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NEGOTIAT ING THE CLIMATE CLIFF

India’s Climate Policy and Intended Nationally Determined Contributions

3 February 2015CEEW Conference Report

New Delhi

3 February 2015

CEEW Conference Report

February 2015

ceew.in

NEGOTIAT ING THE CLIMATE CLIFF

India’s Climate Policy and Intended Nationally Determined Contributions

Copyright © 2015 Council on Energy, Environment and Water

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission.

A report on the conference organised by the Council on Energy, Environment and Water (CEEW) on ‘Negotiating the Climate Cliff: India’s Climate Policy and Intended Nationally Determined Contributions’ held at Hotel Le Meridien, Janpath, New Delhi on 3 February 2015.

This conference was funded in part by the Royal Norwegian Embassy. The views expressed in this report are those of the speakers and do not necessarily refl ect the views and policies of the Council on Energy, Environment and Water.

The Council on Energy, Environment and Water (http://ceew.in/) is an independent, not-for-profi t policy research institution. CEEW addresses pressing global challenges through an integrated and internationally focused approach. It does so through high quality research, partnerships with public and private institutions, and engagement with and outreach to the wider public. CEEW has been ranked as India’s top climate change think-tank two years in a row (ICCG Climate Think Tank Ranking). CEEW has been ranked best in India (and South Asia) in several categories two years running in the Global Go To Think Tank Index.

Council on Energy, Environment and WaterThapar House, 124, Janpath, New Delhi 110001, India

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Contents

Organisational Background v

About the Conference vi

Keynote Address by Shri Prakash Javadekar xi

INDCs: Renewable Energy and the Pathway to Paris 1

Session Briefi ng 1

Background 1

What does our research tell us? 2

Session Outcomes 2

Background 2

Key Issues and Questions 3

Recommendations 4

Powering Ahead: Nuclear or Unclear 5

Session Briefi ng 5

Background 5


Critical issues 6

What are the potential ways to move forward? 6

Session Outcomes 6

Background 6


Recommendations 8

Indian Industry: Pathways to Emission Reductions and Sustainability 9

Session Briefi ng 9

Background 9

Indian Cement Sector 9

What does the research tell us? 10


Session Outcomes 10

Background 10


Recommendations 12

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Towards an Electric Rail-Based Transportation System 13

Session Briefi ng 13

Background 13


Some critical issues 13


Session Outcomes 14

Background 14


Recommendations 15

Hydrofl uorocarbons (HFCs) – Critical Questions for Alternative Refrigeration Technologies 17


Background 17


Some key results are 18



Session Outcomes 18

Background 18


Recommendations 20

Carbon Capture and Storage: What does Integrated Assessment Modelling Tell Us? 21


Background 21


Some key results are: 22



Session Outcomes 22

Background 22


Recommendations 23

Speakers 25

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Organisational Background

The Council on Energy, Environment and Water (http://ceew.in/) is an independent, not-for-profi t policy research institution. CEEW addresses pressing global challenges through an integrated and internationally focused approach. It does so through high quality research, partnerships with public and private institutions, and engagement with and outreach to the wider public.

CEEW has been ranked as India’s top climate change think-tank two years in a row (ICCG Climate Think Tank Ranking). The Global Go To Think Tank Index has ranked CEEW as

Ist in India among ‘Top Think Tanks with Annual Operating Budgets of Less Than $5 Million USD’ (2013, 2014 also fi rst in South Asia; 14th globally)

Ist in India for ‘Best Institutional Collaboration’ involving two or more think tanks (2013, 2014 also fi rst in South Asia)

Ist in India for ‘Best Policy Study/Report’ for its study on India’s National Water Resources Framework (2013)

In four years of operations, CEEW has engaged in more than 70 research projects, published more than 40 peer-reviewed policy reports and papers, advised governments around the world over 80 times, engaged with industry to encourage investments in clean technologies and improve effi ciency in resource use, promoted bilateral and multilateral initiatives between governments on more than 30 occasions, helped state governments with water and irrigation reforms, and organised more than 80 seminars and conferences.

CEEW’s major completed projects: 584-page National Water Resources Framework Study for India’s 12th Five Year Plan; India’s fi rst report on global governance, submitted to the National Security Adviser; foreign policy implications for resource security; India’s power sector reforms; fi rst independent assessment of India’s solar mission; India’s green industrial policy; resource nexus, and strategic industries and technologies for India’s National Security Advisory Board; $125 million India-U.S. Joint Clean Energy R&D Centers; business case for phasing down HFCs; geoengineering governance (with UK’s Royal Society and the IPCC); decentralised energy in India; energy storage technologies; Maharashtra-Guangdong partnership on sustainability; clean energy subsidies (for the Rio+20 Summit); reports on climate fi nance; fi nancial instruments for energy access for the World Bank; irrigation reform for Bihar; multi-stakeholder initiative for urban water management; Swachh Bharat; environmental clearances; nuclear power and low-carbon pathways; and electric rail transport.

CEEW’s current projects include: the Clean Energy Access Network (CLEAN) of hundreds of decentralised clean energy fi rms; the Indian Alliance on Health and Pollution; low-carbon rural development; modelling long-term energy scenarios; modelling energy-water nexus; coal power technology upgradation; India’s 2030 renewable energy roadmap; energy access surveys; energy subsidies reform; supporting India’s National Water Mission; collective action for water security; business case for energy effi ciency and emissions reductions; assessing climate risk; modelling HFC emissions; advising in the run up to climate negotiations (COP-21) in Paris.

Negotiating the Climate CliffIndia’s Climate Policy and Intended Nationally Determined Contributions

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Every country has to submit its “Intended Nationally Determined Contributions” (INDCs) before the Paris climate negotiations. The INDCs will include country-specifi c mitigation and/or adaption actions, targets and approaches to climate change. After the US-China announcement in November 2014, all eyes are on India and what its INDCs would constitute. Any strategy for India has to be based on

analytical approaches, which seek to understand potential transition pathways, role of key technologies, investment requirements, and impact on India’s energy systems and emissions. A potential framework would be to integrate India’s concerns and develop a strategy, which would focus on (energy) access, (resource) effi ciency and (environmental) externalities within the climate negotiation agenda.

About the Conference

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The Council on Energy, Environment and Water, India’s top-ranked climate think-tank, held a climate conference ‘Negotiating the Climate Cliff: India’s Climate Policy and Intended Nationally Determined Contributions’ on 3 February 2015 focusing on the road to the global climate negotiations in Paris. Shri Prakash Javadekar, Hon’ble Minister of State (Independent Charge) for Environment, Forests and Climate Change, delivered the keynote address at this conference. He also released CEEW’s report on ‘India’s INDCs: Renewable Energy and the Pathway to Paris’. Other speakers included senior climate negotiators, senior government offi cials, academics, representatives of the diplomatic corps, civil society organisations, and captains of industry. In all 33 speakers and nearly 300 delegates participated in the deliberations.

Some of the distinguished speakers at the conference included Shri Susheel Kumar (Additional Secretary, Ministry of Environment, Forests and Climate Change); Shri Shatrughna Singh (Additional Secretary, Department of Industrial Policy and Promotion); Mr Jamshyd Godrej (CMD, Godrej and Boyce Mfg. Co. Ltd. and Co-Chairperson, CEEW); Dr Anil Kakodkar (Former Chairman, Atomic Energy Commission and Former Secretary, Department of Atomic Energy, Government of India); Ambassador

Chandrashekhar Dasgupta (Member, Prime Minister’s Council on Climate Change and Distinguished Fellow, TERI); Dr Dipak Dasgupta (Former Principal Economic Advisor, Government of India, and Board Member, Green Climate Fund); Mr Tarun Das (Founding Trustee, CEEW); Professor P.R. Shukla ( IIM Ahmedabad ); Dr Shashi Ahuja (Head IS-STAC & Scientist ‘G’, Department of Science and Technology); Mr K. Swaminathan (Adviser, Ministry of Railways); Dr R.R. Sonde (Executive Vice President, Thermax India) and Professor Dinesh Mohan (IIT Delhi).

The four sessions of the conference focused on:

INDCs: Renewable energy and the pathway to Paris

Powering Ahead: Nuclear or Unclear?

Energy Effi ciency: Industry, transportation and the role of demand-side interventions

Externalities: Hydrofl uorocarbons (HFCs) and Carbon Capture Storage

CEEW’s Climate Conference was the start of a conversation in India, which ought to deepen through this year, leading

up to the Paris Conference of the Parties and beyond.


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I am happy to be here for the inauguration of the conference on ‘India’s Climate Policy and Intended Nationally Determined Contributions (INDCs)’. This is perhaps the fi rst occasion in India where in a public place, in a seminar, we are discussing the INDCs. This is a huge initiative by CEEW and I must appreciate this. Mr Suresh Prabhu, who is now the Minister of Railways and was earlier the

Chairperson of CEEW, is the man who deepened my interest in global environment issues back in 2007. We fi rst went to the G20 meeting in Japan and then attended various other global forums to discuss environment issues. I didn’t know then that I would be heading the environment ministry one day. I have always worked on issues concerning the environment and have had a passion for it.

Keynote Address by

Shri Prakash JavadekarHon’ble Minister of State (Independent Charge) for Environment, Forests and Climate Change


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When I was heading the State Planning Commission in Maharashtra (1995-99), I worked in 11 villages on an intensive watershed development project, and, we succeeded then. I fought against the industries that were not adhering to emission norms. I never intended that the industries be closed. But those who don’t adhere to the air quality standards of emissions and other rules will have to face the music. In 1992, when I was a member of the state legislature, I took videos of effl uent treatment, of the devastation faced by farmers and how factories had to be closed. I am not in favour of closing down industries. But we can’t allow emissions and reckless effl uent treatment to go into the water. I am passionate about such issues and fortunately Modiji gave me the same responsibility. Today we are discussing about ‘Negotiating the Climate Cliff’. I was very happy with the usage of the words. It is like you have to walk a tight rope. But if you are convinced that you are taking your own actions, then you can walk the cliff.

I ask CEEW to be our partner in walking this cliff because then it will be an easy way ahead. So I invite you, because you are a think-tank who can contribute in our preparation of the INDCs and the various studies that we will undertake.

The Prime Minister during President Obama’s visit said something very clearly, which I think is the starting point of how India will walk this climate cliff to Paris. He said that there was no pressure. That means that there was no foreign pressure or any other country’s pressure on India, and we don’t take pressure. We are not in the habit of taking pressure or buckling under pressure. But there is a different

kind of pressure and that is of climate change. The pressure is on the future generations. It is our commitment that we will provide the next generation an earth that is livable, where business is doable and where there is fresh air to breathe and clean water to drink. Hence, we must act today.

In recent years, the world started debating about climate change very seriously when Al Gore, Vice-President of the United States, produced a very powerful document titled ‘An Inconvenient Truth’. So, what is India’s answer? The answer from India lies in Prime Minister Modiji’s passionate, committed, dedicated efforts towards clean energy and environment. He documented 12 years of what he did in Gujarat on this front in a book called ‘Convenient Action’. So, if someone presents us with the inconvenient truth, we answer with convenient action. We have given this book by Modiji, which shows our commitment to mitigate the climate change challenge, to several world leaders.

In the last Five Year Plan, India’s solar target was 20,000 MW. Modiji revised the target from 20,000 MW to 100,000 MW. This is a fi ve-fold jump in target. We aren’t using this revised target as just a slogan. Plans have already been

India wants to walk the clean energy path. The Indian government has already begun work on achieving India’s 100 GW solar target and we are optimistic about meeting our clean energy goals.

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made and I am very sure that in the next fi ve years we will be able to achieve 100,000 MW of solar energy and that is a huge INDC of India. Actually INDCs are for post-2020, but we have already started walking the talk. We will take all the pre-2020 actions and therefore we will raise the question to the developed world. Will it take actions pre-2020 as aggressively as India? Or will they not do that? History tells us that since 1997 when this started, or even after 2005, the situation has not changed. Across the globe more emissions are being witnessed and total emissions are not reducing. So, as of today, the developing world which has a right to develop is asking the developed world whether you will vacate the carbon space or not. Or are you going to tell us that there is, say, only 3000 units of carbon space available to keep the temperature below 2 degrees and therefore, now there is only 1000 units and we have to distribute that. You have to vacate the carbon space parking, where you have parked. This is a historical thing but you have done it. So, the developed world has to vacate it so that developing world can get their new place in that carbon atmosphere.

100 GW of solar energy is a huge thing. It means 100 billion dollars of investment; it means 145 million tonnes of carbon emissions saved. It means lots of things and if we are walking before 2020 towards 100 GW, that means our actions beyond 2020 will be much more aggressive. That will get refl ected into the INDCs.

So we want to walk the clean energy path, including wind energy on-shore and off-shore. Our Prime Minister has set up a huge target and we have already started acting. Hence, our INDCs are not intended but already implemented. The INDCs that we will present is the implemented status of our nationally determined contribution though we were not mandated under the Kyoto Protocol because we are not an Annex-I party.

Of the Annex-I parties, fi ve walked out of Kyoto and these were the largest delegations from United States, Japan, Australia, and Canada. This is how things happen internationally. But, we are already walking the path. Somebody mentioned earlier about the cement industry. We have already mandated more stringent action from the cement industries, so as to lessen the emissions from their plants because that is the most polluting industry. We have identifi ed 17 critically polluting sectors and have mandated

3206 units to put in place by April, the 24x7 pollution monitoring devices on their effl uent discharge points and their chimneys to gauge the air quality and effl uent water quality after treatment. This is just the beginning. In a phased manner, we will make this applicable to all polluting industries. I want to do away with the ‘Inspector Raj’. Otherwise when the inspector goes, two things happen. One, the day the inspector goes, it is all clean water and the next day, it is again bad water. I don’t want that to happen. Two, it is a perpetual system where palms are greased and things go on. It is not business-as-usual for India under PM Narendra Modi. Let me tell you very clearly that business-as-usual will not be the path as far as our actions on climate change are concerned or even with regards to our administrative actions. So there is a change coming up and that change is very important. So both these actions on our part, the decisions which we have taken have tremendous contribution and importance in the days to come.

There are some issues that I want to talk about, but, fi rst, let me tell you about the preparation of the INDCs. Ideologically, we are very clear that Intended Nationally Determined Contribution is nomenclature of INDCs. They are not to be decided internationally. Therefore, at Lima there was a huge debate on whether there can be an ex-ante view or not. We said that it is our contribution, this is different from Kyoto. The UNFCCC mandate has not eclipsed. We are working under the same convention, with the same principles. So principle of equity, common but differentiated responsibility, historical responsibility and polluters to pay principle apply. After 2020, there will be a new regime, a new arrangement where every nation will contribute to mitigate the challenge of climate change. So that is the changed atmosphere of the world negotiations and I think that is a way forward. What we have learnt in the past 20 years, has taught us that it is not only the

Annex-I countries that have to take action and Non Annex-I countries have to sit idle. We have to move forward. We have to increase our energy effi ciency in every fi eld. That energy effi ciency means saving of energy, going towards cleaner energy of all forms. Somebody was asking about nuclear energy, I told them every source is a potential source of energy and we must utilise it. In our country, sewage treatment plants which are supported fi nancially by the central government, where in 70% of the support comes from the central government, 70% of such facilities don’t work. Why? Because the operating cost is more. Why?

Since the last half century, emissions across the world have only been increasing. The developing world is now asking the developed world if they will vacate carbon space.

In India’s case INDCS are not just intended, as it has already started implementing some of the actions that will form of the core of India’s contributions.


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Because there is a huge energy cost to treat the sewage. But from the sewage sludge, if you bi-furcate the liquid and the sewage, the sewage sludge can create methane-based energy, locally at the plant itself, thus serving as a source of energy to treat the sewage and bring costs down. So this is how, nature has also provided such solutions. It is nature’s cycle. We need to understand what nature’s scheme of things are.

So energy effi ciency, to be achieved, to be practiced, has to be a way of life. Our ethos is about energy conservation, water conservation, nature conservation, a synthesis between man, animals, fl aura, fauna… the chalachal sushti, suvyeshti, samashti, sushti, parmeshti - that is what the synthesis is all about.

I am happy to say that these INDCs.. the eight National Missions for Climate Change are progressing well and there are enhanced missions and goals in many other areas. Along with these and other initiatives by the new Government, we are mapping what can be the best INDCs for India. But there are issues which I must point out. One issue is that of cost. Every renewable technology or clean energy intervention has an associated cost. These costs can sometimes be more than those of business as usual. Who will pay these costs? We say that the polluters must pay, but, in those countries where indirect taxation is higher, it is the poor who ultimately pays. Instead of making the polluters pay, we are making the poor pay for the new climate mitigation challenges. Therefore, the world must walk the talk and must come out with real contributions of the Green Climate Fund. With a Green Climate Fund, the developing world can take more action. The second issue is that of technology. Technology if managed well can bring down the associated costs. I will give you an entirely different example of what happened in India with regards to agriculture, the case of Bt Cotton. About 10-12 years ago, 450gms packet of seed used to be sold at INR 1700 of which INR 1200 was royalty. It was a huge cost. This royalty was basically an IPR cost. Farmers agitated against it after which the court verdicts came. Now, the price is INR 600. How did this happen? There were super profi ts built in earlier. You can’t have costs like this. A prohibitive cost which will not allow me to use new technologies which are more effi cient in terms water and energy, will hinder us going down the clean energy path. So, there is a technology issue and I have pleaded at world forums all over to address this. What we said is that for the technology you have developed, the Green Climate Fund can be used to pay your companies the cost of research, we have no objection. It’s a

win-win formula. I am not saying that companies who are into research should suffer. Otherwise everyone will stop doing research. So they must be compensated but at the same time we must get it free of IPR costs. We have done it for the fi ght against HIV. Climate change is a real fi ght. We have done joint collaborative research on the large-hadron collider, which they say will bring out the truth on how the earth was born, but, now we are talking about the earth being affected by climate change. Let us save the earth and to that end your technology must also be without IPR costs. It is not impossible and therefore, we are putting this into our demand.

I intend to give two targets of INDCs. This is just at the conception stage. How we will put forth INDCs to the world is a different issue. The fi rst case would be a business-as-usual scenario, which is not our way of going forward. Then, the second scenario would be INDC-1, which will outline what can be achieved given our resources. The third scenario will be INDC-2, which will outline our potential achievements if fi nance and technology are available at an affordable cost without IPR issues. So these are the three scenarios we can put forward to the world with respect to how we want to go ahead. All these issues of cost, carbon space, technology and fi nance are important and they must be solved.

Today you are talking about Carbon Capture and Storage (CCS) which I have not seen anywhere apart from labs. So if we can really conserve and store energy effi ciently and at the same time deploy technologies such as CCS, it’s a good thing. I believe in science, I believe in human kind, I believe in human intentions and I believe that things will happen positively. I am not a doomsayer. I am not saying that the world will collapse; it will not and therefore, all these issues which you are discussing at the conference are very powerful. I once again invite you to be the partners in the preparation of our INDCs, in the preparation of our case to the world bodies. If this happens we can showcase India’s achievements very strongly to the world because we are committed to make our contributions count in

mitigating climate change. Thank you once again.

India’s INDCs might be of two types: What India can do given its resources and what India would do if technology and fi nance were available.

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Session Briefi ng

Background

The 20th Conference of Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) concluded in the early hours of 14 December 2014. While some basic directions on areas of inclusion for the Intended Nationally Determined Contributions (INDCs) have been provided in the COP decision at Lima, for the

most part it still remains an open ended decision left to individual countries. It is now up to India to decide what the country feels is a fair and ambitious target to achieve the stabilisation of GHG concentrations in the atmosphere at a safe level.

Our analysis studies one important component of India’s INDC, focussing on renewable energy contribution to its future electricity mix. So far, the Government of India has articulated solar targets for renewable energy, which deserves careful analysis.

INDCs: Renewable Energy and the Pathway to Paris


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What does our research tell us?

Our analysis includes a review of actions and declarations made by major emitters, bottom-up approach to analyse an ambitious renewable energy target for India in 2030 as well as the use of the Global Change Assessment Model (GCAM) to understand the cost implications of the targets.

Some key results of our analysis are:

India could push its ambition towards a target of 1,041 Billion Units (BU) of electricity from renewable energy sources by 2030. This would translate to cumulative emissions of 3.4 Gt of CO

2 equivalents (CO

2 eq.) and

per capita emissions of 2.25 tonnes of CO2 eq. in 2030.

The above target would require an incremental cost of approximately INR 39,320 billion (2010, INR) (2010, US$ 715 billion) over the next 15 years and could make the consumption of a threshold level of electricity unaffordable for the bottom two deciles of Indian households.

Declarations made by the European Union, the United States and China on climate actions indicate that ambition for mitigation targets has been on the decline for the latter two and consistent (as compared to previously announced targets) for the European Union.

Based on the most recent declarations made by the three regions, less than half the permissible carbon space remains for the rest of the world in 2030 and 2050.

Even a cost-optimized output redistributes 1.4 Gt of CO2 eq. more to the rest of the world from the permissible annual carbon space in 2030.

A one-on-one comparison between India and China at different levels of development indicates that India has

shown climate leadership in the past and is expected to do so in the future. Specifi cally, the renewable energy contribution to the electricity mix for India was much higher than China (4.4% for India, 1.7% for China, excluding hydropower) in 2010 and is likely to be signifi cantly larger in 2020 (13.8% for India, 5.0% for China, excluding hydropower).

Session Outcomes

Background

CEEW’s research fi nds the following:

Estimates of available carbon space for rest of the world: Given recent commitments by highest emitters, less than 50% of the permissible carbon space would be available for the rest of the world in 2030. By contrast, a cost optimised approach would provide the rest of the world with an additional 1.4 giga tonnes (GT) of CO

2 emissions in 2030, which is equivalent to three-

quarters of India’s emissions in 2010.

Carbon mitigation potential of renewable energy: CEEW analysis indicates that India can push its ambition to include a renewable energy generation target of 1,041 billion units (BU) in 2030. This would include a solar capacity of 150 GW and wind energy capacity of 170 GW in 2030.

Cost implications of India’s ambitious renewable target: An incremental cost of approximately US$ 715 billion would be required over the next 15 years if India were to achieve its stated renewable energy targets including costs for backup generation capacity. This could result in the bottom 20% of Indian households being unable to afford a threshold level of annual electricity consumption of 2,000 kWh.

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Key Issues and Questions Need for a balanced approach: Although the Lima

Declaration primarily focused on mitigation-centric INDCs, it is crucial that the INDCs refl ect a more balanced approach with equal emphasis on adaptation, technology and fi nance activities alongside mitigation strategies.

Peaking emission targets: Panelists concurred that India is not in a position to announce its peaking emission targets for a considerable time to come.

Concerns around adaptation activities: While there was a general consensus amongst the panelists about the inclusion of adaptation activities as part of India’s INDCs, the particular aspects of INDCs were a point of concern.

Time horizon for INDCs: It was highlighted that India endorses a ten year time horizon, 2020 till 2030, for its INDCs.

Comprehensive, transparent and ambitious INDCs: India’s INDCs would be comprehensive, transparent and ambitious – in line with the country’s broader climate policy regime. Further, it is also important to ensure that the INDC targets are defensible and not unrealistic.

Carbon emissions and GDP: It was pointed out that “carbon emissions are unlikely to achieve more than 2.5% decoupling from economic growth – which means, if the economy grows at 7-8% per year, India’s emissions will grow at around 5%”.

Ex-ante reviews: It was agreed that ex-ante reviews of INDCs would not be acceptable. It was emphasized that the ex-ante review must not change the very nature of INDCs to one that is “unintended, internationally imposed” commitments.

Climate commitments from the international community: India does not consider that it is under any pressure to scale up ambition as the major emitting countries are pulling back from their previously communicated ambitions on climate actions.

Does India have the makings to be a good partner: If there was adequate fi nance and technology available, would India be a good partner to work with? In other words, India needs to ascertain if there is enough in house absorptive capacity to aid technology diffusion.

What world should we be adapting to? It may make sense to consider adaptation activities, which take into account the non-achievement of the 2oC scenario.

Realistic targets: It would be helpful to understand how the recently stated target of 100 GW of solar energy


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Recommendations Unpack ambitious plans into tractable packages: There is a need to understand the cost implications of

government targets and how these would be devolved into implementable programmes for the states, before they can be communicated as part India’s INDCs.

Mitigation strategies: INDCs must clearly distinguish between mitigation activities exclusively based on domestic resources, and supplementary activities which are subject to the availability of international support in the form of technology and fi nance.

Devise innovative ways to achieve targets: Innovative ways need to be devised to raise the huge quantum of fi nance that India will require to realise its ambitions, as no single body could be capable of covering it. Technology partnerships, which are mutually benefi cial, would be needed to build India’s capacity to take ambitious climate actions.

Assessing priorities: India must undertake a closer look as to whether it should prioritise high-cost climate actions (such as massive scale-up of renewables) or focus more on the low-hanging fruits of energy effi ciency.

capacity will impact the government’s plan of providing 24x7 electricity to all by 2019. In this light, it may be important to scrutinize what the country can commit to, given its existing development needs.

Sharing the burden: It is still unclear as to who would share the burden of mitigation costs – Indian households; the economy as a whole, or the international community.

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Powering Ahead: Nuclear or Unclear

Session Briefi ng

Background

Nuclear energy for power production has been argued as an important resource for increasing electricity generation capacity in India and for providing energy access to millions currently facing energy shortage. However, there have been concerns around this form of energy from various quarters. The Government of India has ambitious plans of increasing the share of nuclear energy by several-fold in India’s electricity generation portfolio. In this plan, imported nuclear reactors have an important role, along with indigenously developed reactors. Historically however, nuclear energy has seen an increase in capital cost, across regions of the world. Ambiguities around the ‘recourse

to supplier’ clause in India’s nuclear liability framework have added to the delays. Adding to the challenges are public protests against nuclear power plants. Deeper understanding is needed about the implications of all these developments for India’s energy and climate policy.


CEEW’s in house energy and climate policy modelling research is undertaken within the integrated assessment modelling framework of the Global Change Assessment Model (GCAM). There is uncertainty around the future evolution of nuclear energy based electricity production costs. CEEW research assessed the implications of varying nuclear energy cost pathways for the long term future of nuclear energy in India, as well as its interaction with climate policy.


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Three key results need to be highlighted:

Nuclear energy penetration in India’s electricity mix is highly sensitive to its cost. A further 50% increase in cost will effectively push the share of nuclear energy in 2050 to 3% down from 8% (with reference costs).

A climate policy, through pricing carbon, spurs the penetration of nuclear energy even with increased nuclear energy costs. With reference costs, share increases from 8% (in 2050) to 20% (in 2050) due to a carbon price.

Nuclear liability off sets climate liability, and there clearly is a trade-off between the two. Society has to decide which liability it wants to bear, and to what extent.

Critical issues

Some critical issues regarding nuclear energy need to be addressed. First, policy makers need to assess potential future cost trajectories of nuclear energy-based electricity production and plan a strategy accordingly. Technologies that have higher safety standards have proven to be increasingly expensive. Newer confi gurations like small modular reactors have yet to make a signifi cant mark globally, but need to be explored. Secondly, the role of nuclear energy in India’s climate policy has to be highlighted. Signifi cant focus has been on energy effi ciency and renewable energy technologies. However, no particular technology can be neglected if the twin goals of energy access and greenhouse gas mitigation have to be achieved. Finally, risk perceptions have to be addressed to mitigate public opposition for this energy source, if its true potential has to be harnessed.

What are the potential ways to move forward?

Are there ways to bring down cost of imported nuclear power reactors? Domestic manufacturing of foreign nuclear power plants in collaboration with their manufacturers is one such potential option. Operationalising such an arrangement would require complicated legal and administrative procedures backed by the highest echelons of Indian policy making. Another option is articulating the role of nuclear power plants as a carbon emissions mitigation option, and securing international funds for deployment of more costly yet safer power plants which are acceptable to the local populace. This would be necessary to ramp up India’s nuclear power generation capacity at a higher rate compared to the business as usual scenario. Irrespective of options aiming at cost reduction, overall policy ambiguity has to be eliminated through clarifi cations around the ‘recourse to supplier’ clause, or through

innovative liability framework. Finally, public engagement process has to be strengthened to ensure minimal delays during implementation of nuclear power projects in India to avoid cost overruns.

Session Outcomes

Background

Nuclear energy for power production has been argued as an important resource for increasing electricity generation capacity in India and for providing energy access to millions currently facing energy shortage. However, there have been concerns around this form of energy from various quarters. The Government of India has ambitious plans of increasing the share of nuclear energy by several-fold in India’s electricity generation portfolio. In this plan, light water reactors (LWR, developed overseas) have an important role, along with indigenously developed reactors. Historically however, nuclear energy has seen an increase in capital cost, across regions of the world. Ambiguities surrounding the ‘recourse to supplier’ clause in India’s nuclear liability framework have added to the delays. Adding to the challenges are public protests against nuclear power plants. A better understanding is needed about the implications of all these developments for India’s energy and climate policy and to arrive at a national consensus on the role for nuclear in India’s INDCs.

CEEW’s analyses suggest that nuclear technology is sensitive to increments in cost at rates that have been recently witnessed. Should such a rapid increase persist in the decades ahead, the share of nuclear energy in India’s electricity mix could drop to 3%, from an 8% level which would be achieved with current levels of policy support. In a climate policy scenario, with an active carbon market and a price on carbon, it is possible for nuclear to contribute as much as 20% of the electricity mix by 2050, provided the capital cost increase in nuclear is kept at nominal levels. A trade-off between nuclear risk and climate liability would have to be evaluated to understand the true possibilities that nuclear energy offers.

Key Issues and Questions

Nuclear energy has not been fully considered as a viable response solution to tackle climate change, despite the near-zero emissions associated with energy generation. The resolution to keep nuclear energy out of the CDM mechanism is a clear signal to that effect. The fact that nuclear energy forms base load generation works in its favour, unlike the intermittent nature of renewable energy (RE) based generation.

7

Should the fast-breeder programme be successful, the fuel cycle would be closed and for all practical purposes nuclear energy could be considered a renewable form of generation as more fuel is bred in certain reactors for feeding into others.

While a scenario analysis of the steep rise in costs is useful to understand, what is a realistic rise in the cost of nuclear power in the coming decades? The experts were of the opinion that the likely increase in the levelised cost of electricity (LCOE) for nuclear energy due to ‘Civil Nuclear Liability Law’ and ‘Recourse to Suppliers Clause’ would only be of the order of a few paise. The rise in cost of PHWRs (Pressurized High Water Reactors) in India has been commensurate with infl ation, given the prolonged construction periods and the resulting rise in prices.

In the case of LWRs, it is an inevitable requirement to have domestic manufacturing of the components if they are to be competitive with domestic reactors. Although domestic Pressurised Heavy Water Reactors (PHWRs) are capital intensive, they are signifi cantly cheaper than LWRs.

The domestic design has not scaled fast enough and identifi ed sites would be used ineffi ciently if they were all used to promote the smaller sized PHWR design. Larger sized LWRs with multiple units at a single site

also reduce the site preparation cost and O&M costs over the life.

Although Indian industry has made signifi cant progress in all parts of the fuel cycle, the development has been hindered by a lack of public sector investment and has necessitated a deal to procure fuel from overseas suppliers.

Although the nuclear liability bill is seen as an outcome of the Indo-US deal, the framework was being put in place even for domestic suppliers, namely NPCIL. It is needed even for the sole operator of India’s reactors and does not apply solely to overseas providers of technology. The insurance pool created in recent weeks applies equally and is available to NPCIL as well.

At its peak the French programme was adding 5 GW of capacity annually for years together and this was possible only on account of a stable policy and a focused development of a domestic supply chain to cater to engineering needs.

In the case of nuclear energy, the insurance pool is a way of addressing a potential negative externality associated with the technology. While comparing nuclear with other forms of generation (especially on the cost aspect) it is necessary that such externalities – air pollution and water pollution are addressed for these other alternatives as well.


8

Recommendations If a large nuclear programme is envisaged, it must clearly be made a part of India’s INDCs as there is signifi cant

abatement on offer from this source.

Experts believe that a mix of LWRs and domestically designed PHWRs would be needed if India is to achieve the levels of nuclear energy contribution envisaged. The process of enabling technology to fi nd acceptance within the domestic market is important. Skilling and technology absorption capacity needs to be built for domestic participants, in addition to providing unambiguous policy directives to providers of technology to prepare for a roll-out on a large scale in India.

The domestic programme must receive continuous support to prevent development from happening in stops and spurts.

Passive safety design features (i.e. those that would kick in without human intervention) in latest generation reactors is a big step forward and could help to allay public concerns. Active community engagement is needed to showcase the safeguards in place to protect and conserve the environment in the vicinity of the plant itself.

Clarity on the nuclear liability bill has been provided in recent weeks and it is necessary that there are no ambiguities from the perspective of other (non-US) suppliers as well. To this extent, the exclusion of the Russian reactors at Kudankulam needs to be better explained in public and the implications must be made clear.

Domestic manufacturing of critical LWR components has to begin in India to bring down the cost of LWRs and push this technology in India’s electricity mix

9

Session Briefi ng

Background

Fossil fuel and process emissions from Indian industry account for a nearly a fourth of the total emissions of GHG in India. Indian industry is characterized by a high spend on fuel as an input to the manufacturing process. The sub-sectors that contribute signifi cantly to manufacturing GDP – metals, non-metallic minerals, chemicals and textiles, all have a signifi cantly higher burden of energy costs as compared to the average of the entire manufacturing sector.

The fact that Indian industry spends more than 78% (of inputs) towards material costs is not reassuring either. In order to raise manufacturing’s contribution to GDP to 25% resource effi ciency would have to be pursued aggressively, as these cost levels would not be sustainable on a larger scale. A fundamental question to ask would be: what should

we ‘Make in India’? Other sectors like metal fabrication, electronics and computers, machinery and transport equipment manufacture could certainly contribute a larger share and are a lot less demanding in terms of energy, as an input and driver of the process.

The fi rst phase of the Perform, Achieve and Trade (PAT) Scheme is nearing completion and a review would be due in April 2015. The fi rst phase had a modest coverage of the manufacturing sector and accounted for a little over a third of the energy consumed in the manufacturing sector

(~ 63 MTOE). Sectors like iron & steel and chemicals offer signifi cant scope for expanding the base of units that will be included. In sectors like food and beverages and textiles, which represent more than 50% of the number of registered manufacturing units, the coverage is low and extending the scheme in its current form will prove to be a challenge – atleast in the monitoring and verifi cation process. Though the average spending on energy has come down to 5 %, from a level 7.2 % in 2003, it is still signifi cantly higher than what is experienced in developed economies like Germany, where the fuel spend is a mere 2 % of total input costs. Though the energy intensity of India’s GDP has decreased signifi cantly over the last two decades it is likely that energy intensity of the manufacturing sector has increased in the last three years and will ultimately drive overall energy intensity in the coming years. In order to be globally competitive, Indian industry already has the right incentive to act on energy effi ciency and, concomitantly, emissions intensity.

Indian Cement Sector

The Indian cement sector makes for a good case to analyse the need for a robust PAT scheme. By virtue of the very nature of the processes involved, the sector contributes to nearly 7% of the national GHG inventory (compared to the global average of 5%), while consuming close to 3% of the coal and 2% of the electricity in India. Some studies suggest that the sector could double by 2030 and more than

Indian Industry: Pathways to Emission Reductions and Sustainability


10

triple by 2050, even in a low growth scenario. The fact that the industry is concentrated in 11 companies, which control more than 60 % of the capacity, is an advantage to drive change in a majority of the production units. More than 85 % of the units (from an energy consumption perspective) have been covered under the PAT scheme. Despite the large GHG footprint associated with the Indian cement industry, it is a fairly effi cient one by global standards. The best-in-class plants in India are merely 8 per more energy intensive than global benchmarks.

What does the research tell us?

Emissions in the cement industry could be reduced via: i) Thermal and electrical effi ciency improvements, ii) Clinker Substitution and iii) Alternate Fuel use (substituting coal). CEEW analysed 57 cement plants (designated consumers under PAT) over and clustered them as poor performing, in transition and advanced units in terms of energy intensity. 19 interventions were tested for their viability (in combination) in existing plants as well new capacity that will come online between now and 2050. The results indicate that the cement industry can bring down emissions

intensity by 20% (in 2030) for a cumulative investment of

USD 15 billion. This will result in an annual saving of 45 MT

of coal and 18 billion units of electricity (by 2050). The return

on investment for the entire basket of interventions is nearly 33 % and much higher than for existing investments and with an NPV of more than USD 7 billion. In addition, the use of waste a fuel in later years will result in the use of 9 million tonnes of municipal waste, more than 7% of India’s overall waste generation in 2050. Not surprisingly, the NPV associated with every ton of CO2 abated (in 2050) through effi ciency improvements was the highest. The largest potential for emissions abatement arises from clinker substitution and this has the underlying benefi t of saving of virgin materials being used in the manufacture of cement.


The PAT goal of reducing energy consumption does not necessarily result in reducing emissions intensity of industry. If industry is seen an important vehicle to achieve a low carbon transition, the goals set for industry must be in line with broader national commitments on emissions intensity reduction. The key questions that arise are: How must the PAT Scheme be structured, in order to capture the entire range of benefi ts the various stakeholders are set to gain? How must interventions in the existing industries be planned and move beyond the current process of conducting energy audits and sanctioning sub-optimal investments? What broader industrial policies are needed in order to

enable a transition to an energy effi cient development in the sector?

Session Outcomes

Background

Fossil fuel and process emissions from Indian industry account for a nearly a fourth of the total emissions of GHG in India. Indian industry is characterised by a high expenditure on fuel as an input to the manufacturing process. The sub-sectors that contribute signifi cantly to manufacturing GDP – metals, non-metallic minerals, chemicals and textiles - all have a signifi cantly higher burden of energy costs (between 9% and 23% of input costs) as compared to the average (5% of input costs) of the entire manufacturing sector. The fact that Indian industry spends more than 78% (of inputs) towards material costs is not reassuring either. In order to raise manufacturing’s contribution to GDP to 25% resource effi ciency would have to be pursued aggressively, as these cost levels would not be sustainable on a larger scale. Policymakers are cognisant of the need for a robust manufacturing sector. There is also an understanding at the highest echelons of policymaking that a rapid growth in industry will have signifi cant consequence for climate change and the environment.

The fi rst phase of the Perform, Achieve and Trade (PAT) Scheme is nearing completion and a review would be due in April 2015. Iron & steel and chemicals offer signifi cant scope for expanding the base of units that could be included. In sectors such as food and beverages and textiles, which represent more than 50% of the registered manufacturing units, the coverage is low and extending the scheme in its current form would prove to be a challenge – at least in the monitoring and verifi cation process. Though the average spending on energy has come down to 5%, from 7.2% in 2003, it is still signifi cantly higher than what is realised in developed economies such as Germany, where the fuel spend is a mere 2% of total input costs. It is likely that energy intensity of the manufacturing sector has increased in the last three years and would ultimately drive overall energy intensity of the economy in the coming years. In order to be globally competitive, Indian industry already has the right incentive to act on energy effi ciency and, concomitantly, emissions intensity.


Though the government wants to take ‘cradle-to-cradle’ approach in manufacturing, there is no clear under-standing of the contours of a ‘zero-effect’ (important

11

by-line of the ‘Make in India’ campaign) manufactur-ing sector and the policies that would drive such a growth.

New proposals for industrial establishment are not being scrutinised on ‘green’ aspects by the Ministry of Commerce and Industry

Strategic industries like advanced materials, photonics, nano and micro-electronics, nanotechnology have not been given their due and there is a need to rethink the mix for Indian industry. What should we ‘Make in India’?

Experts feel that there is much talk of energy effi ciency but little happening on the ground. Renewable energy gets far more attention and fi nancing push from the policy makers, despite the common understanding that it is not as cost-effective as energy effi ciency improvements.

Historically, industry has argued that energy effi ciency improvements are their prerogative and no specifi c legislation is needed to drive it. However the underlying cost of servicing an ineffi cient industrial base is borne by the state. How could this be addressed?

CII, through the Green Business Centre has carried out energy audits that have resulted in savings for over 2000 fi rms. How could such a model be scaled up to provide such solutions to the myriad SMEs across the country?

Many industrial units measure energy consumption data through existing monitoring systems but have not integrated this with the right analytical tools to drive real change in achieving energy effi ciency improvements.

Companies in India are also not open to sharing data with third parties to drive such an analytical approach to effi ciency improvements.

The cement sector in India is highly effi cient, even by global standards. What could other industries learn from the cement sector in pursuit of higher effi ciency and decreased emissions?

The co-benefi ts achieved from improved effi ciency must be communicated to all stakeholders (society, industries, government and investors) associated with every sector. Only then can one expect concerted action from all those involved to co-operate in the process of identifying and implementing the right interventions


12

Recommendations

There is a strong need to translate the mere word “zero-effect” into the actual conceptualisation and planning of Indian manufacturing sector, and more specifi cally in the ‘Make in India’ campaign. There is a need to establish a framework to assess and evaluate “green” aspect of the new industrial establishment proposals.

Branding and labelling of ‘green products’ which are a result of a ‘green manufacturing’ processes so as to inform public perception and create a demand pull for such products.

Any decision on a future industrial mix for India must factor in the environmental sustainability, and more specifi cally, the emissions that would arise from it and must weigh the benefi ts against the increased GHG footprint. To this extent, the Ministry of Commerce and Industry must interact with the relevant agencies (MoEFCC, mainly) to understand the evolving contributions from various sectors of the economy to the national emissions inventory.

Companies must also be sensitized to the opportunities that are available through data analytics and adopting the solutions arising from such an analysis.

An innovative mechanism for funding unit level energy effi ciency improvement studies and analyses must be worked out, so that companies have the incentive to undertake this exercise and identify optimal investments in pursuit of energy effi ciency, as well as positive economic returns.

Tax incentives for energy effi ciency improvements, much like those available for renewable energy investments could be instituted in order to kindle interest in those sectors where energy effi ciency has not made a signifi cant dent. The list of energy effi cient equipment that warrant accelerated depreciation benefi ts has to be updated periodically in order to push sustained improvements and innovation.

Companies must be mandated to declare targets on energy effi ciency spending, and effi ciency improvements must be regularly monitored.

13

Session Briefi ng

Background

The transport sector was highlighted in the Kyoto Protocol as one of the key sectors to be tackled for meeting ambitious global greenhouse gas emission reduction targets. However, in the last two decades, the emissions intensity of transportation energy has not shown any perceptible decline. Different strategies like land use and urban planning, fuel switching towards low carbon vehicles, improving vehicular fuel effi ciency, etc. have been proposed for reducing transportation energy demand and emissions. Shifting towards mass rapid transportation system has been argued as an important strategy for emission mitigation. A strategy with electrifi cation along with public transportation could provide multiple benefi ts. Is there a role for electricity-based rail system in India’s climate policy?


CEEW’s in house energy and climate policy modelling research is undertaken within the integrated assessment modelling framework of the Global Change Assessment Model (GCAM). Transportation service will be met by a variety of modes, both private and public. CEEW’s research assessed the energy and climate policy implications of a global and regional shift towards a higher share of electricity based rail system for meeting passenger travel demand for India.

Some key results for India are:

Passenger cars would take an increasingly higher share of passenger service demand in the future, from 5% in 2010 to 24% in 2050. The share of passenger rail and buses keeps on declining, although in absolute terms they will increase.

A climate policy, implemented through a carbon price, leads to a 100% decarbonisation of the supply sector by 2100. However there are signifi cant direct emissions from the transportation sector, even with a comparatively higher penetration of low carbon vehicles.

Increasing the share of electric rail in India’s transportation sector to 30% by 2050 from 13% in 2010, can reduce direct transport sector carbon dioxide emissions by 25% in 2050.

However emissions only shift to the electricity production sector. Hence a dedicated rail policy has to be implemented in conjunction with a policy aimed at decarbonization of the electricity generation sector.

A 30% share of electric rail in overall motorised transport service in India reduces the cumulative mitigation cost by over 5% over the century.

Some critical issues

High initial investment has been highlighted as a likely impediment in electrifi cation of the rail transportation sector. As Indian Railways is already electrifi ed to a

Towards an Electric Rail-Based Transportation System


14

signifi cant level, unless it is able to increase its capacity continuously, there will be limited scope for further electrifi cation. Also, as cities grow, the role of metro systems in shifting people away from fossil fueled buses as well as cars would be increasingly critical. Urban travel is expected to grow by leaps and bounds in the future, and ensuring that energy and emission intensity of urban transportation system is low is clearly an immediate challenge. Air travel in any developed country currently is estimated to take a share of 25%-30% in total passenger travel demand. The same is expected to happen in India in the future with increasing incomes. As air travel is highly emission intensive, the only alternative currently technically proven is high speed railway. If bullet trains were able to shift 10% points from air travel, and if electricity sector was decarbonised, it could imply huge reduction in projected transportation emissions. Apart from the passenger sector, the freight sector is also fossil intensive where the share of ineffi cient road transport is increasing.


An important step in moving towards a low carbon future is to recognise the potential role of public transportation and its electrifi cation in India’s climate policy. Detailed assessment is required to understand to what extent public transportation could meet the growing demands of the transportation sector, and what role could the Indian Railways as well as the city metro rail corporations play in it. Also, high speed trains for meeting long distance travel demands become critical. Any related assessment needs to investigate the potential of future air travel demand shifting to high speed rails, and the emission mitigation potential of the same. The potential of electrifi cation and emission mitigation of freight transportation has to be assessed. The Vision 2020 document of the Ministry of Railways aims to source 10% of its total energy consumption from renewable energy by 2020. CEEW’s preliminary analysis has estimated that the potential for renewable electricity generation from Indian Railways’ current land and other assets ranges from 520 MW to 1800 MW depending on the land utilization scenario. Harnessing this potential could be one possible near term step for greening India’s transportation sector.

Session Outcomes

Background

The Kyoto Protocol has identifi ed transport as one of the most important sectors for emissions reduction. Electricity based transportation systems provide greater fl exibility in

adopting mitigation measures as compared to oil based systems. This is because the electricity sector offers more fl exibility vis-à-vis climate mitigation as compared to the transport sector.

It was clearly recognized that the transportation sector has a key role to pay in India’s Climate policy and INDCs. A key player in the transport sector is Indian Rail (IR). The IR network is 65000 kms of which only 25,000 kms is electrifi ed. The current diesel consumption of IR is 4% of the total consumption of India and current electrifi cation rate is 1000 kms/yr. CEEW’s analysis fi nds that if the share of Indian electric rail in meeting total passenger and transportation service demand increases to 30% by 2050 from 13% in 2010, it can reduce CO2 emission by 25%.

Electric vehicles (EVs) provide another avenue to shift away from oil based transport systems. However, EVs just shift the pollution source and do not reduce pollution. Use of electric vehicles, electrifi cation of IR would defi nitely lead to reduction in emission but in real terms it will transfer pollution from one area to another. The implication of this is that de-carbonization of electricity generation has to go hand-in-hand with electrifi cation of transport.


The nature of challenges faced by the Indian Railways (IR) is primarily operational. A lack of forward looking policies has reduced their competitiveness vis-à-vis road transport.

Whereas IR are not considered a major emitter of Greenhouse Gases, a modal shift from road transport is likely to have signifi cant co-benefi ts in terms of reduced congestion, accidents, pollution and CO

2

emissions.

Nonetheless, IR is transitioning to more sustainable practices. IR has a mandate to use biodiesel (5% of the total fuel); however the target is not being met currently. Technological innovations have also allowed use of CNG and diesel together. Although, it must be noted that CNG requires frequent refi lling.

Intercity and intra-city systems need to be designed differently, but planned in an integrated manner. Bus transport may be more effi cient within cities whereas railways may be better for transport between cities.

Rapid rail transit systems (RRTS) would be best for distances over 150 kms, and should not be thought of as an alternative for short distance trips.

Air traffi c maintenance requires a lot of investment. RRTS can serve as an alternative to air travel. The

15

most important criteria to consider while designing RRTS are consumer demand, break-even point and operational costs.

Costs incurred are sensitive to transportation system design. For instance, underground or elevated railways

use 25% and 75% for traction and infrastructure, respectively whereas the fraction is reversed for an on-ground system. Speed is another important criterion in transport system design. When speed doubles energy consumption can go up by four times.

Recommendations

Comprehensive analysis is essential: The focus should be to reduce energy per trip, given the lifecycle costs of all different transportation systems. This approach will automatically reduce emissions.

Integrated land use and transportation planning: Both, land use and transport planning are interlinked. If suffi cient public transport facilities are not reaching areas where colonies have been built, dependence on private vehicles will increase. Also, customising/legalising the illegal but effective land use patterns which exist in India should be given focus.

Connecting transportation and public demand: Transportation planning cannot be divorced from the social fabric of people. Only a top-down approach may render investments useless as demand for those services may not be stimulated.

Developing research around transport: Transport research in India should be given a fi llip so that evidence based transport policies are designed.

Technocrats and decision makers should not work in isolation: Before carrying out new research, the existing research should be discussed thoroughly. They could serve as a foundation to build on research further. Also, the technological reports should not be limited to technical experts but it should form a part of political discussions.

Decarbonization of transportation sector is essential for meeting climate change mitigation targets: Though the argument of increasing the share of electric rail based transport and simultaneously decarbonizing electricity generation sector is valid, feasibility of India following this approach is questionable. As an initial look suggests that this might not be the best strategy for decarbonization of Indian transport sector, this climate policy needs to be analyzed in greater detail for India.

17

Session Briefi ng

Background

Short lived climate polluters are as important for emission mitigation policy as is long lived carbon dioxide. Hydrofl uorocarbons (HFCs) are potent greenhouse gases with global warming impact upto thousands of times of that of CO

2. HFC emissions have increased tremendously in

the developed world since the late 1990s. Based on World Bank and IEA estimates, HFC emissions globally were 775 million tonnes CO

2 in 2010. As per the country reporting

to UNFCCC, HFC emissions in the EU and the US have multiplied by three and four times respectively from 1990 to 2010. IEA and World Bank emission estimates indicate that India’s share in global HFC emissions stands at less than 2% in 2010 where as the US had the highest contribution

of 39% followed by China at 24%. However, there are no assessments from within India that focus on the long-term global warming impact of HFC emissions across various sectors for India, how these compare to energy use related emissions, potential cost associated with any phase-down pathway, and how these costs compare with carbon dioxide emissions mitigation costs. It has been argued in earlier scientifi c assessments that thecontribution of HFC emissions to global warming could be 20% by 2050. It is important to investigate if this claim applies to Indian emissions as well or not.


CEEW’s in-house energy and climate policy modelling research is undertaken within the integrated assessment modelling framework of the Global Change Assessment

Hydrofl uorocarbons (HFCs) – Critical Questions for Alternative Refrigeration Technologies


18

Model (GCAM). This is a fi rst of its kind HFC modelling research undertaken in India,which covers a wide range of residential, commercial, transportation and industrial sectors that emit HFCs. HFC emissions are expected to grow in future as sectors move away from ozone depleting substances, and as the use of cars, air-conditioners, and other commodities grow with increasing incomes in India.

Some key results are: Total HFC emissions from end-use sectors India grow

signifi cantly from 3.3 MtCO2 in 2010 to 438 MtCO

2 in

2050.

Residential ACs emerge as the sector with highest share in HFC emissions (40%) in 2050.

Other sectors, which take a signifi cant share in 2050, are commercial ACs (29%), commercial refrigeration (16%) and cars (11%).

Comparing with total carbon dioxide emissions from energy use in India, global warming impact of HFC emissions in 2050 would be around 5%.


Safety, performance, energy effi ciency and global warming impacts are critical considerations for policymakers and industry. Technical alternatives available for leapfrogging away from HFCs either have medium global warming

potential (GWP), or have perceived safety issues around them. Moving towards safer yet medium GWP alternatives might imply another transition towards low GWP alternatives in the near future, as and when these become available. The double transition could be expensive. CEEW’s past research has highlighted the business case for the air-conditioning industry to leapfrog away from HFCs while shifting to available alternatives, which could also help reducing climate change and increasing effi ciency. Several India companies are experimenting with or marketing products with alternative chemicals as refrigerants. What policy should be adopted, which addresses Indian climate policymakers’ concerns as well as the concerns of the industry is an important discussion question. Finally, if policy-makers agree to a phase-down pathway, there would be associated costs. And the choice of this pathway would be determined by the cost and fl exibility offered by any potential phase-down schedule. Estimating the cost of alternative phase-down arrangements, hence, becomes an important concern.


If India wishes to leapfrog from hydrochlorofl uorocarbons (HCFCs) directly to low GWP refrigerants, technical alternatives have to be available. As for the major emitting sectors, options are available, though there is no consensus within the industry on the preferred alternative. Would it be

19

worthwhile to think about an amendment that could extend HCFC Phase-out Management Plan (HPMP) by a few years, by which technical alternatives are available? At the same time, detailed cost assessment has to be undertaken to estimate the funding requirements for re-engineering production facilities towards low GWP and safer technical alternatives. This has to be done across sectors. Finally, a dedicated funding mechanism would have to be established to channel international funds towards India for making the phase-down away from impending HFC use possible.

Session Outcomes

Background

HFCs are short-lived climate forcers with very high global warming potential (GWP). They have been preferred replacement options to hydrochlorofl uorocarbons (HCFCs) as a result of the transition away from ozone depleting substances (ODS) in the developed world. HFC emissions in the developed world surged as a result of this transition and became an important concern for climate change around the globe. HFC emissions from India, at the moment, originate mainly as a by-product of HCFC-22 production and few applications, such as mobile air conditioners, refrigeration, chillers etc. HFC emissions in India were less than 2% of its global emissions in 2010 (US share was 39%). It is certain that, without a clear policy directive, Indian HFC emissions from end-use sectors, which currently employ HCFCs, will rise signifi cantly.

CEEW has been conducting the fi rst in-country modelling of HFC emission scenarios in India and the cost of alternative technologies.

In India, hydrofl uorocarbon (HFC) emissions from various end-use sectors will grow signifi cantly: by 130 times from the current level to 438 million tonne CO

2e

in 2050

Residential AC emerge as the sector with the highest share in HFC emissions (40%) in 2050

Other major HFC emitting sectors are commercial AC (29%), commercial refrigeration (16%) and cars (11%) in 2050.

The total contribution of HFCs to India’s global warming impact in 2050 would be 5%

The price of propane-based fi ve-star room AC is lower than the average price of a fi ve-star AC.

Key Issues and Questions Can We Leapfrog, Directly to Options with Low Global

Warming Footprint? India has an interest in avoiding a double transition from HCFCs to HFCs and from high GWP HFCs to low GWP HFC alternatives. However, there are barriers for certain end-use appliances where refrigerant uptake is high.

Experiments are undergoing to fi nd alternatives: Industry in India is already experimenting or marketing products with low-GWP alternatives.

• Domestic Refrigerator-The domestic refrigerator industry has already witnessed growth of Hydrocarbon based units, which could have 50%-75% market share in 2050.

• Foam-The PU foam industry has been converting to cyclo-pentane technology wherever HCFC-141b is used.


20

Recommendations

Cost of transition: Any transition to phase-down HFC will entail cost borne by Indian industry. It is pivotal to understand the magnitude of cost that the industry might have to bear in leapfrogging away from HFCs. Research is required in this direction.

Global Developments are shaping the Indian market: The EU and the US have ambitious plans for F-gas regulation. Clear policy directives from governments around the globe have spurred the global market shift towards low-GWP options. The same is required of India, so that industry could start making a transition in this direction.

• Mobile air conditioning- Several automobile and their component manufacturers are experimenting with the possibility of using hydrofl uoroolefi ns (HFO) which are low GWP alternative compared to the existing solution which is HFC-134a. But there are concerns regarding fl ammability, relatively poor performance at high ambient conditions and techno-commercial viability is yet to be seen in Indian market.

• Room air conditioner-One room AC manufacturer in India is using propane for small size room ACs. Another room AC manufacturer has medium GWP product, available in the market.

Patent Issues: There are IPR related concerns around adoption of certain options that both policymakers and domestic industry agree need to be addressed. There is a wider consensus among stakeholders that climate-friendly technologies should be made available without patent restrictions in the developing countries.

Finance for transition: There needs to be clarity on fi nancing options or funding channels that are available for making a switch to low-GWP alternatives? As the future share of HFC in India’s global warming footprint would only be 5%, it is important to inquire the relative cost of HFC mitigation efforts compared to other mitigation options available to policymakers.

21

Session Briefi ng

Background

Carbon capture and storage (CCS) technology has been argued as a mitigation technology, which could help in achieving negative emissions in the medium to long-term, while allowing higher emissions in the near term if the world has to achieve a temperature limit of 2oC above pre-industrial levels. The technology, however, is only at the initial stages of development and testing. Opponents highlight that negative emissions give a perverse incentive to ‘not act’ immediately on climate change, and that leakage of sequestered carbon could lead to irreversible impacts.

Cost is another important barrier making policymakers in developing economies reluctant to invest in this technology. Global modelling assessments have consistently highlighted the important role this technology could play in helping the world achieve deep emission mitigation. It is imperative that India also assesses the mitigation potential, costs and risks associated with this technology.


CEEW’s in-house energy and climate policy modelling research is undertaken within the integrated assessment modelling framework of the Global Change Assessment Model (GCAM). Availability or absence of the CCS option

Carbon Capture and Storage: What does Integrated Assessment Modelling Tell Us?


22

can shape the global and regional emission mitigation pathways, as well as the cost of mitigation. CEEW’s research assessed the implications of CCS technology penetration into the electricity generation mix, as well as the absence of this technology on mitigation pathway and costs.

Some key results are: Given the high cost, CCS would enter the Indian

market only if there is carbon price. Under the Reference scenario there would be no CCS in the Indian electricity mix.

Even under a two degree scenario, CCS does not appear in the short run. Penetration of CCS begins to scale up in India only post 2030.

CCS penetration starts picking up at a price of US$ 47/tCO

2 and has a share of over 20% when carbon price

reaches US$ 70/tCO2.

Absence of CCS implies deeper emission mitigation in the near term both within India and globally, if the two degree temperature target has to be achieved.


Some critical issues around CCS need to be addressed. First, lack of robust information in terms of storage potential is an impediment for clear assessment of the role of this technology in India’s climate policy. Technical storage potential is required for different types of basins and storage reservoirs. Secondly, additional capture and storage costs across different fossil and biomass technologies need to be assessed. Comparative cost and economics determines the market penetration of any technology. Better understanding of costs will inform us about the appropriate level of investment and carbon price required for supporting CCS penetration in India. Another important issue in the future will be the shape and composition of the entity that will operate and manage carbon dioxide storage sites. Ultimately, operation, management and monitoring are critical to minimise leakage risks and ambiguity around this can only hinder the implementation of CCS as a part of India’s climate policy.


An important step in moving towards a low carbon future is to recognise the potential role of all mitigation options, and CCS is one such option which cannot be neglected. For moving forward on CCS, the fi rst step has to be geological mapping of potential CO

2 storage reservoirs across India.

A designated government entity should be spearheading such an effort. Coordinated effort at the national level

is required and a research consortium approach would be useful in assessing the current state of knowledge on various capture and storage technologies. CCS-ready power plants are required to provide fl exibility in India’s climate policy. Guidelines for planning CCS-ready power plants and mapping source with sink need to be formulated. Tapping global funds for experimenting with CCS would be crucial for pushing early experimentation with implementing CCS in India. This will require a clear policy signal from Indian policymakers to global fi nance mechanisms that India is ready with a plan for experimenting with CCS. Finally, a framework needs to be evolved for operationlising the management of carbon transportation and storage. Should a government entity be ultimately operating and managing carbon dioxide transportation and storage, or could this task be given to a private entity? All of these steps need to be discussed and analysed for moving forward on CCS and deciding its optimal role in India’s climate policy.

Session Outcomes

Background

CEEW has undertaken integrated assessment modelling of the role of CCS as part of India’s climate mitigation strategies.

Solar and nuclear are going to remain the most important mitigation options for India in near future, while the penetration of CCS begins to scale up in India only post 2030 in order to stay within a 2ºC stabilization trajectories.

CCS is expected to enter into the market only somewhere between 2030 and 2040 when carbon prices increase to more than $50 per tonne of CO

2.

Absence of CCS implies deeper emission mitigation in the near term, both within India and globally

For every kWh generation, 40% energy is spent for capturing CO

2, with current technology

The National Programme on Carbon Sequestration Research has mapped the potential for sequestration in 16 different agro-climatic zones in the country.


Coal is here to stay and carbon-price will be key determinant of CCS: Modelling studies clearly show that the role of CCS will become increasingly important if India would need to move to deep emission mitigation cuts for lack of suffi cient climate action elsewhere. Coal is going to be the mainstay of India’s energy mix. If the world moves to 2ºC climate

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stabilisation scenario in 2050, the role of CCS becomes important as it provides fl exibility to India for shifting its near term emissions and delaying deep emission cuts for the future. Mitigation costs will increase and the carbon price will need to double in the absence of CCS. It is not going to be feasible to reach the 2ºC scenario in the absence of both carbon price or CCS.

Techno-economic Viability of CCS: Scientifi c, industry and academic community is divided on viability of CCS in India. Pre- and post- combustion technologies are economically viable under specifi c conditions and oxy-fuel technologies are currently under development. Cost-curves for technologies need to be available to have CCS as part of mitigation portfolio.

“India will need to be CCS-ready”: It is pivotal that effi cient super-critical coal power plants are made CCS ready. If we are able to design power plant cycles today for capturing carbon, the penalty for effi ciency in future would also be lower.

Uncertainties regarding storage potential need to be addressed: Storage potential in India is estimated to be low in India, due to the lack of comprehensive assessments. Storage options could include un-minable coal, depleted oil/gas, saline reservoirs, basaltic storage, geo-chemical storage etc.

Mapping India’s carbon sinks: India is an agrarian economy where 61% land is under agriculture and 26% land is under forests. IPCC clearly specifi es that these sectors have immense potential for carbon storage. Mapping of carbon sinks in the country and quantifi cation of carbon sequestration in these sinks is very important.

Potential with algae-based sequestration: The growth rate of algae is 10 times more than the terrestrial plants and has very high potential for sequestration. There is potential for algae-based fertilisers apart from methane and bio-fuels. The government has commissioned pilot plants to use algae for effl uent-treatment. Some sections of the cement and pharmaceutical industry, including companies such as Reliance and JSW are already using algae for carbon sequestration/oil production and effl uent treatment.

Cost issues need to be understood: There is an impact on the cost of electricity for the already volatile and infl ated power market and the cost will largely be determined by technological developments for CCS in coming years. How could energy use in storage be minimized while maximizing net avoided CO

2

emissions?


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Recommendations

Long-term vision: A long-term vision is required for indigenous technology development, which specifi cally addresses geographic issues with CCS.

Role of Government: The role of government support for CCS research is paramount. Private investment is unlikely to fl ow at the current stages of technology development

Research on geological storage capacity: India has large potential for basaltic storage in the Deccan Plateau. But extensive research is pivotal to quantify the storage capacity.

Incorporation of Climate Models to CCS Research: Information from the National Programme on Carbon Sequestration research will be made available in the near future. This information needs to be built into the climate models which are used to asses CCS.

Funding mechanism: CCS will come into picture only when a dedicated funding mechanism is in place and cost concerns are addressed

Regulatory issues need to be addressed: Safety and long term impacts related to CCS need to be addressed. Insurance cover for people around CCS sites is important.

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Speakers

Shri Prakash JavadekarHon’ble Minister of State(Independent Charge) forEnvironment, Forests and Climate Change.

Ambassador Chandrashekhar DasguptaDistinguished Fellow, TERI & Member, Prime Minister’s Council on Climate Change

Dr. Dipak DasguptaFormer Principal Economic Advisor, Government of India & Board Member, Green Climate Fund

Mr. Jamshyd N. GodrejCMD, Godrej and Boyce Mfg. Co. Ltd. & Co-Chairperson, CEEW

Shri Susheel KumarAdditional Secretary, Ministry of Environment, Forests and Climate Change

Mr Nitin SethiAssociate Editor, Business Standard

Ms. Sudatta RayJunior Research Associate, CEEW

Professor P. R. ShuklaIndian Institute of Management, Ahmedabad

Dr. Arunabha GhoshCEO, CEEW


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Mr. Rakesh BhargavaVice-President R&D, Shree Cement Ltd.

Dr. Vaibhav ChaturvediResearch Fellow, CEEW

Dr. R Ramachandran Consultant, Frontline

Mr. Tarun DasFounding Trustee, CEEW

Dr. Rajesh NairAssociate Partner and Global Practice Head, Resource Optimization and Sustainability Group, ITC Infotech India Ltd.

Dr. Anil KakodkarFormer Chairman, Atomic Energy Commission & Former Secretary, Department of Atomic Energy, Government of India

Ms. Natalia Kudryashova First Secretary, Embassy of the Russian Federation in India & Representative, State Atomic Energy Corporation ROSATOM

Shri Shatrughna Singh Additional Secretary, Department of Industrial Policy & Promotion

Professor Dinesh MohanIndian Institute of Technology, Delhi

Mr. Patrick Ledermann Managing Director, ALSTOM India

Mr. Karthik GanesanSenior Research Associate, CEEW

Dr. Bhaskar NatarajanDeputy Chief of Party, Energy Effi ciency, PACE-D, Technical Assistance Program

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Mr. Mohit Sharma Junior Research Associate, CEEW

Mr. Bhaskar DeolIndia Representative, Natural Resources Defense Council

Dr. Shashi AhujaHead (IS-STAC) & Scientist “G”, Department of Science & Technology

Mr. K SwaminathanAdviser (Environment), Railway Board, Ministry of Railways

Dr. Sukumar DevottaFormer Director, National Environmental Engineering Research Institute (NEERI)

Mr. Bhushan DondeBusiness Manger – Refrigerants (South Asia), E.I. DuPont India Ltd

Dr. Malti GoelCSIR Emeritus Scientist, Jawaharlal Nehru University

Mr. Madhav Pai Director, EMBARQ- India

Mr. Roop SalotraCEO & President, SRF Group (Chemical)

Dr. R.R. SondeExecutive Vice President,Thermax India

Dr. Pradeep Kumar DadhichDeputy Director, Integrated Research and Action for Development (IRADe)

Dr. A. Duraisamy,Director, Ozone Cell, Ministry of Environment,Forests and Climate Change (MoEFCC).


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