As hopes mount about the G20 Leaders’ Summit to be held in Delhi under India’s Presidency setting new benchmarks in international cooperation on several critical issues, including Climate Change and Clean Energy Transition, former Central Electricity Authority (CEA) Chairperson Pankaj Batra shares, with R M Consulting, his expectations from this meeting of global leaders, and, also, his views on the impact that the summit could have on COP28, and the issue of climate finance.
Read on to find out what Mr Batra has to say.
There is no doubt that all nations are making efforts to prevent climate change, as it threatens the very survival of human beings, if not tackled urgently. Under the Indian Presidency, the G20 in 2023 focuses on the theme, 'One Earth, One Family, One Future'. Thus, it is expected that climate change would have to be tackled jointly by all nations, and (the process) would have to be inclusive.
The Prime Minister of India, Narendra Modi, launched the International Solar Alliance (ISA) at the UN Climate Change Conference in Paris along with the President of France on November 30, 2015. ISA is an action-oriented, member-driven, collaborative platform for increased deployment of solar energy technologies as a means for energy access, ensuring energy security, and driving energy transition in its member countries. Subsequently, he proposed the idea of ‘One Sun One World One Grid’ (OSOWOG), a transnational electricity grid, supplying solar power all over the world, during the first assembly of the International Solar Alliance (ISA) in 2018. The concept behind the OSOWOG is ‘The Sun Never Sets’ and is a constant at some geographical location, globally, at any given point of time.
The “Green Grid Initiative” was launched by the Prime Minister of India and the Prime Minister of UK jointly, at the COP26, at Glasgow, for joint responsibility of all nations. It is to build a framework for global cooperation on the effective utilisation of renewable resources and to help ensure that clean and efficient energy is a reliable option for all nations to meet their energy requirements by 2030.
However, presently, 63.3% of electricity generation is still based on fossil fuel sources, 36.7% from coal, 23.5% from gas and 3.1% from oil. Since electricity is an essential commodity, it would take time to substitute coal with clean energy sources. Therefore, to my mind, a balance would have to be struck between availability of electricity through any source vis-à-vis transition to clean sources of energy. It will not make good sense for closing coal-based power plants, that still have useful life left in them, from the point of view of economics. Therefore, energy transition would have to be done in a methodical way. For new power generation sources, it would be preferable to source these from renewable sources of energy.
Consolidating the information given above, my guess is that a general statement may come out for transitioning of energy sources from fossil fuel to clean energy sources like wind, solar, and hydro power. Nuclear power could also be considered, as it, too, is a non-fossil fuel source. But outright ban on fossil fuel sources, without substituting these with clean energy sources, is not likely. India already has a target of 500 GW of clean energy sources by 2030. Considering the above, my sense would be more persuasion of all countries, to the extent that they can based on their NDCs (Nationally Determined Contributions), to increase the NDCs, and increase efficiency in all aspects of the energy cycle, whether generation, transmission, distribution, or utilization. I feel that there is a huge scope for efficiency in utilization. An energy audit could be done to see where efficiencies can be brought out. Efficient fans, efficient cooling, efficient heating, efficient use of materials and method of construction of buildings, and efficient processes in industry. LED bulbs have already reduced lighting consumption substantially. System efficiencies could be another focus area, an example of which is the Green Grid Initiative. This, I think, has a lot of scope for energy saving, and therefore saving in emissions. This demand side efficiency (or efficiency in utilization) is even more effective than the others, since one unit of electricity consumed less is more than 1.2 units of lesser generation, considering auxiliary consumption and transmission and distribution losses. So, I think energy efficiency should form a part of the resolution of the Energy Summit of G20 nations.
Impact on COP28
The UAE will host the 28th Conference of the Parties to the UN Framework Convention on Climate Change (COP28) from November 30 to December 12, 2023, at Dubai, to unite the world towards agreement on bold, practical, and ambitious solutions to the most pressing global challenge of our time. All events, such as the G20, where UAE has been invited this year, as India's special guest to take part in the group's summit, chaired by India, have a bearing in shaping global events such as COP28.
Any decisions taken in the G20 this year with respect to energy transition, which is occupying the minds of the thought leaders and political leaders globally, would undoubtedly have a bearing on the outcome of COP28. The COP28 Presidency has said it will work to keep the 1.5 degrees Celsius goal alive and ensure that the world responds to the Stocktake with a clear plan of action, including measures that need to be put in place to bridge the gaps in progress. Sustainable agriculture will also feature prominently on the agenda at COP28, where participants will seek to spur innovation in how food is grown and produced. Since UAE has already made clear its emphasis on mitigating climate change, it follows that any decision on climate change in the G20 will influence the decision taken at COP28. Sustainable agriculture is being thought of, in view of ensuring food security in adverse climatic conditions, which again is an outcome of climate change. So, I think, the outcome of the G20 Leaders’ Summit will play a big part in continuing efforts in COP28 on climate change.
Climate Finance & Developed Nations
Although developed countries had committed finance for energy transition for developing and under-developed nations, my feeling is that they themselves need money to switch to green energy, and, also, possibly feel that they themselves are not going to be the most adversely affected countries. However, climate change will adversely affect all nations, and, also, threaten livelihoods in all nations, given the increasing dependency (of countries) on each other through trade in all commodities, including in energy. We have seen the increased intensity of cyclones in the US. We see heat waves in Europe, forest fires, melting of the Arctic ice, increasing floods, and a rise in sea level. We are, therefore, all in it together. We will have to jointly tackle this together, in a united manner, and support each other. The sensitivities for all human beings within a nation, including the marginalized, as well as across nations, will have to increase. All countries, even if they are capitalists, have a dash of socialism in them, where there is the feature of subsistence allowance for those out of jobs. This feeling for all humans will have to transcend national boundaries.
With less than two months to go for the G20 Leaders’ Summit to be held in New Delhi on September 9-10, 2023 where discussions on the issues of Climate Change and Energy Transitions are expected to feature prominently, former Coal India Chairman Partha S Bhattacharyya shares, with R M Consulting, his perspective on how India (current holder of the G2O Presidency) should go about its own process of energy transition to make it just, equitable, sustainable, and in keeping with the development aspirations of the country’s 1.4 billion citizens who make up close to 18 percent of the global population.
Read on to find out what Mr Bhattacharyya has to say.
The energy environment landscape globally is dominated by the discourse on climate change arising from global warming.
Over the decades, this has emerged as a major challenge to the sustenance of the human race. The urgency to arrest the pace of rise in global temperature prompted all major nations, including India, to pronounce Nationally Determined Contributions (NDCs) as forward-looking targets set voluntarily for meeting the challenge of global warming and climate change in COP21 at Paris in 2015.
The primary targets set by India were as follows:
These NDCs from India needs to be viewed in the context of the following:
a) Besides global warming and climate change that dominate the global discourse in the energy environment landscape, the Indian compulsion of meeting the rapidly rising energy requirement of a fast-growing large economy occupies the centre stage of the discourse with equal, if not higher emphasis. The latter is obviously linked to the development of the economy and raising the quality of life of the average citizen, the key indicator for which is the per capita power consumption. At around 1400 units/annum, this is one of the lowest globally, a third of the World average, a fourth of China and anywhere from a fifth to a tenth of advanced countries.
b) It is generally accepted that instead of current emissions, cumulative emissions since industrialization (1850 onwards) have a more direct bearing on the contribution of each country to global warming. Such share for India at around 4% is far below the share of the US, EU, Russia, and China. It stands to reason that the countries with a larger share in cumulative emission, and therefore in global warming, than India, come up with stronger NDCs and make all efforts to achieve the same.
c) The position on-ground has unfolded differently. Despite the factors stated in paras a) and b), India is well poised to achieve the NDCs ahead of schedule. In comparison, the US, which is the largest emitter of GHG in cumulative terms, stepped away from the Paris agreement only to renter in 2021 after a change of Presidency. One of the main targets of advanced economies was a pledge to finance climate goals of developing nations. This was reinforced again in COP26. However, this largely remains an unmet target so far. Also, coal usage in advanced countries, after taking a dip, rebounded back in 2022. Globally, coal- based power generation slid from 40% to 35% till 2020 but rebounded back to 36% last year, much higher than the share of any other source of primary energy.
d) In the context of the foregoing, India’s claim, on considerations of equity and fairness, to a higher share of residual carbon space to develop faster is compelling and undeniable. Also, on considerations of geo-political stability, an economically strong India is an imperative.
Fast forward to COP26 at Glassgow in 2021. Encouraged by the trend of performance against 2015 NDCs, India further strengthened it’s 2030 climate commitments. The target for non-fossil fuel-based power capacity was enhanced to 50%. This necessitated setting the renewable power capacity target to 500GW. The achievement, as at present, is around 150 GW. The aspired growth in capacity addition thus translates into a CAGR of around 19%.
The policy framework provides substantial advantages to renewable power in terms of capital subsidies, accelerated depreciation, 'Must Take' directions to discoms, relief from bearing share of T&D losses etc. On the contrary, coal-based power is subjected to severe headwinds. Levy of GST compensation cess of Rs.400 pt for meeting the shortfall in GST collection of certain States is an example. The payout on this account alone from the coal sector is around Rs 40,000 crore per annum. Next in line is the incommensurately high rail freight on coal to meet the burden of cross-subsidizing passenger freight. These factors are eating into the cost competitiveness of coal-based power vis-a-vis renewable power, compelling coal-based plants to operate at low PLF, thereby further raising the cost of coal-based power.
Aided by the tailwinds in favor of renewable power and headwinds against coal-based power, renewable derived a cost advantage and is currently quite below the coal-based power. However, the high cost of storage continues to deter full 24*7 utilization of renewable power. Also, large import dependence on countries like China for various capital items like solar panels has emerged as a constraint. Technological break-through for cheaper storage and creation of large capacities for manufacture of components should help easing out of these constraints in due course.
In most developed nations where growth in power demand is minimal, addition to renewable capacity accompanies phasing out of fossil fuel-based power capacity. The Indian scenario is very different. Fast growth in power demand has rendered addition to renewable capacity not a substitute but a complement to coal-based capacity. In fact, growth in both renewable and coal-based capacity, albeit much faster for renewable, has been established as an imperative to meet the per capita power consumption, which continues to rise fast even after factoring the impact of efficiency improvement in electrical appliances and electric bulbs.
Considering all these factors, the Central Electricity Authority (CEA) has run a sophisticated software program to arrive at the optimal energy mix in 2030. It shows not only a massive rise in renewable capacity, but also a modest 30% rise in coal-based capacity by 2030. For India to become energy secure, the rise in coal-based capacity may need to continue beyond 2030 for a few more years.
Imperatives for India
India consumes around 1 bnT of coal currently. Based on the CEA projections for coal-based power, the consumption is likely to rise to around 1.3 bnT by 2030 and reach a plateau of 1.5 bnT anywhere between 2035 to 2040. Tapering of coal consumption from this level may commence a few years later. This projection duly factors in the massive ongoing and future efforts to usher in renewable power at breakneck speed.
It is apparent from the position explained that India has at least two decades to plan and commence execution of a ‘Just Transition’. A favorable position that the country enjoys is the heterogeneity of the mix of mines. If the mines are arranged in ascending order of annual coal production, the top 50% least producing mines contribute just 8% of total coal produced but engages over 60% of the aggregate manpower, mostly unskilled or semiskilled and in the older age group. These mines with large manual operations incur huge losses even as the coal companies are profitable. Hence, a planned phaseout of these mines without providing replacement for superannuating employees can substantially reduce the task of Just Transition. After a decade, planning will be required for Just Transition in far lesser number of mostly mechanized mines deploying skilled labor.
The land released from closure of the mines can be restored, reclaimed, and made fit for alternative use, including agriculture or afforestation. The manpower requirement for such activities can be sourced from the superannuated and contractual employees. The finances required for this purpose can be provided partially by the coal companies from the savings accruing from closure of loss-making mines and from a share of the Royalty income of the State Government or GST Compensation cess levied by the Union Govt.
The country should adopt a holistic position regarding coal usage as well as thrust on renewable in future COPs, including COP28. India, while doing better than most countries in pursuing climate goals, must assert its right to a fair share of the residual carbon space to meet the development aspirations of its people. This position will justify usage of coal in increasing quantities for at least two decades, even though renewable capacity addition continues exponentially.
With a month to go for the next global conference on Climate Change, a premier Indian industry body has expressed the view that a positive outcome at the upcoming COP27 summit at Sharm El-Sheikh, Egypt, can only be possible if participating countries don’t let political issues come in the way of fast-tracking effective Climate Action worldwide.
Responding to questions raised by R M Consulting related to expectations from COP27 and other issues connected with Climate Change, Director General at CII, Mr Chandrajit Banerjee, said: “The ongoing Russia-Ukraine conflict has led to soaring global energy prices and increasing food security issues. As a result, there have been new investments made by several countries in fossil fuels.”
“It is evident that Climate Change has fallen in priority for stakeholders across the world. In order for COP27 to be successful, governments and other stakeholders must set aside political issues as a reason for backsliding on climate commitments and Climate Action.”
Mr Banerjee said that the COP26 (held at Glasgow in November 2021) had led to the launch of an ad-hoc program to initiate deliberations on the establishment of a ‘new collective quantified goal (NCQG)’ for Climate Finance from the base of USD 100 billion annually considering the requirements of developing countries (https://unfccc.int/NCQG).
“At COP27, it would be important to establish technical committees, processes, and work programs to establish the new collective goals. COP27 should also seek to deliver resolutions to the long-standing issues of Article 6 along with clarity on long-term, low-interest finance particularly for developing countries,” the CII official pointed out.
“There should be greater focus on loss and damage due to climate impacts and towards this the outcomes of the Glasgow–Sharm el-Sheikh Work Programme on the global goal on adaptation would be crucial.”
Mr Banerjee said that developed nations must fulfil the commitments they had made on the pivotal issue of Climate Finance.
“Industrialized countries are still falling short of their target to provide developing nations USD 100 billion in climate finance…Without robust long-term finance processes being put into place that can address issues of mobilization and scaling up of climate finance, several developing nations (especially the Global South) will not be able to meet their climate commitments,” he said.
“While several global technology cooperation and co-development initiatives and platforms have been initiated (India plays an important role in the Clean Energy Ministerial forum, Mission Innovation platform, is a founding member of the International Solar Alliance), there are still significant challenges in ensuring transfer of climate technologies. Stakeholders need to develop integrated approaches between technology and climate finance related plans and programmes at the national and global levels, in particular the integration of technology needs assessments with other relevant national and sectoral plans and programmes,” Mr Banerjee pointed out.
“Additionally, there is a need to enhance coherence between international institutions in order to reduce the complexity of processes that developing countries have to follow to request financing for climate technologies. Intellectual property licensing issues are also a challenge as it hinders (the) ability of domestic actors (particularly in developing countries) to produce, adapt, (and) innovate on and around climate technologies,” he added.
Incidentally, the matter of developed countries not living up to promises made on Climate Finance had also been mentioned most recently at the pre-COP27 meeting held at Kinshasa (Democratic Republic of Congo). At that forum, H.E. Sameh Shoukry, Egyptian Minister of Foreign Affairs and COP27 President-Designate, said: “We have not yet delivered on the 100 billion dollars’ pledge, which in itself is more a symbol of trust and reassurance than a remedy to actual climate needs” (https://cop27.eg/#/news/79/Egypt's%20COP27%20Presidency%20urges).
Climate Action & Role of Business
Mr Banerjee said that Indian businesses were doing their bit in the fight against Climate Change.
“We must take note and acknowledge that India Inc. is leading the way both globally and nationally for industry-led decarbonization. About 94 Indian businesses have committed to setting emissions reduction targets under the Science Based Targets Initiative (SBTi) to drive the climate action in business decision making. The Indian cement industry remains a global leader in terms of emissions reduction efforts,” he asserted.
The CII official, however, pointed out that there is now also an urgent need to address issues of adaptation and resilience considering the increasing number of extreme climate-related events worldwide. “Another key issue, especially for India, is ensuring that our Net Zero journey takes into account a just transition for all members of society and businesses. As we develop and implement new technologies and switch to alternate sources of energy, we must ensure that energy access, energy security, livelihoods, food, and water security issues are addressed for MSMEs and low-income members of society,” he said. At COP26, India had committed to achieving Net Zero by 2070.
Mr Banerjee said businesses should prioritize the making of robust new infrastructure, strengthen early warning systems, make water resource management resilient, and address local community issues. “These areas should go hand-in- hand with ongoing efforts to decarbonize not only (their) own operations but also those of supply chain partners,” he added.
Combating the humungous challenge posed by Climate Change will require a “whole-of-society” approach so that no stakeholder group – be that of ordinary citizens, or micro, small and medium enterprises – feels that their voice has not been heard while framing a suitable response to the Climate crisis. So feels Dr Mukund Rajan, Chairman of the Environment, Social and Governance (ESG)-focused platform ECube Investment Advisors.
Climate Action is one of the 17 UN Sustainable Development Goals (SDGs).
The world’s top leaders are slated to meet once more later this year at the 27th UN Climate Change Conference, more popularly known as COP27, that would be held in Egypt to take fresh stock of the Climate situation in the backdrop of significant geopolitical developments that have taken place since the conclusion of the COP26 organized in Glasgow last year. India is not immune to the ill-effects of Climate Change, with its agriculture sector (on which most of its citizens are dependent) being one of the domains perceived to be high at risk.
In an interaction with R M Consulting on the issue of Climate action and the role that different Indian states can play in helping the world’s soon-to-be-most populous nation realize its stated ambition of reaching Net Zero (https://www.un.org/en/climatechange/net-zero-coalition) status by 2070, Dr Rajan – a former Brand Custodian of the Tata Group – said: “(On Climate Change), I think it will require an all-embracing approach.”
“Often in government, we hear this phrase ‘a whole-of-government’ approach in resolving a problem. On Climate Change, we will not only need a ‘whole-of-government’ approach; we will need a ‘whole-of-society’ approach. Otherwise, there is going to be significant sections that will feel left out of the process, that will feel they have not been consulted, that will feel they have not been adequately informed, (or) that will feel they have not been adequately prepared to face the challenges that lie ahead of us.”
Dr Rajan said a ‘whole-of-society’ mechanism should entail, among others, an active involvement of various pillars of the government (including the bureaucracy), and the education system (schools, colleges, etc.). Even the Panchayati Raj system (https://www.panchayat.gov.in/en/web/guest/home) should be put to good effect to carry out conversations on Climate Change and how things can be improved so that every villager feels that he/she has had a say in the process.
“If sea-level rise is expected to impact parts of Gujarat, for instance, you would expect the state government to start having these conversations with the local communities in the areas that are most likely to be subject to sea-level rise and encroachment of the sea into land.”
Dr Rajan said that political parties should also play a key role on the Climate Action front. “The role of our political parties becomes quite critical because, in many ways, they are the ones who ultimately purport to represent the will of the people and end up with control of the policy-making organs of the state. And, therefore, we need to judge every political party through its manifestos on their commitment, in turn, in resolving all these issues (related to Climate Change).”
Deeper Engagement with small and medium industry
Given the pivotal role that small and medium enterprises (SMEs) play in society, Dr Rajan pointed out it is imperative that authorities at both the federal and state levels step up their engagement with this segment on the Climate issue.
Dr Rajan said that SMEs typically tended to be poorly informed about some of the challenges related to Climate Change as well as the science behind these challenges, and the new technologies that are emerging to resolve these. Their inability to access adequate finance compounded the difficulty faced by these enterprises to make the course corrections necessary to tackle the problems posed by Climate Change.
“This is where (both the)state government and the Central government become very important because they need to have those conversations and understand what are the specific issues that components of industry face,” Dr Rajan said. These discussions need to result in the working out of a collaborative approach that benefits all.
Elaborating on the role that industry can play in the fight against Climate Change, Dr Rajan said that there is much that industry can do. “I think, unfortunately, in many of our experience, industry tends to move faster when there is a sort of regulation and potential penalties hanging over their heads rather than simply because the challenge is coming up. Certainly, some of the forward-looking enterprises led by visionary leaders have tended to be ahead of the curve but a large part of industry tends to wait for the regulation to come before they respond,” Dr Rajan pointed out.
Dr Rajan said that given this backdrop, the role of the government at the state levels also became very important in public interest. “State governments will have to play a role in ensuring that they are bringing in local industry into the conversation on what needs to be done both on adaptation and mitigation, and that the local communities understand that industry is responding to the challenge and living up to its corporate social responsibility.”
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