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Corporates consult on climate change

By Darryl D'Monte

Given the projected rise in energy costs within the next 20-30 years, reducing the ecological footprint of companies has become a corporate necessity. And corporate India is finally getting its act together on the environment front

Environmentalists are sceptical about businessmen, usually with good reason, and all the more so in this country where corporate leaders tend to believe that environmental laws are unnecessary impediments in their bid to boost their bottom lines. But things are gradually changing, at least in some more progressive firms, as a recent TERI-Business Council for Sustainable Development (BCSD) consultation in Mumbai on the government’s National Action Plan on Climate Change demonstrated.

The Prime Minister’s Council on Climate Change issued the National Action Plan at the end of June. It has eight missions and all stakeholders, including business, are being asked to respond to it. The Mumbai meet was to examine ‘Growth and Prosperity in a Carbon-Constrained World’. There were only passing references, however, to the cloud that is hovering over the financial world, nothing less than the biggest crisis since the Great Depression. It cannot but cast a shadow over any developing country’s attempts to grapple with the reality of climate change.

Jamshed Irani, who heads Tata Steel, cited a modern-day parable, likening the prosperity of Western countries to a speeding train. Developing countries were standing still on the platform, waiting to board the passing train, which offered so much promise of a better life. But there was no one to slow the train down and give the poor a helping hand in boarding it.

Shyam Saran, who is special envoy to the prime minister in the PMO’s office and India’s chief negotiator in the post-Kyoto Protocol climate change regime, believes that “industry is ahead of the curve” with organisations like the Confederation of Indian Industry (CII), the Federation of Indian Chambers of Commerce and Industry (FICCI), and Assocham. The National Action Plan wasn’t a long laundry list of things to do -- a la so many other official environmental documents like India’s national environmental status issued at international meetings like the UN Earth Summit in Rio de Janeiro in 1992. Manmohan Singh himself has asserted that the plan is nothing less than a strategy for sustainable development in India.

If it has taken the Kyoto Protocol to galvanise the country’s rulers into drafting a plan for such a mission, it is better late than never. Energy is crucial to any country’s development, and India is far from being an exception. As much as 70% of the country’s oil is being imported, while we are heavily dependent on generating electricity from coal. Even by 2030, however, India will continue to import between a third and a fifth of its coal needs from countries like Australia (Indian coal is also not very ‘clean’ and is high in ash content).

However, in most of the deliberations at the TERI-BCSD consultation there was a deafening silence about our country’s most crucial energy need. Far from fossil fuels, and even further from nuclear energy which is the most capital-intensive and expensive once all subsidies are removed, it is lighting and cooking for the rural and urban poor that ought to be given first priority. But this is generally considered last by our policymakers.

As anti-nuclear activists recently wrote to the five Left parties that criticised the Indo-US nuclear deal mainly on grounds of catapulting the country into the US camp and also ignoring indigenously-developed nuclear know-how, India’s electricity needs are far removed from the concerns of New Delhi and Washington, not to mention Paris and Moscow, capitals of two other countries that are straining at the leash to sell nuclear technologies to India. They wrote: “India’s ruling class says that if India has to achieve and sustain the desired growth level of 9-10%, the country has to have energy security, or, as some nationalist leaders put it, energy independence. In India, electricity has always been considered a development input, but now it has come to be regarded as a tradable commodity.  

“Of the 593,732 villages in India (1991 census), 474,982 have been electrified with remarkable 80% electrification. But if we look at the electrification of rural households, we see a different picture. There are some 138.3 million rural households (2001 census) in India, but only 60.2 million (well less than half) of them have access to electricity and the electrification percentage is only 44%. So it is not that electricity is not available in their villages for these rural households, but they simply cannot afford it. It is poverty that prevents them from accessing electricity.  

“Although India has more or less sufficient quantity of electricity today, a considerable portion of our electricity is said to be wasted because of technical and commercial factors. Some 40% of electricity is lost in transmission because of energy dissipation in conductors and equipment used for transmission and distribution (T&D). Pilferage, defective meters, errors in meter reading, errors in estimating unmetered supply are other reasons for this huge wastage of electricity. So the challenges India faces today include reducing and eliminating T&D loss, improving the quality of supply and delivery systems, providing electricity for all at an affordable price, and improving the economic lot of all people across the country.  

“Ignoring all these socio-economic-political intricacies and complexities, India’s ruling class seeks a scientific-technical solution for the energy issue and keeps chanting the nuclear mantra. They completely overlook the fact that there have been no new nuclear power stations built in the United States for the past 35 years, and in Russia for almost 22 years, and that many European countries are phasing out their nuclear power programmes. There is hardly any debate about the enormous amount of dangerous nuclear waste we will accumulate from the nuclear power plants, the need to safeguard this ‘hazmat treasure’ for 48,000 years, huge amounts of heavy metals discharged by light and heavy water reactors, radiation blues, shoving around fissile material, nuclear weapons proliferation, and Armageddon on the earth.” Incidentally, Dr Pachauri has been strongly advocating the inclusion of nuclear energy in India’s mix. 

At the Mumbai consultation, Saran waxed eloquent on the role of the private sector in the energy sector. “You must tell us what the government’s role should be,” he told the assembly of CEOs and other executives of multinationals, Indian companies and public sector plants. “We have to put a policy framework in place. This is not CSR (corporate social responsibility), but a truly attractive long-term business opportunity.”  He reminded the businessmen that industrial countries always had a “huge presence” at international negotiations, unlike G77 countries and China. The government felt at a distinct disadvantage because it needed to have constant feedback at these meetings about how any law would impact industry. 

Nitin Desai, who headed the UN secretariat on environment and development during the Earth Summit in Rio in 1992, and now chairs TERI-BCSD India, underlined the fact that given the projected rise in energy costs within the next 20-30 years, and new policy regimes, it was basic strategy and a corporate necessity to take measures to reduce the ecological footprint of companies.  

The consultation heard countless examples, big and small, of how corporate India was finally getting its act together on this front. Prasad Chandran, chairman and managing director of BASF India, clarified that although he headed an MNC he was “very aware of the national interest” when it came to the environment in general and forest cover in particular. “Our role as Indians must come to the fore,” he emphasised. Although this was not discussed in Mumbai, forestry is raising its head in international negotiations too, as it did back in Rio. There could be curbs on deforestation by making forests a “global resource”, thereby undermining national sovereignty. On the other hand, some tropical countries would like to make afforestation eligible for credits under the UN’s Clean Development Mechanism (CDM), though the future of the CDM itself is in some doubt after the first phase of the Kyoto Protocol ends in 2012.  

In Mumbai, industry saw proposals to increase the country’s green cover from the current 22% to 30%, which would cover the entire value chain as “a huge opportunity” for industry in terms of sustainable manufacture of paper, construction materials, furniture, etc. As for sustainable agriculture, which is another of the eight missions in the National Action Plan, there was a call for “green biotechnology” -- implying the breeding of plants that are modified to survive in harsh, dry conditions. Participants decried the fact that 95% of the government’s expenditure on research and development went on salaries, ignoring the fact that the government has systematically throttled these research institutions by starving them of funds. One must recall that the Green Revolution was entirely hatched in government- or multilateral institution-funded institutions in the US and elsewhere, whereas seeds, genetically modified (GM) crops and other technologies are all in private (usually MNC) hands these days. 

It was noteworthy that it was none other than the Hindustan Unilever representative who cautioned against designating wastelands to grow biofuel crops because it would amount to diversion of foodcrop land. This was also underlined by Desai, who heads the National Wastelands Development Board as well. Speakers made a case for growing jatropha, a dry land plant that requires three or four years of care after which it can survive on its own. However, there is no guarantee that growing jatropha, if taken up by corporates as distinct from small farmers, would not also amount to diversion of productive land, if there are profits to be made. And, at the end of it, as we observed earlier, the fact remains that biofuel is for powering cars, whereas India’s need is to light up homes and hearths.  

According to TERI, there are 600,000 hectares of degraded forest land to be reforested in the country, which would call for an investment in the region of Rs 6,000-Rs 8,000 crore. Tata Power made a case for using agri-waste, pointing out the number of villages that are denied electricity. However, there was the question of the private sector being allowed to sell power generated from this fuel at the highest price, which would defeat the very objective of the exercise. Environmentalists here have always pointed to the anomaly of villages right in the shadow of giant hydel dams having to do without electricity since it is all fed to the grid and they can’t afford a connection. Tata Power made out a case for energy from agri-waste to be used locally. 

It is significant that MNCs are also often most proactive when it comes to CSR ventures. ABN Amro cited the importance of involving communities in converting waste and fallow land into productive areas, alleviating poverty in the process. In Melghat, eastern Maharashtra, which is a tiger sanctuary and where adivasi children are dying of malnutrition, the bank has launched an initiative spread over 25 sq km and extended the benefits of afforestation to forest communities by leasing them land to green on a long-term basis, earning CDM credits in the process.  

The consultation heard from Intel that IT could be profitably used for weather forecasting, even for a small farm, as well as for forecasting demand for local agricultural produce. Arun Seth, chairman of BT (India), the IT company, cited how it had collaborated with Dr Ashok Gulati of the International Food Policy Research Institute in Delhi to provide information through mobile phones; this lifeline receives around 20,000 calls a month. Seth believes that IT could help all the missions in the National Action Plan, since it is all-pervasive and has a five-fold return on investment in every industry. “If you can’t measure it, you can’t control it,” he summed up. A participant observed, however, that you couldn’t have IT without electricity in the first place.  

Seth is involved in the Sustainable Habitat Mission -- which is something of an oddity, considering that builders ought to have been present. The switch-over to compact fluorescent lighting (CFL) would save 40% of the country’s electricity and there were further savings to be made by using LED (light-emitting diode) technology. The IOC building in Delhi has installed solar panels all over, cutting down on its electricity needs. TERI has developed a Griha certification for energy-efficient buildings that could be offered incentives like a reduction in property tax.  

Rudolf D’Souza from Eureka Forbes made a good case for introducing time zones in India, since the sun rises much earlier in the east and sets earlier too, so that maximum use could be made of daylight. Pachauri recalled that in the 1980s, the Advisory Board on Energy calculated that this change would lead to a 5% reduction in peak load consumption of electricity. Prime Minister Narasimha Rao -- in an era which was not beset by environmental crises -- dismissed the suggestion as being of no consequence.    

InfoChange News & Features, October 2008