Group2_C | SDG 7 : An inside out perspective

 Introduction   

 

The 7th SDG aims to Ensure access to affordable, reliable, sustainable, and modern energy for all while having five targets to be achieved by 2030 measured by six indicators. These targets include:  

• To ensure access to an affordable, a reliable, and a modern energy service to all. 
• To increase the share of renewable energy globally 
• To double the global improvement rate of energy efficiency 
• To promote international cooperation to encourage investment in energy infrastructure and clean energy technology 
• To expand energy infrastructure with promoting technology upgrade in developing countries.  

As the world population has grown from 5.2 Billion in 1990 to almost 7 billion in 2010 (27% growth), energy use has increased by nearly 39%. Despite such overall growth, there is a lack of uniformity across various regions with almost a billion people without access to electricity and about three billion without access to clean fuel for cooking. The dependency on fossil fuel for meeting the world demand is as high as 80%, and the fact that they are limited and cause severe damage to the environment makes it essential that the use of renewable energy is promoted across the world while trying to bridge this gap between supply and demand.  

Through the course of this article, we will see what steps have been taken to achieve these objectives and analyze the role of various stakeholders like Government, Businesses, etc. during these efforts.  

 

Relevance to India

Globally, India is one of the fastest-growing economies and would likely have a 25% contribution in the projected increase in the worldwide demand for energy by 2040. It is already the 4th largest greenhouse gas emitter after China, the USA, and the EU. These emissions are set to rise as it aims to increase its production capacity and provide better opportunities for its people. Even though the country's energy usage had doubled since 2000, per capita energy consumption is only one-third of the global average, and 237 Million Indians do not have access to energy.  

 

Agriculture, which is the primary source of livelihood for almost 60% of Indians, contributes 18% to the GDP and has traditionally been a labour-intensive sector. The share of human and animal resources has fallen from 60% in the 1970s to 10% in 2013. This is because of the increased use of machines, resulting in higher yields. The international energy agency (IEA) estimates that the energy consumption in India could double by 2024. Hence India faces a challenge to sustain agricultural output for future generations while reducing dependence on fossil fuels. Roughly 137.44 of 178.66 million rural households in India, i.e., 76.93% have been electrified as of August 27, 2017, the quality of electricity service provided remains low, and because of frequent power cuts, there is still a significant dependence on diesel generators.   

Business Implications   

Impact of Covid-19 on Renewable Energy  

 

Covid-19 pandemic has had a significant impact on all kinds of energy globally. According to KPMG, the overall energy demand is expected to drop by 25-30% globally due to the pandemic.  

  

Renewable sources have demonstrated strong resilience during the COVID-19 pandemic. The percentage share of renewables has almost reached 28% on a global level. But despite all the positive trends, the absolute growth is expected to slow down. This is primarily due to lockdown measures, supply chain disruptions, and the emerging financial challenges that came along. There was seen a significant drop in demand which also played a substantial role in slow growth.  

  

The good news here is that the cost of electricity from wind, hydro, solar & geothermal is now below or at par with conventional fossil fuel plants in most places around the world. A report from IRENA shows that newly installed renewable power capacity increasingly costs lower than the cheapest power options based on fossil fuels. Solar PV & onshore wind are now the most affordable sources of new-build energy generation for 2/3rd of the world. IRENA suggests that renewable energy solutions should ideally provide a quick response to the pandemic building more resilient energy systems for the future.  

  

The world had been working on two critical emerging technologies – Energy Storage & Hydrogen. These technologies are expected to become critical beneficiaries of different stimulus packages provided by governments (like how solar & wind energy sectors benefitted from 2008 recession stimulus packages).  

 

Global Coverage

On the global side, as per a report by International Renewable Energy Agency, by doubling the share of renewable power in the mix of global energy by 2030 can lead to an increase in the global GDP by up to 1.1% of USD 1.3 trillion. These positive reinforcements, coupled with doubling of the share of renewables, increase employment in this sector to an estimated 24.4 million jobs in 2030. The benefit of a clean, renewable energy source transcends far beyond economic use. Improvements to human well-being and welfare will be on the rise. For countries which are currently dependent on import of fossil fuels will see a change in their consumption patterns which may help reduce the import of such fossil fuel.  

 

International Finance Corporation (IFC), a World Bank Group entity provides up to 20% of the equity into a company or a venture which focusses on infrastructure development financing.  Their venture ‘Scaling Solar’ which was introduced in the year 2015, was formed to create viable markets for solar power in developing countries. This program will be undertaken in a Public-Private Partnership (PPP) model, where the solar project would be privately funded to yield expanded national power capacity coupled with a lower cost of electricity.   

 

In Zambia, the Industrial Development Corporation had signed an agreement with IFC to develop two large scale solar projects. The auction attracted a lot of solar power developers, seven of whom submitted final proposals, and the bids submitted were the lowest solar power tariffs in Africa to date.  

 

Both the plants are successfully operating since the beginning of 2019. 22.1% of the nation's population has access to this source which is available at a mere 6.02 US cents per kW-hr. The total capacity generated is 75.7 MW of Solar Power from these two plants.  

Analysis of SDG 

 

Indian Context 

India has set an aim of generating 175 (GW) of renewable energy by the year 2022 and it is aiming for 450 GW by 2030.  However, the analysis suggests that achieving the short-term target might be slightly tricky, mainly because of the pandemic, which has changed the priorities of government and companies.   

Another reason is the lack of having a consistent policy related to renewable energy provisions. For instance, the country was aiming to install low-cost units for renewable energy generation, and at the same time imposed high import duties on the equipment to promote the Make in India strategy. A joint vision and standard reform measures among the central, state as well as local government would be needed to achieve the goals. Also, incentives need to be offered to compensate for the losses incurred due to the import duties imposed. Government has recently introduced production-related incentives to produce photovoltaic cells to boost the solar energy sector. A similar motivation needs to be extended to other sectors as well.   

The government is aiming at increasing the share of natural gas in the country’s energy mix from 6% to 15% by 2030. This would help in replacing traditional energy sources like coal, wood, especially in the power generation sector. Currently, the country has five terminals for liquified natural gas and is aiming to add 11 more in the next seven years. The government needs to take measures to bring efficiency in the market and drive up the demand by building transport infrastructure for gas.   

Coal consumption remains very high in India, especially in the energy generation and industry. The environmental consequences of coal are very high, and the government need to continue taking measures in the reduction of usage of coal. This can be achieved by promoting alternative renewable sources of energy. 

  

Global Context 

In the current scenario, it was seen that the global population with no access to electricity has reduced from 1.2 Billion in 2010 to 789 million in 2018. This change has been primarily because of the increase in investments in renewable energy solutions by countries leading to affordable electrification options like on-grid and off-grid solutions. Businesses have also contributed by the adoption of initiatives that focus on increasing renewable energy across their operations and committing towards SDG 7 goals from their end.  Companies across different sectors Sanofi, Johnson & Johnson, Citi, Amazon, BCG etc. have collaborated with climate action groups like RE100, which is committed towards 100% renewable energy.  

The scenario of clean access to cooking fuels has not changed the same way as for electricity access. For most of the developing economies, the growth in access to clean energy for cooking has been lesser than the increase in population. This problem can be mainly seen in the Africa region with more prevalence in Sub- Saharan Africa as well as a bit in the West Asia region. The current scenario stands at 2.8 Billion people with no access to cooking fuels which was 3 billion in 2010. This variation has also been due to a difference in the infrastructure of cooking in urban and rural regions. 

Consequently, people operating with biomass-based fuels, charcoal, etc., is substantially high in rural areas compared to urban areas across the globe. The current crisis has highlighted this issue for the regions mentioned above, which do not have energy access to the healthcare sector. For tackling the same, contribution through SDG 7.b which is focused upon increasing financial flows to developing countries to promote access to technology and access to clean energy is established which saw an increase from USD 10.1 billion in 2010 to USD 21.4 billion in 2017. However this increase, even though beneficial, has not helped towards SDG 7 since only 12% of the finance flows has reached the least developing countries.  

Looking at the global scenario of progress towards SDG 7, there have been substantial efforts taken towards meeting the objectives of SDG 7. However, to reach goals set for the year 2030, there needs to be an increase in the progress rate. Further, the COVID 19 pandemic has highlighted the need to include access to clean energy for cooking and electricity to the healthcare sector as well as to the public for purposes of educating children, access to underground water and access to information. Thus, in the stimulus packages that would be announced by various nations, it is essential to consider long term goals of sustainability.   

 

Measures taken by top companies 

Many top companies have taken various measures towards renewable energy. A few examples are 

• Amazon - Amazon has taken an aggressive goal to run 100% of business on renewable energy by 2025, 5 years ahead of the UN target. The company is the biggest corporate buyer of renewable energy ever. It has 59 utility-scale wind & solar energy projects and 68 solar rooftops on fulfillment centres around the globe 
• Citi - Citi Bank allocated $100Bn towards its Environment Finance Goal, which aims at providing reliable, affordable, clean, and sustainable energy sources to all. Green, social, and sustainable bonds were issued to finance the social and environmental goals of its clients.  
• BCG - In 2019, we launched the Center for Climate Action to help the private, public, and social sectors align their strategy, operations, and stakeholder engagement with a low-carbon world. 
• Sanofi - Sanofi has committed to carbon neutrality by 2050 by reducing greenhouse gas emissions and promoting the use of renewable energies. For the same Sanofi has committed itself to 100% renewable electricity across all its global operations by 2030. 
• Johnson & Johnson - Johnson & Johnson was awarded with the Energy Star Partner of the Year Award in 2019 for adopting energy-efficient best practices in their supply chain. The company also joined steering committee of the Renewable Energy Buyers Alliance (REBA), which enables them to buy zero- carbon, renewable energy.  

 

The Road ahead

 

The improvement in energy efficiency across the world has been good but in recent years has dropped slightly mainly because of an increase in aggregate use across different sectors.  

The road ahead will require actions that will be deeply collaborative in nature. This collaboration would be needed on political fronts of nations as well as by businesses. By leveraging technology, tracking real-time usage, and forming indicators would be useful in ensuring that actions taken will be impactful in an equitable fashion. Active investments in promoting renewable energy businesses by governments and international organizations would help in increasing the rate of progress. Other companies will have to implement their initiatives equitably across the organization. Many companies have begun the same to meet their goals in sustainability.    

 

  

References  

 

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Authors: Adityraj Phadnis (BJ20124), Anjali Dahiya (BJ20128), Hameer Nagda (BJ20138), Shivani Agarwal (BJ20168), Vedant Vyas (BJ20179), Vrishank (BJ20182)