Make In India needs to work

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India has followed a peculiar growth story over the years. India has seen high growth in the services sector. The government has been focusing on right from creating a single window facility for addressing investor concerns, identifying key manufacturing sectors, to creating a common platform to unite state governments, bureaucracy and corporate leaders.

India is blessed with a large labour pool and admirable levels of judicial transparency. We can leverage our territorial position to play a critical role in the global supply chains. Doubling up as a potential high consumption market can keep demand fluctuations in check as well as save up on the logistics costs.

I trust that our Industries need to strengthen on three fronts: cost (cheaper labour), quality (high skilled workforce), and supply chain (robust infrastructure), India can call itself the next global factory in future.

We shall emulate a ‘culture of manufacturing’ in India which is prevalent in a few countries such as Germany and South Korea. We need to attract our best brains and encourage them to join the manufacturing sector. We need to establish manufacturing linkages. The lack of infrastructure pushes up the logistics cost, which at 14 per cent of GDP is one of the highest globally.

The idea of promoting manufacturing is to ensure our demographic dividend finds meaningful employment. We launched the Make in India campaign to create employment and self-employment opportunities for our youth.  We are working aggressively towards making India a Global Manufacturing Hub.  We want the share of manufacturing in our GDP to go up to 25 per cent in the near future.

We are also aware that under the pressure of this campaign, the government machinery will be required to make a number of corrections on the policy front.  There is an increasing need to stress on zero defect and zero effect manufacturing.  We shall place high emphasis on energy efficiency, water re-cycling, waste to energy, clean India and river cleaning.  These initiatives are directed at improving quality of life in cities and villages.  These initiatives provide you additional avenues for investment in technologies, services and human resources.

Keshav C Das

Sectoral Strategies for Transforming the Food Processing Industries in India

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In the context of India’s vision of becoming the ‘Global Manufacturing Hub’; food processing is the ‘SUNRISE SECTOR’. The Food & Grocery market in India is the sixth largest in the world. Food & Grocery retail market in India further constitutes almost 65% of the total retail market in India. The Government of India through the Ministry of Food Processing Industries (MoFPI) is taking all necessary steps to boost investments in the food processing industry. The government has sanctioned 42 Mega Food Parks (MFPs) to be set up in the country under the Mega Food Park Scheme. Currently, 17 Mega Food Parks have become functional. Our food and retail markets are all set to touch $ 828.92 billion investment by 2020. The Processed food market is expected to grow to $ 543 bn by 2020 from $ 322 bn in 2016.

By 2024, the Food Processing industry will potentially attract $ 33 bn investments and generate employment for 9 million people. These are all remarkable targets and asipiration for us. The Government has been working to linking Indian farmers to consumers in the domestic and international markets. The Ministry of Food Processing Industries (MoFPI) is making all efforts to encourage investments across the value chain.

The potentiality of the food processing sector is huge. We shall acknowledge that India offers the largest diversified production base and has a growing food industry. We are the largest milk producing nation. We are the largest producer, consumer and exporter of spices. We are world’s second largest producer of food grains, fruits, and vegetables. Hence, we have a glorious legacy, excellent track records and necessary skills-technologies and know-how to become a ‘manufacturing Hub in the food processing sector.

To make this aspiration we need only three things: firstly promoting profitable farm production with appropriate agronomical practices, secondly, linking farmers with market and thirdly attracting investment for transforming this important sector.

The government has been already working to secure these ‘development triangle’. For instance, under the Nivesh Bandhu program, which is an investor facilitation portal to assist investors on the investment decisions. A special fund of $285 Mn has been set up in National Bank for Agriculture and Rural Development (NABARD) for affordable credit.

The government has also 100% FDI in the food processing sector. Sector-specific Skill Development Initiatives are also being taken up, with National Institute of Food Technology, Entrepreneurship and Management (NIFTEM) and Indian Institute of Food Processing Technology (IIFPT) being recognized as Centres of Excellence.

Apart from growing population and burgeoning purchasing power, rising urbanization, rising retail trade due to initiatives such as Digital India, together with the presence of global players of the industry can be considered as the major growth drivers for the segment.  We have a population base of 1.3 bn offering a large demand-driven market, with the retail sector expected to treble by 2020. Hence, this is our time now to make India Better! This is our time to make India a leader in the food processing Industry’.

Is the Paris Agreement entering into ‘Actual Force’?

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The news from Indian Prime Minister came today evening as a surprise- that India will ratify the Paris Agreement on October 2 and submit its NDC. This submission of India will push the Paris Agreement nearer to ‘’force into implementation’’. India accounts for 4.5 percent of the global emission.  However, the big question is: Will the Paris Agreement and its supporting NDCs are having sufficient clarity on its ambition and resources necessity (financing, technical and institutional) to implement the NDCs? The answer of this question is again very confusing (yes and no).

In an analysis based on the synthesis report of UNFCCC and other analysis, it is found that most of the INDCs are national in scope; they address all major national GHG emissions or at least the most significant sources such as Co2, and CH4. Approximately, 129 Parties included in their INDCs sectoral or sub-sectoral quantified targets. These Parties included targets for the energy and land use, land-use change and forestry (LULUCF) sectors together with their economy-wide targets. 78 Parties identified targets for renewable energy as part of the information to facilitate the clarity, transparency and understanding of their INDCs.

A few Parties referred to the need to respect human rights and gender equality. Over half of the communicated INDCs indicate that Parties plan to use or are considering the use of market-based instruments from international, regional or domestic schemes, including the clean development mechanism (CDM). Support needs for the implementation of INDCs were highlighted by several Parties. Those Parties identified in their INDCs needs for targeted investment and finance, capacity-building and technology, with some providing quantitative estimates of the support required for the implementation of their INDCs and for achieving the upper level of their mitigation contributions.  158 Parties noted the importance of enhanced international support in the context of the new global agreement, including its scaling-up, and the strengthening of the role of and linkages between the existing operating entities of the Financial Mechanism, including the Green Climate Fund (GCF) and the Global Environment Facility (GEF), and the Technology Mechanism under the Convention.

Information contained in the INDCs shows a clear and increasing trend towards introducing national policies and related instruments for low-emission and climate-resilient development. Information provided by Parties highlights the trend towards an increasing prominence of climate change on national political agendas, driven in many cases by inter-ministerial coordination arrangements as well as by an increasing trend towards the mainstreaming of climate change in national and sectoral development priorities. The INDCs show an increasing interest of Parties in enhanced cooperation to achieve climate change goals collectively through a multilateral response and to raise ambition in the future. In particular, Parties stressed the need for strengthening finance, technology transfer and capacity-building support for climate action in general as a means of creating an enabling environment and scaling up action.

Inclusion of adaptation in INDC: One hundred Parties included an adaptation component in their INDCs. The secretariat received adaptation components from 46 African States, 26 Asia-Pacific States, 19 Latin American and Caribbean States, 7 Eastern European States and 2 Western European and other States.

Parties highlighted their common determination to strengthen national adaptation efforts in the context of the 2015 agreement. Loss and damage associated with past and projected impacts of climate variability and change were reported by several Parties, some of which have quantified projected loss and damage. Regarding the monitoring and evaluation (M&E) of adaptation action, Parties highlighted that they have established or will establish quantitative and qualitative indicators for adaptation and vulnerability to measure progress.

The above mentioned facts are very much encouraging. However, there are critical concerns about majority of INDCs and even in case of submitted NDCs, mainly related to their BAU and the reference level. Defining the baseline level of emissions against which country’s reductions will be achieved (i.e., emissions associated with the BAU scenario) is imperative for transparency and accountability. Absent this information, tracking progress towards INDC goals is impossible for countries. This applicable for majority of the INDCs. Similarly, INDCs are not yet clear on financial allocation and resource mobilization strategies. INDCs are not yet owned by sectoral ministries in countries, rather, it has been considered as an initiative only of Ministry of Environment and Climate Change. In some case, INDCs are merely developed as ‘’wish list’’. The actual prioritization has not yet been conceived by national government. Institutional arrangement for implementing NDCs is yet to be done. Securing financing for implementation of NDC is a key challenge. Lack of quantitative indicators/tools to measure the adequacy and effectiveness of planning and implementation. Hence, still there are a ‘wishy-washy’ picture of global commitments on NDCs.  Perhaps, this can be overcome with strategic supports of international development agencies as well as strong commitments of national government. In addition, public participation is also key to make a transformational change in the INDC context.

Keshav C Das

Berlin, September 26, 2016

 

Climate Resilient Economic Growth

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Climate change creates a new context for policy-making in developing countries. The economic costs of climate change can put their economic growth prospects at risk and endanger the achievement of their development objectives. At the same time, development can inadvertently increase vulnerability to climate change. Building “climate resilience” into development policies can help to reduce the costs of climate change and sustain economic growth and social well-being over time. Climate-resilient development includes climate change in the baseline for development planning.

The cross-sectoral nature of climate impacts calls for a co-ordinated approach by the public sector, civil society and development partners across levels of governance. Climate-resilient development needs to go beyond individual programmes and projects and consider systemic aspects and linkages between economic development, climate change and resilience. This need has been acknowledged in international discussions that have recently shifted from project- and programme-based approaches for adaptation to promoting national, strategic responses to the effects of climate change. This includes the call for Least Developed Countries to develop National Adaptation Plans (NAPs) in the framework of the United Nations Framework Convention on Climate Change (UNFCCC).

There is a strong link between socio-economic development and resilience to the effects of climate and climate change. Extreme climate events can reduce economic growth(McDermott et al., 2013; UNISDR, 2013). This slowdown, which can affect a country for several years, is in marked contrast with developed countries, where disasters have the potential to act as an economic stimulus (Cavallo and Noy, 2010; Loayza et al., 2009). Developing countries also bear the heaviest human burden. Between 1970 and 2008, 95% of deaths due to natural disasters occurred in developing countries(IPCC, 2012). This vulnerability is due to a combination of factors, including a lack of coping capacity, low levels of disaster preparedness and high dependence on the agricultural sector for development and livelihoods.

Development itself is one of the most effective means to increase the capacity to cope with disasters. Higher disposable income, better education and healthcare, and improved transport infrastructure are some of the characteristics of development progress that also strengthen resilience. But this is not automatic. Development choices can lead to a concentration of economic activities and assets along rivers and coastlines; places which are vulnerable to flooding, storm surges and sea-level rise. There is also evidence that certain characteristics of middle-income countries, such as a high reliance on physical infrastructure for GDP creation and a high interconnectedness between economic sectors, can increase their vulnerability to extreme events (Benson and Clay, 2004; Ghesquiere and Mahul, 2010; Okuyama, 2009; Cummins and Mahul, 2009).

Climate change adds a new dimension to this relationship between development and resilience. Development as usual – and even development that strengthens resilience against current variability – might not be a sufficient strategy to prepare for future climate challenges. Gradual changes in climate can reduce labour productivity and give rise to additional costs for climate-proofing infrastructure and productive activities. This can even lead to shifts in countries’ comparative advantages. Disaster risk is likely to increase, as certain phenomena such as temperature extremes, heavy precipitation and extreme coastal high water levels become more frequent (IPCC, 2012). The parallel developments of economic and population growth and climate change can have significant consequences.

To get benefitted from the growth model of economic growth with the climate resilient development, countries need to adopt the below recommendations:

Sustain leadership and high-level political commitment: climate resilience efforts need to be driven by strong and visible leadership. This will help to establish and maintain high-level political support across the government.

Formalise national development visions and defining key climate resilience objectives: The formulation of a national vision for climate-resilient development helps raise awareness of the benefits and opportunities of enhanced resilience, thereby building momentum for institutional and policy change.

Create institutional mechanisms that encourage cross-sectoral co-ordination and high-level political commitment:

The institutional system needs to be explicitly designed to facilitate and encourage co-ordination across ministries.

Secure dedicated financing for resilience investments: Financing for resilient activities needs to be leveraged and it should support coherence in investments for climate change resilience and economic growth projects. Alignment with the national budget should help to ensure that domestic resources complement international financing.

Keshav C Das

May 28, 2016

 

FINANCING REDD+ AND GREEN CLIMATE FUND*

5fe714a62d2417e54a50d9a48eeea001Result Based Financing (RBF) was a new addition to the REDD+ domain, incorporated during COP.19 under the Warsaw Framework for REDD+. This new set of financing instruments is designed for disbursing payment against pre-determined performance indicators (both carbon and non-carbon benefits and performance). However, the Warsaw Framework does not address non-carbon benefits of REDD+ or provide methodological guidance on non-market-based approaches for defining performance indicators while implementing REDD+ program interventions. Parties continued discussions of these aspects of REDD+ at the 40th session of the Subsidiary Bodies to the UNFCCC (SB 40) as well as during the meetings of Subsidiary Body for Scientific and Technological Advice (SBSTA). Unfortunately, there is very little progress on this agenda item, and further consideration of these issues was postponed to future sessions. Encouragingly, there are a few promising progresses with respect to the modality of the result based financing of REDD+, which is expected to be linked to the Green Climate Fund (GCF). The key development on this financing modality is presented below.

  1. Parties agreed while developing the Warsaw Framework for REDD+ that the GCF would play an important role in channelling REDD+ payments to developing country governments, and that results-based payments will depend partially on the submission of a reference level for review by experts from an assessment team. Assessment guidelines and procedures were also established, so that developing countries know how their reference levels will be evaluated.
  1. In addition, developing countries wanting to participate in GCF REDD+ activities will have to establish national forest monitoring systems (NFMS) as a basis for estimating forest-related greenhouse gas (GHG) emissions if they do not yet have such systems in place. Changes in emissions levels will be measured against respective national reference levels. In addition, parties officially mandated a link between safeguards (such as respecting livelihoods, the rights of indigenous peoples and local communities, and biodiversity) and payments. REDD+ beneficiaries must submit summaries identifying strategies to address the safeguards framework. Furthermore, all information submitted, including data on payments should be posted on an “information hub” that parties requested the Secretariat to create.
  1. During the fifth part of the second session of the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP 2-5) and the Ministerial Dialogue on the Durban Platform, the need to capitalize the GCF was underscored. Much anticipation around whether the GCF will be able to provide the necessary financing for REDD+ surrounds the ongoing efforts to operationalize the Fund. Some parties suggested COP 20 should open a REDD+ window in the GCF. During the TEM on land-use, the GCF reported that its initial focal areas include REDD+ implementation and sustainable forest management (SFM).
  1. At the seventh Board Meeting of the GCF, the final six items needed to operationalize the Fund were agreed, including an initial Results Management Framework (RMF). The RMF, as it applies to REDD+, differentiates itself from the Warsaw Framework in that it will also be used for ex ante payments. However, plans for more specific guidance on REDD+ are in the pipeline, as the Board requested the Secretariat to “develop a logic model and performance framework for ex post REDD+ results-based payments, in accordance with the methodological guidance in the Warsaw Framework for REDD+, for consideration at the third Board meeting of 2014.” As an operating entity of the financial mechanism of the UNFCCC, the GCF’s REDD+ approach should be in line COP decisions.
  • Complexities:

The board meeting of GCF and UNFCCC’s meetings (SB, SBSTA, ADP etc.) did not create an enabling environment for motivating financial institutions (donor countries, UN funds, multi-laterals fund like FCPF etc.) to operate under a single umbrella of REDD+ finance. Rather, the FCF stated during it last board meeting that entities not beholden to the UNFCCC COP, however, can continue to operate as they please. The Forest Carbon Partnership Facility (FCPF), which was originally intended to sunset once the GCF became operational, has recently completed a methodological framework for its Carbon Fund based on its experience thus far, and there is no indication that the FCPF will twilight soon. Likewise, UN-REDD, at its recent policy board meeting, adopted a roadmap for the development of a new strategy beyond 2015. Meanwhile, the Food and Agriculture Organization of the UN (FAO) takes its own approach to REDD+, based on its Strategic Framework.

Donor countries also continue to offer REDD+ funds to developing forest countries through bilateral agreements, making their own stipulations as they do so. Norway, through its Climate and Forest Initiative, and Germany, through its REDD Early Movers Program, have taken this approach while REDD+ issues were being sorted under the UNFCCC. Despite the adoption of the Warsaw Framework, donor countries inclined to do so cannot be prevented from making bilateral deals under their own terms and conditions. The primary implication of having various scattered institutions distributing REDD+ finance is that developing countries, their capacity already stretched, have to follow different rules, produce different documents and reach different benchmarks depending on where they turn for REDD+ financing.

With this background, question marks surround the future of REDD+ financing. Some cooperative efforts, such as between UN-REDD and the FCPF, to consolidate financing are yielding positive results for REDD+ readiness, but as financing is scaled to move beyond the readiness and pilot programme phases, will cooperation and coordination efforts be scaled as well? Will the capitalization of the GCF lead to a convergence of REDD+ finance under the GCF?

There is no clear lead to find answers of these questions. The only hope is that parties agreed to continue considering these difficult questions (including the methodological issues related to non-carbon benefits) in 2015 at SBSTA’s 42nd session and to discuss non-market-based approaches at SBSTA 41, to be held in Lima, Peru (FCCC/SBSTA/2014/L.8).

 Lima Expectation:

 Expectations are high for COP 20, which will convene in Lima, Peru, in December, as it is the last negotiating session of the COP before a new legal instrument is to be agreed in Paris in 2015. In Bonn, some developing countries expressed support for including REDD+ in the negotiations of a global agreement, in particular the inclusion of the Warsaw Framework for REDD+. Keeping Lima in mind, UNFCCC parties and the GCF can take a number of actions between now and Lima to build confidence in the efficacy and authority of the guidance created at COP 19. From capitalizing the GCF, to submitting reference levels, to completing the GCF’s “logic model and performance framework,” showing the Warsaw Framework in action will be the most expedient way to encourage convergence to its methodology.

Keshav C Das

New Delhi, August 08, 2014.

[1] Source: http://climate-l.iisd.org/policy-updates/the-direction-of-redd-financing-merging-ahead/

India’s Renewable Energy: Vision and Reality

indexIndia’s substantial and sustained economic growth over the years is placing enormous demand on its energy resources. Inspite of the substantial increase in installed electricity capacity in India, demand has outstripped supply. Thus, there is an emerging energy supply demand imbalance. This is a major reason for which promoting clean (renewable) energy in India has assumed great importance in recent years in view of high growth rate of energy consumption, high share of coal in domestic energy demand, heavy dependence on imports for meeting demands for petroleum fuels and volatility of world oil market. A number of renewable energy technologies (RETs) are now well established in the country. The technology that has achieved the most dramatic growth rate and success is wind energy; India ranks fourth in the world in terms of total installed capacity. India hosts the world’s largest small gasifier programme and second largest biogas programme. After many years of slow growth, demand for solar water heaters appears to be gaining momentum. Small hydro has been growing in India at a slow but steady pace. Installation of some of the technologies appears to have slowed down in recent years; these include improved cooking stoves (ICSs). However, in the solar photovoltaic (PV) and solar based power generation sector, India has been making remarkable progress in the last two years due to the creation of conducive environment for investment as well as relatively pro-development government policies and regulations.

In spite of these successes, the overall growth of renewable energy in India has remained rather slow. Significant barriers to renewable energy development remain in India. Given the high upfront capital costs of renewable energy technologies, financial barriers are substantial. But nonfinancial barriers are equally important in limiting the growth of renewable energy. Barriers can be grouped into three categories: financial viability, support infrastructure, and regulatory approval. A number of factors are likely to boost the future prospects of renewable energy in the country; these include global pressure and voluntary targets for greenhouse gas emission reduction, a possible future oil crisis, intensification of rural electrification program, import of hydropower from neighboring countries, focusing on energy efficiency as a distinctive market segment and lastly introducing a more robust and sustainable financing in the cleantech sector, which can be made available to promoters and developers of RETs against a performance based market mechanism. And, this is the bottom-line for renewable energy development in India.

Therefore, it is felt that the country needs a new set of strategies and approaches for cleantech development and promotion in India. Currently, there are good numbers of visions in place, including the vision of 100% Renewable Energy Scenario (REN) for India by the middle of the century against a reference scenario in which the economy is likely to be dependent primarily on fossil fuels – coal, oil and gas. But this type of vision also needs short term pragmatic workplan, which could help the country to meet the current needs and demand. Energy is central to achieving the interrelated economic, social, and environmental aims of sustainable human development. if India is to realize this important goal, the kinds of energy India produces and the ways it uses them will have to change. Otherwise, environmental damage will accelerate, inequity will increase, and economic growth will be jeopardized.

It will be timely to the current government to address these issues.

 

Keshav C Das

Senior Advisor, Renewable Energy

Netherlands Development Organisation

ENERGY SMART FOOD – LINKING FOOD AND CLEAN ENERGY

If energy prices continue to rise, the global food sector will face increased risks and lower profits. The efforts from low-GDP countries to emulate high-GDP countries in achieving increases in productivity and efficiencies in both small and large-scale food systems may be constrained by high energy costs. Lowering the energy inputs in essential areas, such as farm mechanization, transport, heat, electricity and fertilizer production, can help the food sector mitigate the risks from its reliance on fossil fuels. Hence, a major focus of food processing industries should be to reduce energy demand and/or promoting efficient energy management as well as introducing renewable energy technologies (RETs) to reduce the food sector’s dependence on fossil fuels. Indeed, introduction of RETs should happen from field to factory (processing) and up to the retail-outlet.  Energy.Smart

The encouraging development is that there is increasing consensus on the necessity on energy smart food and very recently in a study on energy-smart food, the Food and Agriculture Organization of the UN (FAO) stresses that agriculture’s dependence on fossil fuels is undermining efforts to build a more sustainable world economy. The paper, which is titled “Energy-Smart Food at FAO: An Overview[1],” notes that world food production consumes 30% of all available energy, most of which occurs after the food leaves the farm. The paper calls for: increasing the efficiency of direct and indirect energy use in agri-food systems; using more renewable energy as a substitute for fossil fuels; and improving access to energy services for poor households. It outlines numerous approaches to adapt practices to become less energy intensive.

However, to promote the campaign on energy smart food, we need affordable technologies at farm-level and food processing level. Unfortunately, most of the ‘energy efficient’ technologies in the agriculture sector of developing countries are expensive and not within the reach of poor farmers. Similarly, financing is also pivotal. Most farmers do not have upfront investment for introducing energy efficient devices in to their farm operations. Can we think of introducing a concessional loan systems into the farm system to meet this requirement as well as provide a really doable and practical contract farming model to the farmers, where, farmers will receive advance market commitments from global retailers and big MNCs in food market chain, and therefore, farmers will be in a comfortable situation to produce more and trade more? Indeed, agriculture insurance is also a key and obligatory intervention in the current context; particularly to reduce the risk of damage and loss due to climate change related adverse effects.

We also need enabling policies: strong and long-term supporting policies and innovative multi-stakeholder institutional arrangements are required if the food sector is to become energy-smart for both households and large corporations. Financial policies to support the deployment of energy efficiency and renewable energy will also be necessary to facilitate the development of energy-smart food systems. Examples exist of cost-effective policy instruments and inclusive business schemes that have successfully supported the development of the food sector. These exemplary policy instruments will need to be significantly scaled up if a cross-sectoral landscape approach is to be achieved at the international level.

Indeed, development organisations like SNV Netherlands Development Organisation has a major role to play in this domain so that the agriculture sector of developing countries are ready for the deployment of appropriate technologies; introduction, sharing and adaptation of energy-smart technologies; and carrying out capacity building, support services, and education and training on energy smart food production supply chain. Nevertheless, addressing the energy-water-food-climate nexus is a crucial and complex challenge. It demands significant and sustained efforts at all levels of governance: local, national and international.

 

Keshav C Das

Senior Advisor, Renewable Energy and Climate Finance

SNV Netherlands Development Organisation

 

[1] http://www.fao.org/docrep/014/i2454e/i2454e00.pdf

KEY ROADBLOCKS IN PROVIDING ACCESS TO MODERN ENERGY

When I was talking to one of my senior colleagues last week on issues related to access to modern energy, we could identify a series of factors, which negatively influence initiatives on providing access to modern energy. A few of such key roadblocks are- (i) Politically linked decisions (which we generally avoid in our discussion), (ii) lack of institutional capacity in facilitating the system for providing access to clean energy sources to poor, (iii) absence of private sector involvement in the supply chain owing to non-conducive investment environment for its resources and (iv) acute poverty of people and therefore weak ‘ability to pay (ATP)’ by the households.

With respect to the political roadblock, it was apparently clear from literatures review that political interference in development is unavoidable and most of the time, it becomes inhibitory in its actions. For instance, most political parties in India advocate for free, or highly subsidised, often unmetered electricity supply to poor. After electricity was put under public control and local states received the authority to set electricity prices in 1948 following the Electricity (Supply) Act, electricity pricing rapidly emerged as a powerful political tool and stake (Swain, 2006). Since then, political parties have campaigned for a subsidised or free electricity supply at least for agricultural consumption, in anticipation of capturing farmers’ political support. Subsidy has become such a political node that, in recent years, it has gained a prominent place in party manifestoes. Elections are sometimes won or lost on the basis of political parties’ commitment to this policy.

But, how useful this type of politically moved decisions is? Can we expect to develop a commercially viable market place for promoting access to modern energy sources to rural poor in this type scenario? Perhaps, this is a million dollar question and needless to say that this type of political myopia kills market potentials and continue to keep poor people at the level of poverty even in the coming years.

Lack of institutional capacity in facilitating the system for providing access to clean energy sources to poor is also a major roadblock. The deficiency in institutional capacity is observed at all level, starting from lead renewable energy agency in a country to the sub-national level and services centre, NGOs and communities. I believe that there is an urgent need to make an assessment of capacity building to manage the processes for effective deployment of modern energy sources. This assessment should outline where human resources could support the public sector.

There are limited funds available for developing and least developed countries to bear the initial finance and maintenance costs of project development. The lack of financial institutions and limited collateral to get a loan is a related hurdle. Besides, for many countries like in Nepal, conducive FDI policy is absent, which makes private sector involvement more difficult. As an immediate patchwork, government can consider providing attractive tax benefits or importing duty exemptions to the private importers, however, countries need a more organised solution to systemically remove this barrier.

At last, access to sustainable sources of clean, reliable and affordable energy has a profound impact on multiple aspects of human development; it relates not only to physical infrastructure (e.g. electricity grids), but also to energy affordability, reliability and commercial viability.  In practical terms, this means delivering energy services to households and businesses that are in line with consumers’ ability to pay. Unfortunately, the aspect of ATP is very often neglected.

I think, this is now key to work together to remove barriers to access to modern renewable energy solutions and improve access, quality, security and affordability of clean energy around the globe. SNV is committed to this endeavour.

Keshav C Das

Senior Advisor, Renewable Energy and Climate Change

 

Reference:

SWAIN, A. K. (2006), “Political Economy of Public Policy Making in the Indian Electricity Sector: A Study of Orissa and Andhra Prades”, M. Phil., Jawaharlal Nehru University

In Pursuit of Energy Efficiency in India’s Agriculture: Fighting ‘Free Power’ or Working with it?, Ashwini Swain, University of York, Olivier Charnoz, PhD, Agence Française de Development, 2012

Why environmental issues are important for business?

Jan2013Business can’t sustain without a sustainable production and consumption value chain development. Environmental sustainability is now conceived and implemented in regular business operations of companies not merely as a ‘green washing’ approach, rather, for most companies these days; sustainability is the core of corporate strategy. The rationale for this paradigm shift in the corporate strategy [from the old school of thoughts-produce more with less cost] is mainly powered with energy efficiency, process management, introduction of cleantech, green growth etc.

In one of the recent global survey of McKinsey[1], it is stated- companies know that consumers and employees care about the environment, and their interest often presents real business opportunities and risks. According to the survey, an emerging key environmental concern is biodiversity, or the diversity of species, variety of ecosystems, and variability of genes. The survey found that a majority of executives (59 percent), see biodiversity as more of an opportunity than a risk for their companies. They identify a variety of potential opportunities, such as bolstering corporate reputations with environmentally conscious stakeholders by acting to preserve biodiversity and developing new products or ideas from renewable natural resources. The positive outlook on biodiversity is in stark contrast to executives’ views on climate change in late 2007, when only 29 percent saw the issue as more of an opportunity than a threat[2]. Perhaps, addressing climate change over the past few years has changed some executives’ views on the potential upside of environmental issues.

Based on the ongoing discussion in the World Economic Forum (Davos) and the deliberations of Lord Stern, author of the government-commissioned review on climate change that became the reference work for politicians and green campaigners as well as the stern warning of Jim Yong Kim, the new president of the World Bank, are two significant statements in the beginning of 2013, which reaffirms the severity of the climate change problem and necessities to take up this issue as a market determinant, and perhaps, also as a business’s core activities. While Mr. Kim pledged to make tackling climate change as a priority of his 5 year term, he stated that “there will be water and food fights everywhere”. Lord Stern regretted that he underestimated the risks of climate change in his much referred Stern Review Report of 2006 and he now believed that he could have been more ‘blunt’. He said: “Looking back, I underestimated the risks. The planet and the atmosphere seem to be absorbing less carbon than we expected, and emissions are rising pretty strongly. Some of the effects are coming through more quickly than we thought then.”

With these concerns of two world leaders, the critical question for companies and businesses is: should they capitalize on this increasing threat of climate change and aligned their corporate environmental sustainability strategy? The answer is certainly YES. The corporate strategy should be to engage in these environmental value chains through market-based solutions that can quickly and effectively deploy capital to appropriate projects. The companies should use the market more effectively, and look for options with new climate finance mechanism and tools (like nationally appropriate mitigation actions-NAMAs), which will not only bring new investment opportunities to fund private sector sustainability and carbon reduction projects but also create new windows for profits. With corporate strategy ever more sensitive to climate risks and environmental sustainability, the business can adopt for greening of supply chains as a bright spot of opportunity for corporate investment in offsetting – and in some cases “insetting” – particularly in the realm of agriculture[3].

Keshav C Das, Senior Advisor, Climate Finance, REDD, and Renewable Energy

SNV Netherlands Development Organisation