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Sustainable Development in India

November 30, -0001

Sustainable development in India encompasses a variety of development schemes in social, cleantech (clean energy, clean water and sustainable agriculture) and human resources segments, having caught the attention of both Central and State governments and also public and private sectors.

In fact, India is expected to begin the greening of its national income accounting, making depletion in natural resources wealth a key component in its measurement of gross domestic product (GDP).

India's sustained efforts towards reducing greenhouse gases (GHG) will ensure that the country's per capita emission of GHG will continue to be low until 2030-31, and it is estimated that the per capita emission in 2031 will be lower than per capita global emission of GHG in 2005, according to a new study. Even in 2031, India's per capita GHG emissions would stay under four tonnes of CO2, which is lower than the global per capita emission of 4.22 tonnes of CO2 in 2005.

Major Achievements

The number of carbon credits issued for emission reduction projects in India is set to triple to 246 million by December 2012 from 72 million in November 2009, according to a CRISIL Research study.

This will cement India's second position in the global carbon credits market (technically called Certified Emission Reduction units or CERs). The growth in CER issuance will be driven by capacity additions in the renewable energy sector and by the eligibility of more renewable energy projects to issue CERs. Consequently, the share of renewable energy projects in Indian CERs will increase to 31 per cent.

CRISIL Research expects India's renewable energy capacity to increase to 20,000 megawatt (MW) by December 2012, from the current 15,542 MW.

The contribution of renewable energy to the power business in India has now reached 70 per cent, compared to 10 per cent in 2000, in terms of project numbers and dollar value, according to Anita George, Regional Industry Director, Asia Infrastructure and Natural Resources, International Finance Corporation (IFC).

Growth in use of green technologies has put India on the green-building leader board with countries such as the US. "About 2-3 per cent of all construction in India is green, as good as (in) the US. In the next two or three years, we want to bring it up to 10 per cent, which will put us on top," as per the Indian Green Building Council (IGBC).

The US$ 1.79 billion Indian lighting market is estimated to be growing at 18 per cent annually and switching rapidly to energy-efficient systems. In value terms, about US$ 425.58 million of the current market size belongs to the compact fluorescent lamp (CFL), according to Electrical Lamp and Component Manufacturers' Association of India (ELCOMA) statistics.

On the back of the incentive package for electric vehicles announced by the Ministry of New and Renewable Energy, average monthly sales of electric two-wheelers has risen 20 per cent, according to Sohinder Gill, Director, Society of Manufacturers of Electric Vehicles.

Backing the ‘polluter must pay’ principle to deal with the issue of residual pollution, Prime Minister Dr Manmohan Singh has endorsed proper enforcement of regulatory standards to prevent green damage. He also inaugurated the 'Delhi Sustainable Development Summit' (DSDS), organised by The Energy and Resource Institute (TERI), on February 3, 2011.

National Aluminium Company Limited (NALCO), the Navratna PSU, under the Union Ministry of Mines, Govt. of India, has become the first PSU in the country by implementing a pilot-cum-demonstration project on Carbon Sequestration in its captive power plant at Angul. The project is expected to go a long way towards addressing the issue of bringing down GHG, a NALCO spokesperson said.

Currently, India has 18,655 MW of installed renewable energy, accounting for a total of 11 per cent of the total capacity of 168,954 MW. The target includes adding 20,000 MW of solar energy by 2022, which would take the share of renewable energy in the total electricity generation capacity of the country to 15 per cent, said Dr Arun Tripathi, a director and a scientist at the ministry. He added that the Indian government's goal is that renewable energy should account for 30 per cent share of the total electricity capacity by 2032.

Investments

India expects investments to the tune of US$ 55 billion by 2015 in the renewable energy sector which is expected to produce 35 giga watt (GW) of power, according to Mr Debashish Majumdar, Chairman and Managing Director, Indian Renewable Energy Development Agency Ltd (IREDA).

According to a recent study on India attractiveness survey by Ernst & Young, Foreign Direct Investment (FDI) in Renewable Energy in India witnessed a 105 per cent rise. Wind energy is the fastest growing renewable energy sector and the FDI inflow in the sector has been increasing over the years.

Private equity investment in renewable energy sector picked up pace in the country from 2004. According to a report by 3i Network – IDFC, from a private equity investment of US$ 851 million in 2005, inflows into the renewable sector in India soared to US$ 2,136 million in 2008. Separately, a study by the Word Resources Institute recently estimated a renewable energy market of over US$ 2 billion a year in India.

Independent Power Producers (IPPs) in this sector appear to provide attractive investment opportunity for private equity funds as a result of policy and regulatory developments such as generation-based tariffs, renewable energy tariffs and the national solar mission. Companies such as Auro Mira Energy, Greenko, Orient Green Power and Green Infra have been cited in the report as some of the IPPs which received funding from investors such as IDFC PE, Axis PE, Baring PE and Global Environment Fund.

With the proposed commissioning of a 50 MW tidal power project off the coast of Gujarat in 2013, India is ready to place its first “seamark” that will be a first for Asia as well. London-based marine energy developer Atlantis Resources Corporation, along with Gujarat Power Corporation Ltd, has signed a memorandum of understanding (MoU) with the Gujarat government to start this project.

Corporate Investments

State-owned Gujarat Alkalies and Chemicals Limited (GACL) has entered into an agreement with a Germany-based specialty chemicals maker, Evonik Industries for setting up a multi-million Hydrogen Peroxide and Propylene Oxide (HPPO) project at Dahej in Gujarat. This project would be based on an innovative, environment friendly HPPO technology.
Overseas Private Investment Corporation (OPIC), an agency of the US Government, has signed an agreement with Azure Power to fund its 15 MW solar photovoltaic (PV) project in Gujarat. The investment in the US$ 40 million project will be led by OPIC.
Toshiba JSW Turbine & Generator Pvt Ltd said its manufacturing facility for super-critical steam turbines and generators would go on stream in the second half of 2011.

Corporate Initiatives

The world’s first facility to manufacture carbon foam batteries will be set up at Bavla near Ahmedabad. Firefly Energy India is planning to build a plant to produce carbon foam batteries at an investment of US$ 28 million, the company’s chairman Mukesh Bhandari said.
State Bank of India (SBI), the country’s largest lender, has become a signatory investor in the Carbon Disclosure Project (CDP), a collaboration of over 550 global institutional investors with assets under management of US$ 71 trillion.

CDP is an independent not-for-profit organisation, holding the largest database of primary corporate climate change information in the world. Over 3,000 organsations across the world’s largest economies measure and disclose their greenhouse gas emissions and climate change strategies through CDP. These disclosures aid them in setting reduction targets and make performance improvements.

Switzerland-based Satarem AG has signed an agreement for joint venture with SA India, erstwhile promoters of Crocodile brand in India, to enter the waste management and renewable energy business along with consultancy services for cement manufacturers in the country.
State-run power company NTPC has set up a joint venture with the Asian Development Bank and Japan’s Kyuden International Corporation to develop renewable energy projects with a capacity of 500 MW over the next three years.
Hyderabad based Premier Solar has signed a contract for import of 200,000 thin film modules — which can provide for generation of 20 MW — from German manufacturer Schott Solar. Of these, Premier would receive 10 MW worth modules in August 2011, with the rest to be taken in 2012.
Wind turbine manufacturer KENERSYS, a part of the Kalyani Group, has set up a new facility at Baramati near Pune with an investment of US$ 11.18 million. The new plant will manufacture large multi-megawatt turbines, with 2 MW rated power. The company will manufacture 250 turbines every year, with a total power generation capacity of 500 MW.
IFC has announced corporate equity financing up to US$15 million to Andhra Pradesh-based Shalivahana Green Energy Limited (SGEL), a privately owned entity producing power based on biomass, to fund the latter's pipeline projects.

National Solar Mission

The Ministry of New and Renewable Energy (MNRE) has informed that the progress in implementing the Jawaharlal Nehru National Solar Mission is satisfactory and according to schedule. The Ministry has sanctioned 802 MW capacities of grid-connected solar projects and 36 MW of off-grid solar projects. In addition, six major research projects include setting up of National Centre for Photovoltaic Research and Education at IIT-Bombay were also approved.

Clean Energy and Technology

Recently, Cerebra Integrated Technologies has announced the launch of India's largest e-waste recycling facility in Bangalore. With this, Cerebra has begun the first phase of its e-waste management initiative that is separation of metals, non-metals, and processing (crushing) of PCB in the Mobile Shredder. Cerebra plans to send the crushed PCBs to Singapore for further processing and raw material extraction.
The Bureau of Energy Efficiency (BEE) is looking to create a demand for energy efficient, products, goods and services awareness. The Bureau has set up an energy efficiency financing platform (EEFP), which aims at ensuring availability of finance at reasonable rates for energy efficiency project implementation and its expansion.
Finnish clean technology companies, which have joined forces within a common CleanTech Finland brand, see significant opportunities for Indian companies to help the country achieve its target of producing 38 per cent of energy through renewable sources by 2020.

Government Initiatives

The Union Budget of 2011-12 announcements clearly indicate Indian government’s decisive plans to promote and develop clean energy and technologies, which will advance India’s Clean Revolution. Key points from the Finance Minister’s speech included:

Planned launch of National Mission in hybrid and electric vehicles
Allocations of US$ 89.41 million from National Clean Energy fund for speeding up The National Mission for a Green India.
The budget of the Environment Ministry increased by around US$ 67.1 million.
Extension of Tax holiday for the power sector by one year
A budgetary provision (2011-12) of US$ 56.6 million has been made for research and development in new and renewable energy for the first four years of the 11th Five Year Plan of the MNRE.
The government would dole out US$ 335 million over the next two years to banks and finance companies to lend money to solar energy projects at a generous 5 per cent interest rate, top government official said. The money would be lent to small solar projects adding up to 200 MW by companies like Sidbi, Nabard and National Housing Bank. These lenders would be provided interest-free loans by IREDA.
IFC will provide up to US$ 15 million in corporate equity financing to Simran Wind Project Private Limited (Simran), a privately-owned entity which is into wind-based power production. The company will use the money to finance its pipeline projects worth US$ 40 million in Tamil Nadu.
Punjab government has initiated an ambitious clean energy project to generate 1,500 MW power from the ‘run of the canal turbines’. The Punjab Energy Development Agency (Peda) has already developed an indigenous prototype of the turbines.
To facilitate fast track exploration of shale gas, the Ministry for Petroleum and Natural Gas expects the process of carving out suitable blocks to be completed by April 2011, which would allow floating of the first round of auctions of shale gas blocks in August 2011.
Solairedirect Energy India is in talks with the Gujarat government to set up a 20 MW plant at the Solar Energy Park in Kutch at an estimated cost of US$ 67.1 million.

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