Carbon emissions impact not only the air we breathe but also recent changes in weather; more storms, floods and unexpected climate events. 2016 is likely to be tipping point in action against climate change post the agreement amongst 190 odd nations for urgent steps towards carbon emission reduction. Towards this goal, India is pushing initiatives to develop climate resilient infrastructure, as well as focus on efforts to enhance climate resilience and reduce vulnerability to climate change. The role of both the companies as well as the government is critical in achieving the ambitious climate goals.
Globally, after years of purchasing renewable energy credits (RECs) governments and companies are increasingly tilting towards renewables. This is founded on the belief that accelerating the scale-up of renewable energy will help deliver a better, healthier more sustainable world. Renewable energy investment is also a smart business opportunity. Apart from providing power to businesses, it provides returns on capital comparable or higher than a number of other business opportunities.
Renewable energy in India has got a push due to a variety of reasons. A quick look at the current scenario reveals the following:
Government pushing for higher power generation. With many coal-based plants under construction stuck at various stages the faster way to generate power is through renewables. Hence an increased push towards solar and wind.
Reduced costs of power production through solar. This arises due to
Technological development leading to reduced cost of power production.
Greater competition among solar power developers leading to reduced power tariffs.
Economies of scale arising out large sized solar farms.
This effect is seen in the recent SunEdison bid for 500MW power agreement with NTPC at Rupees 4.63 per kWh (or $0.07 per kWh)
The solar push is likely to get further impetus from India, along with France, taking a lead in launching the International Solar Alliance to boost solar energy in developing countries. In addition, the Indian government has committed to slashing the rate of emissions relative to gross domestic product by 33%-35% by 2030 from 2005 levels. This can be achieved by shifting from fossil fuel to renewables. Solar will be a major component here.
So, what is corporate India up to in this area? We studied 214 companies and based on their sustainability reports/business responsibility reports/ annual reports we found some interesting patterns.
There are two areas where environment/sustainability gets covered, as part of CSR and as part of normal business operations.
Renewable investments as part of CSR initiatives
According to our study about 69% of the companies invest in environment. The percentage has remained almost constant over 2 years. Of the companies investing in renewable projects, only a relatively small fraction of companies invest in renewable energy projects. Utilities and banks have shown a marked preference for renewable energy CSR projects.
Renewable investments as part of Business Operations
Companies also spend/invest in renewables as part of their regular activities. Companies invest in
Renewable Energy – Solar, Hydro, Geo Thermal, Biofuel, Others
Green Buildings, Green Manufacturing units – LEED Certification
Power management systems
Energy management appears to be the most popular means of GHG emissions reduction followed by adoption of renewable energy. IT, Oil & Gas and other industries focus more on energy management. Oil & Gas, auto and telecoms tend to focus more on renewable energy as demonstrated by the chart below.
Can Corporate India focus more on renewables?
With the Paris accord in play, companies will need to pitch in, in a significant manner for India to achieve the NDC (nationally determined commitment) of emission cuts by 33-35%. Hence it is expected that companies would focus more and more on renewables with a strong focus on solar.
For this to happen, corporate India needs to believe that tackling climate change, while meeting the energy needs of a growing and developing world is an urgent matter. Some of the ways that companies can help tackle climate change through renewables is:
Source an increasing component of power needs through renewables.
Create a platform for companies to come together and build renewable capacity that can be shared between companies.
Help suppliers move move towards renewable power sources.
Communicate the need to shift to renewables both within the industry as well as to the customers.
Engage with the government in policy making and contribute towards an effective public-private partnership on renewables.
Written by – Namrata Rana and Utkarsh Majmudar. (Original Post)