India’s Role in Optimising Environmental Performance

At COP26, India announced its goal of achieving net-zero emissions by 2070. Currently, India is the third-largest emitter globally, contributing 2.9 gigatons of carbon-dioxide equivalent annually. Critical contribution here from India comes from focus industries such as power, steel, automotive, aviation, cement, and agriculture, which collectively account for about 70% of total emissions nationally. 

To achieve its net-zero target, India is considering decarbonisation opportunities such as Green Hydrogen, Carbon Capture, Natural Climate solutions, and Circular Economy. In addition, India needs to increase renewable capacity additions, reduce hydrogen and carbon prices, decrease battery and green hydrogen costs, establish a nationwide charging infrastructure, promote sustainable farming practices, and meet circularity targets.

The transition to renewables is expected to lower the average cost of power supply while potentially saving $1.7 trillion in foreign exchange spent on energy imports. Since fossil fuels comprise 75% of India’s commercial energy mix, there’s a real opportunity to reduce this portion to one-half or even one-sixth by 2050, according to McKinsey’s current line-of-sight and accelerated scenarios. Furthermore, significant portions of refining and coal-mining capacity and coal-power generation would no longer be required.

By following an accelerated scenario with impactful policies and technology adoption, India could create 287 gigatons of carbon space, nearly half of the global carbon budget, for limiting warming to 1.5°C. India could reduce annual emissions to 0.4 gigatons of carbon dioxide equivalent by 2050 by relying on technological advancements such as direct air capture.

With the ongoing investment, growth, and regulation that’s fuelling innovation in the climate-tech space, India has the potential to become a global leader in battery manufacturing, electrolysers, and green steel production.

Changing Methods and Mindsets

A report from Bain & Co. found that 48% of Indian consumers started buying sustainable products in the past two years; 20% said environmental/social benefits are the top purchasing criterion while 49% listed health benefits; 94% said they are willing to pay more for more sustainable products and 52% plan to spend more on sustainable products.

Consumer mindset and acceptance are key elements in ensuring that future funding is focused on sustainable solutions. Customer expectations are pivotal to investors’ strategies, particularly as 78% of global investors say that they’re now placing more emphasis on ESG than they did five years ago, while 65% believe ESG will become standard practice over the next five years.

This inherent link between investors and consumers highlights the ongoing market shift towards environmentally responsible products, services, and business practices. Not only does this change force organisations to operate more responsibly, but it has significant potential to fuel economic growth and innovation. A study from the World Economic Forum found that ‘nature-positive’ solutions can create 395 million jobs and $10.1 trillion in business opportunities by 2030.

From the 16,000+ consumers surveyed by Bain & Co. across the Asia-Pacific region, 15% said that they don’t buy sustainable goods due to a lack of information or simply don’t trust companies’ claims of sustainability. Another 10% mentioned low availability, while 16% cited price as barriers.

However, at a time when consumers have significant choices and access to global brands, providing more sustainable products will become a key differentiator for businesses. 

By operating transparently and demonstrating environmental consciousness, brands can become a compelling choice for consumers and potential employees who want to partner with companies that share their commitment to ethical and responsible practices.

India’s Climate-Tech Landscape

Climate-tech innovations attract entrepreneurs, product managers, and engineering talent driven by consumer demand, increasing regulatory requirements, and an ever-increasing scope for sustainable innovation. Home to 2,260 climate-tech companies, India currently has the world’s third-largest ecosystem of this business behind the US (7,561) and the UK (2,503). Examples in this space include EV manufacturer Ola Electric , protective farming manufacturer Growit India , battery swapping network ChargeUp, carbon management company Carbon Master, and several more.

Furthermore, we are witnessing innovative startups deliver solutions that make sustainability more accessible and intuitive for businesses and customers. For example, Climes offers carbon neutralisation-as-a-service, operating as a climate finance company that leverages technology and scientific methodology to enable the transparent flow of capital from consumers and enterprises to climate solutions that reduce or remove atmospheric carbon. 

Meanwhile, Econscious technology converts plastic waste into innovative and functional products. With India creating 49.8 million tonnes of waste annually, of which one-third ends up in landfills or waterways, Econscious collects and upcycles plastic waste in eco-boards to manufacture utility and decorative products, delivering a circular solution for the world’s third-largest waste-generating nation.

However, the lack of green practitioners such as green consultants, green architects, green developers, and other experts in sustainability results in many organisations apprehensive about adopting green solutions. This is troubling when, on average, companies’ value chain emissions in India outweigh their direct carbon effect by 11.4 times.

Tracking metrics is a critical element to understanding inefficiencies and unlocking areas for improving sustainability practices. While specialists are useful for advising on new protocols and policies, taking a step back to assess current processes, technologies, and impact is an important first step in determining a more sustainable path forward. 

Regulatory Requirements and Results

The Indian government continues refining its sustainability-driven regulations, such as sustainability reporting requirements under the Companies Corporate Social Responsibilities Policy Rules (2014) and the Companies Act (2013) – whereby certain businesses must establish a CSR Committee, allocate at least 2% of their yearly net income to CSR projects, and include a CSR report as part of their annual board reports.

Due to its lower cost and lower emissions, the Indian government plans to promote Liquified Natural Gas as an alternative fuel to combustion coal, committing to build 1,000 LNG stations over the next three years. 

In terms of mobility and efficiency, India is implementing GPS-enabled toll payments to ensure that there is minimum fuel wastage and associated emissions from toll plazas. Furthermore, online retailers have pledged to carry 30% of their shipments using electric vehicles, which aligns with the government’s plan to have an 30% EV sales penetration for private cars, 70% for commercial vehicles, and 80% for two- and three-wheelers. 

As of March 2023, there were more than 2.3 million electric vehicles in India. The majority of the EVs in India were two and three-wheelers, each at over 1.1 million vehicles. India’s electric vehicle market is changing rapidly as current rates of adoption show that the nation’s automobile market could be fully electric by 2035. The Indian government has set a target to achieve 30 percent electrification of the country’s vehicle fleet by 2030, and has introduced several incentives and policies to support the growth of the EV industry.

Supply chain decarbonisation is a crucial focus for India’s public and private sectors, which have made significant investments and innovations in this space. For example, TATA Group has prioritised sustainable supply chains, water conservation, and renewable energy programs. Meanwhile, Hero MotoCorp has been working with its suppliers through the Green Partner Development Program since 2007, assisting them in integrating environmental sustainability practices throughout their supply chain operations.

To achieve supply chain sustainability, companies are adopting various best practices like conducting supplier audits to ensure compliance with environmental and labour requirements, making operational adjustments that reduce energy and waste, investing in renewable energy, collaborating with NGOs and other groups to promote sustainability, incentivising suppliers to adopt sustainable practices, and developing environmentally friendly products and packaging.

Leading the World in Sustainability

From a national perspective, India needs a detailed decarbonisation plan with sector-specific priorities and policy frameworks that consider interdependencies across industries, thereby guiding corporate investments. 

This should be supplemented with the implementation of a national carbon market that includes demand signals and incentives for investment in newer technologies such as carbon capture, utilisation, and storage – particularly in hard-to-abate industries. This can include the establishment of carbon capture and storage hubs, potentially through public-private partnerships.

India should also accelerate renewable energy adoption, aiming for a four-fold increase in capacity while deepening market reforms to create a stable grid powered predominantly by renewable sources. This could include enhancing the National Hydrogen Mission by driving demand through blending mandates, boosting cost competitiveness with subsidies and R&D investments, and exploring export opportunities through international trade agreements.

Indian government should also work closely with businesses, banks, and other key industry players to help more organisations transition to green energy, sustainable investments, and other decarbonisation efforts across different sectors. 

As manufacturing is a key industry and carbon creator for India, we must develop resilient local manufacturing capabilities that encourage further investment in clean technologies. This includes developing local raw-material resources, securing materials globally, and promoting local production through incentives like production-linked incentives. 

Many innovations in sustainability stem from the ability to monitor and measure key environmental metrics such as water and energy use, and waste generated. Looking ahead, India’s surging growth in tech startups and innovation is key to improving transparency, accountability, and efficiency.

To make a real impact on a global stage, it is critical to build partnerships across industry, academia, and government, thereby creating more seamless pipelines from education to the workforce, incentivising a national shift towards more sustainable practices and becoming an international powerhouse in renewable energy, waste reduction, and circular economy.