A shift to clean energy is welcome but Indian industry needs deep decarbonization over the next 30 years to make a difference
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We have seen two local events completely bring down global supply chains.
A ship in the Suez Canal blocked traffic for a week, delaying $9 billion of goods each day. And a pandemic originating in Wuhan led to the world economy contracting by 3.5% and 255 million jobs lost in 2020.
Such events reveal the fragility of the seemingly invulnerable and adaptable business sector. Bill Gates, in his new book, How to Avoid a Climate Disaster, estimates that the economic damage caused by climate change will be like that of a covid-scale pandemic every 10 years.
Indian industry has started preparing for the battle against climate change. Climate Trends’ recent survey of 400 large and small businesses in Maharashtra found that more than 70% believe climate change is affecting their profit, material supply, and expenditure.
Their main concerns are heavy rainfall, floods, water shortages, and droughts. Top Indian companies estimate the financial impact of climate risks at more than ₹7 trillion, with an average risk of ₹92 billion per company, according to a 2021 report by CDP India.
Several Indian companies have voluntary commitments on climate change, including targets for renewable energy, energy efficiency, electric mobility, greenhouse gas emission reduction, and internal carbon pricing to help achieve these targets.
In a new report, World Resources Institute India and Confederation of Indian Industry (CII) find that the existing climate commitments of just 50 leading Indian companies can reduce the country’s total greenhouse gas emissions by almost 2% below national projections for 2030.
More than 90% of this emission reduction comes from heavy industries, even though their current emission reduction targets are less ambitious on average. There is clearly potential to do more in these industries.
While Indian industry is starting to take bold action on renewable energy and electric mobility, all studies show that the war against climate change cannot be won without deep decarbonization of industry. This will require major shifts over the next 30 years and more. Here are three big things India’s corporate sector can do.
First, electrify as much as possible all energy use and switch as much as possible of the remaining fuel use to hydrogen. Today, industry burns coal, gas, petroleum and fuel oil to generate heat. But over the next few decades, at least half of this needs to be replaced by clean electricity and hydrogen.
Manufacturing hydrogen from electrolysis rather than fossil fuels is currently in the research and development stage. But concerted efforts like the Union government’s new national mission on green hydrogen can help reduce costs and create reliable supply infrastructure for this critical technology. This is the mitigation option with the biggest bang for the buck, potentially reducing a billion tonnes of carbon dioxide by 2050 compared to business as usual. For comparison, India’s current emissions are 2.8 billion tonnes.
Second, increase energy efficiency of industrial equipment. Even if we switch to renewable energy, wind and solar power need scarce land, making it important to squeeze efficiency out of available energy. While many leading Indian companies are among the most efficient in the world, others need to follow suit.
Micro, small and medium enterprises (MSMEs) that have the potential to become energy-efficient but lack the capital to upgrade need to be helped by large companies whose supply chains they constitute. Industrial energy efficiency improvement can save around 250 million tonnes of India’s emissions by 2050, and would come at very low cost.
Third, increase material efficiency, product longevity and re-use. Fossil fuels are used not only for energy but also as components of materials and in industrial processes. While we can use renewable energy to replace energy needs, there is nothing similar for materials.
However, we can reduce resource use through the circular-economy approach—use low energy and local materials, mix fly ash in cement, recycle scrap metals, re-purpose construction waste, and conserve water. This could help India reduce more than 300 million tonnes of carbon dioxide by 2050.
Finally, because not all process emissions can be eliminated, invest in carbon capture utilization and storage. As the world adopts stronger climate policies, proactive measures by Indian corporates can help them tap new markets and prepare for the economy of the future.
Even the finance industry can propel transformative action through its investments, spurring innovation in disruptive technologies and driving down their costs. In doing so, Indian industry also has the responsibility of looking after the well-being of its workers and the communities living near its sites—to equip them with new skills and help them adapt to climate risks. But the challenge is very clear: Without industry, the world cannot win its fight against climate change.
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- In the Large States category (overall), Chhattisgarh ranks 1st, followed by Odisha and Telangana, whereas, towards the bottom are Maharashtra at 16th, Assam at 17th and Gujarat at 18th. Gujarat is one State that has seen startling performance ranking 5th in the PAI 2021 Index outperforming traditionally good performing States like Andhra Pradesh and Karnataka, but ranks last in terms of Delta
- In the Small States category (overall), Nagaland tops, followed by Mizoram and Tripura. Towards the tail end of the overall Delta ranking is Uttarakhand (9th), Arunachal Pradesh (10th) and Meghalaya (11th). Nagaland despite being a poor performer in the PAI 2021 Index has come out to be the top performer in Delta, similarly, Mizoram’s performance in Delta is also reflected in it’s ranking in the PAI 2021 Index
- In terms of Equity, in the Large States category, Chhattisgarh has the best Delta rate on Equity indicators, this is also reflected in the performance of Chhattisgarh in the Equity Pillar where it ranks 4th. Following Chhattisgarh is Odisha ranking 2nd in Delta-Equity ranking, but ranks 17th in the Equity Pillar of PAI 2021. Telangana ranks 3rd in Delta-Equity ranking even though it is not a top performer in this Pillar in the overall PAI 2021 Index. Jharkhand (16th), Uttar Pradesh (17th) and Assam (18th) rank at the bottom with Uttar Pradesh’s performance in line with the PAI 2021 Index
- Odisha and Nagaland have shown the best year-on-year improvement under 12 Key Development indicators.
- In the 60:40 division States, the top three performers are Kerala, Goa and Tamil Nadu and, the bottom three performers are Uttar Pradesh, Jharkhand and Bihar.
- In the 90:10 division States, the top three performers were Himachal Pradesh, Sikkim and Mizoram; and, the bottom three performers are Manipur, Assam and Meghalaya.
- Among the 60:40 division States, Orissa, Chhattisgarh and Madhya Pradesh are the top three performers and Tamil Nadu, Telangana and Delhi appear as the bottom three performers.
- Among the 90:10 division States, the top three performers are Manipur, Arunachal Pradesh and Nagaland; and, the bottom three performers are Jammu and Kashmir, Uttarakhand and Himachal Pradesh
- Among the 60:40 division States, Goa, West Bengal and Delhi appear as the top three performers and Andhra Pradesh, Telangana and Bihar appear as the bottom three performers.
- Among the 90:10 division States, Mizoram, Himachal Pradesh and Tripura were the top three performers and Jammu & Kashmir, Nagaland and Arunachal Pradesh were the bottom three performers
- West Bengal, Bihar and Tamil Nadu were the top three States amongst the 60:40 division States; while Haryana, Punjab and Rajasthan appeared as the bottom three performers
- In the case of 90:10 division States, Mizoram, Assam and Tripura were the top three performers and Nagaland, Jammu & Kashmir and Uttarakhand featured as the bottom three
- Among the 60:40 division States, the top three performers are Kerala, Andhra Pradesh and Orissa and the bottom three performers are Madhya Pradesh, Jharkhand and Goa
- In the 90:10 division States, the top three performers are Mizoram, Sikkim and Nagaland and the bottom three performers are Manipur and Assam
In a diverse country like India, where each State is socially, culturally, economically, and politically distinct, measuring Governance becomes increasingly tricky. The Public Affairs Index (PAI 2021) is a scientifically rigorous, data-based framework that measures the quality of governance at the Sub-national level and ranks the States and Union Territories (UTs) of India on a Composite Index (CI).
States are classified into two categories – Large and Small – using population as the criteria.
In PAI 2021, PAC defined three significant pillars that embody Governance – Growth, Equity, and Sustainability. Each of the three Pillars is circumscribed by five governance praxis Themes.
The themes include – Voice and Accountability, Government Effectiveness, Rule of Law, Regulatory Quality and Control of Corruption.
At the bottom of the pyramid, 43 component indicators are mapped to 14 Sustainable Development Goals (SDGs) that are relevant to the States and UTs.
This forms the foundation of the conceptual framework of PAI 2021. The choice of the 43 indicators that go into the calculation of the CI were dictated by the objective of uncovering the complexity and multidimensional character of development governance
The Equity Principle
The Equity Pillar of the PAI 2021 Index analyses the inclusiveness impact at the Sub-national level in the country; inclusiveness in terms of the welfare of a society that depends primarily on establishing that all people feel that they have a say in the governance and are not excluded from the mainstream policy framework.
This requires all individuals and communities, but particularly the most vulnerable, to have an opportunity to improve or maintain their wellbeing. This chapter of PAI 2021 reflects the performance of States and UTs during the pandemic and questions the governance infrastructure in the country, analysing the effectiveness of schemes and the general livelihood of the people in terms of Equity.
Growth and its Discontents
Growth in its multidimensional form encompasses the essence of access to and the availability and optimal utilisation of resources. By resources, PAI 2021 refer to human resources, infrastructure and the budgetary allocations. Capacity building of an economy cannot take place if all the key players of growth do not drive development. The multiplier effects of better health care, improved educational outcomes, increased capital accumulation and lower unemployment levels contribute magnificently in the growth and development of the States.
The Pursuit Of Sustainability
The Sustainability Pillar analyses the access to and usage of resources that has an impact on environment, economy and humankind. The Pillar subsumes two themes and uses seven indicators to measure the effectiveness of government efforts with regards to Sustainability.
The Curious Case Of The Delta
The Delta Analysis presents the results on the State performance on year-on-year improvement. The rankings are measured as the Delta value over the last five to 10 years of data available for 12 Key Development Indicators (KDI). In PAI 2021, 12 indicators across the three Pillars of Equity (five indicators), Growth (five indicators) and Sustainability (two indicators). These KDIs are the outcome indicators crucial to assess Human Development. The Performance in the Delta Analysis is then compared to the Overall PAI 2021 Index.
Key Findings:-
In the Scheme of Things
The Scheme Analysis adds an additional dimension to ranking of the States on their governance. It attempts to complement the Governance Model by trying to understand the developmental activities undertaken by State Governments in the form of schemes. It also tries to understand whether better performance of States in schemes reflect in better governance.
The Centrally Sponsored schemes that were analysed are National Health Mission (NHM), Umbrella Integrated Child Development Services scheme (ICDS), Mahatma Gandh National Rural Employment Guarantee Scheme (MGNREGS), Samagra Shiksha Abhiyan (SmSA) and MidDay Meal Scheme (MDMS).
National Health Mission (NHM)
INTEGRATED CHILD DEVELOPMENT SERVICES (ICDS)
MID- DAY MEAL SCHEME (MDMS)
SAMAGRA SHIKSHA ABHIYAN (SMSA)
MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE SCHEME (MGNREGS)