatible devices in their homes.

References:

https://niti.gov.in/sites/default/files/2020-01/IEA-India%202020-In-depth-EnergyPolicy_0.pdf

https://mnre.gov.in/green-energy-corridor

https://www.eeslindia.org/smnp.html

https://economictimes.indiatimes.com/industry/energy/power/ireda-mulls-usd-100-mn-green-window-for-financing-renewable-projects-mnre-secretary/articleshow/72476584.cms?from=mdr

https://beeindia.gov.in/content/nmeee-1

Asian Paints Sustainability Report 2019-20

https://www.asianpaints.com/sustainability/pdf/Sustainability%20Report-2019-20.pdf

ITC Sustainability Report 2020

https://www.itcportal.com/sustainability/sustainability-report-2020/sustainability-report-2020.pdf

Bain and Company Press Release

https://www.bain.com/about/media-center/press-releases/2020/bain-achieves-carbon-neutrality-for-ninth-year-in-a-row/