Download Low Carbon Report

Low Carbon Industrial
Growth in India
TITLE
Low Carbon Industrial Growth In India
YEAR
October 2013
Himanshu Shekhar (Responsible Banking Team, YES BANK)
AUTHORS
COPYRIGHT
Priyanka Kochhar (Sr. Programme Manager, ADaRSH), Sachin Kumar (Fellow, TERI BCSD),
Akshima Tejas Ghate (Fellow, TERI BCSD)
No part of this publication may be reproduced in any form by photo, photoprint,
microfilm or any other means without the written permission of YES BANK Ltd. and TERI
BCSD.
This report is the publication of YES BANK Limited (“YES BANK”) & TERI BCSD and so YES
BANK & TERI BCSD have editorial control over the content, including opinions, advice,
statements, services, offers etc. that is represented in this report. However, YES BANK & TERI
BCSD will not be liable for any loss or damage caused by the reader's reliance on information
obtained through this report. This report may contain third party contents and third-party
resources. YES BANK & TERI BCSD takes no responsibility for third party content,
advertisements or third party applications that are printed on or through this report, nor
does it take any responsibility for the goods or services provided by its advertisers or for any
error, omission, deletion, defect, theft or destruction or unauthorized access to, or
alteration of, any user communication. Further, YES BANK & TERI BCSD does not assume any
responsibility or liability for any loss or damage, including personal injury or death, resulting
from use of this report or from any content for communications or materials available on this
report. The contents are provided for your reference only.
DISCLAIMER
The reader/ buyer understands that except for the information, products and services
clearly identified as being supplied by YES BANK & TERI BCSD, it does not operate, control or
endorse any information, products, or services appearing in the report in any way. All other
information, products and services offered through the report are offered by third parties,
which are not affiliated in any manner to YES BANK & TERI BCSD.
The reader/ buyer hereby disclaims and waives any right and/ or claim, they may have
against YES BANK & TERI BCSD with respect to third party products and services.
All materials provided in the report is provided on “As is” basis and YES BANK & TERI BCSD
makes no representation or warranty, express or implied, including, but not limited to,
warranties of merchantability, fitness for a particular purpose, title or non – infringement. As
to documents, content, graphics published in the report, YES BANK & TERI BCSD makes no
representation or warranty that the contents of such documents, articles are free from error
or suitable for any purpose; nor that the implementation of such contents will not infringe
any third party patents, copyrights, trademarks or other rights.
In no event shall YES BANK & TERI BCSD or its content providers be liable for any damages
whatsoever, whether direct, indirect, special, consequential and/or incidental, including
without limitation, damages arising from loss of data or information, loss of profits, business
interruption, or arising from the access and/or use or inability to access and/or use content
and/or any service available in this report, even if YES BANK & TERI BCSD is advised of the
possibility of such loss.
YES BANK Ltd.
Registered and Head Office
9th Floor, Nehru Centre,
Dr. Annie Besant Road,
Worli, Mumbai - 400 018
CONTACTS
Tel
Fax
: +91 22 6669 9000
: +91 22 2497 4088
Northern Regional Office
48, Nyaya Marg, Chanakyapuri
New Delhi – 110 021
TERI-Business Council for Sustainable
Development (BCSD)
The Energy and Resources Institute (TERI)
Core 6C, Darbari Seth Block, Habitat Place
India Habitat Center, Lodhi Road
New Delhi - 110 003
Tel
Fax
Email
Website
Tel
: +91 11 6656 9000
Email
: [email protected]
Website : www.yesbank.in
:
:
:
:
(+91 11) 2468 2100, 41504900
(+91 11) 2468 2144, 2468 2145
[email protected]
www.teriin.org/bcsd
MESSAGE
It is heartening to see that YES BANK and TERI-BCSD have developed their second knowledge
paper, this one focusing on Low Carbon Industrial Growth in India. This is a subject on which
Indian business and industry will have to focus with greater attention and analytical rigor than has
been the case in the past. In a world of globalised economic activity comparative advantage would
lie in reducing resource use intensity, and if Indian industry is to benefit from reduced costs in the
international market, it would have to optimize the intensity of carbon dioxide emissions per unit
of output. While in some cases the immediate next quarter profit may not benefit from such an
approach, the strategic advantages that Indian industry would establish by lowering its carbon
intensity are apparent and becoming increasingly more important. To that extent this knowledge
paper would provide a very useful roadmap for Indian industry in general.
Even more important is the analysis of three industry groups which can contribute substantially to
reduction in emissions, and these are iron and steel, electricity and power, and cement
production. In the case of cement as well as iron and steel, efficiency improvements in the use of
energy, for instance, have only added to the competitive edge of units located in India as
compared to the situation a couple of decades ago. The paper clearly identifies several
impediments and roadblocks which have come in the way of achieving the high levels of energy
efficiency and, therefore, lower carbon emissions intensity. This would require attention not only
by business and industry but by government as well as financial institutions. The role of the
financial sector in promoting solutions in the right direction is paramount. Two other sectors which
have also been mentioned in this paper are transport and buildings. Across the world there is
substantial disparity between levels of energy efficiency and emissions intensity in these two
sectors. In both these, government regulations, appropriate pricing policies and a set of incentives
and disincentives are of critical importance.
Overall, the major benefit of this paper would be in stimulating a debate on how Indian industry,
with adequate appreciation by banks and financial institutions, can and should reduce carbon
intensity of production and use. One major argument apart from competitive reasons lies in the
fact that it is just a matter of time before the government in this country would have to lay down
policies requiring reduction in carbon intensity. The early initiators and adopters of techniques by
which such outcomes can be achieved would have a clear advantage, while those which react to
government policy after the fact would have to pay a higher cost in due course and would be at a
clear disadvantage with respect to their peers. Overall, a country like India with 1.2 billion people
cannot pursue a pattern of industrialisation which replicates the experience of the developed
world. We would have to anticipate scarcity and global realities and adopt them early for our own
strategic benefits and economic gain.
Dr R K Pachauri
Director-General, TERI
FOREWORD
I am pleased to share with you YES BANK's Knowledge Report titled “Low Carbon Industrial
Growth in India”.
Natural resources depletion has put pressure on Countries and Industries to transform the way
business conducts itself. Industrial revolution, population growth, heightened use of fossil fuels
like petrol, coal, natural gas, and deforestation have resulted in high green house gas emissions,
thus leading to a global warming situation.
Multiple international organizations and Governments are working towards various frameworks on
climate change, policies to reduce green house gas emission and mitigation programs that would
contain the climate change situation.
In India too, there is a growing focus on energy and resource efficiency across all major industries.
The Government of India has taken significant steps towards promoting green economic growth.
Mechanisms such as National Action Plan for Climate Change, Government sponsored regulatory
control, standards and quasi-fiscal measures indirectly encouraging clean technology uptake to the
National Clean Energy Fund, facilitating clean energy and technology are steps in this direction.
Bureau of Energy Efficiency, (BEE) energy emissions cap and trade market mechanism - “Perform,
Achieve & Trade” (PAT) applicable to nine most energy intensive sectors to trade energy saving
certificates (ECerts), is targeted towards enhancing cost effectiveness and energy efficiency
improvement in energy intensive large industries and facilities.
Further, in order to encourage the financial sector to finance energy services companies (ESCOs)
led energy efficiency projects, the BEE has also instituted partial risk guarantees, subsidized loans
and a private equity fund.
However, there is a need for a comprehensive policy roadmap towards technology adoption and
indigenization wherein the financial sector and the Government of India can play interdependent
roles to develop critical and enabling policy environment, and facilitate organizations towards Low
Carbon technologies.
The financial sector fuels the economy through capital infusion and has a responsible role. We
have always believed that it can potentially play a significant role through innovative financing and
collaborate with government agencies, civil society organizations and multi lateral funding
agencies to co-develop and implement low carbon financing products and trigger a process of
clean technology integration within the country.
This Knowledge Report focuses on the industry-wide changes expected in the developing world
and transformations that are essential from a carbon saving point of view, sustainability of
businesses and the role of the financial sector in facilitating organizations to adapt low carbon
technologies into their strategy.
While there remain some on-the-ground implementation challenges for the widespread uptake of
the new Low Carbon technologies, YES BANK and TERI, our knowledge partner for this report are
of the view that this low carbon revolution in Indian industrial sectors like Power, Steel & Cement
would open up significant business avenues, and corresponding financing opportunities. At the
same time, it will also address the critical issues of India's long term energy security, and the
reduction of environmental impact ascertained to burning fossil fuels.
This Report brings out insights on technologies that can create tremendous reduction in the
overall carbon output of Indian industry thus taking India to the forefront of green manufacturing.
While currently the penetration of such technologies is limited to a small percentage of new
plants, technology improvements in energy efficient technologies, heat & raw material recovery,
and renewable energy usage are evolving techniques in the business landscape. Large
manufacturing units are already investing in adoption of such technologies, and are scaling
manufacturing capacities. The Indian cement industry for example has already taken a lead, and is
amongst one of the most carbon efficient cement industries in the world.
Environmental concerns and rising price of fossil fuels in the international market have
precipitated into an energy security challenge for India. Low carbon technologies provide the best
step forward for Indian industry.
I firmly believe that the contents of this Knowledge Report, “Low Carbon Industrial Growth in
India” will provide important insights to policy makers and Indian Industry in achieving a smooth
transition to Low Carbon technologies, thus ensuring India's long term environment sustainability.
Thank You.
Sincerely,
Rana Kapoor
Managing Director and CEO
Executive Summary
The contemporary industrial growth model equates high fossil fuel consumption with high growth;
with carbon emissions as a byproduct. However, these emissions now threaten our fragile
ecosystem and raise a question over this model. Thankfully, there are technologies that can break
this linkage and realize high growth without high fossil fuel usage and high carbon emissions. This
study illustrates some of these technologies, the hurdles they face in adoption and the potential
way forward to develop a Low Carbon based growth model for India.
The paper investigates low carbon technology based development models across three major
carbon emitting industries: Steel, Power and Cement. A concerted effort to reduce carbon
intensity across these sectors will deliver maximum reduction in carbon emissions. There are
industrial units that are adopting these technologies and delivering substantial reductions in
emissions. A striking example is the Indian cement industry that is among one of the most carbon
efficient cement industries in the world due to adoption of Low Carbon technologies.
However, the path to low carbon economy in India has its own set of challenges. The paper
presents these issues and the steps that policy makers, financial institutions and industry can
adopt to help overcome these challenges.
Technologies that can create significant carbon and resource reduction are often not well known.
This paper tries to address this gap by identifying the best available low carbon technologies.
Most of these technologies require institutional and financial support for mainstreaming. The paper
highlights key central and state policies that can provide the needed institutional and financial
support, and also critically analyzes the short comings of these schemes. It also identifies
prominent financing options that can be explored to channel resources to low carbon
technologies: Government sponsored funds, low interest lending, partial project risk guarantees
and co-equity investments being some prominent examples.
Perhaps the biggest change needed for the transformation is a new industry mindset. The industry
needs to focus on the long term results provided by Low Carbon technologies. These technologies
not only create an efficient and low cost manufacturing platform for the company, but also allow
the company to differentiate its green products in the already crowded market space. The paper
presents some of such success stories that we hope will help convince the industry to embrace
the transition.
Contents
MESSAGE
FOREWORD
Executive Summary
1
Low carbon Growth- Demystified
1
Business as Usual (BAU) and Low Carbon (LC) ................................................2
The Global Development...................................................................................3
The India Relation..............................................................................................4
Climate Change............................................................................................6
International and National Regulatory Pressures .........................................7
Challenges vs. Opportunities for the Industry...................................................7
2
The Focal Industries ...............................................................................................9
Iron & Steel......................................................................................................11
Electricity and Power.......................................................................................12
Cement............................................................................................................12
3
The Pivotal Technologies .....................................................................................15
Energy Efficiency as low carbon initiative........................................................17
Iron & steel......................................................................................................18
Energy Efficiency Improvement Options for Indian Iron ............................18
and Steel Industry
Future Technological Options......................................................................19
Electricity & Power..........................................................................................20
Improvement in thermal power plants .......................................................21
Alternative sources of power .....................................................................22
Smart Grids for effective distribution .........................................................24
Cement ...........................................................................................................25
Improvement in current systems ...............................................................26
Alternatives to the current cement ............................................................27
Future technologies....................................................................................27
Energy Conservation options identified during energy audits....................28
Contents
4
Major Road Blocks ...............................................................................................31
Understanding of the severity of the climate change crisis ............................32
Understanding and slow adoption of new technologies .................................32
Cost advantage of old technologies ...........................................................32
Slow adoption of new technologies ...........................................................32
Cost of technology .....................................................................................33
Lack of financing options.................................................................................33
Quantification of Efficiency ........................................................................34
Credibility and ability of the entrepreneur .......................................................34
Effectiveness of government schemes...........................................................34
Lacking focus on energy efficiency .................................................................34
5
The Government Support ...................................................................................37
National Action Plan for Climate Change (NAPCC)..........................................38
State Initiatives................................................................................................39
Renewable Purchase Obligation and Renewable Energy Certificates.............41
Perform Achieve and Trade (PAT) .....................................................................41
Energy Conservation Building Code (ECBC) ...................................................42
Jawaharlal Nehru National Urban Renewal Mission (JNNURM)......................43
Standards and labeling scheme ......................................................................43
The Clean Energy Cess and National Clean Energy Fund ...............................43
A Brief Analysis on the Initiatives....................................................................43
6
Role of the Financial Sector ................................................................................47
Natural Capital as a tool...................................................................................48
Developing a market for environment securities.............................................49
Use of innovative financing schemes..............................................................49
Project finance through bonds ...................................................................49
An Environment Bond ................................................................................50
Financial solutions on government initiatives.............................................51
Line of credit from international funding agencies..........................................51
Customer education and financial skill development ......................................51
Contents
7
The Policy Bottlenecks and expectations from the government .....................53
Including New Technology as priority sector ...................................................54
Promoting financial markets for environment securities .................................54
Use of National Clean Energy Fund (NCEF) ....................................................55
Reducing subsidy to fossil fuels......................................................................55
Including banks in policy discussions and making them accountable.............56
8
Looking beyond designated consumers ............................................................57
Transport .........................................................................................................58
The Pivotal Technologies ............................................................................59
Residential & Commercial Building .................................................................60
The pivotal technologies.............................................................................61
Resource optimisation in residential and commercial buildings.................63
9
Conclusion ............................................................................................................65
10 Annexure I: List of Abbreviations .......................................................................69
11 Bibliography .........................................................................................................73
1
Low carbon GrowthDemystified
Low carbon Growth - Demystified
T
A Low-Carbon
Economy (LCE) is an
economy that adopts
the Low Carbon
Growth path and
minimizes the release
of greenhouse gases
(GHG) without
compromising on the
development
objectives of the
country
he growth of economies today, generally, pertains to high
industrial growth and modern luxuries dependent on high usage
of coal and other fossil fuels, inadvertently leading to high carbon
emissions. The Low Carbon growth is a novel concept that challenges
this linkage, and promotes economic development based on industrial
energy efficiency and low carbon technologies, thus aiming to reduce
the carbon-footprint and sustain economic growth in an ecologically
sustainable model. A Low-Carbon Economy (LCE) is an economy that
adopts the Low Carbon Growth path and minimizes the release of
greenhouse gases (GHG) without compromising on the development.
Governments and businesses have been making significant strides to
research and develop a carbon positive way forward driven by long term
resource saving and immediate cost reduction. Some typical examples
include:
ü
The reduction of emissions by increasing efficiencies in current
processes
ü
The absorption of carbon using artificial techniques to reduce the
carbon level
ü
Carbon/Energy Efficiency trading through various global and local
trading schemes
ü
Cutting edge Clean and disruptive technology financing at R&D
and implementation levels
Business as Usual
(BAU) is continuing
with current business
practices and targeting
resource reduction as
part of operational
improvements, and not
as part of
environmental
requirements
2
Business as Usual (BAU) and Low Carbon (LC)
Business as Usual (BAU) refers to the existing scenario of business
functions; it assumes that the industry is making, or will make, efforts
on its own to reduce energy and resource consumption in its
operations. The driver for these changes is the increasing cost of energy
and industry peers adopting better technology to reduce their costs and
stay competitive. On the other hand, Low Carbon (LC) model supports
the next stage of technology innovations which may not make
immediate economic sense but are essential from the climate change
perspective.
Low Carbon Industrial Growth In India
LC technology could eventually evolve to mainstream technology in BAU
scenario, but the time period required could be much longer since
economic growth is the key considerations for BAU. For example, use of
renewable energy sources like wind, solar are LC technologies as the
carbon emissions per unit of electricity produced is much lower than
coal fired thermal power plants. BAU scenario assumes that the coal
reserves of the world would eventually deplete, thus increasing the cost
of mining and pushing the industry to switch to renewable energy.
However, the coal reserves could last 100 years thus impacting the
transition and negatively impact potential carbon emissions. (BP)
The following exhibit explains the possible carbon emissions in different
models for power sector in India
Exhibit 1: Emission Trajectory of Power Sector in India in different Economic Scenarios
No
2362
Change
1935
2000
BAU
1500
1533
LC
1000
570
2030-31
2028-29
2026-27
2024-25
2022-23
2020-21
2018-19
2016-17
2014-15
2008-09
0
2012-13
500
2010-11
Total Emission (mMt/annum)
2500
Source: (Bhushan, 2010)
The Global Development
Changing climate
patterns have
restricted the
number of technical
options that can help
achieve high growth
rates
3
The carbon emission projections above illustrate that neither “No
change” nor “Business as Usual” is possibly the best of solutions in
light of the impending climate change induced disasters like
temperature changes of environment and oceans, errant monsoons etc.
This demonstrates a possible business case for “Low Carbon” solution.
Although the cost of low carbon technology adoption is higher, the
possible benefits outweigh the cost when viewed from a triple
bottom-line perspective i.e. overall economic, environmental and social
impact. (Levy, 2010 June)
Low Carbon Industrial Growth In India
The Copenhagen climate talks in 2009 were an important landmark in
this regards with various countries, including the developing and the
least developed countries, promising voluntary reduction targets in their
energy intensity. Although the targets were not binding on the member
nations; they created a benchmark for countries to innovate and achieve
emission reductions. Copenhagen talks led to many countries adopting
strategies and defining roadmap for potential low carbon growth model
with Brazil, India, Indonesia, Mexico, Poland, and South Africa being few
notable models.
The India Relation
The Indian story offers an intriguing case study for Low Carbon based
growth models. The Indian economy currently has a comparatively low
per capita carbon footprint. Although India is ranked among the top 5
emitters (The Guardian, 2010) due to the size of its economy and
population, the per capita CO2 emissions from fuel combustion, at 1.7
tonnes in 2007, was a fraction of the global average of 4.4 tonnes. In the
same year, India's CO2 emission intensity per unit of gross domestic
product (GDP), valued at purchasing power parity (PPP), was at the
world average (exhibit 2).
India's per capita
emissions are lowest in
the world, but this is
usually attributed to
inadequate
infrastructure
Exhibit 2 : Tonnes of Carbon -dioxide per 1000 dollars of GDP
Tonnes of CO2 per $1,000 of GDP
2.000
1.800
China
1.600
1.400
Russian Federation
1.200
1.000
South Africa
0.800
India
0.600
0.400
0.200
World
Italy
Brazil
0.000
0
2
1
93 994 995 996 997 1998 999 000 2001 002 003 004 005 006 2007
2
2
2
1
1
199 199 199 19
2
1
1
1
2
2
Sources: IEA 2009a, World Bank 2009, and authors' calculations.
Note: GDP is valued at purchasing power parity in 2005 U.S. dollars.
4
Low Carbon Industrial Growth In India
India's relatively low carbon footprint on per capita (Exhibit 2) basis can
be attributed to several factors. Large numbers of people still lack
access to electricity and modern commercial fuels, and a large section
of the population lives below the poverty line with very low energy
consumption. There are roughly 80 million households which still lack
access to electricity (GoI, 2011). Another underlying factor behind the
composition is the change in the contribution of different sectors to the
GDP. Both the industry and service sectors have increased their share of
GDP at the expense of agriculture, and service more so than industry.
Because the service sector has lower energy intensity than industry,
although higher than that of agriculture, there is a small overall reduction
in total use of energy for a given amount of GDP (CSO, 2012).
On the other hand, India is in an important juncture in its growth
trajectory. While the immediate GDP growth rates have faltered to
around 6% in the wake of the global economic crisis and the Indian
political scenario, the long term prospect of the Indian economy are still
very impressive (WorldBank, 2013). Backed by an ever increasing middle
class and the relatively young population, the consumption and
production both have a steep growth path in the Indian economy. As
India follows a steep growth path; the challenges, especially in the
energy sector, are going to be plenty.
With an increasing middle class, the demand for domestic electricity is
bound to grow. The per capita electric consumption will increase with
the aspiration need increase with the growing per capita income. As
already established, the power generation in India is much below
requirements. The overall electrical energy deficit was about 10%, and
peak shortages exceeded 17%. More than two thirds of all Indian
households relied on traditional use of biomass as the main source of
cooking fuel and one third of households on kerosene for lighting in
2009-10 (NSSO, 2012) The energy sector is up for a multiple fold
requirement increase pertaining to rising standards of living and
increased access through better connectivity.
The growing Indian
middle class is bound
to add pressure on the
existing infrastructure
requirements
5
Meeting these prospective energy and power requirement could be an
uphill task for India. Currently 80% of the power produced is from the
Thermal Power plants (CEA, 2013) This could be detrimental to the
energy security of the country and the overall carbon emission from
energy resources. It also creates an impediment to India's voluntary
commitment at Copenhagen of 25% reduction in its total carbon
emission footprint, considering 2005 as the base year (IISD) It also
Low Carbon Industrial Growth In India
presents a strong case for policy makers and industry to look at the low
carbon industrial growth model more seriously. In the following section,
we shall review on some potential impacts of current industrial model in
Indian scenario.
Climate Change
Climate change could
push development
towards resource
efficient but costly
technologies and thus
could be a game
changer for developing
countries
Experts usually acknowledge that the carbon emitted by the industries is
one of the major reasons behind changing weather patterns (Walker, et
al., 2012). Climate change becomes more important for developing
countries as these countries possibly stand to lose from changing
patterns as the climate change could push development towards much
costlier resource efficient technologies. India, in particular with its rich
natural resources can be one of the largest victims of climate change.
Some of the reasons have been highlighted below:
1. Availability of resources: The large and increasing population
will require much more resources. While this can be an
opportunity for the industry, the limited availability of resources
can be the greatest challenge to the industry. Only the most
innovative and efficient nations will survive the race (Rothschild,
2012)
2. Impact on Agriculture: The impact of climate change is evident
on agriculture with the increasing irregularity of rainfall and
changing patterns of monsoons (Singh, 2013) This impacts the
production of the most important resource i.e. food, and the loss
in production also reduces the income of the households
dependent on agriculture. The loss of market impacts the
secondary product manufacturers and the growth of the
economy as a whole.
3. Impact on seas and associated communities: The large
coastline of India helps in international trade and access to
numerous sea resources. The coastal areas are impacted by
rising of sea levels, change in frequency and intensity of storms,
acidity and temperature changes which impact the millions of
dependent livelihoods (USEPA). The rising sea levels also pose a
danger of submerging land area. The rising sea levels also pose a
danger of submerging land.
6
Low Carbon Industrial Growth In India
International and National Regulatory Pressures
The climate change impacts have prompted both international and
national authorities to develop a regulatory environment in this area.
India has been an active member to represent the case of developing
countries in these talks' at all international forums (The New York Times,
2012). India has volunteered a reduction of 20% to 25% in carbon
intensity by 2020 from 2005 levels through policy interventions,
including mandatory fuel efficiency standards for all vehicles. This
reduction in emission intensity has displayed the seriousness with
which the country looks at climate change. The government and various
regulatory bodies have taken steps to regulate the Indian industry as a
proactive approach to achieve the task. For example, Securities
Exchange Board of India (SEBI) (SEBI, 2012) has mandated large
companies to report on their resource consumption patterns under the
NVG guidelines developed by IICA. The PAT scheme, by the ministry of
Power, has mandated 478 companies to reduce their emissions or buy
carbon certificates (MoP, 2012). The Indian government has also come
up with National action plan for climate change (NAPCC) which has
various supports and incentives provided for companies to adopt new
technology and induce energy efficiency.
At the same time, the Indian industry witnessing pressure from
customers, regulators and traders world for green products. For
example, Multinational companies are putting pressure on their
suppliers from developing countries like India to improve their
operations as part of their greening the supply (Kaerney, 2011), (WWI)
chain initiatives. Even the export of goods and service could be subject
to Carbon tax regulations in the importing nations. These moved could
severely impact the competitiveness of Indian companies if they are not
as carbon conscious as the other countries (Simon).
Challenges vs. Opportunities for the Industry
There has been a
constant push from the
customers towards
green products
7
The low carbon and climate friendly growth poses some very
challenging questions for the industry to ponder over. Low carbon
technologies offer a lot of promise but are not easy to implement. Many
of these technologies have been developed and are in production, but
the industry is still skeptical to making large investments as the new
technologies have not matured to achieve the scale and be available at a
lower cost.
Low Carbon Industrial Growth In India
The changing business
scenario has opened
new opportunities for
low carbon
technologies but there
are challenges that are
still open
While the new technologies face challenges mentioned above, it is also
interesting to note that many large Indian companies are actually the
lowest cost producers in the world. For e.g. Tata steel Jamshedpur plant
has become one of the world's lowest cost producers of steel (Tata
Steel), Ambuja Cements, Suli Solan, has total energy consumption
comparable to the best in the world for PPC plants (BEE, 2012). The
large promoters have realized the importance of these technologies and
the cost advantage they bring in. The emerging challenges in the
economy have opened a lot of opportunities for the Low Carbon
technologies, but at the same time there are various challenge
associated with these technologies, some of these issues are listed in
Exhibit 3.
Exhibit 3: Challenges and Opportunities in Low carbon economy
Emerging Challenges
Opportunities in Low carbon
Challenges for Low carbon
Climate Change
Innovative Solutions
Lack of Clear understanding of technology
Regulatory Requirements
Regulatory push and support
Unclear understanding of financing institutions
Market Requirements
First mover Advantage
Lack of interest in customers and investors
High capital investments
Huge cost savings
Unavailability of skilled manpower
Environmental risk to business
Reduced fuel and energy costs
Lack of repair and maintenance infrastructure
Improved brand reputation
No regulatory bindings
Crowded Marketplace
Access to new markets
Reduced environmental risks
Source: YES BANK Analysis
8
Low Carbon Industrial Growth In India
2
The Focal Industries
The Focal Industries
T
Focus on high growth,
high emission
industries will allow
them to maintain
robust growth rates
while adopting a low
carbon path
his paper focuses on the industries with high carbon footprint.
Achieving big carbon reduction in these industries will provide the
biggest savings in carbon output for the country as a whole as
biggest impact can be achieved by targeting the largest carbon
contributors. A focus on high growth high emission industries will allow
the industry to maintain high growth rates while adopting a lower
carbon path and thus achieve lower emissions in a future ready
environment. The industries selected are:
1. Iron & Steel
2. Electricity and Power
3. Cement
The list is concurrent with the global standards published by world
resources institute with their findings in 2005 as shown in Exhibit 4.
Source: World Resources Institute, 2005
10
Low Carbon Industrial Growth In India
The list also coincides with the PAT list (BEE, 2012) of designated
consumers in carbon intensive sectors identified by BEE (See Exhibit 5);
it is also in line with Greenhouse Gas Emission 2007 report by Indian
Network for Climate Change Assessment with Ministry of Environment
and Forests (INCCA, 2010) (Exhibit 6). We have deliberately excluded
agriculture from the list since the overall contribution of agriculture to
India’s carbon emissions has fallen from 27.6% to 17.6% in the last
decade (exhibit 6) which is in line with Indian economy’s transition from
an agriculture based economy to a mix of Industrial and services
economy. It is also interesting to note that the carbon emissions of the
selected sectors have shown an upward trend, thus validating our
choice of the sectors (Exhibit 6).
The forthcoming sections cover the details of these industries and their
environmental impact.
Exhibit 5: Sectors identified
under PAT Scheme
Sector
Exhibit 6: Carbon emissions of various sectors in
India (1994 – 2007)
1994
Mtoe
2007
CAGR (%)
Power (Thermal)
104.1
Electricity
355.03
(28.4%)
719.30
(37.8%)
5.6
Integrated Steel
28.0
Transport
80.28
(6.4%)
142.04
(7.5%)
4.5
Cement
11.87
Residential
78.89
(6.3%)
137.84
(7.2%)
4.4
Fertilizer
7.86
Other Energy
78.89
(6.3%)
100.87
(5.3%)
1.9
Textile
1.62
Cement
60.87
(4.9%)
129.92
(6.8%)
6.0
Aluminium
7.73
Iron & Steel
90.53
(7.2%)
117.32
(6.2%)
2.0
Paper
2.09
Other Industry
125.41
(10.0%)
165.31
(8.7%)
2.2
Chlor-Alkali
1.06
Agriculture
344.48
(27.6%)
334.41
(17.6%)
-0.2
Total
164.15
Waste
23.23
(1.9%)
57.73
(3.0%)
(mtoe: million tonnes of oil equivalent)
Total without LULUCF
1251.95
Source: Bureau of Energy Efficiency
(BEE), 2012
LULUCF
14.29
-177.03
Total with LULUCF
1228.54
1727.71
1904.73
7.3
3.3
2.9
Source: Ministry of Environment and Forest report, (INCCA, 2010)
The Working Group on
Steel for the 12th Five
Year Plan has projected
that crude steel
capacity in the country
is likely to grow by
100% over the next 5
years
11
Iron & Steel
Iron and steel industry in India is about 100 years old with first
integrated steel plant by Tata steel & Co in 1907 (His12). Steel forms the
backbone of traditional sectors such as infrastructure (construction &
housing), ground transportation and major engineering industries such
as power generation, petrochemicals, fertilisers, automotive, steel tubes
and pipes, consumer durables and packaging). The steel industry is
growing on account of the high growth rates in the Asian countries
Low Carbon Industrial Growth In India
mainly India and China. China was the world’s largest crude steel
producer in 2011 (684 mt) followed by Japan (108 mt), the USA (86.4 mt)
and India (72.2 mt). The Working Group on Steel for the 12th five year
plan has projected that the crude steel capacity in the country is likely to
be 140 mt by 2016-17. This entails doubling the capacity in 5-6 years
timeframe (Ministry of Steel, 2012).
Power sector is the
largest contributor to
the total GHG
emissions with around
719 million ton of CO2
emitted per annum
Iron & steel industry emits around 117 million ton of CO2 equivalent in
2007 which accounts for 28.4% of total industry emissions and 6.2% of
the total emissions from all sectors in India. Although the industry has
improved in terms of the total contribution from 7.2% in 1994 to 6.2% of
total emission of India it remains one of the largest contributors of GHG
emissions (INCCA, 2010)
Electricity and Power
Power is one of the most critical components of infrastructure affecting
economic growth and wellbeing of nations (GoI, 2013).The power sector
provides one of the most important inputs for the development of a
country and availability of reliable and inexpensive power is critical for its
sustainable economic development. Although the total installed capacity
in India, 225 GW (CEA, 2013), is 5th largest in the world (The World
Factbook, 2009), India lags far behind even in comparison to other
developing countries. The per capita annual consumption of electricity in
India is one of the lowest in the world at approximately 626(2010)
kWh/yr as against the world average of 2977(2010) kWh/yr and middle
income countries average of 1686(2010) kWh/yr (World Bank Data,
2012).
Power sector is the largest contributor to the total GHG emissions at
719 million ton of CO2 equivalent on 2007 it contributes 37.8% of the
total GHG emissions from India. The contribution of power sector has
also increased from 28.4% in 1994 to 37.8% in 2007 of the total GHG
emissions India. The major contribution comes from the coal fired
thermal plant still contributing to 56.92% of the total power generated in
India (INCCA, 2010).
Cement
The cement industry in India is second largest in the world after China
with a total installed capacity of 307.6 MT (IBEF, 2012). China (with an
12
Low Carbon Industrial Growth In India
average annual growth of 11.4%) and India (with an average annual
growth of 9.8%) have been the drivers of growth in global cement
output. Most of the cement produced in India is consumed internally,
and with an all-time high investment in infrastructure projects, imports
are also rising steeply. And the industry will require another 150 MT by
the end of 12th five year plan.
Cement is a major GHG emitter with around 130 million ton of CO2
equivalent in 2007. It has also increased its contribution to India’s total
GHG emissions from 4.9% in 1994 to 6.8% in 2007 of total GHG
emissions. At current emission intensity, cement is bound to remain a
major contributor to GHG emissions (INCCA, 2010).
13
Low Carbon Industrial Growth In India
3
The Pivotal Technologies
The Pivotal Technologies
T
Indian industry has
built plants that can
compete with global
efficiency standards,
but such instances are
an exception rather
than the rule
he Indian growth story supported by its increasing young
population not only requires new jobs and increased economic
activity but also requires higher standards of living with improved
consumption patterns. The youth is not only getting paid more but also
spending a larger amount with respect to the previous generation
(Farrell, et al., 2007). Boosted by the domestic demand the industries
are poised to go for multifold increase in their production capacities. The
only saving grace is the dependence of Indian economy on the less
carbon intensive service sector for its GDP growth.
India is also an energy starved country which imports most of its oil &
gas requirement. India has one of the largest deposits of coal in the
world, but it’s not of high quality (Coking coal is just 11.5% of total
reserves) (Ministry of Coal, 2012). This keeps the energy prices very
high and forces the industries to become energy efficient. Technology
comes to the rescue of the industry which has to produce at the lowest
cost. The technologies not only reduce the resources required but also
reduce the overall environmental impact of the product and hence the
GHG emissions.
In ideal scenario the industry should adopt these technologies as Indian
industries have been pioneers in building the most efficient industries.
But these instances are not very frequent. For e.g. the carbon intensity
of the power sector in India is much higher than the US and Europe
(CARMA ) (Exhibit 7).
Exhibit 7: Carbon Intensity of Power Sector (kg CO2 / MWh Energy)
1000
800
2004
600
2009
400
200
0
India
USA
Asia
Europe
Source: World Bank
16
Low Carbon Industrial Growth In India
Energy Efficiency as low carbon initiative
There are a number of technologies can reduce carbon emissions
drastically, but there are even larger number of technologies that can
help with incremental improvements. These energy efficiency
technologies are low cost – low impact technologies which do not
require an overhaul in the systems. These technologies can be
implemented on existing plants, are low cost and provide incremental
savings. Although these technologies are best suited for the older plants
and SMEs the major impediment in acceptance is information about
these technologies in the industry and the financial sector. Also, lack of
available collateral on the basis of technology prevents the financial
sector involvement.
Iron & Steel
The Iron & Steel industry is one of the largest energy consuming
sectors in the Indian manufacturing industry. Energy cost is about 3040% of the total manufacturing cost in the sector. Iron making through
BF route accounts nearly 70% of the total energy consumed by the
industry. The energy efficiency of steel making depends on various
factors including production route, types of Iron-ore & coal used,
product mix, material efficiency, technology used, plant capacity
utilization and economic & political incentives.
An analysis of the technology profile of Indian Iron & Steel industry in
2011-12 shows that 42.4% CS (crude steel) is produced through the BF
(blast furnace) / BOF (basic oxygen furnace) route (including marginal
quantity from THF), 25.1% through EAF (electric arc furnace) route and
the balance 32.5% through the EIF (electric induction furnace) route
(Ministry of Steel, 2013).
Iron-ore is expected to
remain the mainstay of
crude steel production
in India, while
developed economies
produce around half of
their steel from
recycled activities
17
The SEC (specific energy consumption) of the Indian Iron & Steel Sector
(ISS) has improved dramatically from about 32 GJ/tcs in 2000-2001 to
27.3 GJ/tcs in 2008-09(LBNL 2009). However, the SEC values in Indian
plants compare rather poorly against the SEC values in countries like
Japan (23.3 GJ/tcs - 2004), US (20.1 GJ/tcs - 2001), EU (15 GJ/tcs 2002) & China (25.6 GJ/tcs - 2001) (CSE 2010). The emissions intensity
of steel production in India was estimated at 2.21 MT CO2-eq/tcs in
2007 (Planning Commission, May 2011 ).
Low Carbon Industrial Growth In India
Energy Efficiency Improvement Options for Indian Iron and Steel
Industry
Considering the non-availability of large volume of scrap for EAF/EIF
route of steel making and natural gas for DRI making, Iron-ore will
remain the mainstay of crude steel production in the country for the
foreseeable future. The two prominent routes for steel making from iron
ore are BF-BOF process and Coal-DRI/EAF-EIF. Major energy efficient
and environment friendly options that could improve the profile of Indian
Iron and Steel sector are presented in Exhibit 8 (Ministry of Steel,
September 2011)
Exhibit 8: Energy conservation options for Indian Iron and Steel Industry
Process
Energy Saving option
Medium term (2015-2025)
Sinter
making
Saving potential
Remarks
About 20-25% of the
energy requirement in the
sinter making process
Working in Bhilai Steel
Plant (BSP), RSP (Rourkela
Steel Plant) and DSP
(Durgapur Steel Plant).
This option is applicable
only with blast furnace
technology.
Long term
(2020-2030)
Sinter Cooler Waste Heat
Recovery
• 0.4-0.55 GJ/tcs (steam
generation at 120 kg
steam /t of sinter at 9
bar and 273°C)
Total heat input for ignition
will reduce by about 30%
as compared to
conventional burner
Multi-slit burners in
ignition furnace
Working in BSP, RSP and
BSL.
Reduction of moisture
content from 7- 8 % to 46% can result in savings
of about 1GJ/tcs
Coke making Coal moisture control
process (CMCP)
Coke dry
quenching
0.8-1.2 GJ/t of coke (steam
generation at 480 °C and
60 bar, at initial stage 0.4
GJ/t of coke or 0.2GJ/tcs)
- Applicable only with blast
furnace route of steel
making;- Tata Steel has
already installed CDQ with
the help of NEDO to
improve COBs;
- BSP, RSP & ISP is also in
process of installing CDQ;
- About 90 to 95% of
Indian plants yet to adopt
this technology.
18
Automatic combustion
control and monitoring
system
0.17GJ/t of coke
Additional use of coke-oven
gas as supplementary fuel
in blast furnace
Coke oven gas with a
heating capacity of 6-8 GJ
can be recovered for every
ton of coke produced
Low Carbon Industrial Growth In India
Process
Energy Saving option
Medium term (2015-2025)
Remarks
•
About 18% fuel
savings and 13% O2
consumption reduction
•
Applicable only for
green-field projects
•
•
Saving of 4 GJ/tcs (due
to use of non-coking
coal without pretreatment) and off gas
credit of 8-12 MJ/ton
of hot metal (tHM)
Corex technology (C2000 Module, 1.6
mtpa) is working at
JSW, Bellary. Essar
Steel is also putting up
2 units of the same
module at Hazira.
Long term
(2020-2030)
Iron
Smelting
– Corex
Iron making
Saving potential
Iron
Smelting –
Finex
Steel making
Casting
Rolling and
Finishing
SAIL has signed an
agreement with POSCO to
incorporate the technology
under JV for creating a
2.5-3.0 mtpa additional
capacity at BSL.
Adoption of top pressure
recovery turbine (TRT)
0.4-0.6 GJ/tcs (for 15 MW
turbine to generate 40-60
kWh/tHM)
Working in BSP, RSP, BSL
and ISP
Use of Hot Stove Waste
Heat Recovery in
existing/ new BF
0.3 GJ/t pig iron
Working in BSP, RSP, BSL
and ISP
Pulverized Coal Injection
(PCI) in existing/ new BF
0.7-0.77 GJ/tHM
Working in BSP, DSP and
RSP
Bled basic oxygen furnace
(BOF) gas and Waste
Heat Recovery
1 GJ/tcs
Working in BSP, DSP, RSP
and BSL
Oxy-fuel burners in electric
arc furnace (EAF)
0.5 GJ/tcs
Applicable to both old and
new EAF based steel
melting operations
Scrap pre-heating with EAF
0.6 GJ/tcs
Ultra high power (UHP)
transformers with EAF
0.2 GJ/tcs
Continuous Casting (CC)
replacing Ingot Casting
0.02 GJ/t product
Near-Net Shape-Strip
Casting (30-60 mm
thickness rather than
typical 120-300 mm)
It integrates the casting hot
rolling in one step. Energy
savings 2-3 GJ/ton.
Walking Beam Furnace
0.59 GJ/t throughput
(reduction in electricity
consumption by 25%
per ton)
BSP and BSL are in
process of installing this
technology (2012-13).
Future Technological Options
Some of the technological options that could make the Indian Iron and
steel sector more competitive are highlighted in Exhibit 9 (Ministry of
Steel, September 2011)
19
Low Carbon Industrial Growth In India
Exhibit 9: Future technological options for Iron and Steel sector
Process
Technology
Remarks
Coke making
• Installing Stamp Charging & PBCC
(partial briquetting of coal charge),
• Tata Steel Limited and SAIL has installed stamp charging
&PBCC.
• Tall COB (coke –oven batteries)
• SAIL, RINL and Neelachal Ispat have installed 7 m tall COBs,
Bhushan Steel is in the process of setting up a 7.60 m tall
COB, the tallest in the country (2012-13).
SCOPE21 (Super coke oven for
productivity and environment
enhancement towards 21st century)
Developed by Nippon Steel, Japan and offers more flexibility in
terms of coal resource quality and provide reductions in energy
& emissions intensity of the coke making process.
DAPS (Dry cleaned and agglomerated
pre-compaction system)
The DAPS is a new coal pretreatment process for coke making
to enhance coke strength and suppress dust level to improve
the environment friendliness of coke making by drying coal,
separating fine coal from lump coal and forming the fine coal
into agglomerate.
HISMELT process
The salient feature of the process is moderate to high degree
(70% & above) of post combustion. The technology is still at
demonstration stage.
FASTMET/FASTMELT Process
This process envisages reduction of ore-coal composite
pellets in Rotary Hearth Furnace (RHF). The process was
successfully demonstrated by MIDREX Corporation, USA
jointly with Kobe Steel Ltd. (KSL), Japan and subsequently, a
demonstration plant was set up at KSL's Kakogawa Works.
This process may be attractive for small to medium iron
producing units.
Iron making
ITmk3 Process
Developed by KSL, Japan, the process uses a rotary
hearth furnace (RHF) to turn green dry pellets made
from low grade iron ore fines and pulverised coal into solid iron
nuggets of superior quality (97% Fe) DRI, suitable for use in
EAF, BOF and foundry applications. SAIL has entered into an
agreement with KSL under JV to set up a 0.5mtpa facility in
Alloy Steel Plant, Durgapur. Energy savings 30% over
integrated steel making and 10% savings over EAF. It reduce
emissions by >40%; (less NOx, SOx& particulate matter
emitted).
Casting
Thin Slab/ Near Net Shape Casting
Electricity & Power
India is a power starved country with per capita power consumption is
among the lowest in the world at 626(2010) kWh/ yr (Ele12). The major
sources of power in India include thermal, nuclear, hydel and other
renewable including wind, solar. But the distribution is highly skewed
towards the thermal which is again skewed towards the high carbon
intensive coal based thermal power plants (CEA, 2013) (Exhibit 10).
20
Low Carbon Industrial Growth In India
Exhibit 10: All India region-wise Installed capacity (MW) as on July 2013
S
Region
No
THERMAL
Nuclear
HYDRO
R.E.S
(Renewable)
(MNRE)
Total
Coal
Gas
Diesel
Total
1
Northern
33173.5
(54%)
5031.26
(8%)
12.99
(0%)
38217.75
(63%)
1620.0
(3%)
15467.75 (25%) 5589.25 (9%)
60894.75
2
Western
50144.51
(65%)
8988.31
(12%)
17.48
(0%)
59150.30
(76%)
1840.0
(2%)
7447.50
(10%)
8986.93
(12%)
77424.73
3
Southern
25182.50
(45%)
4692.78
(8%)
939.32
(2%)
31084.60
(55%)
1320.0
(2%)
11353.03
(20%)
12251.85
(22%)
56009.48
4
Eastern
23727.88
(83%)
190.00
(1%)
17.20
(0%)
23935.08
(84%)
0.0
(0%)
4113.12
(14%)
454.91
(2%)
28503.11
5
North
Eastern
60.00
(2%)
1187.50
(41%)
142.74
(5%)
1390.24
(48%)
0.0
(0%)
1242.00
(43%)
252.68
(9%)
2884.92
6
Islands
0.00
(0%)
0.00
(0%)
70.02
(92%)
70.02
(92%)
0.0
(0%)
0.0
(0%)
6.10
(8%)
76.12
7
All India
132288.39 20359.85 1199.75
(59%)
(9%)
(1%)
153847.99
(68%)
4780.0
(2%)
39623.40
(18%)
27541.71
(12%)
225793.10
Source: Central Electricity Authority, 2013
Mitigation and control of GHG emissions from the power sector
requires a three pronged approach on the technology front:
(1) Improvement in thermal power plants: Shifting to new and
efficient technologies
(2) Alternative sources of power: Shifting the dependence on
carbon intensive thermal to low carbon nuclear and other
renewable energy sources
(3) Smart grids for effective distribution: reducing transmission
losses.
The subsequent sections cover these strategies in further details
Improvement in thermal power plants
The distribution of
various sources of
power is highly skewed
towards Coal based
Power plants.
Removing the bias
would require major
policy changes
21
Thermal power plants are the backbone of the Indian power sector
contributing more than 66% of the total power generated in India of
which 57% is contributed only by coal fired power plants. India enjoys
one of the largest coal reserves of the world making it the cheapest
source of power in the long run at current technologies.
Super Critical & Ultra – Super Critical Power plants
The new technology of super heating water generates higher
efficiencies up to 42% in net higher heating value (HHV) (Bhushan,
2010). The technology incentives are clear from government of India
Low Carbon Industrial Growth In India
getting private sectors investments in mega power plants and ultramega power plants.
Efficiency increasing technologies
New technologies like pressurized fluidized bed combustion and
integrated gasification combined cycles increase the efficiency of coal
plant drastically. The efficiencies can be improved up to 45% as
compared to the current world average of 35%.
Use of Natural Gas
Natural gas, standalone or in combined cycle power plants, is a lower
carbon replacement of coal where the establishment & technology
costs are not as high as compared to other renewable power, but the
carbon impact is reduced by around 30-40% with respect to coal. But
natural gas cannot be the best alternative for India given the limited
supply available to India.
Carbon capture and Storage (CCS)
CCS technologies (ABELLERA, et al., 2011) are not one of the most cost
efficient technologies in reducing emissions from the power sector. Still,
CCS technologies can be incorporated in both coal and gas fired power
plants. It increases the cost of power marginally and provides an
effective alternative to costlier solar and off shore wind.
Alternative sources of power
The government of India is providing the right pressures, incentives and
steps to reduce the dependence of India’s power on thermal power. A
clear guideline to procure nuclear fuel, increased incentives for
renewable power and focus on clearances for hydropower will go a long
way in providing energy security to India and at very low environmental
impact.
Nuclear Power
Nuclear power may not be the most carbon efficient, but it gives an
excellent middle ground where it reduces up to 80% of emission and is
only twice in efficient as a solar PV and produces power at a much lower
cost (DoAE, 2011), (2012). Nuclear power contributes only around 2.5%
22
Low Carbon Industrial Growth In India
of total India’s generation capacity in 2012 as against 12.3 % of the
world’s electricity production in 2011. As of August 2012, 30 countries
worldwide are operating 435 nuclear reactors for electricity generation
and 66 new nuclear plants are under construction in 14 countries
(Nuclear Energy Institute); although the potential risks associated with
the possible leakages of radioactive material remain a concern with
some stakeholders. For E.g. Radioactive leakages due to tsunami at the
Fukushima Nuclear Plant, Japan is an actual threat to livelihoods and
biodiversity in and around nuclear plants.
Renewable Energy
Renewables are a potential way forward for India. The Hydel and Wind
power have ramped up drastically in India, but the real potential lies in
Solar and biomass (MNRE, 2012). The daily average solar energy incident
over India varies from 4 to 7 kWh/m2 with about 1500–2000 sunshine
hours per year (depending upon location), which is far more than current
total energy consumption making solar energy as one of the best
potential sources of energy to be harnessed.
Exhibit 11 displays the potential and installed capacity of various
renewable energy sources in India.
Exhibit 11: Potential and installed capacity of Renewable Energy in India
Potential and Installed capacity (Mar 2012) of Renewable
power in India (in MW)
120000
100000
100000
80000
60000
49130
40000
20000
0
16078
18000
15380
3050
Wind
Bio Mass
Potential
3252
Small Hydro
445
Solar
Installed
Source: MNRE Website
The major hindrance in the adoption of solar PV and Solar water heating
technologies is the huge initial cost of establishment and faith in the
technology; though the solar economy is on the move and many
entrepreneurs are taking advantage of the subsidies provided by
23
Low Carbon Industrial Growth In India
national solar mission by government of India to put up both on grid and
off grid establishments. India plans to add 20,000 MW by 2022 of solar
power under the JNNSM (MNRE, 2010).
Other technologies and sources of Energy
Along with solar power Ministry of New and Renewable Energy (MNRE)
has identified are (MNRE):
•
Hydrogen Energy: Hydrogen is an explosive source of energy
and low in carbon than other fossil fuels but still availability and
production of hydrogen is the major problem.
•
Chemical Sources of Energy (Fuel Cells): Fuel cells are efficient
technology for the combustion of hydrogen and lower
hydrocarbons, the carbon emission reduces due to increased
efficiency. But the cost, size and availability of hydrogen are the
major hindrances.
•
Alternative Fuels for Transportation: Alternative fuels like
biodiesel and ethanol actually fit in the mold of tiding over the
energy deficiency but may not be exactly low carbon to the
current fossil fuels.
•
Geo Thermal Energy: Geothermal is an excellent energy source
which is abundant and renewable. It is an upcoming technology
and expected to grow at a much faster rate.
•
Tidal Energy: Wind energy is already being harnessed from
offshore locations. Tidal energy is a manifestation of wind
available to countries with a long coastline.
Smart Grids for effective distribution
In India transmission and distribution losses in electricity are among the
highest in the world as shown in the below figure. It averages around
24% as against the world average of 8-9% (The World Bank). Exhibit 12
displays the consistently high T & D losses of electricity in India.
24
Low Carbon Industrial Growth In India
Exhibit 12: Transmission & Distribution losses in India, 2009
Transmission & Distribution Losses of grid electricity India
30
25
20
15
10
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
T&D Losses (in % of total output)
Source: World Bank
Smart grids provide the solution since a smart grid applies sensing,
measurement and control devices to capture information from power
generation, transmission & distribution and consumption components of
the grid. A smart grid switches demand with high load, peak & off peak
hours and matches the demand based on supply. It can also integrate
different sources of the power grid, renewable, battery etc. and manage
their output based on their requirement. Smart grids can help cut down
transmission and distribution losses making more power available to
consumers and reducing the per capita carbon emissions.
Cement
The smart grid
implementation can
have an immediate
impact on transmission
and distribution losses
and, increase power
availability to the user
25
Cement production is done in a 4 step process which includes crushing,
blending, clinkerization and finally grinding and mixing. Forming clinker
involves maximum usage of energy. The Indian cement industry today is
by and large comparable to the best in the world in respect of quality
standards, fuel & power consumption, environmental norms for new
cement plants, use of the latest technology and capacity. Presently,
about 97% of the total capacity in the industry is based on modern and
environment-friendly dry process technology, and about 50% of the
capacity has been built in the last ten years. The industry’s weighted
average energy consumption is estimated to be about 725 kcal/kg
clinker thermal energy and 80 kWh/t cement electrical energy. The best
thermal and electrical energy consumption presently achieved by the
Low Carbon Industrial Growth In India
Coal is one of the
major ingredients for
cement manufacturing
both as a fuel and as
an ingredient
Indian cement industry are about 667 kcal/kg clinker and 67 kWh/t
cement which are comparable to the best reported figures of 660
kcal/kg clinker and 65 kWh/t cement in a developed country like Japan.
It is expected that the industry’s average thermal energy consumption
by the end of the Twelfth Five –year plan (2012 – 2017) will be about 710
kCal/kg clinker and the average electrical energy consumption will come
down to 78 kWh/tonne cement
Coal is one of the major ingredients of cement and acts as both a fuel
and an ingredient in production. Also limestone a key ingredient in the
cement manufacturing process produces a lot of carbon in the ensuing
calcinations process. The technologies are available to improve the
current system or using a new method to produce cement.
Improvement in current systems
Thermal and electric efficiency
Using latest technologies (IEA, 2009) in newer plants not only improves
efficiencies but also reduces carbon impact of the current process.
Savings on a per unit basis range from 0.2-3.5 GJ/tonne clinker with
thermal efficiency and to around 40 kWh/t cement from electrical
efficiency.
Use of Alternative fuels and raw materials
0
0
Due to high temperature (800 C to 1600-1700 C) and wide spectrum of
residence time up to 3 minutes and the biggest advantage of complete
absorption of ash in the complex cement compounds, cement kilns are
best suited to use a different kind of waste, which would otherwise be
burnt in incinerators, land-filled or improperly destroyed, as AFR.
However, the use of alternate fuel is nearly zero (on average 0.6% of
thermal energy across the country) as compared to the global average
of about 4%. In some countries, the average use is as high as 30%.
Typical wastes that can be used as AFR include industrial wastes, sorted
municipal solid waste, discarded tyre and tyre chips, expired consumer
goods, waste oil and solvents, effluent treatment sludge, biomass etc.
Clinker substitution
Carbon intensive clinker, an intermediate in cement manufacture, can be
substituted with other low carbon materials with cement properties. The
best substitutes include Ground blast furnace slag, Fly ash, Natural
26
Low Carbon Industrial Growth In India
pozzolanas(e.g., volcanic ash), rice husk ash, silica fume, Artificial
pozzolanas(e.g., calcined clay), Limestone. The global average clinker
ratio was 78%, equivalent to more than 500 million tonnes of clinkersubstituting materials used for 2,400 million tonnes of cement
produced. The current clinker to cement ratio in India is about 0.74
compared to a global average of 0.80.
Carbon capture and storage (CCS)
Capturing CO2 before it is released into the atmosphere and storing it
securely, so it is not released in the future. A reduction efficiency of
80% would lead to an overall CO2 emission reduction of maximum 2035 Mt per year.
Waste Heat Recovery (WHR)
The installed capacity of WHR system in India is about 110 MW against
the estimated potential of close to 550 MW. Approximately, 15 kWh/t to
20 kWh/t of clinker or 12% to 15% of the power consumption of
cement plant can be generated by using currently available WHR
technologies, without significant change in kiln operation. The potential
exists in almost all cement plants having kiln capacity 3000 tonnes per
day and more.
Alternatives to the current cement
Low carbon cement alternatives like Novacem, Calera, Calix’s and
Geopolymer have a great potential to decrease the overall carbon
footprint of Cement industry.
Future technologies
Several technological options that could improve the profile of Indian
cement industry are at various stages of development. Some of them
are described briefly in this section.
Use of mineralizer to improve burnability of the raw mix
Addition of mineralisers to raw material entering the kiln can reduce the
clinkerisation temperature by about 500C without compromising the
clinker quality. The selection and use of mineralisers is dependent upon
factors such as compatibility with raw materials, desired reaction
effects, economic viability etc.
27
Low Carbon Industrial Growth In India
Fluidised bed advanced cement kiln system
This system is widely used in some other countries although its
suitability at scale is yet to be proven. Granulation control is the most
important component in this system.
Algal growth promotion and use of biofuels
Algae can be used directly as fuel or can be converted into biofuel to
provide energy for cement production.
Geopolymer cement
Alkali activated alumina-silicate cements are known as geo-polymeric
cements because of similarity of their structure with the structure of
silicate and alumina-silicate minerals. Geo-polymeric cements are ecofriendly binders and are produced from non-limestone bearing raw
materials and wastes such as fly ash and slag. Geo-polymeric cements
include alkali activated slag cement, alkali activated metakolinitic cement
and alkali activated fly ash cement.
Use of nanotechnology in cement production
Nano cement contains nano-sized particles of cement evenly distributed
among larger particles of mineral admixtures. Fine distribution of nano
particles ensures that even a lower content of cement is able to provide
desired bonding of aggregates and admixture particles, generating the
required strength and performance in the final concrete.
Energy Conservation options identified during energy audits
During the past few years, TERI has carried out energy audits of few
large cement plants in the country and had identified potential energy
saving areas respective to each plant. Major energy saving options
recommended by TERI through energy audits for two such Indian
cement plants that were engaged in production of OPC, PPC and export
of cement are presented in this section. Both the plants have captive
power plants and were using coal as the main fuel input. The average
specific energy consumption for one plant was about 850 kCal/kg, and
for another it was about 892 kCal/kg.
28
Low Carbon Industrial Growth In India
Exhibit 13: Energy conservation options identified by TERI
S. No
29
Major energy saving option
Estimate investment (in INR lakhs)
Energy Saving
1
Replacement of kiln inlet pneumatic
seal with graphite seal
2
Installing variable speed drive for
boiler feed water pumps
3
Installation of Roto scale for
coal firing
50.0
2 k Cal/kg-clinker
4
Operation of cooling tower fans
at lower speed
20.0
about 5 lakh kWh per
annum
5
Feeding of pre ground material
(100% VRM) product to cement mill
27.0
3 kWh/tonne
6
Installation of screw compressors
instead of reciprocating compressors
90.0
about 12 lakh kWh
per annum
7
Replacement of HT motor of flash
dryer by LT motor with VVVFD
25.0
about 4.5 lakh kWh per
annum
25.0
60
2 k Cal/kg-clinker
about 13 lakh kWh per
annum
Low Carbon Industrial Growth In India
4
Major Road Blocks
Major Road Blocks
T
he low carbon growth is the potential best solution available for
the long term sustainability of the country’s economy, but it is
also the most unaffordable one. The major roadblocks are:
Understanding of the severity of the climate change
crisis
Climate change is still
not a business
consideration for most
companies
The businesses now focus mostly on quarter to quarter basis and are
reluctant to look at a larger time horizon. This view has not only
impacted businesses to assess risks in a long term basis but also
averted any expenses that may not have any direct impact on the
bottom line. The exact correlation of current climatic tragedies like
hurricanes could not be established as being caused by climate change
or temperature rise. The consumers are slowly waking up to the nature
conservation cause, and green products are getting preference. But the
rate is really slow as the cost differentials are high and awareness about
the climate change is still low in the country.
Understanding and slow adoption of new
technologies
Many of the large companies are very quick in adopting new technology
and reducing their costs. These companies set the examples for large
investments into energy efficiency and new technology. But there is no
broad base adoption. The major reasons include:
Cost advantage of old technologies
The whole industry operates on the full spectrum of least efficient to
most efficient technology available. The cost of new technologies is
higher, and the fully depreciated machinery of the industry offers cost
advantage to the older players.
Slow adoption of new technologies
Any new technology has definite rate of adoption which is very slow to
start with and picks up gradually overtime. This is also directed by the
32
Low Carbon Industrial Growth In India
consumers which range from early adopter to laggards. This in turn is
also dependent on the stability of the technology, the initial high failure
rates and lack of necessary scale to bring down the costs. All these
factors together make it very difficult to compete with older
technologies. Exhibit 14 explains the standard rate of diffusion of a new
technology in a normal scenario which explains the slow adoption.
Exhibit 14: Rate of “Diffusion of technologies”
100
50
Market share %
75
25
Innovators
2.5%
Early
Adopters
13.5 %
Early
Majority
34 %
Late
Majority
34%
0
Laggards
16%
Source: Everett Rogers, Diffusion of Innovations, 1962(Blue line denotes the time variance with
new customers and yellow indicates the population)
Cost of technology
New and innovative technologies come at a substantially high price in
the market and are practically inaccessible to many in the market. At the
same time as the acceptance increases and the costs come down and it
gets adopted. This creates a doubt in the minds of entrepreneur or
consumer of the technology to wait for the prices to come down make
the technology more profitable.
Lack of adequate
financial support is a
major roadblock in
adoption of new
technologies
33
Lack of financing options
The technologies for low carbon are still in an evolving stage, and
although the benefits are clear the risks associated with these
technologies are unknown. The financial sector analyses a project on the
basis of risk associated with the project and is unable to ascertain the
cost of the project and hence is skeptic towards new technology.
Low Carbon Industrial Growth In India
Quantification of Efficiency
Energy efficiency
technologies are
usually dubbed as
'trivial' even though
these can provide
immediate returns
Energy efficiency measures are the best low hanging fruits when it
comes to reducing carbon emissions and are also low cost with respect
to changing the equipment. The ESCO model (India Carbon outlook) of
financing is an excellent way to provide finance for energy efficiency
initiatives. But the major challenge remains in assessing the efficiency
as it gets lost in the normal accounting procedures. There is always a
difference between the efficiency promised by the vendor and realized
at the location. The problem also lies in the handling of the energy
efficiency measures in current accounting procedures where the clarity
in handling savings is absent. The concerns for the financiers lie in the
credibility of the technology providing the promised returns and lessee
paying the promised where the realized varies.
Credibility and ability of the entrepreneur
New technologies are propagated faster by a new generation
entrepreneurs who understand the technology and are willing to take it
as a business opportunity. Entrepreneurs have the ability to take more
risks with the new technology but essentially lack the business acumen
to take the model to scale. The entrepreneur also lacks appropriate
financial backing to make the initial investments. The business plans lack
the basic requirements of a good proposal. This impacts the credibility
of the entrepreneur and his ability to conduct business and eventual
rejection of the proposal.
Effectiveness of government schemes
There are many government schemes available for adoption of new
technology. But the benefits of government programs are availed by a
select few. Although the government has the largest network and
outreach the program incentives have very little trickledown effect. The
bureaucracy involved acts as a further deterrent on the hands of the
beneficiary.
Lacking focus on energy efficiency
The financial sector is now considering the renewable energy space as a
sunrise sector of the economy along with various government
incentives and priority sector norms by RBI. The overall spending on
renewable energy projects in India has increased from USD 4.2 billion in
2009 has increased three folds to USD 12.3 billion in 2011 (UNEP, 2012).
34
Low Carbon Industrial Growth In India
A similar growth trend is not seen in energy efficiency space. There have
been various reasons for the slow uptake including clarity on the various
technologies, inherent flaws in ESCO model of financing and lack of
adequate processes in the industry. Apart from the above reasons the
uptake from the industry has not been very good as the industry is
reluctant to change the existing equipment as the capital costs have not
been recovered yet. The new equipment financing is also not
categorized as an ‘energy efficient’ investment. The financing also
becomes difficult for FIs because many times the ticket size of the total
initiative is too small for the bank to finance and too large for an SME /
industry to write it off as an expense.
35
Low Carbon Industrial Growth In India
5
Government Support
Government Support
T
The Government of
India is taking various
measures like NAPCC,
RPO, PAT to tackle
climate change
he Government of India appears committed to reducing carbon
emissions and has declared a voluntary reduction in carbon
intensity of up to 25% over 2005 levels by 2025. The government
has taken many policy initiatives under the central plan of National
Action Plan for Climate Change (NAPCC). Apart from the NAPCC, the
government has also focused on individual sectors e.g. emphasis on
supercritical and ultra-supercritical power plants for all future power
plants in India. Technology support is also arranged from developed
nations by the government for the Indian companies.
National Action Plan for Climate Change (NAPCC)
The Action Plan, launched in June 2008, NAPCC primarily aims at
identifying potential opportunities and delineating the path forward for
the implementation of technologies that address India's twin objectives:
sustainable development and adaptation and mitigation of commercial
emissions in an accelerated manner.
The NAPCC has 8 core pillars (National Missions) that represent multipronged, long-term and integrated strategies to achieve the said goals in
the context of climate change and sustainable development. Exhibit 15
explains the various missions.
Exhibit 15: NAPCC Missions, 2008
National Mission
Actions Items
National Solar Mission
ü
Solar Capacity targets at national & State levels
ü
Support for both producers & consumers through subsidies and R&D for
new indigenous products
ü
Attractive Feed-in- Tariffs and Renewable Purchase Obligation (RPO) with
minimum cap on renewable energy for grid to encourage large power plants
38
Low Carbon Industrial Growth In India
National Mission
Actions Items
National Mission for Enhanced
Energy Efficiency
ü
Perform Achieve and Trade (PAT):A market based mechanism to enhance
cost effectiveness of improvements in energy efficiency in energy-intensive
large industries and facilities, through certification of energy savings that
could be traded.
ü
Market Transformation for Energy Efficiency (MTEE): Accelerating the shift to
energy efficient appliances in designated sectors through innovative
measures to make the products more affordable.
ü
Energy Efficiency Financing Platform (EEFP): Creation of mechanisms that
would help finance demand side management programmes in all sectors by
capturing future energy savings.
ü
Fr a m e w o r k f o r E n e r g y E ff i c i e n t E c o n o m i c D e v e l o p m e n t
(FEEED):Developing fiscal instruments to promote energy efficiency
National Mission on Sustainable
Habitat
ü
Energy conservation in Buildings
ü
Waste management & recycling including power from waste
ü
Encouragement to purchase efficient vehicles & Use of Public transport
National Mission on Water
ü
Comprehensive water database and assessment of impact of climate
change on water resource
ü
Water conservation, augmentation and preservation & increase in water
usage efficiency
ü
Focused attention to over-exploited areas
National Mission for a Green India
ü
Increase forest cover & density
ü
Improve ecosystem services including biodiversity, hydrological services,
carbon sequestration
ü
Increase forest-based livelihood income
National Mission for Sustainable
Agriculture
ü
Dry land Agriculture
ü
Access to Information
ü
Use of Bio- technology
ü
Integrate farming systems with livestock and fisheries
National Mission for Strategic
Knowledge of Climate Change
ü
Enlisting the global community to collaborate in R& D of technologies
ü
The twin focus 1) Mitigation Technologies, and 2) Adaptation Technologies
ü
Creation of research infrastructure, and Capacity building for institutions and
individuals
National Mission for Sustaining the
Himalayan Ecosystem
ü
Safeguard the Himalayan glaciers and mountain eco-systems
ü
Evolving suitable management and policy measures for sustaining and
safeguarding
ü
Studying traditional knowledge systems for community participation in
adaptation, mitigation, and coping mechanisms
Source: Government of India, 2008
State Initiatives
Apart from the overall initiative from the central government, the state
governments have also put up plans (Exhibit 16) to boost solar and other
renewable energy initiatives
39
Low Carbon Industrial Growth In India
Exhibit 16: Renewable Energy Initiatives of States
State(s)
Type of arrangement
Total impact
References
North-Eastern States,
Sikkim, J&K, Himachal
Pradesh and Uttarakhand
SPV systems including power
plants and packs by Central and
State Government Ministries/
Departments and their
organisations, State Nodal
Agencies and local bodies
MNRE subsidy: 90%
the subsidy will be limited to
INR 243/Wp(with battery)
and INR 171/Wp(without
battery)
http://pib.nic.in/newsite
/erelease.aspx?relid=8
3277
North-Eastern States,
Sikkim, J&K, Himachal
Pradesh, Uttarakhand and
Jharkhand
For each of the 100 numbers of
solar charging stations per
district having module capacity
of 300 Wp for charging 50
lanterns and 10 mobiles in all the
LWE affected districts
Scheme of extending 90%
subsidy subject to a
maximum of INR 1,35,000/-
http://pib.nic.in/newsite
/erelease.aspx?relid=8
3277
Rajasthan
Fo r s e tt i n g u p o f n e w
enterprise, enterprises going
for expansion, modernization
and diversification, and projects
set-up for common social good
50% of the tax deposited,
i . e . VAT a n d C ST
Employment generation
subsidy has been announced
@
1 0 , 0 0 0
p e r
employee/annum Up to 10
year for MSMEs
http://investrajasthan.c
om/cms.php?id=62&m
edia=print
Rajasthan
Power purchase Agreements
for solar power plants
Pr i c e s by c o m p e t i t i ve
bidding upto 25 years
http://www.eai.in/ref/a
e/sol/policies.html
Gujarat
Power purchase Agreements
for solar power plants
PV
http://www.eai.in/ref/a
e/sol/policies.html
Year1-12: INR 15.00/12.00
Year 13-25: INR 5.00/3.00
Thermal
Year 1-12: INR 10.00/9.00
Year 13-25: INR 3.00/3.00
40
Karnataka
Power purchase Agreements
for solar power plants
Tariff based competitive
bidding with base price of
INR 14.50 /kWh (max)
http://www.eai.in/ref/a
e/sol/policies.html
Tamil Nadu
Power purchase Agreements
for solar power plants
A maximum amount of INR
12.00 per Kwh would be
provided as incentive for
electricity generated from
solar photovoltaics and INR
10.00 per Kwh for electricity
generated through the solar
thermal route and fed to the
grid
http://www.tn.gov.in/po
licynotes/archives/polic
y200809/energy_2.htm
Kerala
State mandates state electricity
board to purchase Renewable
power Provide Renewable
Energy Certificate for each
MWh of off grid power
Tot al RPO (Renewable
Purchase Obligation) of 3%
in 2010. Of this, 2.75% is to
be met from non-solar
sources and 0.25% from
solar energy. The RPO
increases by 10% of 3%
every year, up to a maximum
of 10%.
http://www.anert.in/ind
ex.php/policy/111-recrpo
Low Carbon Industrial Growth In India
State(s)
Type of arrangement
Total impact
References
Kerala
For homes with upto 1kW
system
Cost of Project: 2.5 Lakh
Subsidy from center: 81,000
+ interest Total subsidy
including state: 1.5 lakh
http://articles.timesofin
dia.indiatimes.com/201
20813/kochi/33182017_
1_solar-panels-solarpower-solar-scheme
Source: Various (Mentioned herewith)
Renewable Purchase Obligation and Renewable Energy Certificates
Renewable Purchase Obligation (RPO) and Renewable Energy
Certificate Mechanism (RECRI) are market driven mechanisms to
promote renewable energy and make it more lucrative business
proposition. An REC is a certificate equivalent to 1 MWh of renewable
power generated which can be openly traded for offsetting carbon
emission due to consumption of fossil fuel generated power. RPO on
the other hand mandates the state electricity boards to buy a definite
minimum percentage of grid electricity from renewable sources. Under
NAPCC the target purchase was set at a minimum of 5% of total grid
electricity purchase for FY 2009-10 and a subsequent increase of 1%
per year.
Perform Achieve and Trade (PAT)
The industrial sector has been a consistent driver of GDP growth,
accounting for about 28% of GDP over the last three years (2009-12).
The overall growth and development in India has brought about a
concomitant increase in energy consumption and related GHG
emissions. Increasing from 44% in 2005-06 to 47% in 2008-09, the
industrial sector has been the highest contributor in final commercial
energy consumption in the country. In recent years, Indian industries
have taken many initiatives to become energy efficient including use of
state-of-the-art technologies. To further accelerate and incentivize
energy efficiency, Bureau of Energy Efficiency (BEE), a statutory body
under Ministry of Power, Government of India has designed the
Perform, Achieve and Trade (PAT) mechanism.
The genesis of the PAT mechanism flows out of the provision of the
Energy Conservation Act, 2001. The Ministry of Power (MoP) has
notified industrial units and other establishments consuming energy
more than the threshold as Designated Consumers (DCs). These DCs
account for 25% of the national gross domestic product (GDP) and
about 45% of commercial energy use in India. The details of DCs
relevant to PAT mechanism are presented in Exhibit 17.
41
Low Carbon Industrial Growth In India
Exhibit 17: Estimated number of Designated Consumers (DCs), annual energy
consumption and energy saving targets in select sectors under PAT Cycle-1 (2012-15)
No. of
DCs
Minimum Annual
Energy Consumption
for the DC (tonnes
of oil equivalent-toe)
Aluminum
10
7,500
7.71
0.456
Cement
85
30,000
15.01
0.816
Chlor-alkali
22
12,000
0.88
0.054
Fertilizer
29
30,000
8.20
0.478
Iron and Steel
67
30,000
25.32
1.486
Pulp and Paper
31
30,000
2.09
0.119
Textile
90
3,000
1.20
0.066
Thermal Power Plant
144
30,000
104.56
3.211
Total
478
1,72,500
164.97
6.686
Sector
Annual Energy
Consumption
(million toe)
Energy saving targets
under PAT cycle 1
(2012 - 15) in million toe
Energy efficiency improvement targets fixed for each sector under PAT
mechanism are “unit specific”. Each unit (DC) is mandated to reduce its
Specific Energy Consumption (SEC) by a certain value, based on its
current SEC (or baseline SEC) within the sectoral bandwidth. BEE has
arrived at these sectoral bandwidths through the baseline studies of
each sector. The total energy saving targets of 8 sectors covered under
first PAT cycle is 6.686 million tonnes of oil equivalent (mtoe).The units
have to achieve the target during the first commitment period ending in
2015.When a unit achieve and surpass the target, it can sell its excess
savings in the form of Energy Savings Certificates (ESCerts), and if a
unit fails to achieve its targets, it is mandated to purchase the
appropriate number of ESCerts to “meet” its energy savings targets.
Each certificate will be unique tradable commodity which will be traded
in two exchanges namely, Indian Energy Exchange (IEX) and Power
Exchange of India (PXIL).
PAT is one of the most promising initiatives to achieve the energy
efficiency improvement goal by implementing best available practices
and technologies in the identified sectors through economically viable
projects.
Energy Conservation Building Code (ECBC)
The ECBC (USAID-INDIA) was launched by the Ministry of Power in
consultation with BEE and USAID. The code defines norms and
standards for energy performance of buildings and their components
42
Low Carbon Industrial Growth In India
based on climate zone in which they are located. ECBC covers building
envelop heating, ventilation, and air conditioning system, interior and
exterior lighting system, service hot water, electrical power system and
motors. It has not been adopted significantly by the Industry.
Jawaharlal Nehru National Urban Renewal Mission (JNNURM)
JNNURM (JNNURM) is a city-modernization scheme launched by
Government of India in 2005. It works on the centers contribution
meant to improve the quality of life and infrastructure in the cities.
JNNURM aims at creating ‘economically productive, efficient, equitable
and responsive cities’ by a strategy of upgrading the social and
economic infrastructure in cities and by provision of basic services to
the urban poor. It aims at providing better public transport systems and
supporting the transport infrastructure across all major towns and cities
of India. Providing better public transport will have a major impact on
reducing GHG emissions from India’s transport sector.
Standards and labeling scheme
The scheme is implemented by BEE (BEE) to improve energy efficiency
in both residential and commercial appliances. The schemes aim at
promoting energy efficiency through consumer involvement where an
enlightened customer will buy higher efficiency product at a higher price
and manufacturers get an incentive of higher price with more efficient
appliances. The labeling has been made mandatory for most of home
appliances enabling customers to take the right decision.
The Clean Energy Cess and National Clean Energy Fund
Carbon cess can
potentially create a
level playing field
between renewable
and non renewable
energy sources
India has announced a levy a clean energy cess on coal, at the rate of
INR 50(~1 USD) per ton of both domestic and imported coal in June
2010. The money will go into National Clean Energy Fund (MoEF, 2010)
that will be used to fund research, innovative projects in clean energy
technologies, and environmental remedial programs. This initiative
further reduces the monetary gap between a clean fuel and a polluting
fuel.
A Brief Analysis of Initiatives
Integration of all major initiatives of the government under one umbrella
of NAPCC has put the focus back on the topic of climate change. The
overall action plan pans across various ministries. The sub division into
43
Low Carbon Industrial Growth In India
sub plans has put a further clear vision on the various topics to focus to
achieve the national plan. The government has been formulating many
action items under each plan and there is a clear review system in place.
The NAPCC has also incorporated many existing initiatives like the RECs
under its ambit to realign all the initiatives of the government. The action
plans are yet to achieve any significant feats but the continuous focus
from the government has kept the action plans on track.
While there are quite a
few government
policies to mitigate the
effects of climate
change but most of
these policies require
the much needed
implementation push
There has been some criticism (Byravan, et al., 2012) of NAPCC mainly
on lines of priorities of the action plans at the government level and no
common framework of targets and evaluation under each action plan.
While the plans like NSM and EEE are very detailed and clear guidelines
have been provided other plans are broad and clear guidelines are not
present.
RECs have been a good market linked scheme for popularization of
renewable power but has not been very effective after the economic
slump hit all industries and the takers of the RECs remained stagnant as
against growing producers with improved government incentives
(RECRI). Exhibit 18 shows the trends in RECs uptake in India which
clearly shows the reduced uptake of RECs by the industry in the last
year.
Exhibit 18: Progress of Renewable Energy Certificates in India, 2012
RECs Progress
3500.0
RECs(in'000)
3000.0
2500.0
2000.0
1500.0
1000.0
500.0
Opening Balance
REC Redeemed
REC Issued
Closing Balance
Jul,13
Aug,13
June,13
May,13
Apr,13
Feb,13
Mar,13
Jan,13
Dec,12
Nov,12
Oct,12
Sep,12
Aug,12
Jul,12
Jun,12
May,12
Apr,12
Mar,12
Feb,12
Jan,12
Dec,11
0.0
Source: RECRI Website
44
Low Carbon Industrial Growth In India
JNNURM has been a great initiative in the upliftment of the urban
transport in all major cities across India. But JNNURM has not been a
great success due poor planning and improper execution (The Economic
Times, 2012). The objectives have not been realized to the fullest and
the initiative requires more prudent handling but the on ground
availability
The labeling program has worked well and marketers are using the star
ratings as a differentiating point for the product as being high tech and
low electricity bill. The sales of high consumption items like air
conditioner, refrigerator, etc for domestic and boilers for commercial are
increasingly being adopted.
45
Low Carbon Industrial Growth In India
6
Role of the
Financial Sector
Role of the Financial Sector
T
he financial sector holds the key to the development of any
economy. It has the financial prowess and power to channel the
money available in the economy in the right directions. This
makes the sector the biggest enabler after the government in an
economy. The Reserve Bank of India, the regulator of banks in India,
issues guidelines with respect to priority sector lending by the financial
sector and these guidelines have been the major driver of funds to the
weaker sections of the economy. The same is used by the RBI to
channel the flow of funds to a particular sector. Apart from priority
sector banks finance projects based on their own understanding of
markets and risks. And each proposal is analyzed on the basis of
historical risk that a particular sector or a particular company faces. New
technology is always considered as high risk investments by the banks.
The non-availability of historical data and lack of understanding of the
sector enhances the risk perception of the technologies. The risk of the
technology can often not be decoupled from the implementation. The
lack of experience and risk capital sets the onus of assessing risk and
mitigating it rests mostly on the entrepreneur.
A comprehensive risk
assessment of the
current business
practices against the
climate and natural
resource impact can
provide a much better
understanding of
overall risks
48
New technologies not only pose risks of default but also provide
opportunities of new business avenues for the financial institution. New
technologies provide better returns to the entrepreneur and in turn
better repayments for the bank. It also provides future growth
opportunity as against the mature technologies. To reap the full benefits
of growing technologies the financial institutions (FIs) should work
towards eliminating the roadblocks and act as enablers of new and
growing businesses.
Natural Capital as a tool
Financial sector should extend its arm to understand the risks
associated with new low carbon technologies. The risks should be
associated with the mitigation of climate change risk. The new initiative
of Natural Capital declaration taken by financial institutions (FIs) at
Rio +20 is a step in the right direction. The financial sector plays a crucial
Low Carbon Industrial Growth In India
role in assigning value to the natural resources by analyzing the
economic value supported by it.
A comprehensive risk assessment of current business practices against
the climate and natural resource impact will provide the understanding
of overall risks. This will bring in light the actual risk of competing
projects for the FIs investments with the low carbon sector.
Developing a market for environment securities
Market linked incentives for promotion of low carbon initiatives is
considered the way forward for adoption and assimilation of low carbon
growth objectives. A market driven approach allows valuation of the
relevance of carbon to the society in its development. Various
instruments like Carbon Credits, ECerts (PAT Scheme), RECs have been
conceptualized and implemented. The greatest hurdle for these
instruments is lack of proper market place to trade these securities
which prevents impartial price discovery which in turn reduces the
relevance of these instruments. FIs should come together to create a
market place for these instruments. India Energy Exchange (IEX) and
Power Exchange India Limited (PXIL) have been great initiatives in this
regard and need to be further popularized. Launch of BSE Greenex and
BSE Carbonex indices on lines with DJ Sustainability index is an
excellent initiative to identify the green companies and showing their
performance vis-a-vis the broader market.
Use of innovative financing schemes
Financial institutions (FIs) play a key role of channelizing the societal
resources in the right direction. The FIs gather resources from those
who have a surplus and distribute it to those who need it to perform
economic activity. FIs have come up with new and innovative
techniques to gather resources and distribute them taking a risk on both
sides as the major concern.
While there are various
innovative
technologies to reduce
carbon emissions, they
need to be supported
by tailor made financial
schemes
49
Project finance through bonds
Creating special purpose vehicles (SPVs) for different projects is not a
new concept in finance and has been used to fund many infrastructure
projects across the globe. EU in coordination with EIB has come up with
providing a guarantee to investors in the bond through bond guarantee
facility (The European union) (Exhibit 14). This is an excellent facility
where the government funds share the risk for new technology projects
Low Carbon Industrial Growth In India
at the same time the impact is enlarged by the pooling in of the private
and other investors money. The pilot has been launched by EU in 2012 to
channelize government fund in a high impact manner. India can create
similar bonds where the role of EU EIB can be played by Government of
India and NABARD.
Exhibit 18 : Project finance through bonds
Special entity
Sponsor (s)
Senior
debt
in form of
PROJECT
BONDS
Equity
Investors
buy or underwrite
Project Bond
Guarantee Facility
EIB
Risk
sharing
EU
Source: The Europe 2020 Project Bond Initiative
This structure enables the developmental bodies like government
agencies to invest small amount and create a larger impact on the
ground.
An Environment Bond
Flow of funds to the new technology sector is a very important to
achieve the growth targets planned. The government is already feeling
the pinch of falling GDP growth rate and widening current and fiscal
deficits. The limited supply of funds from government is not enough to
fuel growth in low carbon technologies across various sectors. An
environment bond will be ideal equipment to garner resources for the
sector. This will allow channelizing of private sector money to promote
low carbon and green economy. The environment bond is already used
by developmental financial institutions across the globe (NIB). The fund
can be used for implementation of large long term projects which
cannot compete for money in the open market. The governments on the
other hand can provide guarantee to the investor there by lowering the
interest requirements.
50
Low Carbon Industrial Growth In India
Financial solutions on government initiatives
The Government of India has been rolling out many initiatives under the
various missions of NAPCC including financial guarantees, subsidies,
and priority sector support. These initiatives have been gaining ground
across, but the uptake is not very good because the large FIs have not
come up with robust products to support the cause. The government
subsidies are not utilized fully, and only small and local FIs are utilizing
the opportunity. This makes the percolation of schemes to the
customers even more difficult as the critical mass is not achieved. The
major cause of this gap between the incentive provided, and actual
results are the lack of incentives for the large FIs to look at this highly
risky sector.
Line of credit from international funding agencies
As a developing country India has always been in resource shortage for
implementing projects. International development banks like ADB, World
Bank have resources earmarked in their budgets for renewable energy
and energy efficiency but lack the essential reach in the developing
countries to create an impact. Indian FIs should use this opportunity gap
to work as a vendor these international funding agencies and get a line
of credit specially to lend to these sectors. Some banks like SIDBI for
energy efficiency (SIDBI) and ICICI for both RE & EE (ADB, 2012) have
already taken some initiative to channel international funds, and the
effort should be emulated by other FIs.
Customer education and financial skill development
Various international
funding agencies can
provide necessary
resources for carbon
mitigation
51
Entrepreneurs find it difficult to prepare a good business plan that suits
the financial institutions. Especially in case of small new entrepreneurs
the FIs are not very inclined to provide service due to their initial size. At
the same time, it becomes more hassle for an FI to evaluate so many
proposals coming their way in all formats possible. The FIs should
provide clear criteria and guidelines for entrepreneurs to provide the
proposals in a format that is best understood by the FI and the industry
as a whole.
Low Carbon Industrial Growth In India
7
The Policy Bottlenecks and
expectations from the
government
The Policy Bottlenecks and
expectations from the government
T
he government of India has taken various steps including NAPCC
to meet its carbon reduction target. But still there are some
bottlenecks especially in terms of implementation of the policies
and clarity of the guidelines.
Including New Technology as priority sector
The priority sector
push from RBI can be
the single largest
policy initiative to
channel funds towards
low carbon
technologies
Priority sector targets are very important ways to redirect banking funds
to a particular sector and RBI uses it judiciously. The norms direct funds
towards the under banked sections of the society. Currently priority
sector is available for only off grid renewable energy solutions.
Going beyond the priority sector, government financial institutions like
NABARD & SIDBI are also promoting new technologies through
different schemes (SIDBI). But these schemes are limited to the
initiative by SIDBI and lack awareness across sectors. Other financial
institutions do not offer similar products which limits the reach of such
initiatives. Inclusion in priority sector will help drive the larger banks to
offer similar products and hence boost the sector.
Promoting financial markets for environment
securities
Government has introduced many schemes for marketable energy
certificates. To augment and promote investors to consider these
certificates as an investment instrument a proper market for such
securities needs to be developed. The government should come forward
to facilitate open market trading and clear price discoveries for these
securities. It should incentivize the stock and commodities exchanges in
India to open trading terminals for these securities. It should also
promote digitization of such securities to smoothen the transactions. A
clear policy intervention to create markets for these securities will add
life to credibility and make the initiative truly market driven.
54
Low Carbon Industrial Growth In India
Use of National Clean Energy Fund (NCEF)
The coal cess collected over the 2 years is estimated to aggregate to
INR 8200 crores in the NCEF, and the disbursal is only about one eighth
of this amount (The Hindu). This leaves a big corpus to be utilized for
innovations in clean energy projects, the objective of the fund. NCEF,
while being a great initiative, should be used efficiently and swiftly. The
government should promote research projects at universities in the
clean energy space. The government could also start dedicated institute
on the lines of Fraunhofer institute, Germany (Fraunhofer Institute)
where post graduate research can be done on dedicated topics of low
carbon technologies. This will go a long term in making indigenous low
cost technologies which can be used to accelerate the process of
adoption by reducing the cost.
The fund can also be used to garner extra resources from public and
private sector by channelizing this fund as partial guarantees to existing
and new environment and green dedicated funds/ bonds. This will help
multiply the effect that the government creates in this sector. Along
with the higher impact it will also shift the burden of implementation off
governments’ shoulder to the fund owners. This will also improve
accountability on the projects.
NCEF should also take cues from the aggregation of all national plans
under one head i.e. NAPCC and work as a common fund to support all
the causes. It is very essential to channel resources in a concerted
manner. This helps keep track on investments in a particular sector,
increases accountability, and measure the impact. NCEF should act as a
common fund which can be used to fund all the missions which gets
funding from the government budget allocations and from carbon cess
like instruments.
Reducing subsidy to fossil fuels
Fossil fuels consume
most of India's subsidy
budget and low carbon
technologies need a
reduction in subsidies
to compete with
prevalent technologies
55
India spends a lot in subsidizing fossil fuels and grid electricity for
consumption, and the amount has been increasing over the years to
around USD 39 billion (Exhibit 20) for the year 2011 (IEA). This not only
consumes a big proportion of countries resources but also makes the
new and renewable energy options less attractive to the already
subsidized fossil fuels. The higher subsidy on fossil fuels entails higher
consumption and in turn higher subsidies for the next year. The
government should reduce the subsidy on fossil fuels and provide the
necessary incentives to the new energy sector.
Low Carbon Industrial Growth In India
Exhibit 20 : Subsidy by fuel in India (in billion USD)
Fuel
2009
2010
2011
Oil
11.49
16.2
30.86
Electricity
6.21
3.87
5.81
Natural Gas
2.72
2.22
3.03
Coal
0
0
0
Source: (IEA)
Including banks in policy discussions and making
them accountable
The growth of large private sectors banks which provide services in all
corners of the country has made them an important stakeholder to
achieve financial inclusion. The government should include
representation from both public and private sector banks while
discussing the policy. Private sector banks operate with business
generation in mind hence will be able to provide good policy
recommendations.
It’s not only that the policy should be framed in consultation with all the
banks, it is also important to make the banks accountable for the
feedback given by them. Banks should be cajoled to offer products that
bridge the gap between the consumer requirements and government
policy incentives. This will not only offer better service but also create a
larger ecosystem for low carbon development of the economy.
56
Low Carbon Industrial Growth In India
8
Looking beyond
designated consumers
Looking beyond designated
consumers
T
Transport and
Buildings are other
major sectors that
need to be targeted to
achieve the goal of low
carbon growth
he BEE & Government of India have taken prudent steps to
identify Power, Steel and Cement sectors as designated
consumers in the PAT scheme and have assigned a cap on their
emissions. But achieving a Low Carbon Economy in India should look
beyond the designated consumers and also focus on other highly
emitting sectors. In this section, we take a brief look at two such
sectors – Transport and Buildings and the possible approach that these
sectors might consider adopting.
Transport
The transport sector forms an integral part of the economy, ensuring
smooth flow of goods and passengers to keep the wheel of the
economy moving. The major modes of transport in India include
railways, roadways, airways and coastal shipping. Although the railways
alone carried 8.22 million passengers over 1,047 billion passenger
kilometers, and 969 million tonnes of freight over 669 billion tonne
kilometers in 2011-12 (Ministry of Railways, 2012) it was only a fraction
of the total traffic in the country. As of 2011, the railways are estimated
to have only about 13 and 38% of the total passenger and freight traffic
shares respectively (TERI 2013). The remaining shares are largely moved
by the roadways, and less than one percent on air and water.
The transport sector is also seen as a major contributor to GHG
emissions. The sector accounted for the consumption of 15% (IEA,
2007) of the commercial energy consumption in India in 2007, and
generated about 7.5% of the total GHG emissions. The major fuels used
for transportation in India are petroleum, coal and very recently natural
gas. The total GHG emission from transportation is expected to grow to
about 712 million ton of CO2 by 2030 (INCCA, 2010).
58
Low Carbon Industrial Growth In India
The Pivotal Technologies
Transportation in India can be categorized into passenger and freight
transport. Currently a large share of the passenger traffic moves on
public and non-motorized modes of transport. This is one of the most
important reasons why the country has a low per capita emissions
footprint from transport. However, with economic development of the
nation, this scenario is fast changing. There is a continuous increase in
motorization across the country, and a rapid uptake of personal modes
of transport.
To add to this, the development of the national highways in the country
has led to a large shift of freight transport from rail to road (MoRTH,
2012). The roadways being more energy and emissions intensive than
the railways have led to an overall increase in both energy and
emissions from the sector. Efforts to control this unwarranted and
unwanted change have to be made by both the Government and the
private sectors; the Government with inducing policy changes and the
private sector by making the appropriate changes in logistics and
planning. Given the objective of this paper, the following section
highlights some of the ways in which this trend can be first halted and
then reversed specifically from the point of view of the industry sector.
Railways and
Waterways are usually
more efficient and
environmentally
friendly modes of
transport compared, to
Roadways and Airways
Increase share of the railways in National mobility
The railways and waterways are significantly more efficient and
environmentally friendly modes of transport compared to road and
airways (Exhibit 21).Although historically the railways had a major share
of the traffic movement for the industries in India, as mentioned above,
the last couple of decades have seen it lose a significant share of traffic
to the roadways.
Exhibit 21: Carbon intensity of different modes of freight transport in
per tonnes-km(TCS &Xyntéo, 2011)
59
Mode (freight)
Emission (Kg CO2 per tonne-km)
Train
0.02
Air
0.62
Waterways
0.01
Road
0.16
Low Carbon Industrial Growth In India
By having a national transport plan which encourages increasing the
share of transport movement by the industries on the railways and by
ensuring multimodal transport planning there is scope for large
reductions of emissions from this sector. Multimodal transport planning
can be efficiently done by the prudent use of ICT solutions to both
reduce the costs and the emissions from industries.
Efficiency improvement
Given its large share of total mobility in India, the road transport sector
generates the highest volumes of overall emissions. It is estimated that
road transport generated about 87% of the transport sector emissions
(INCCA, 2010); of this heavy commercial vehicles constituted the largest
share. Given that the industrial sector mostly uses commercial vehicles
for its mobility, efficiency improvements in commercial vehicle engine
technologies will make the largest difference in reduction of overall
emissions from the transport used by the industrial sector.
Fuel choices
Although petroleum sources will continue to dominate the fuel mix for
the transport sector as a whole, it is important to move towards cleaner
fuels for a low carbon scenario. There is a need therefore to promote
and use CNG and other forms of natural gas and supplement petroleum
with bio-diesel wherever possible. In addition to this, increasing the use
of electricity in the railways while changing the source of power from
coal fired power plants to renewables and nuclear would help in
reducing overall emissions (TERI 2009).
Residential & Commercial Building
The rapid increase in Indian population and growth of Gross Domestic
Product (GDP) has given rise to an enormous demand for buildings with
a subsequent pressure on availability of resources. With an anticipated
500 million people living in urban India by 2020, the challenges of
greenhouse gas emissions from electricity use in new and existing
buildings, and building material manufacturing are likely to spike up
significantly. Another key challenge for the built-environment of Indian
cities is the diminishing availability of water for urban areas. The
electricity consumption by buildings has been growing over the years,
from 15% in 1970-71 to 34% of the total consumption in 2010-11.
60
Low Carbon Industrial Growth In India
Exhibit 22 : Historical growth in Sector-wise Electricity Consumption in India (1970-2011)
Historical Growth in Sector-wise Electricity
Consumption in India (1970-2011)
800000
700000
600000
500000
400000
Others
Traction & Railways
Commercial
Domestic
Agriculture
Indusrtry
300000
200000
100000
19
70
-7
19 1
75
-7
6
19
80
-8
1
19
85
-8
19 6
90
-8
1
19
95
-9
20 6
00
-0
20 1
01
-0
20 2
02
-0
20 3
03
-0
20 4
04
-0
20 5
05
-0
20 6
06
020 7
07
-0
20 8
08
20
-0
09 9
-1
20 0(p
)
10
--1
1(
p)
0
(Source: Central Electricity Authority)
The residential sector accounts for 137.84 MT of CO2 equivalent or 7.2%
of total GHG emissions of India and has risen to this level from 78 MT of
CO2 equivalent in 1994. The commercial buildings not being the largest
contributor to the GHG emissions still account for more than 1% of
India emissions (INCCA, 2010).
The pivotal technologies
This fast paced growth of the Indian building stock is likely to result in an
enormous demand for energy in the near future.
At present the building sector consumes 34% of the overall electricity
consumption (from utilities) by the country, out of which almost 72% is
consumed by the residential sector.
A closer look at the electricity consumption pattern of the residential
sector shows that fans and lighting consume 62% (Approximately
105,000 GWh) of total consumption, more than 1.5 times the total
electricity consumption of the Commercial Sector.
61
Low Carbon Industrial Growth In India
Exhibit 23: Sector wise consumption
of Electricity (2010-11)
Exhibit 24: Electricity Consumption
Pattern in Residential Buildings
Others
6%
Evaporative
Cooler 4%
Industry
39%
Refrigeration
13%
Lighting 28%
TV 4%
Agriculture
19%
Fans 34%
Traction &
Railways
2%
Residential
24%
Air
conditioning
7%
Commercial
10%
(Source: Energy Statistics 2012,
Central Statistics Office, MOSPI)
Others
10%
(Source: BEE, Figure taken from the Interim Report
of the Expert Group on Low Carbon Strategies for
Inclusive Growth, Planning Commission,
Government of India)
Higher income will result in increase in the disposable income of the
households, resulting in increased spending. Growing income will lead
to increase in ownership of home appliances and therefore increase in
fuel demand. With reference to the year 2011, by 2021 the electricity
consumption by heating/ cooling appliances and by lighting will grow by
180% and 80% respectively.
Higher household
incomes can
potentially translate
into an increase in air
conditioner usage
Exhibit 25: Energy Consumption Distribution in Commercial Buildings
Lighting 25%
Internal
loads
15%
HVAC 55%
Others
5%
(Source: BEE, Figure taken from the Interim Report of
the Expert Group on Low Carbon Strategies for Inclusive
Growth, Planning Commission, Government of India)
62
Low Carbon Industrial Growth In India
As per a study conducted by TERI for the commercial sector, it is
estimated that 55% of energy consumption in commercial buildings is
due to HVAC systems.
Resource optimisation in residential and commercial buildings
Residential buildings
Based on a study done by TERI (TERI, 2010), 19-35% savings can be
achieved in air conditioned residential buildings through efficient building
envelope. At present the stock of residential air conditioned houses is
very small compared to the total urban housing stock- less than 5%
(Estimated by TERI).
However, with rapid growth in the population of Air Conditioners, the
proportion of air conditioned housing is likely to increase at a fast pace
in the coming years.
Commercial Sector
As per a study conducted by TERI (TERI, 2010), in a conventional air
conditioned commercial building, approximately
• 20% savings can be achieved by incorporating passive design
features like optimum orientation, envelope shading, daylight
integration, etc.
• 30% savings can be achieved by making the building ECBC
compliant
• 40% savings can be achieved by incorporating passive design
features and making the building ECBC compliant
Way forward
Both transport and buildings sectors involve public and private
enterprises. The consumption of these sectors is also highly fragmented
and diverse. These sectors may not also offer the best cases for short
term solutions to achieve a low carbon impact. At the same time, being
one of the biggest GHG emitters these sectors offer our best case of
improvement over a long term including efficient transport and housing.
63
Low Carbon Industrial Growth In India
9
Conclusion
Conclusion
T
he Working group I contribution to the IPCC Fifth Assessment
Report (AR5) has reiterated the fact that the average
temperatures across the location have been highest in the last 30
years (1983 -2012) in a period of last 1400 years. The report also
concludes with high certainty that the temperatures will keep on
increasing in the coming years. These results are a reminder of the fact
that increasing carbon dioxide concentration in the atmosphere is
leading to global climatic changes. As we move towards higher
economic development, we should be prudent enough of our impacts
on the environment.
India is one of the largest and fastest growing economies of the world
and the growth path that it has to choose cannot be the one with carbon
output equivalent to that of the developed nations.
The green house gas emissions of India face two challenges
international pressures and the inherent resource crunch. At the same
time, the Low Carbon technologies present various opportunities,
including future energy security, sustainable development and lower
environmental impact. The prime sectors for GHG emissions in India as
highlighted by the PAT scheme are the Power, Steel and Cement. These
sectors also have extensive opportunities to reduce emissions by using
various Low Carbon technologies. Some of these technologies have
already been tested and implemented in India by select companies
mostly in their green field projects. The most important factors to
develop these technologies on a mass scale are awareness and
requisite incentives to the industry at large.
Buildings and Transport are the other two sectors that should be looked
into from a strategic perspective to achieve a Low Carbon economy.
Although segregated in their production and consumption, these
sectors pose a huge carbon impact on India's total carbon emissions
and provide for various opportunities of abatement.
66
Low Carbon Industrial Growth In India
The financial sector can play a pioneering role in enabling the change.
The low carbon technologies can be adopted easily with dedicated
financial products to support these technologies. The financial sector can
also generate resources for these technologies through special
financing mechanisms like project financing and environment bonds.
Bridging the knowledge gap between the technology supplier and
financier will also go a long way.
The Indian government has already put environmental programs at the
forefront of policy making through various missions of the NAPCC and
other programs. The different state governments have also provided for
various incentives to adopt new technologies. The essential link to
achieving the best results remain the effective implementation of these
initiatives. While the first assessments for the PAT scheme is awaited
next year. A focused approach of policy and reducing bottlenecks in
emerging business scenario can go a long way in enabling a Low Carbon
Economy.
67
Low Carbon Industrial Growth In India
10
Annexure I:
List of Abbreviations
Annexure I: List of Abbreviations
70
S No
Term
Explanation
1
2
BAU
BAU
IEA
International Energy
Agency
3
NAPCC
4
BEE
5
S No
Term
Explanation
23
24
PAT
Perform, Achieve & Trade
ECBC
Energy Conservation
Building Code
National Action Plan
for Climate Change
25
Bureau of Energy
Efficiency
26
JNNURM Jawaharlal Nehru
National Urban Renewal
Mission
NCEF
National Clean Energy
Fund
LCE
Low Carbon
Economy
27
GHG
Green House Gas
6
GDP
28
PPP
Purchasing Power Parity
7
INCCA
Gross Domestic
Product
Indian Network for
Climate Change
Assessment
29
NSSO
National Sample Survey
Organization
8
SEBI
Securities Exchange
Board of India
30
MoEF
Ministry of Environment
and Forests
9
MoF
Ministry of Finance
31
NVG
National Voluntary
Guidelines
10
SIDBI
Small Industries
Development Bank
of India
32
IICA
Indian Institute of
Corporate Affairs
11
MoP
Minstry of Power
33
MoF
Ministry of Finance
12
SME
Small & Medium
Enterprises
34
CCS
Carbon Capture and
Storage
13
JNNSM
Jawaharlal Nehru
National Solar
Mission
35
MNRE
Ministry of New and
Renewable Energy
14
PV
Photo Voltaic
36
ESCo
Energy Services
Company
15
UNEP
United Nations
Environment
Program
37
NMEEE
National Mission for
Enhances Energy
Efficiency
Low Carbon Industrial Growth In India
S No
71
Term
Explanation
S No
Term
Explanation
16
RBI
17
ESCert
Reserve Bank of
India
Energy Saving
Certificate
38
REC
Renewable Energy
Certificates
39
DCs
Designated consumers
18
NABARD National Bank for
Agriculture and
Rural Development
40
USAID
United States Agency
for International
Development
19
FI
Financial Institution
41
DJSI
Dow Jones Sustainability
Index
20
SPV
Special Purpose
Vehicles
42
EU
European Union
21
EIB
European
Investment Bank
43
DoEA
Department of Atomic
Energy
22
ADB
Asian Development
Bank
44
CEA
Central Electricity
Authority
Low Carbon Industrial Growth In India
11
Bibliography
Bibliography
1.
“Emerging Energy-saving and CO2 emission reducing technologies in the Iron and
Steel Industry: Worldwide" [Report] / auth. (ISI) Lawrence Berkeley National Laboratory
(LBNL) and Fraunhofer Institute for Systems and Innovation Research. - January 2013.
2.
“Low Carbon Strategies for Inclusive Growth" [Report] / auth. Planning Commission
Govt. of India. - May 2011 .
3.
A 2020 Low Carbon Economy: A Knowledge Economy Programme Report [Report] /
auth. Levy Charles. - [s.l.] : The Work Foundation, 2010 June.
4.
A Roadmap For Research & Development and Technology for Indian Iron and Steel
Industry [Report] / auth. Ministry of Steel Govt. of India. - September 2011 .
5.
About Standards and Labelling Program [Online] / auth. BEE // Bureau of Energy
Efficiency. - December 2012. http://www.beeindia.in/schemes/standard_and_labeling%20-%20Copy.php.
6.
ADB Provides Credit Lines [Online] / auth. ADB // Asian Development Bank. - March 29,
2012. - Decemeber 2012. - http://www.adb.org/news/india/adb-provides-credit-linefinance-renewable-energy-and-energy-efficiency-projects-india.
7.
All India Regionwise Generating Installed capacity [Online] / auth. CEA // Central
Electricity Authority. - July 2013. - September 2013. http://www.cea.nic.in/reports/monthly/inst_capacity/jul13.pdf.
8.
An Evaluation of India's National Action Plan on Climate Change [Report] / auth.
Byravan S and Rajan S C. - [s.l.] : IFMR Research & IIT Madras, 2012.
9.
An overview of Steel Sector [Online] / auth. Ministry of Steel // Ministry of Steel. - July
27, 2012. - December 2012. - http://steel.nic.in/overview.htm.
10. Analysis of existing thermal comfort and energy performance of typical housing
units and proposed measures to enhance thermal comfort and energy efficiency
[Report] / auth. TERI. - [s.l.] : National Housing Bank, 2010.
11. Annual Report [Online] / auth. MNRE // Ministry of new and Renewable Energy. - 2012. December 2012. - http://mnre.gov.in/file-manager/annual-report/20112012/EN/content.htm.
12. Annual Report 2012-13 [Report] / auth. Ministry of Steel Govt. of India. - 2013.
13. Application-oriented research [Online] / auth. Fraunhofer Institute // Fraunhofer Institute.
- December 2012. - http://www.fraunhofer.de/en/research-topics.html.
14. Business Responsibility Reports [Report] / auth. SEBI. - [s.l.] : Securities Exchage Board
of India Circular, 2012.
74
Low Carbon Industrial Growth In India
15. Cement Industry in India [Online] / auth. IBEF // India Brand Equity Foundation. November 2012. - December 2012. - http://www.ibef.org/industry/cement.aspx.
16. Cement Technology Roadmap: Carbon Emissions Reductions up to 2050 [Journal] /
auth. IEA. - [s.l.] : OECD Publishing, 2009.
17. Census of India [Online] // Census of India. - 2011. - December 2012. http://censusindia.gov.in/2011-provresults/paper2/data_files/India2/1.%20Data%20Highlight.pdf.
18. Changing pattern of the Indian summer monsoon rainfall: an objective analysis
[Journal] / auth. Singh Charu // Climate Dynamics. - 2013. - pp. 195-203.
19. Clean Energy Fund headed nowhere [Online] / auth. The Hindu // The Hindu. - December
2012. - http://www.thehindubusinessline.com/opinion/clean-energy-fund-headednowhere/article4051259.ece.
20. Coastal Areas [Online] / auth. USEPA // United States Environment Protection Agency. september 2013. - http://www.epa.gov/climatechange/impacts-adaptation/coasts.html.
21. Countries in the World [Online] / auth. CARMA // CARMA Carbon monitoring and Action.
- Dec 2012. - http://carma.org/dig/show/world+country.
22. ECBC User Guide [Online] / auth. USAID-INDIA // USAID-INDIA Energy Conservation and
commercialization. - November 2012. - http://eco3.org/ecbc-user-guide/.
23. ECO4: leading the way in total train performance [Online] // Bombardier. - Nov 2012. http://www.bombardier.com/en/transportation/products-services/eco4technologies?docID=0901260d80048cf1.
24. Electric power consumption (kWh per capita) [Online] // World Bank Data. - December
2012. - http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC.
25. Electric power consumption (kWh per capita) [Online] / auth. World Bank Data // World
Bank Data. - 2012. - Sept 2013. http://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC?order=wbapi_data_value_2010+
wbapi_data_value+wbapi_data_value-last&sort=asc.
26. Electric power transmission and distribution losses (% of output) [Online] / auth. The
World Bank // The World Bank. - Nov 2012. http://data.worldbank.org/indicator/EG.ELC.LOSS.ZS.
27. Electricity - Production [Online] / auth. The World Factbook // The World Factbook. - 2009.
- December 2012. - https://www.cia.gov/library/publications/the-worldfactbook/rankorder/2232rank.html?countryName=India&countryCode=in&regionCode=sa
s&rank=7#in.
28. Electricity Consumption (Apr- Sep 2012 Actuals) [Report] / auth. CEA. - [s.l.] : Central
Electricity Authirity, ministry of Power, 2012.
29. Energy Efficiency and Carbon Dioxide Emissions Reduction Opportunities in the U.S.
Iron and Steel Sector [Journal] / auth. Worrell E, Martin N. and Price L. // Ernest Orlando
Lawrence Berkeley National Laboratory, Berkeley, CA. - 1999.
30. Energy Efficiency Improvement and Cost Saving Opportunities for the U.S. Iron and
Steel Industry [Journal] / auth. Worrell E [et al.] // Ernest Orlando Lawrence Berkeley
National Laboratory, Berkeley, CA. - 2009.
75
Low Carbon Industrial Growth In India
31. Energy Sources of Indian Households for Cooking and Lighting 09-10 [Report] / auth.
NSSO. - [s.l.] : National Sample Survey Office, Ministry of Statistics and Programme
Implementation, 2012.
32. Energy Statistics [Report] / auth. CSO. - [s.l.] : Mospi, 2012.
33. Financing models of energy efficiency project [Online] / auth. India Carbon outlook //
India Carbon outlook. - December 2012. - http://india.carbonoutlook.com/content/financing-models-energy-efficiency-project-%E2%80%93-overview.
34. Financing Scheme for Energy Efficiency [Online] / auth. SIDBI // Small Industries
Development Bank of India. - December 2012. - http://www.sidbi.com/directenergy.asp.
35. France plans to revive EU carbon tariff [Online] / auth. Simon Frédéric // The Guardian. December 2012. - http://www.guardian.co.uk/environment/2012/may/18/france-eu-carbontariff .
36. Global Trends in Renewable Energy Investment [Report] / auth. UNEP. - [s.l.] :
Bloomberg New Energy Finance, 2012.
37. High Performance Commercial Buildings in India: building a greener future [Journal] /
auth. TERI. - [s.l.] : TERI, 2010.
38. History [Online] // Tata Steel. - December 2012. http://www.tatasteel100.com/heritage/index.asp.
39. Houselisting and Housing Census Data [Online] // Census of India. - 2011. - December
2012. - http://www.censusindia.gov.in/2011census/hlo/HLO_Tables.html.
40. Houselisting and Housing Census Data Highlights - 2011 [Online] / auth. GoI // Census
of India. - 2011. - Dec 2012. http://www.censusindia.gov.in/2011census/hlo/hlo_highlights.html.
41. India Development Update [Report] / auth. WorldBank. - [s.l.] : The World Bank, 2013.
42. India Pushes Developed Nations to Cut Emissions [Online] / auth. The New York Times
// The New York Times, India Ink. - November 2012. - September 2013. http://india.blogs.nytimes.com/2012/11/30/at-the-doha-summit-india-pushes-developednations-to-cut-emissions-to-fight-climate-change/?_r=0.
43. India Will Meet Its Copenhagen Climate Commitment, Ramesh Says [Online] //
Bloomberg. - January 7, 2010. - December 2012. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aNWb.M3t0KNI.
44. India: Greenhouse Gas Emissions 2007 [Report] / auth. INCCA. - [s.l.] : Ministry of
Environment & Forests, Governement of India, 2010.
45. India: Taking on Climate Change [Report] / auth. MoEF. - [s.l.] : Ministry of Environment
and Forests, 2010.
46. India's greenhouse gas emissions rise by 58% [Online] / auth. The Guardian // The
Guardian. - May 12, 2010. - Dec 2012. http://www.guardian.co.uk/environment/2010/may/12/india-greenhouse-gas-emissionsrise.
47. Informations: India [Online] / auth. IEA // International Energy Agency. - September 2013.
- http://www.iea.org/subsidy/index.html.
76
Low Carbon Industrial Growth In India
48. inventory of Coal Resources of India [Online] // Ministry of coal. - April 1, 2012. December 2012. - http://www.coal.nic.in/welcome.html.
49. Jargon Buster [Online] // Clear About Carbon. - Dec 2012. http://www.clearaboutcarbon.com/resources/jargon-buster.php.
50. Kamal Nath ministry seeks cabinet's nod for new version of JNNURM [Online] / auth.
The Economic Times // Economic Times. - November 6, 2012. - November 2012. http://articles.economictimes.indiatimes.com/2012-11-06/news/34946263_1_jnnurm-urbanrenewal-mission-urban-governance.
51. Low Carbon Development Studies [Online] / auth. ESMAP // Energy Sector
Management Assistance Program (ESMAP). - Dec 2012. http://www.esmap.org/esmap/LowCarbonDevelopmentStudies.
52. Low carbon Growth Options for India [Report] / auth. Bhushan Chandra. - [s.l.] : Center
for Science and Environment, 2010.
53. Mission Overview [Online] / auth. JNNURM // Jawaharlal Nehru national Urban Renewal
Mission. - November 2012. - http://jnnurm.nic.in/.
54. More Corporations Are “Greening” Supply Chains [Online] / auth. WWI World Watch
Institute // World Watch institute. - December 2012. http://www.worldwatch.org/node/6268.
55. Natural and Anthropogenic Factors Affecting Global and Regional Climate [Report] /
auth. Walker Henry, Keim Barry and Arndt Martina B.. - [s.l.] : New England Regional
Assistant, 2012.
56. Natural Gas in India: An Analysis of Policy [Report] / auth. Jain Anil and Anupama Sen. [s.l.] : Oxford University Press, April 2011.
57. New Technologies [Online] / auth. MNRE // Ministry of New and Renewable Energy. December 2012. - http://mnre.gov.in/schemes/new-technologies/.
58. Next big spenders: India's middle class [Online] / auth. Farrell Diana and Beinhocker Eric
// McKinsey Global Institute. - May 19, 2007. - December 2012. http://www.mckinsey.com/Insights/MGI/In_the_news/Next_big_spenders_Indian_middle_c
lass.
59. NIB Environmental Bonds [Online] / auth. NIB // Nordic Invesment Bank. - December
2012. - http://www.nib.int/capital_markets/environmental_bonds.
60. Perform Achieve & Trade [Report] / auth. BEE. - [s.l.] : Ministry of Power, 2012.
61. Pero Unit cost of Nuclear power [Report] / auth. DoAE. - [s.l.] : Department of Atomic
Energy, Government of India, 2011.
62. Renewable Energy Certificate [Online] / auth. RECRI // Renewable Energy Certificate
Registry of India. - September 2013. - https://www.recregistryindia.nic.in/.
63. Report of the Working Group on Steel Industry for The Twelfth Five Year Plan (20122017) [Report] / auth. Ministry of Steel Govt. of India. - November 2011.
64. Road Transport Year Book(2009-10 & 2010-11) [Report] / auth. MoRTH. - [s.l.] : MoRTH,
GoI, 2012.
77
Low Carbon Industrial Growth In India
65. Scheme / Documents [Online] / auth. MNRE // Ministry of New and Renewable Energy.
- 2010. - december 2012. - http://www.mnre.gov.in/solar-mission/jnnsm/introduction-2/.
66. State of World Population [Report]. - [s.l.] : UNFPA, 2007.
67. Statistical Summary [Report] / auth. Ministry of Railways. - [s.l.] : Indian Railways, 2012.
68. Summary of Copenhagen Climate Change Conference [Online] / auth. IISD // IISD
Reporting Services. - December 2012. - http://www.iisd.ca/vol12/enb12459e.html.
69. Summary of Economic Survey of India 2011-12 [Report] / auth. MoF. - [s.l.] :
Government of India, 2012.
70. Technology Upgradation Programmes [Online] / auth. SIDBI // Smalll Industries
Development Bank of India. - November 2012. http://www.sidbi.com/promotionalTechnology.asp.
71. The Business of Resource Scarcity [Online] / auth. Rothschild Lord Jacob // Huffington
Post. - June 2012. - September 2013. - http://www.huffingtonpost.co.uk/lord-jacobrothschild/the-business-of-resource-scarcity-_b_1614807.html.
72. The Carbon Disclosure Project Supply Chain Report [Report] / auth. Kaerney A T. - [s.l.]
: A T Kaerney & CDP, 2011.
73. The costs of CCS and other low-carbon technologies [Report] / auth. ABELLERA C
and SHORT C. - [s.l.] : Global CCS Institute, 2011.
74. The Economics of Nuclear Power [Online] // World Nuclear Association. - July 2012. December 2012. - http://www.world-nuclear.org/info/inf02.html.
75. The Europe 2020 Project Bond Initiative [Online] / auth. The European union // The
European union. - November 2012. http://ec.europa.eu/economy_finance/financial_operations/investment/europe_2020/index
_en.htm.
76. The Road Ahead: Low-carbon freight logistics for the 21st century [Report] / auth.
TCS and Xyntéo. - [s.l.] : TCS, 2011.
77. The World of Steel [Online] / auth. Tata Steel // Tata Steel. - December 2012. http://www.tatasteel.com/media/pdf/group-brochure.pdf.
78. Union Budget & Economic Survey [Online] / auth. GoI // India Budget. - 2013. september 2013. - http://indiabudget.nic.in/.
79. Union Power Minister Launches “PAT“ Scheme [Online] / auth. MoP // Press
Information Bureau. - july 4, 2012. - Dec 2012. http://www.pib.nic.in/newsite/erelease.aspx?relid=85182.
80. Valuing the greenhouse gas emissions from nuclear power: A critical survey
[Journal] / auth. Sovacool Benjamin K. // Elseviers Energy Policy. - 2008.
81. WHERE IS COAL FOUND? [Online] / auth. BP // World Coal Association. - September
2013. - World Coal Association.
82. World Energy Outlook 2007: China and India Insights [Report] / auth. IEA. - [s.l.] :
International Energy Agency, OECD, Paris, 2007.
83. World Statistics [Online] / auth. Nuclear Energy Institute // Nuclear Energy Institute. Decemeber 2012. http://www.nei.org/resourcesandstats/nuclear_statistics/worldstatistics/.
78
Low Carbon Industrial Growth In India
YES BANK, India's fourth largest private sector Bank, is the outcome of the professional &
entrepreneurial commitment of its Founder, Rana Kapoor and his top management team, to
establish a high quality, customer centric, service driven, private Indian Bank catering to the
Future Businesses of India. YES BANK has adopted international best practices, the highest
standards of service quality and operational excellence, and offers comprehensive banking and
financial solutions to all its valued customers.
YES BANK has a knowledge driven approach to banking, and a superior customer experience
for its retail, corporate and emerging corporate banking clients. YES BANK is steadily evolving
as the Professionals' Bank of India with the vision of building the "Best Quality Bank of the
World in India" by 2015.
With a vision to create a synergy for the corporate sector as a whole to move towards
sustainability, TERI-BCSD (Business Council for Sustainable Development) India was set up by
The Energy and Resources Institute (TERI) in 2001. It has now evolved into a strong industry
body, with membership from diverse sectors, including public sector undertakings,
multinationals, and private companies from across India. They work towards evangelizing
business sustainability through industry specific initiatives that provide a platform for
knowledge, learning and encourage sharing of best practices. It is also the Indian partner of the
WBCSD (World Business Council for Sustainable Development), Geneva. TERI-BCSD India
member company representatives identify, conceptualize and implement projects in
partnership with researchers at TERI and the structure of the business council reflects this
partnership. TERI provides research and implementation support to the business council and
acts as the permanent technical resource for various theme specific action oriented projects,
knowledge papers, seminars and capacity building workshops. Membership is by invitation
only. For more information please visit www.teriin.org/bcsd
N OT E S
N OT E S
N OT E S