Low carbon growth: A mirage or a target well in sight?

“The entire Mahindra Group and all its companies would be carbon neutral 10 years before the Paris Agreement deadline by 2040.” Indian business magnate, Mahindra Group’s Chairman Anand Mahindra, made this pledge while speaking at a panel on environment at the World Economic Forum in Davos in January 2019. Mahindra was reaffirming the commitment he had already made at the Global Climate Action Summit in California in September 2018.

Mahindra is a prominent vehicle manufacturing corporation in India and among the Indian corporates that are on the path to carbon neutrality. As corporates head down this path, the question however arises whether the government policy structure is robust enough to support the industry’s decarbonisation process and encourage low carbon growth – development with a minimal output of greenhouse gases like carbon dioxide.

Over the past few years, the Indian government has committed to a series of policy steps to lead the country towards low carbon growth. For instance, in its Intended Nationally Determined Contribution (INDC) submitted to the United Nations Framework Convention on Climate Change (UNFCCC), India had promised to reduce the emissions intensity of its GDP – the volume of emissions per unit of GDP – by 33-35 percent by 2030 and achieve 40 percent of its cumulative electric power from renewable power.

India had also said that to move towards a low carbon economy it is focusing on “low carbon infrastructure and public transport systems like dedicated freight corridors and energy efficient railways to reduce their environmental impact.” In the INDC, India had also highlighted its efforts to move from a carbon subsidy regime to a carbon taxation one by taking steps like cutting subsidies and increased taxes on fossil fuels (petrol and diesel).

It has been estimated by NITI Aayog that for India, the “mitigation activities for moderate-low carbon development” would cost around USD 834 billion (approximately Rs. 57 trillion) till 2030.”

Ajay Mathur, who is the director general of The Energy and Resources Institute (TERI) and a member of the Prime Minister’s Council on Climate Change, stressed that India has done right things as far as the decarbonisation of the electricity sector is concerned but a lot is still desired as far as transport and heavy industry sector is concerned.

“Those are two areas where major policy decisions are yet to be taken. On the transport side, we believe electrification will probably occur in the two-wheelers segment and it will probably occur in the commercial sector like buses and taxis. But we don’t know what will happen in the car and the truck sector. Those are still unknown. We need to focus on heavy industry (as well),” Mathur told Mongabay-India.

Indian corporates are stepping up to achieve low carbon growth

The claim that the adoption of a low carbon growth is a profitable venture for both environment and corporates has been reiterated several times over. Low carbon growth is primarily gauged on the basis of factors like an increase in energy efficiency, a decrease in carbon emissions, switching to alternative fuels (fuels that are less carbon-intensive) and adoption of renewable energy among others.    

According to a report in June 2019, a group of the world’s biggest companies has valued the climate risks to their businesses at almost a trillion dollars, with many of these risks likely to hit within the next five years. These major climate-related risks include extreme weather patterns, rising global temperatures, increased pricing of greenhouse gas emissions, and stranded assets due to high prices of fossil fuels.

The report published by CDP, which runs the global disclosure system for environmental information, covers 6,937 companies worldwide including some of the world’s biggest firms. It analysed the risks and opportunities related to climate change, reported by companies in 2018.

As per CDP’s India report 2018, since the Paris Climate Agreement in 2015, there has been a trend of companies across the world committing to reduce their emissions, in line with the levels required, to prevent dangerous global warming.

Based on its analysis, the report said that “Indian companies are at the forefront of this initiative where science-based targets (SBTs) are rapidly becoming the new norm for sustainable business practice.”

As per the CDP’s India report, by December 2018, 25 Indian companies committed to reducing emissions, propelling India to the fifth position after the United States, Japan, United Kingdom, and France as far as corporate climate action is concerned.

“In 2018, 52 of the top 200 companies in India responded to us. Another 10-odd came to us on our their own as they may not be listed on the stock exchange in India but have foreign investors who would want to be compared on global benchmarks. So, over the past few years, we have seen the quality of responses (or corporates) improve but the number of responses is growing very slowly,” India Director of CDP Damandeep Singh told Mongabay-India.

CDP is a global voluntary disclosure programme that enables companies to disclose, measure and manage their environmental data including their target to reduce carbon emissions. Every year CDP comes out with a series of reports on the basis of the data collected from companies worldwide. It claims that their “network of investors and purchasers, representing over USD 100 trillion, along with policy makers around the globe, use our data and insights to make better-informed decisions.”

Singh also explained that they have another 125 supply chain companies sharing information regarding their environmental impacts as they are either under contractual obligation from the big firms they are supplying to make these disclosures or it is being done to keep investors and shareholders happy.

“The other important trend is that Indian cement sector companies are doing quite well. Of the top five cement companies in the world – in terms of low carbon strategy and managing carbon emissions – three are Indian (Dalmia Cement, Ambuja Cement, and Shree Cement),” said Singh. Strategies used by the cement sector to move to low carbon path include steps taken to cut down emissions, improve energy efficiency, renewable energy deployment, and integrating carbon capture into cement production.

Anupam Badola, who is the senior sustainability officer of the Dalmia Cement (Bharat) Limited, emphasised that Dalmia Bharat Group is one of the pioneers in commissioning of new technologies including renewable energy deployment.

“In 1993, when India’s total installed capacity of wind power was just 80 megawatt at that time Dalmia group commissioned about 17-megawatt wind power project in Tamil Nadu. At present, we are identifying and adopting the low carbon transition opportunities for achieving a low carbon growth,” said Badola while outlining the company’s ambition to become carbon negative by 2040, 100 percent renewable energy consuming company by 2030 and doubling energy productivity by 2030.

“These ambitions are charting the course for us. For instance, cement, steel, and aluminium industries are considered energy intensive but these high energy intensity industries also present an opportunity to save energy and reducing costs. Taking actions to conserve energy and reduce cost is a profitable action as well. So, wherever we find these opportunities, we are implementing them and making it a profitable business case for us,” Badola told Mongabay-India.

Technology to rapidly adopt low carbon growth is a challenge

While there is a push towards low carbon strategies, access to advanced technologies as well as the absence of certain technologies that will facilitate achieving low-carbon goals is a challenge.

In its second biennial update report (BUR) to the United Nations Framework Convention on Climate Change (UNFCCC), which took stock of India’s action to tackle climate change, India had made a similar point.

“Transition to a low carbon ecosystem is cost intensive even for developed countries. India has so far proactively pursued mitigation and adaptation activities by deploying its domestic measures. However, to meet future commitments, India requires enhanced new and additional finance, technology and capacity building support, which is not forthcoming,” the report said.

TERI’s Ajay Mathur highlighted that there are technological and policy challenges for different sectors in moving towards the low carbon growth path.  

“For instance, look at the steel sector where we use coking coal – do we have a technology which we can use instead of blast furnace? We don’t. But it is not just India as no one in the world has that technology. Similarly, as far as the cement is concerned, there too are technology challenges,” Mathur said.

“For the cement sector, there are some advanced technologies to reduce emissions such as Carbon Capture and Utilisation (CCU). But they are not available at the commercial-scale as of now – they are mostly at the lab-scale. We are exploring options to bring it to demonstrable-scale and then to commercial-scale,” said Anupam Badola.

Banner image: Funding and technology are two major impediments in achieving low carbon growth. Photo by Ajay Balachandran/Wikimedia Commons.