Green Crop for Corps to Reap
The 21st Conference of Parties (COP21), under the United Nations Framework Convention on Climate Change, delivered an international agreement at Paris to limit future global warming to under 2° C above pre-industrial levels. The Paris agreement was, in many ways, symbolic of the ability of the international community to come together in the face of a common threat. With its formal adoption on Friday, April 22, the international community makes a significant advance in its efforts to mount a united defence against global warming.
As part of its Intended Nationally Determined Contribution (INDC), India has announced its determination to reduce the emissions intensity of its GDP by 33-35% by 2030 from 2005 levels. This, and other commitments to tackle climate change, need to be seen in the context of India’s proportionately small contribution to global greenhouse gas emissions.
Despite having close to 20% of the world’s population, India only accounts for 3% of historical global emissions. And rising economic growth and creating at least 12 million jobs every year for the vast numbers of young Indians entering the workforce will require access to greenhouse gas-producing energy sources.
Indian corporates are experiencing first-hand the impact on their operations of climate change-driven natural calamities, and the inevitable emotional stress for their workforce. In only the last couple of years, we have seen unprecedented calamities like flash floods in Uttarakhand, Srinagar, and most recently Chen- nai, with the attendant impacts on corporates and their ability to successfully transact business. At the same time, corporates also clearly see business opportunities in identifying spaces such as renewable energy and electric vehicles, where they can innovate and develop solutions to deal with climate change.
In this endeavour, industry collaboration on innovative technologies, leveraging of scale, and regulatory frameworks that support industries in their green initiatives will help to collectively catalyse the achievement of India’s ambitious goals.
Recognising the value of collaboration, Indian corporates are coming together in interesting ways. A case in point is the manner in which major Indian auto makers such as Tata Motors, Mahindra and Maruti Suzuki have come together to invest in and develop components and systems for electric and hybrid vehicles. They will ensure common standards and help drive down costs. This is expected to eventually lead to lower cost of ownership of these vehicles.
Indian corporates are also likely to be significantly influenced by the need to comply with the new corpor- ate social responsibility (CSR) legislation in the amended Indian Companies Act. This Act, unique in the world, requires corporates that meet a size and scale test to spend 2% of their net profits on CSR. The new CSR requirements are likely to stimulate collaboration in the form of pooling of funds by corporates, and the spending of some part of these on joint initiatives to address climate change.
At Paris, Prime Minister Narendra Modi and French President François Hollande unveiled plans for the International Solar Alliance, conceived as a coalition of 121 solar resource-rich countries lying between the Tropic of Cancer and the Tropic of Capricorn. India has also announced its intention of developing 100 GW of solar capacity by 2022, which would make it the largest solar power producer in the world.
More such initiatives, aggregating demand, are likely in India, including in areas like wind and nuclear power, and smart cities with rapid urban mass transit based on clean fuel.
The recognition that addressing challenges on scale can yield significant benefits has also informed solu- tions in areas like Ujala, the domestic efficient lighting programme. Inaugurated in early 2015, the main objective behind this programme is to promote energy-efficient LED lighting for domestic consumption and bring down the cost of LED bulbs through demand aggregation. Ujala is likely to touch the 100 million bulbsmark by the end of April.
Forward-looking government policies that enable industries to reduce their energy consumption are yielding results, for instance, the PAT (Perform, Achieve and Trade) and ZED (Zero Effect, Zero Defect) schemes. PAT is a market-based energy efficiency trading mechanism. The scheme is being widened and deepened to include more sectors like railways, electricity distribution and refineries in the next cycle, and will cover more than half the commercial energy consumed in India.
ZED, along with ‘Make in India’, is an initiative to rate small and medium industries on parameters such as quality control and certification for energy efficiency, pollution control and waste management with the ZED Maturity Assessment Model.
India’s migration to a low-carbon growth pathway would require significant financial resources. Delivering the commitments outlined in the current INDC is itself expected to cost India $2.5 trillion between now and 2030. The international community will need to closely monitor the Paris Agreement commitments made by the developed countries and ensure they step up their funding to support a faster migration of developing countries to lowcarbon growth pathways.
Governments and corporates recognise and acknowledge the reality of the challenges they collectively face. They will need to come together and deliver on their commitments. The real work begins now.
The writer is brand custodian, Tata Sons
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