Where is India in the fight against climate change?
The fight against climate change is no new concept, and every person is aware of the severity of the climate crisis. Countries, committees/unions, and individuals across the world are making efforts in each’s capacity to save the planet for the future. However, the pace and sincerity with which countries are fighting vary. While some countries, such as the UK go rigorous with net-zero emission pledge, other countries like India, though trying to go rigorous, are unable to do deliver the desired results on time due to several socio-political and economic reasons.
Thanks to the COVID-19 pandemic, pressing issues of climate change have surfaced. Some pressing issues include:
- Use of fossil fuel in vehicles and aircrafts
- Lack of adequate investment in renewable energy avenues
- Lack of adequate investment in regions providing alternative sources of fuel
- No regulatory requirement to disclose material environmental impact of a company’s operations
These issues are gradually being addressed with rising awareness and shift in focus from age-old fossil industry to newer sources and avenues among the global investor cohort. But, there’s still a long way to go and not much time left. The change desired here is prominent in the West. However, the East still needs a lot to change, and that has to be quick. Countries such as China, India and South Africa may become the saviours if they speed up their fight against climate change. However, considering the struggles of a developing country and with the pandemic ruining important revenue streams, there is ought to be some slowdown in the mission, temporarily though.
On a global front…
There are numerous things to work upon. For example:
The concept of solar energy and other forms of renewable energy is not new to the world. However, fluctuating oil prices, the dominance of oil or fossil fuels in major economies has restricted the growth of renewable energy businesses. Some businesses have shut down due to lack of funds. It is important to note here that investors have not shifted to fossil fuel from renewables but have shifted from fossil fuels to technology. Technology is an industry where cash can be burnt out faster than renewables, thanks to the low regulatory support to renewable businesses! Where an investor takes a decade or more to gain returns in renewable business, he/she gets his/her returns within 5-7 years on an average in the technology business. While technology and renewable businesses cannot be compared, the former definitely eats up the funds that might have gone to the latter. And the solution is not in restricting the fund flow in the technology segment but in subsidising renewable business to levels that attract more investment.
Let’s simply take into consideration the number of companies that truly disclose the material environmental impact in their annual reports. Ideally, all losses have to be accounted for in the current year irrespective of the fact whether they are paid or payable. Climate impact is one such loss. But do we see it in any statement in any form? Not everywhere. If there is an impending regulation, on a global level, mandating every company and every country to disclose and account the material climate impact in their financial statements, the financial result of many companies would alter drastically. However, this concept requires brainstorming and concrete definition of methodologies to be implemented without glitches. For example, how to give a currency value to the environmental impact of a certain substance being emitted from a certain factory into the water and in the air. Researchers and financiers across the globe are dedicated to eliminating this ambiguity. Today or tomorrow, this disclosure will be required on a global scale to track and reduce the impacts of climate change.
India in this fight against climate change
When it comes to fossil fuels, India is one of the major economies giving hefty subsidiaries to fossil fuel providers. Understandably, the government cannot take away significant subsidiaries from one industry in one go. Its repercussions may collapse the economy. Further considering the efforts of India in building and maintaining ties with Saudi Arabia, withdrawing all of the subsidies is out of the question for now. Another option is to subsidise renewable sources of energy such as solar energy and wind energy to the level at which fossil fuel industry is subsidised. India is already doing it through its ambitious targets of installing 175 gigawatts of renewable energy by 2022 and 450 gigawatts by 2030 as mentioned by PM Modi in the G20 Summit this year. At the summit, he also claimed that India is well on its way to achieve and exceed the targets in the Paris Agreement. Though commendable and achievable in certain ways, the claim seems to be a little out of reach considering the NBFC crisis, the economic slowdown and the subsequent pandemic.
Some recent regulatory changes in India that are supposedly aimed at climate change may, in reality, be diluting the essence of its fight against climate change. For example, the ambiguity and vagueness in and around the NAPCC, the exemptions mentioned in the EIA draft, and the controversial withdrawal of Draft Indian Forest (Amendment) Bill, 2019 which paved the way for easy allotment of land for non-forest use. In whatever circumstances these regulations have been altered or proposed, India must understand, despite being one of the potential drivers in the fight against climate change, it does have competitor countries that are doing equally well such as China and Africa.
In this fight against climate change, while the European countries and the American continent as a whole are doing great, the East has a long way to go. Climate change can be fought together by integrating all the industries and sectors. Shifting to biofuels, for example, in light and heavy vehicles and aircraft, recycling and reusing waste, compelling companies to adopt environmentally gentler methods of production are some ways we can fight climate change. PE and VC can help shift the focus to ESG, which indirectly helps the bigger purpose. Governments, alongside research institutions, can add stringent regulations to disclose climate impacts in a company’s financials which directly helps cut down pollution through factories. Credit Rating Agencies can include climate impact as one of the mandatory points while grading the companies. It is all happening somewhere in the world but with a few numbers of people. It is time for everyone to get involved. India is so populated with talent! If all minds are directed towards one bigger goal of saving this planet for the future, India can very well become a superpower in this regard.