Economic Times, February 25, 2023
By Pradeep S. Mehta and Simi TB
Currently, the shift to renewables is largely restricted to large corporates and industries due to multiple factors, including the initial high cost, inadequate repair and maintenance facility, battery storage issues, and lack of sufficient products on the market.
As the world inches closer to extreme warming and climate crisis, an urgent need arises for strengthening international cooperation to tackle it. The G20 platform, whose members are responsible for more than 75 percent of global emissions, is undeniably the most appropriate venue to discuss and find solutions for this global menace.
With India, the voice of Global South, at the helm of G20 this year, the country bears a greater responsibility to provide the necessary impetus to key issues, such as the need for financing and technological support for renewable energies for developing economies to achieve net-zero emissions. One way of financing is through a universal financial transaction tax which can be levied on financial flows and put into a global kitty under the UN to fund climate action for recovery and rebuilding climate-resilient infrastructure.
At present, though renewables are the world’s cheapest source of energy, they need to be made more affordable for the common man through the development of more efficient technologies. While catching up with such efficient forms of renewable energy systems, including finance, would present enormous challenges, it would also present enormous opportunities for economies, with the potential to create millions of new green jobs and boost economic growth. But to reap these benefits the country needs to move fast but smarter.
Making Renewable Energy Affordable
Currently, the shift to renewables is largely restricted to large corporates and industries due to multiple factors, including the initial high cost, inadequate repair and maintenance facility, battery storage issues, and lack of sufficient products on the market.
Therefore, focusing efforts to localise renewable energy technologies, scaling up research and development, mobilising investment, and instilling the concept of circularity in the renewable energy supply chain are all crucial to achieve universal access to sustainable energy.
More importantly, boosting energy storage and decentralising the energy system would encourage optimal use of renewable energy, thereby reducing the dependence on fossil fuels and increasing eco-efficiency. For boosting energy storage, focus should be on Behind the Meter (BTM) innovations along with large energy storage programmes. BTMs allow for much greater levels of renewable energy penetration and in most other countries including the United States and Germany, the main driver for adopting this has been the ability to reduce electricity expenses.
Taxonomy and green public procurement (GPP) are two other tools that could aid in boosting renewable energy production. While taxonomy could offer clarity about green technologies thereby increasing transparency in financial markets for private sector sustainable investments, GPP could attract investors and encourage uptake of innovations.
On green hydrogen, while the union government has come up with a clear policy and allocated billions for it in the recent budget, there needs to be a clear mandate on how things will work. This would send positive signals to investors. Also needed is the development of state level policies to complement the efforts taken at the national level. To make green hydrogen affordable, there is also a need to put some serious efforts into the research and production sector and work towards innovation in the development and manufacturing of green hydrogen. Simultaneously, the government must work towards multilateral and bilateral agreements like the Just Energy Transition Partnership (JET-P) with G7 countries for supporting the green hydrogen ecosystem.
Financing Climate Resilience
Making renewable energy affordable and achieving net zero emissions by 2050 requires a tremendous amount of funding. For ensuring adequate finance, there is a need for engagement from both the private sector and governments. While the private sector can contribute through investments, governments can instigate through national programmes, policies and international cooperation on topics like energy, climate issues, reduction of greenhouse gas emissions etc.
As agriculture is an important sector of the Indian economy contributing about 17 percent to the total GDP and as rural India is home to over 70 percent of the Indian population, investments in renewables in the agricultural and rural areas also need high priority. While there is enormous potential to produce renewable energy on farms, significant barriers remain. These include lack of coordination among various stakeholders, different priorities for union and the states, high investment costs, limited access to credit, lack of awareness and uncertainty about the profitability of such investments.
Furthermore, given that nearly 325 kilotons of solar panel waste will be generated in India by 2030, investing in the circular economy and material efficiency within the renewable sector should be prioritised. Today, the volume of waste like panels, turbine blades and batteries nearing the end of their lives might be moderate, but it will never remain the same. Things will change for the worse if the country fails to build up its recycling capacity to match its growth in clean technologies. If not well planned and effectively managed to tackle them, these wastes have the potential to negatively impact our ecosystems and communities.
Efforts should be taken to come up with a suitable renewable waste management policy and encourage private investments to enable recycling of clean energy technologies. De-risking small scale finance and SMEs financing is also critical for enabling green investments in SMEs that are engaged in clean energy production. This would help address the existence of risks, attract investment, and enable more funding sources to develop the sector. At the same time, SMEs need to be nudged towards clean energy, resource efficiency, and circular economy measures through concessional and incentive-based credit.
It is undeniable that finance is an important factor in achieving a just energy transition, and both profitability and predictability are its pillars. The absence of these two key components could limit the financing of renewable energy projects.
Transit Smarter
Given the ambitious vision of producing 450 GW of renewable energy in the country by 2030, a whole lot more needs to be done. Most importantly, it is important to focus on a relatively smart, mature and advanced version of technologies so that they remain relevant in the market once set up. For instance, agri-photovoltaics enable the dual use of land for both agriculture and power generation, thereby considerably increasing land use efficiency. Even agri-photovoltaics with a rainwater collection system is a unique idea. Such clever technological expertise should be encouraged and promoted so that we can transit to renewables without inconvenience or deprivation of valuable farmland. For this, the micro, small and medium enterprises sector need a fillip to adopt such new and advanced technologies and larger industries should take them along to ensure access to climate finance.
Also, renewable energy should not be just limited to the electricity sector, it should wisely be used for heating, cooling and as transport fuels. Often, the progress seen in renewable electricity is not achieved by these other sectors in most countries. Lastly, there is a need for the development of new educational programmes on renewables, targeted training, and skill development, including upskilling or reskilling, to keep up with the pace of technological advancement. Recent studies in the country point to an enormous shortage of trained workers in various segments under the clean energy sector.
The authors work for CUTS International
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