Achieving Net Zero by 2070

A recent tweet by Nikki Haley, a US Republican presidential candidate, calling India and China as major polluters created a huge furore on the internet. Let us also look at some facts. As of 2019, per World Bank, India’s per capita carbon emission was 1.78 MT (metric tons), where as that of China and the US stood at 7.61 MT and 14.67 MT, respectively.

The debate on historical responsibility for polluting the earth as opposed to potential pollution owing to the developmental needs of emerging economies is the mainstay of the COP deliberations. While these debates continue, the developed world is moving to ensure their future carbon footprint does not reduce their gravitas in geopolitics.

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The European Green Deal (2020) has set a legally enforceable mandate to achieve net-zero by 2050 and has prompted multiple policy actions. This deal spells out strategic priorities for EU nations and recommendations for actions across all sectors. Further, the EU Carbon Border Adjustment Mechanism (border tax) seeks to levy a tariff on carbon-intensive products being imported into the EU. Germany has launched a €50 billion Industrial Decarbonisation Subsidy program on its own.

The US Inflation Reduction Act (2022) sets a hefty target of $400 billion of public spending in renewable energy and carbon footprint reduction in various sectors by 2035. The Act not only promotes technological R&D to maintain the US’ leadership in the space, but incentivises corporates and general consumers alike to reduce their carbon footprint.

Closer home in India, incentives in the form of Perform, Achieve and Trade (PAT) for energy saving (industrial) started rolling out in 2012. The LiFE Mission (2022) announced by the prime minister is a clarion call for everyone to act responsibly towards the environment. We have otherwise in the past often depended on a mandating/penalising approach to curbing environmental pollution, mirroring global precedents, under the Environment Protection Act (1986), various Waste Management Rules (2016) and Pollution Control Norms. Sebi has also mandated Business Responsibility and Sustainability Reporting (BRSR) for the top 1,000 listed companies from FY23.

The financial world, in the meanwhile, has a new buzzword—ESG, or environment, social and governance. Tying into the UN SDGs, investors globally are increasingly trying to bring ESG credibility into their portfolios. In the near future, all cross-border investments, whether private or developmental, would probably use an ESG lens for scrutiny. Global ESG fund assets reached $2.5 trillion in 2022 by some estimates.

Can India, with its already stretched national balance sheet, create multibillion-dollar programmes to push for its own 2070 net-zero target? While the need for such a commitment can’t be set aside, we also need a holistic strategy to achieve our Nationally Determined Contributions (NDCs) and targets, with limited resources.

Leveraging our academic strengths, a push for R&D for environmentally-friendly industrial manufacturing processes, better machine design, new material research, and recycling and retrieval technology could pay huge dividends. It will not only increase self-reliance in technology, but can potentially open big global south markets for Indian technology. A complementing focus on skill development and education will further lead to quicker industry adoption.

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Budget 2023 announced the creation of a domestic carbon credit market. While this is a laudable development, to avoid the pitfalls of greenwashing, there is a need to define transparent, verifiable, and foolproof mechanism for real carbon footprint reporting. A digital-only approach needs to be developed and standardised to reduce concerns of misreporting. This can make us a global leader, like UPI has in digital payments, and can make cross-border authentication of carbon data easier as well.

Another neglected element of carbon calculations is India-specific emission factors for various sectors concerning input and output materials. The Central Electricity Authority, for example, publishes updates on emission factors to be used for electricity around the country. Similar, localised national-level data should be developed to ensure the aggregate carbon footprint of the country doesn’t get misrepresented at the global stage.

We have seen excellent success in rolling out time-bound and phased policy in various forms. Vehicular pollution norms Bharat Stage I-VI and the Phase Manufacturing Program for mobile components are excellent examples. Creating similar roadmaps for ‘greenification’ of products and services with adequate scientific rigor for threshold setting will kickstart action on various fronts. Business owners and investors can plan better. Policy incentives and controls can be structured to be in tandem and R&D will gain more focus.

A great first step was taken in approving the Sovereign Green Bonds Framework (2022). Expanding the remit to other financial instruments, not just funding large-scale public infrastructure projects, but to provide low interest loans to SMEs for green transition will ease the heartache of many a business owner.

The customer is the king, but the customer of today is also easily being misled by fake claims. The price-sensitive Indian customer, however, is slowly gravitating towards reduced life-time cost offerings, as is visible in auto and consumer white-goods. To address this concern, appropriate standardisation of qualitative and quantitative measures of the planet-positivity of a product have to be developed and their declaration mandated.

All of the above horizontal interventions can seed the ecosystem for climate-friendly growth for India that can help us progress qualitatively with minimal stress on the country’s finances.

Writers are respectively CEO Indiatech.org, and founder, Idasu Labs (ILa) Pvt Ltd