Green signal for eco business
Vinod Kala is among many businessmen who will be waiting for news from Copenhagen with bated breath.
Vinod Kala is among many businessmen who will be waiting for news from Copenhagen with bated breath. He is the founder of Emergent Ventures, a Gurgaon-based climate change consultancy company.
Kala is hoping Copenhagen will open a slew of new opportunities for green businesses. These hopes got a boost this week with the announcement by environment minister Jairam Ramesh that India will voluntarily cut its carbon emission intensity by 20-25 per cent from its 2005 levels.
This is a significant shift in policy because till now, India had set targets for lowering energy intensity (measured as units of energy per unit of GDP). Now the emphasis will be on reducing carbon emissions per unit of GDP. This will bring into play new areas that go beyond improving energy efficiency. For example, the conservation of forests which help absorb carbon dioxide will become important.
“The creation of bio sinks (such as forests that absorb CO2) is an important area around the globe,” says Vinod Kala. Afforestation, reducing deforestation and waste land management will therefore provide new opportunity for green businesses, he adds.
new calculations
Another thrust area will be increasing the share of renewable energy in the overall energy mix. Mohanjit Jolly, executive director of Draper Fisher Juvertson, a venture capitalist firm, explains why this will become vital for reducing India’s carbon intensity:
“We have invested in Reva, an electric car. By itself, the grams of carbon [emitted] per kilometer by the Reva is much lesser than a car running on petrol or diesel. That would be enough to convince someone about [the advantages of] an electric car. But now we need to peel the onion. If you use coal to produce the electricity to charge Reva, then question marks will arise. If you shift to non-coal sources to produce that electricity, then the carbon footprint of the car falls drastically.”
Jolly sees great potential in companies entering areas such as power generation, distribution and management from solar, micro hydro, and bio mass sources. The shift in emphasis from energy intensity to carbon emissions intensity will require hard decisions.
As Ritu Mathur, associate director, Energy Environment Policy Division, The Energy Research Institute (Teri) puts it, “When you start looking at emissions intensity, then the pressure is totally different [compared to reducing energy intensity]. You have to start looking at substituting fuel and technology, which are currently high-cost or not yet at the mass-production level.”
FEARS EXAGGERATED
But fears that the reduction in emission intensity will have a drastic impact on industries, especially the manufacturing sector, too might be exaggerated, according to Rangan Banerjee, professor, Department of Energy Science and Engineering, IIT Bombay.
He feels that a 20-25 per cent reduction in emissions intensity by 2020 can be achieved partly by improving energy efficiency and partly by increasing the share of renewable energy in India’s total energy mix. The technology needed for this is quite cost-effective, he says.
But all this still remains in the realms of what is possible. As Kala points out, “[Making] announcements does not mean any mechanism can be evolved in Copenhagen… We still need to figure out the exact mechanism for trading, financing, and technology sharing and adoption… I think the clarity over this will emerge over 6-9 months. But Copenhagen will clarify the ambitions and commitments of the entire world and will give an impetus to the market for carbon credit and renewable energy.”
Kala is hoping Copenhagen will open a slew of new opportunities for green businesses. These hopes got a boost this week with the announcement by environment minister Jairam Ramesh that India will voluntarily cut its carbon emission intensity by 20-25 per cent from its 2005 levels.
This is a significant shift in policy because till now, India had set targets for lowering energy intensity (measured as units of energy per unit of GDP). Now the emphasis will be on reducing carbon emissions per unit of GDP. This will bring into play new areas that go beyond improving energy efficiency. For example, the conservation of forests which help absorb carbon dioxide will become important.
“The creation of bio sinks (such as forests that absorb CO2) is an important area around the globe,” says Vinod Kala. Afforestation, reducing deforestation and waste land management will therefore provide new opportunity for green businesses, he adds.
new calculations
Another thrust area will be increasing the share of renewable energy in the overall energy mix. Mohanjit Jolly, executive director of Draper Fisher Juvertson, a venture capitalist firm, explains why this will become vital for reducing India’s carbon intensity:
“We have invested in Reva, an electric car. By itself, the grams of carbon [emitted] per kilometer by the Reva is much lesser than a car running on petrol or diesel. That would be enough to convince someone about [the advantages of] an electric car. But now we need to peel the onion. If you use coal to produce the electricity to charge Reva, then question marks will arise. If you shift to non-coal sources to produce that electricity, then the carbon footprint of the car falls drastically.”
Jolly sees great potential in companies entering areas such as power generation, distribution and management from solar, micro hydro, and bio mass sources. The shift in emphasis from energy intensity to carbon emissions intensity will require hard decisions.
As Ritu Mathur, associate director, Energy Environment Policy Division, The Energy Research Institute (Teri) puts it, “When you start looking at emissions intensity, then the pressure is totally different [compared to reducing energy intensity]. You have to start looking at substituting fuel and technology, which are currently high-cost or not yet at the mass-production level.”
FEARS EXAGGERATED
But fears that the reduction in emission intensity will have a drastic impact on industries, especially the manufacturing sector, too might be exaggerated, according to Rangan Banerjee, professor, Department of Energy Science and Engineering, IIT Bombay.
He feels that a 20-25 per cent reduction in emissions intensity by 2020 can be achieved partly by improving energy efficiency and partly by increasing the share of renewable energy in India’s total energy mix. The technology needed for this is quite cost-effective, he says.
But all this still remains in the realms of what is possible. As Kala points out, “[Making] announcements does not mean any mechanism can be evolved in Copenhagen… We still need to figure out the exact mechanism for trading, financing, and technology sharing and adoption… I think the clarity over this will emerge over 6-9 months. But Copenhagen will clarify the ambitions and commitments of the entire world and will give an impetus to the market for carbon credit and renewable energy.”