Shaping a Sustainable India

 As we look forward to election results and the formation of the new government today, we take a moment to recap key news trends leading up to May to create a sustainability ‘primer’ for our new government: 

1. India’s energy intensity indicates a worrisome rise 

As reported last month, the energy intensity of India's GDP ( the amount of energy needed for increasing one unit of output) has gone up significantly from 0.1355 kilowatt hour per rupee in 2006 to 0.1518 in April this year, indicating a need for greater effort on the energy efficiency front. 

From an environmental perspective, a rise in energy intensity (from fossil fuels) can be offset by increasing green energy mix.

However, as the end-of-year tally last month revealed, the renewable energy sector in the country missed capacity addition target for the second year in a row. As against the target of 4325MW, the new capacity addition stood at 3640 MW in April. All segments such as wind, solar, small hydro, biomass and waste-to-power added lower than their annual targets.

Industry observers believe that this is due to the investor distrust created by delays in public policy and procurement processes, as well as the shortage of land for solar and wind projects. 

2. Fuel efficiency benchmarks and subsidy phase-out for transportation fuels is a MUST-DO 

A report in April highlighted that the concentration of PM2.5 (fine, respirable particles) is the highest in Delhi at 153 micrograms per cubic metre (mg/m³) when the WHO standard is just about 10mg/m³ - making Delhi the most polluted city on air quality in the world. Removing fuel subsidizes would promote energy efficiency that would curb the rise of India’s energy intensity curve, while also reducing the fuel bill. With reduced use, toxic levels of air pollution created by burning diesel will also come down. In April, Government reiterated its intention for updating fuel standards. India’s gas stations may start selling fuels of the same quality sold in Europe by April 2021, according to a draft copy of recommendations by the oil ministry’s auto fuel policy panel. This is a well-needed step in the right direction if approved & implemented swiftly. 

3. Subsidy announced last month will boost uptake of electric vehicles 

The most significant policy announcement in April was that EV subsidies were reinstated by the Central Government. These ranged from Rs 8,000 up per vehicle for two-wheelers to Rs. 1.5 lakh per vehicle for cars and Rs. 12 lakh per vehicle for electric buses. The aim is that 30%-40% of the purchase price differential between EVs and petrol/diesel vehicle equivalents will be met through the subsidy. 

This is an important announcement for the sector to help consumers get over the price hurdle. To support uptake, other market trends are favourable for EVs. The long run cost of vehicular fuel relative to the cost of electricity (ofcourse subsidized) is creating a competitive environment for electric vehicles. Mahindra has capitalised on this by offering a battery re-charge service. This service charges Rs. 2500-2999/month for 800 km - a monthly fee which will lock in energy costs for electric car owners, thereby protecting their customers from inflation. 

4. Solar industrial rooftop is ablaze in India 

In the last 2 months, news reports reveal rooftop solar providers have installed anywhere from 50 KW to 500KW for cement, F&B, textiles, steel, pharma, pulp & paper, and packaging. In April, MNRE, Haryana Electricity Regulatory Commission, and DLF city convened several Gurgaon-based commercial establishments through rooftop solar meet-ups last month to catalyse industrial solar rooftop. Other urban clients include: nursing homes, mall owners, hotels, hospitals, universities, schools, canteens, petrol pumps, ATMs, street/factory lighting. 

Solar is becoming an option for fuel substitution, just as diesel and furnace oil, as part of a wider fuel mix and particularly for MSME sectors. This is driven by state subsidies on capex for solar infrastructure and a closing gap between traditional grid vs. solar electricity prices (Rs/kwh). As Indian Industries Association (IIA) points out, a typical solar power system costs about Rs 1.40 lakh per KW capacity for SMEs in UP who can avail a rooftop solar subsidy. In the NCR region, the cost of electricity paid by some industrial users has been Rs.7-9/kWh, which is more or less in line with the Rs. 8 – 8.5/kWh being offered by rooftop ‘solar as a service’ providers. 

5. Increasingly inaccessibility to water will raise costs of water production 

Last month, the biggest deals of 2014 in the water sector were bagged at Rs. 505 crore by Suez Environnement across three new contracts dealing with waste and wastewater solutions, with deals funded by JICA and the Indian government. Baseline pollution levels in India are so high that water-tech companies see two distinct markets for a) creating drinking water and b) delivering wastewater treatment and recovery.

The costs associated with these functions are much higher for India than countries with a low level of baseline pollution in ground and surface water aquifers. 

Many states are discovering and clamping down on mis-use of water assets. In April alone, nearly 80% of 600 dyeing and printing units in a single cluster in Pali, Rajasthan were issued a closure notice whereas 112 stainless steel pickling units in Wazipur were closed. This clearly indicates that consistent support from the Center is required to monitor and contain this alarming mis-use. In the absence of resource pricing for water, development aid / central enforcement tools and funding will be required to help MSMEs respond to water supply, waste treatment and environmental risks. 

The task for the new Government is cut out – hopefully the new leadership will be able to go beyond short term and local interests and launch the sustainability agenda in true earnest. We look forward with hope! 

Sustainability Outlook Team

Images: Spkyster, Lingaraj GJ via Flickr, Natesh Ramaswamy