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India's Green New Deal Making Progress, but Low-Carbon Path is Steep

India beginning to show that pitting climate and development objectives against each other is a false choice

by Manish Bapna,

Nov 29, 2010

This is the backdrop against which, in June 2008, Prime Minister Manmohan Singh signaled India’s intent to shift to a low-carbon economy by unveiling the comprehensive National Action Plan on Climate Change (NAPCC). Singh, a vocal advocate for the transformative power of science and technology, outlined a raft of ambitious existing and future policies and programs to address both climate mitigation and adaptation.

In so doing, he essentially abandoned the mindset that climate action must be at the expense of development progress. Despite this, Singh’s speech and subsequent roll out of the climate plan have not caused much public or political domestic debate. In sharp contrast to the divisive political battle over climate legislation in the United States, the three main coalition groups all back the NAPCC. (Although, no doubt, this support might waver as costly initiatives are rolled out.)

Delivering on the Prime Minister’s words, India has recently unveiled significant incentives for renewable energy. These include investment incentives for financial institutions; accelerated depreciation rates, ten-year sales tax exemptions, and customs and excise exemptions to stimulate private investment; attractive feed-in tariffs (prices at which utilities commit to purchase renewable energy); and renewable energy standards (which designate a percentage of power that utilities are mandated to source from renewables). Delhi also plans to roll out efficiency standards and codes for new appliances and buildings, and to launch a pilot trading program to incentivize energy efficiency.

While all these missions (see list) have merit, I want to focus here on those with the most potential to transform national markets and habits.

Energy-Efficiency Innovations

In the arena of energy efficiency, India is preparing to rival the United States in innovation and ambition—at least on paper. The National Mission on Enhanced Energy Efficiency has four key components: a pilot, market-based trading system for energy-intensive industries; a fast-track shift to energy-efficient appliances; financing instruments to help unlock demand-side, energy-efficiency improvements; and initiatives to improve the efficiency of power plants.

While the U.S. Senate has apparently shelved legislative efforts to introduce a cap-and-trade system to reduce carbon emissions, India is expected to enroll up to 700 major industrial polluters in a market-based mechanism to enhance energy efficiency later this year. Managed by the Bureau for Energy Efficiency (BEE), the pilot “Perform, Achieve and Trade” program will set a percentage by which participating companies (responsible for half of India’s fossil-fuel use) must reduce energy intensity within three years. Those that beat their targets will receive tradable energy permits which they can sell to plants that fail to meet their own targets and would otherwise face penalties. While less transformative than a national cap-and-trade system in terms of emissions reductions, the impact will be far from negligible.

Meanwhile, new nationwide certification standards for buildings will potentially transform the market for energy-efficient appliances and materials. Sectors including household equipment and appliances; hotel and office equipment; and industrial products will all be subject to mandatory efficiency standards and labeling requirements for new products.

The ball started rolling in January 2010 with mandatory energy-efficiency ratings introduced for four key appliances: refrigerators, air conditioners, tubelights, and transformers. India’s sprawling public sector will be required to procure only energy-efficient products which will help drive costs down. An energy-conservation building code will mandate maximum energy consumption norms per square foot for new commercial buildings. Commercial banks that invest in energy-efficiency projects will receive access to a partial-risk-guarantee fund to reduce the risks involved.

All told, India’s energy-efficiency plans will help avoid 20 gigawatts of additional electricity-generation capacity over the next four years and 100 million tons of greenhouse gas emissions annually, according to P Uma Shankar, the secretary of India’s Ministry of Power.

Solar Innovations

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