Group6_C | SDG 7: Affordable and clean energy

 

Introduction

Our economy today is heavily dependent on fossil fuels and with the increase in the greenhouse gas emissions globally it is creating a drastic impact on our climate system. Energy is a very critical resource and is crucial in every key challenge that the world faces be it climate change, jobs, production, construction, security etc, and unequal access to energy and low development have a direct relationship with each other. 

The goal targets to achieve access to modern energy globally, increase the use of renewable energy and escalate energy efficiency. It also aims to expand energy services while promoting research and investments in developing countries. With more than 800 million people still living without electricity, stepped up efforts to increase use of renewable energy are needed so that it not only generates opportunities for people but also helps in renovating the economy and life present on the planet. 

Energy that is from renewable resources such as solar, water, wind, biomass & geothermal energy is not only inexhaustible but also clean. The goal is to be able to provide universal access to clean & affordable energy by 2030, essentially means investing heavily in clean energy sources. Currently biofuel is one of the best solutions where fuel is produced with the help of fiber, vegetable oil and corn etc. These renewable energy sources produce very little waste products of carbon dioxide and chemical pollutants.

There is an urgent need for long term political commitment to enhance the process of energy planning as well as policies and incentives to motivate the use of new technologies.  With more public and private financing, a transition to the use of sustainable energy systems will have a direct impact on the socio-economic conditions of communities across the globe. 

  

Relevance to India:

Being the pioneer in innovation, India can spearhead the global search on clean cooking and access to electricity. Due to the diverse ecological environment and vast size, the country faces the worst impact of climate change. Hence the need for renewable energy sources arises. As the population continues to increase rapidly, the expansion of infrastructure for cheap energy and less usage of fossil fuels become vital in energy productivity and growth. The advantages of India’s renewable energy resources are plain to see. According to a special report given by the Intergovernmental Panel on Climate Change, if India breaches the temperature limit of 1.5 degrees according to the Paris Agreement, it will have to face severe consequences with frequent floods and droughts, intense heat waves affecting the food production and worsening the water crisis. 

The use of renewable sources will also accelerate employment, wherein, as of 2017, the renewable energy sector employed more than 10.3 million in the country and a boost to entrepreneurs and innovators. With the support of the strong government and thriving start-up culture, the correct use of R&D and effective supply chains can make substantial progress in sectors such as manufacturing and agro-processing. 

With the One Sun One World One Grid programme, the mantra of “The Sun Never Sets” will make India be able to make a global grid for the supply of clean and affordable energy. The National Solar Mission is playing a vital role in bringing about a positive change when more than 200 million Indians lack access to electricity. The National Energy Policy and the creation of the Energy Access Fund will further enhance the Decentralized Renewable Energy (DRE) sector.  

To bring out an effective change and ensure development, India must provide decentralized solutions that ensure there is effective mobilization from various resources and implement policies and programs that help achieve the comprehensive target of long-term energy security and covering the increasing supply and demand imbalance. 


 Business implications and responses

 Businesses can provide impetus to the creation of a sustainable energy system by adopting efficient practices and the required technology to implement them. 

While the level of global consumption of renewable energy has increased rapidly, the progress has been hampered by barriers such as high setup and maintenance costs, efficiencies, and the slow pace of integrating such technologies. Adoption of clean energy solutions involves a high degree of risk, given the huge upfront capital costs involved and the infrastructure required in order to leverage these resources. While new companies and startups face several challenges in entering the energy market, the barriers can be overcome and growth can be spurred with the help of government initiatives and support in the form of financial resources, and investment in R&D.

 

 Businesses all over the world are taking responsibility to become more sustainable, with many companies making onsite installations to produce clean energy for self-consumption and meet their emission targets. Industry leaders are looking beyond their core operations and contributing to long term strategies for improvement in renewable technologies and reduced costs. Companies should accelerate the adoption of clean energy by investing in infrastructure and technology to help the government and communities cover the costs and risks associated with this shift. Pressure from leading conglomerates can also help the enforcement of such practices at the government and community levels. 

 

The adoption of SDG 7 provides the country with a huge array of opportunities in accelerating employment generation, technological innovation, and the development of smart and modern infrastructure. Along with this, businesses can derive personal benefits in terms of more stable resources, a higher return on investment in the long term, aligning with changing consumer sentiments and attracting the segment that values contribution to the environment, as well as the scope of becoming the industry leader by differentiating itself from the competitors and pioneering in the clean energy adoption. 

 

With over 300 operational and in-development projects in renewable energy, Walmart has established itself as the global leader in renewable energy, and the company has committed to having a 100% supply of renewable energy, driving its projects through purchases of wholesale energy, onsite generation of solar and wind energy cells, and large wind-farm projects. The company aims to achieve larger goals for the community by reducing the costs of procuring renewable energy and accelerating energy efficiency.

 

Microsoft also has a high commitment towards using more sustainable energy and has invested in India by procuring local solar power to meet the company’s electricity needs at its local plant in Bengaluru. With their first solar energy agreement in India, Microsoft was set on a path to help the country achieve its energy transformation goals in line with the Paris Agreement, while also contributing to the company’s target of achieving 50% reliance on solar, wind, and hydropower electricity by 2018.

 

Over the last 15 years, the F&B giant Nestle has managed to reduce CO2 emissions by 55% and energy usage by 47%. Nestle is also committed to the adoption of sustainable production and is consistently expanding its scope with a few global plants operating on 100% clean energy resources, and initiatives like the biogas production using leftovers from sweets at Fawdon.

 

Companies like Asian Paints are setting an example for their industry by reducing their emissions on average by 50% and becoming energy-efficient and actively moving towards maximizing their renewable energy capacity with a footprint of 57.38% in 2019.

 

Analysis and suggested path ahead

 Universal access to affordable, modern and reliable energy services

The target, aimed at ensuring access to affordable energy sources which are sustainable has many challenges ahead. 

Access to electricity is a key indicator of the SDG 7 framework. By November 2019, 100 percent of urban and 99.99% of rural households in India were electrified. Although this number paints a cozy picture, the figure does not include large number of households that willingly reject the electricity connections due to their inability in paying electricity bills. Moreover, the presence of electricity connection does not mean reliable and affordable supply. The burdening of grids with unaccountable power theft burdens both the supplier and its users.

Suggestions:

  • To decrease the rural households, willingly rejecting connection, a separate identification action plan must be conducted, and their relaxation must be increased to nudge them towards economic growth and income generation, while also making sure that the subsidies do not lead to an unsustainable supply model
  • Investments to be made to switch from coal which is the primary source of power generation, to renewable sources
  • Distribution and transmission systems need to be upgraded to reduce faults and leakages. This could increase rural demand, leading to higher electricity infrastructure utilization and lower dependence on diesel generators, solid fuels, stoves, open fires etc.
  • PPP models can be leveraged to bring financial and operational efficiencies in distribution systems
  • Promote clean technology and fuels for cooking, lighting and heating. The urban regions can adopt natural gas distribution networks while the rural regions can be benefited with LPG connections, subsidized with DBTL and Pradhan Mantri Ujjwala Yojana. 
  • Promote biogas and bio-CNG plants for large generators like hotels, marriage halls, restaurants etc.

 

Increasing the share of renewable energy

This target is aimed at ensuring the share of renewable energy by increasing both the installed capacity and final consumption.

The share of renewable energy consumption in India decreased from 40.7 percent in 2010 to 34 percent in 2017, out of which, 31.4 percent is from solid biofuel like wood and charcoal which are unsustainable and inefficient.

On the capacity side, although the total share of installed capacity of renewable energy is 21.12 percent at the end of 2018 (an increase of 20 percent since 2010), its share in actual electricity generation is only 12 percent. Indian government plans to increase it to 40 percent by 2030.

The existing distribution network is also replete with problems. Regional disparities in distribution, tariff caps, land acquisition and import duties makes the challenge even more difficult.

 

Suggestions:

  • Infrastructure upgradation to minimize deficiencies of transmission and distribution losses which are the highest in India
  • Hybrid power plants (e.g. Solar and Wind) can compensate for each other’s inefficiencies to fulfil the energy demands at all times and seasons
  • Subsidies and reduce import duties on equipment used in renewable energy power plants
  • Use Internet of Things (IoT) in Smart Grids to shift and share the load between different channels of the grid.

 

Doubling the energy efficiency improvement rate

This is measured in terms of energy intensity. It is the amount of energy used to produce per unit of economic output. The lower this ratio is, the better it is. However, this is not a perfect measure as it is affected by several other factors, like climate.

In recent years, the distribution of LED bulbs and other energy-efficient appliances through the UJALA program has contributed towards improving energy efficiency. Many private companies have also come forward to pioneer the research and development of energy-efficient products.

The main challenges for India remain the high leakages and ineffective distribution of energy. Another challenge is to convince the farmers to use more energy-efficient appliances because electricity is already highly subsidized for agriculture. The introduction of the National Smart Grid Mission is a good step in the direction to improve effectiveness.

The overall objective is to achieve an annual drop in intensity to 2.6% annually. The period for 2010-2016 achieved a 3% annual drop in energy intensity globally.

Suggestions

  • The Government should develop an 'Energy Efficiency Policy' declaring the standards and schemes for different energy-consuming industries and appliances.
  • The energy sector's efficiency can be made a priority lending sector for banks to improve R&D investments.
  • Old vehicles should be phased out, and schemes and incentives should be given for electric vehicles to increase their adoption apart from ramping up their production and charging stations.

 

Enhancing International Co-operation & Expanding Infrastructure and Upgrading technology

This was aimed at improving cooperation across nations to improve access to clean energy research and technology. Several funds have been formed at the international level to facilitate the financial flows to developing countries. Developed countries pledged 100 bn investment till 2020. The investments in clean energy have been improving, and India has been one of the highest recipients of such funds from banks and funds. However, most of these funds are not in the form of grants. The developing countries have been pushing to clearly define these funds, which developed countries have not accepted. The need is to deliver cross-boundary funds and not just promises or pledges of future investments of massive amounts.

The target of access to affordable energy needs expanding the infrastructure and technology to developing nations and, more particularly, to the least developed countries apart from the financial support. The investments in clean energy as a percentage of GDP need to improve apart from the increase in FDI and technology sharing. India spent 0.5% of its GDP on renewable energy in 2018. It also received FDI of around USD 4.5 bn, and the Asian Development Bank also approved loans of USD 250 mn to expand clean energy investment in India.

 



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