Economy and environment can no longer be viewed as concepts independent of each other.
“Only One Earth” the theme which was used at the first global environment gathering in 1972, is being revived by Sweden for World Environment Day 2022. From countries suffering through waves of mutated Covid-19 to economies which just came out from a pandemic and facing a tough time ahead, to the Russia-Ukraine war which potentially holds the power to destroy the whole planet, 2022 is undoubtedly a watershed moment in the course of mankind and the steps that we take today will decide where our planet will be tomorrow.
According to Inger Andersen, Executive Director of UNEP, the cost of climate change is rising, as is the gap between what is being spent to adapt to climate change and what is needed. As recently as 2014, the cost of adaptation in developing nations was estimated at $100 billion a year. Today that figure is $500 billion. To limit the rise in global temperature, which is driving climate change, to 1.5C, worldwide CO2 emissions will need to halve by 2030. If there is no change in current plans, temperatures will be 2.7C higher by the end of the century.
Calculated annually by Global Footprint Network (GFN), Earth Overshoot Day, the day in the year on which the world stops living sustainably, is yet another way of measuring how mankind is using natural resources faster than they can be replaced naturally. The earlier in the year it falls, the more unsustainable life on Earth becomes. For what started as 31 December in 1970, Earth Overshoot Day was July 29 in 2021.
One thing is clear from the course the world has taken recently that we are on a make-or-break situation. Advancements in fields like green energy, electric mobility, rapidly growing energy efficient technologies are the only ways through we can grow sustainably. While Russia-Ukraine war has inflicted many injuries to innocent citizens, it has also brought forward the crucial idea of how being dependent on traditional sources of fuel is extremely unhealthy for economies as it adversely affects fiscal situations and pushes up inflation. The lesson is clear: Economy and environment can no longer be viewed as concepts independent of each other, complimentary growth in both of them is the only way to attract more money in future.
The time is more demanding and the role of behemoth consumeristic economies like India and China will truly decide whether the Earth can achieve its sustainability goals. That said, there is also a lot to learn from the success stories. The Nordic model, for example, has achieved almost 80% EV penetration with its holistic model of growth with equity, high degree of public commitment, high employment rate and income and means of subsistence independent of market forces.
Aside from steps like investing globally only in green energy, recent Chinese bold steps like curbing coal production to curtailing steel exports in a strategically planned manner signals the idea that environment and economy can grow together. The only way green energy can reach scale is when it becomes profitable and China holds supreme power for the same with its highly advanced technology and cheap labour. If the economies of scale work out in China, there is a very high likelihood that it works out globally too.
Over the past five years, India has launched new efforts to advance its transition to clean energy and mobility, including its nationally determined contribution to install 500 GW of renewable energy capacity by 2028 and the Faster Adoption and Manufacturing of Electric Vehicles (FAME) II scheme to support the adoption of 7,000 electric buses, 5 lakh electric three-wheelers, 55,000 electric passenger cars, and 10 lakhs electric two wheelers.
Invariably, the inputs to mobility will decide where it is heading towards in the future and thus the push for production of green hydrogen under the flagship scheme where the government is offering to set up manufacturing zones for production, connectivity to the ISTS (Inter-State Transmission System) on priority basis, and free transmission for 25 years if the production facility is commissioned before June 2025, has become of immense importance.
Apart from unavoidable implementation challenges, India is still at phase of struggle as most discoms are stuck in a debt cycle. Tariffs are partially non-rationalized. As subsidies to the rural customer base continue to expand, discoms have experienced worsening finances. As the electricity network is expanding, it is becoming difficult to maintain progress, increasing aggregated technical and commercial (AT&C) losses. Upgradation and digitization of the grid will be necessary to optimally integrate high levels of renewable energy at the lowest cost. Ultimately, discom health is a critical leverage point for the decarbonization of India’s powesr sector.
Erik Solheim, former UN Environment chief, said that “we’re in the midst of the fourth Industrial revolution and the few sectors that will witness tremendous growth and will become crucial include biotech and medicine, digital transformation and green and sustainable businesses”. India is unequivocally at the cusp of becoming a renewable energy superpower, but there is a lot to observe and learn from global examples to create resilient and full-proof institutional structures. To lead, we must pick the best from success cases globally coupled with a strong willingness to execute them on ground.
Rajesh Mehta is a leading consultant and columnist working on Market Entry, Innovation & International Affairs. Sandesh Dholakia is the founder & CEO at Case Ace and a strategy consultant.