Overview of the draft National Resource Efficiency Policy

India’s unforgiving resource consumption over the last decade has enabled India to cultivate the reputation of ‘the fastest growing economy’. With exception of the recent economic slowdown, India has seen an average growth of 6.74% in the last decade. On the flip side, India has faced severe water shortages in urban zones, desertification, air pollution and increasing reliance of imports to meet the growing demand of consumers.

To bring much needed change in the existing resource inefficient system, the Ministry of Environment, Forest and Climate Change (MoEFCC) has drafted India’s first National Resource Efficiency Policy (NREP). One of the aims of NREP is not only to make industries resource efficient but also remediate pollution of air, land and water. While the policy is yet to launch, the draft outlines the ways in which sectoral interventions can optimize resource use through both regulatory and market-based instruments.

The first of this three part article series will provide an overview of NREP’s background, its features, targeted sectors and role of stakeholders in policy implementation.

The draft NREP addresses resource overuse

On the 25^th July, the MoEFCC released the draft National Resource Efficiency Policy (NREP) outlining the need to promote responsible production and consumption. The draft policy suggests the use of regulatory instruments to limit both unsustainable production and consumption patterns.  National Resource Efficiency Authority (NREA) is the regulatory body that will be spearheading the initiative i.e. developing action plans, setting targets, capacity building etc.  as well as collaborating with state governments  and local ministries (See fig. 1). Inter-ministerial National Resource Efficiency Board (NREAB) will guide the NREA in areas of implementation. While the specific roles of these governing bodies have not been revealed in the draft policy, the first part of the action plan (from 2019-2022) constitutes setting up both NREA and NREAB.

Figure 1 Shows the nodal agencies involved in setting targets and implementing NREP

The NREP calls for significant waste management reform in various sectors by normalizing Extended Producer Responsibility (EPR) in the supply chain. It also aims to alter long-term industry behavior towards resource efficiency. According to the draft policy an effective way employ that is through both market-based instruments and command-and-control approaches. If enacted properly, NREP can be a vital stepping stone in helping industries limit resource use.

The urgency of a resource efficiency plan in India

To revive the Indian economy from its current slowdown, the manufacturing sector will be a central component in doing so since it is instrumental in spurring jobs and increasing production. India’s current rate of consumption and production is what boosted economic growth simultaneously worsening environmental and societal impacts. Fig. 2 below shows that India is in the top 10 domestic extractors and importers of materials in 2017. As seen in Fig. 3 India is one of the top net importers of materials as measured by the Physical Trade Balance (PTB) i.e. an indicator that measures imports and exports.

Key features of the NREP

It is the current government’s intentions to turn India into a $5 trillion economy by 2024. This is bound to welcome policies that will propel both production and therefore consumption. With that in mind, the MoEFCC’s plan to tackle resource efficiency comes at a vital point in India’s growth trajectory.  The intention is to set India up for “environmentally sustainable and equitable economic growth” as is stated in the draft NREP.

NREP is currently applicable across seven sectors. Below is list of sectors covered under NREP and the resources used in each.

Table 1: Shows the targeted sectors and the respective resource use in each sector

(Source: Draft National Resource Efficiency Policy)

The draft policy includes a life-cycle analysis (LCA) of each sector, shedding light on resource use and GHG emissions at each stage.  Each sector has a different set of interventions and targets based on the LCA and current resource use within that sector. Since India is committed to meeting Paris Agreements, the targets under NREP will be in line with that of SDGs however the roadmap for resource efficiency will be set beyond 2030 as well.

Figure 4 Shows the Life-Cycle Analysis (LCA) of a product. Emissions based on LCA conducted for every sector will be the basis of targets

Implementation of at all levels can be a challenge

While the NREA is mandated to take on its duties under the Environment Protection Act (1986), there is no indication in the draft that the targets that will be set are mandated. Since MoEFCC suggests implementation of NREP through command-and-control approach as well as market-based instruments, it may be unrealistic to mandate taxes and subsidies especially as NREP is designed to evolve into a more participatory approach led by industries. Broader goals for industries can sensitize the market initially and can gradually make it more conducive for ambitious policies. However, some may argue that a non-mandated approach may be ineffective as industries may not feel the push to meet the targets.

Industry perspectives on NREP

Participation of industries is key in thorough implementation of NREP. They play a vital role in initiating betterment in resource efficiency in both short-term and long-term. In the draft NREP, the role of manufacturers and service providers section lays out supply-side responsibilities which include factors like improving product design to minimizing waste generation in all stages of production amongst other things. During conversation with Maxson Lewis, Managing Director of Magenta Power, he says currently “there is no accountability for efficiency. In India, the end of life of a product is not factored in”. Ritu Lal, Senior VP and Head of Institutional Relations at Amplus Solar agrees, “We don’t have a focused approach on recycling”. India’s ambitious renewable energy goal is double-edged. Ms. Lal said with reference to solar PVs “higher [RE] targets means there is an increased drive to meet them. Hence other aspects like quality may take a back seat. While cost optimization comes from a good place, often quality is sacrificed in the process”. With higher degradation of solar panels come higher waste generation.

Industries can face certain challenges in implementation to which Mr. Lewis says “there is a mental block in accepting newer ideas. There has to be an ability to think beyond ‘what is it going to cost me now?’” referring to the perception that businesses can be slow to uptake ideas that may not seem economically viable in the short-term. An added challenge to this is a lack of favorable policy environment regarding end-of-life management of solar PVs. On a positive note Ms. Lal stated that “what India is going through is not a unique problem” referring to robust e-waste policies in the EU establishing that there is potential in India mimicking best practices of EU, domestically.

Includes consumers to alter their consumption patterns

Consumers are an important stakeholder in the NREP. While an overview of the draft policy may indicate a need for full participation solely by industries, consumers are known to play a valuable role during the life-cycle of the product (particularly during ‘usage’ and ‘disposal’ stages of any product). In part, the intention of NREP is to penalize consumers for choosing to utilize resource inefficient products/services at the same time incentivizing usage of environmentally sustainable products/services through schemes/programs.

Resource scarcity is an ongoing issue in India, as evident from the water crisis in Chennai. NREP is a necessity to ensure there is a limit set on current resource use. It can also integrate a larger portion of India’s economic growth to its Paris Agreement commitments since the policy directly and indirectly feeds into 12 of the 17 SDGs.

To drive market participation, the draft NREP has suggested using regulatory instruments such as polluter-pays-principle and precautionary principle. The next article in this series will look at whether polluter pays is an effective regulatory instrument in supporting implementation of the National Resource Efficiency Policy (NREP).