A Lens on Climate and Sustainability in India (Issue #3, March 2023)

A Lens on Climate and Sustainability in India

Hello readers,

I was originally going to discuss how the current “global plans” for net-zero and climate change look like, how they’re evolving, and some of the potential gaps (in parallel with an ongoing review of contrarian views and key hurdles). However, as I explain below, I decided to dedicate this current issue of the newsletter to a "focus on India", and will postpone the proposed review of current net-zero and climate change "plans" to the next 2 issues (in one of these issues, I will also do a review of "False Alarm" a book by Bjorn Lomborg). This March issue is a bit longer than usual, reflecting the reality and nuances of the task at hand.

Over the past 2 months, I happened to have discussions with several Indian executives, government officials, and other friends - including during a recent 3-week visit to India. These have included formal and informal meetings, dozens of conversations with the "(wo)man on the street", visits to several Indian cities (all north Indian cities - Delhi, Gurugram, Jaipur, Chandigarh, Panchkula, Sawai Madhopur, Lucknow, Agra, Noida), and attending two “big fat” Indian weddings. There were lots of insights from these, and I thought I’d share some takeaways from both my own observations as well as discussions with this sampling of government officials, executives, investors, and normal citizens (from India and internationally).

Incidentally, I also read Bill Gates' recent Linked In post "My message in India: To fight climate change, improve global health", which highlights that 'hotter temperatures will make poverty reduction harder by increasing food insecurity and the prevalence of infectious diseases and diverting resources away from those who need them the most' ... (https://www.dhirubhai.net/pulse/my-message-india-fight-climate-change-improve-global-health-gates/?trackingId=9wtA99ZVTO2JxjBi0Dncqw%3D%3D)

… so, from the Gates Foundation’s viewpoint, 'you can’t improve life for the world’s poorest without also tackling climate change'.

The African continent for example, contributes the least to climate change yet is the most vulnerable to its impacts - and India is also in a somewhat similar boat, as the 2023 report by the World Meteorological Organization indicates (see scan below)!

Let me start with some observations of some "layman thinking", a perspective on what Indian government officials and corporate executives are thinking, and follow that up with some lessons from the two weddings.

What does the layman in India think?

Over the past year or so, I have spoken with dozens of Indians within and outside India. Not unexpectedly, there was a lack of consensus on the if and how of reflecting sustainability themes - reducing the CO2 footprint, ensuring energy and resource efficiency, and avoiding the use of plastics (in many daily uses) - and the views fell into 3 groups. The first group -?the most informed and in agreement with the need for "net-zero" and sustainable living - felt that the main dilemma was about more "sustainable" products and services likely being more expensive; my guess is that this group is perhaps two thirds of the top 20% of the Indian population (upper and upper middle class, and both young and old) and are generally quite aware of the sustainability imperative, even if they are not all well versed in the key drivers and the politics and regulations needed. The second group includes perhaps the other third of the top 20% as well as other strong opponents, whose views seem to be a mix of “we really need to let economics and evolution take course even if it means the end of the human race”, and “we must first ensure that the rich developed countries pay their dues”, and “we cannot just do this at the cost of economic progress”; I must highlight that this group includes very few of the younger (born after 1985 or so) generation! The third group, maybe 70-75% of the population across socio-economic segments - said they were largely unaware of the issues, solutions, and challenges (or felt powerless to affect these) - though they did see possible troubling issues such as air quality, waste management and recycling, and increases in respiratory diseases; they were generally unsure of how some solutions might impact economic progress.

While the above was not a statistical study by any means, it is a bit at odds with a couple of recent studies in India which suggest broad awareness and support for climate change and corresponding actions (e.g., this 2021 study suggested that 77% of Indians recognize that earth is at a tipping point - https://globalcommonsalliance.org/wp-content/uploads/2021/08/Global-Commons-G20-Survey-full-report.pdf, https://www.thequint.com/amp/story/climate-change/climate-change-seventy-percent-indians-worried-about-nature-says-global-commons-survey#read-more). This divergence is not different from the gap seen elsewhere in the world, between formal surveys and studies and action, what I call the “say-do” ratio or gap (though there is also a sample bias because the respondents in surveys of countries, such as India - where awareness is certainly lower among those less educated - are likely to be those much more aware)!

Overall, in India, as perhaps in much of the world, the younger generation cares much more about the climate, sustainability, and the need to act now (even though some segments are more aware than others)! They see the extreme pollution and poor air quality in the cities, they see the mountains of waste burning in Mumbai and Delhi, and they see the climate changes around the world – and want to act, now!

Clearly, the "layman" view needs to be accompanied by social acceptance, policy and government actions and economic plans, and demand-supply shifts (for products and companies, reflecting the ground realities), and also acknowledging that this is a very complex issue and we are only scratching the surface!

The View from the Top

My discussions with several Indian government officials - current and retired - as well as recent publications and news, provide some insights into the thinking, points of view, and ongoing plans and initiatives.

First, the Indian government has made some excellent starting commitments recently - such as overall CO2 reduction goals announced at COP-26 (emissions-intensity target of 45% below 2005 levels by 2030, and net-zero by 2070), renewables (electric power installed capacity of ~500GW from non-fossil fuel-based energy resources by 2030 - which is ~50% of projected total capacity), coal (phasing out by 2040), banning of single use plastics (since July 1, 2022),?creation of a carbon sink of 2.5 to 3 Billion Tons of CO2e through additional forest and tree cover by 2030, and air quality (commitment under National Clean Air Program - NACP - to reduce particulate matter by 30% by 2024) ..... all integrated into the Ministry of Environment, Forest, and Climate Change (MoEF)’s National Action Plan on Climate Change (NAPCC).

Climate change and sustainability are indeed widely acknowledged in the corridors of power in India, at least at the Central government level. India's National Statement at COP-27 is now widely known, and though the Prime Minister's absence at COP-27 was noted, the launch of Mission LIFE (Lifestyle for Environment), and India's 2023 Presidency of the G20 - with the motto of ‘One earth, One family, One future’ - are all excellent initial actions and initiatives.

My second point is that when one digs deeper, while the national plan NAPCC and India’s updated Nationally Determined Contribution (NDC) commitments are great first steps, they also reveal a few major gaps. Overall, in my personal view, as well as that of the "Climate Action Tracker", these starting commitments are not quite adequate for the #6 and soon-to-be #3 economy of the world (https://climateactiontracker.org/countries/india/#:~:text=India's%202022%20NDC%20has%20three,energy%20resources%20by%202030%3B%20and)! The overall "net-zero by 2070", while itself challenging and needing a lot of planning and execution - is acknowledged to be 20 years too late beyond the global 2050 targets. India’s coal consumption is still a major issue (26GW of additional coal-to-electricity planned by 2027, with a "gradual" phasing out after that, hopefully by 2040), and even though the per capita CO2 emissions in India are a fraction of those for developed countries - 1.8 T/ year vs 14.7 T/ year for the US - the sheer volume affects India itself first (e.g., the air quality in Delhi and other cities affects residents' health as well as overall productivity). The renewables target of 500GW of installed capacity by 2030 (50% of all electricity) will be easily achieved and exceeded - kudos to the public-private solar initiatives and investments over the past decade - but having subsidies for fossil fuels 9 times higher than for renewables is almost criminal, and should instead flip to a carbon tax!

The 30% air quality commitment under NACP does include several possible initiatives - but most of these have not yet been started - and overall, still lacks a practical and concerted plan for Indian cities and villages.

Looking at some of the causes - coal power plants, burning of cow dung as residential fuel, motorized transport, open waste burning, ongoing crop burning, and industrial emissions - it is complex and difficult ( see, e.g., https://www.sciencedirect.com/science/article/abs/pii/S0269749121018923).

And, even if the 30% is achieved by 2024, as an example, it will only improve New Delhi's typical Air Quality Index (AQI) of about 450 in December to maybe 315, still in the "severe" category -?with tremendous ongoing health costs as well as economic setbacks given the loss of productivity as well as the disruption of air/ road/ rail transport (this photo below shows the dense smog in an Indian city on a February evening)!

The creation of the 3 Billion Tons CO2e carbon sink is excellent, and approximately a 10% improvement over the current ~30 Billion Tons of CO2e, though it is confounded by debates about definition and inadequate measurement standards. India and the world, however need a much higher commitment to forestation (https://www.economist.com/leaders/2023/03/02/saving-the-rainforests-would-be-a-bargain) ?

And then there is the critical but under appreciated need to rapidly and significantly change agriculture and soil practices (the farm sector is responsible for almost 20% of India's carbon footprint); while this is notionally included in the National Mission for Sustainable Agriculture under the NAPCC, there are no concrete measures or indicators of progress, and India's fragmented agriculture sector does not make it easy; also see Sadhguru's thoughtful views https://isha.sadhguru.org/us/en/wisdom/article/save-the-soil-revitalization-methods).

Third, there are several institutional hurdles - real and perceived - that India has to overcome to achieve many of the net-zero commitments and imperatives, and some of these do need international support. Some examples that have been widely mentioned include managing capital availability, ensuring that coal workers are not left behind, energy prices do not rise in the near term, and the need for power distribution reforms - to ensure a connected smart grid, adequate investments in capacity, and competitive pricing and customer service! Others include strict enforcement of regulations, significant education and behavioral change in areas such as urban transportation and agriculture, political and social acceptance of mechanisms such as carbon taxes, and many others. India’s federal structure - the states manage many “subjects” under the Indian constitution - means that the central government has to get the states on board, through a combination of economic and political offers and appeasements!

Another institutional hurdle is the significant gaps in creating detailed forward looking plans and ensuring effective execution. Several current and retired civil services officers bemoaned the fact that tomorrow's plans are still solving yesterday's issues, and, even if superbly executed, will be 20 years behind. This is true in urban planning as well, where, as an example, the Master Plan for Delhi (MPD - 2041), while quite ambitious and comprehensive, misses a big opportunity - of being a breakthrough plan reflecting India's emergence as a leading global economy, proactively leading on sustainability and air quality imperatives - and is instead a high-level catch-up plan (that lacks vision and detail) that hopes to catch up with 2021 by 2041!

When it comes to capital availability, there is clearly a gap, not only for India but also globally, coupled with considerations of who and how to fund. There is an ongoing debate about various analyses suggesting that the $90 Trillion needed globally over the next 15 years or so could actually deliver returns in the form of both ROI and job opportunities (though many believe this won’t really happen). Several recent global initiatives - led by the UN/ World Bank, individual governments (US, EU being the leaders), philanthropic capital, and private investments (companies, insurers and banks, PE, VC) - have begun to add up to the needed investment numbers, though the question of ROI, project risks, and economic impact remain complex discussions. For India, aside from the central government initiatives, several states have also initiated investment projects, and the CFLI (Climate Finance Leadership Initiative) has begun to mobilize private capital. This is a great start, though more holistic financing planning will be needed in the next few years since the estimated climate investment for India ranges from $1.5 to 3 Trillion over the next few decades. Mechanisms such as a carbon tax, are being discussed, but do not seem to have broad support yet. My discussions with several Indian government officials also suggest to me that some commitments are falling behind also because of the global stalemate on India’s (partly justified) ask for developed countries to compensate developing countries (the loss and damage fund was agreed at COP-27 but will take a year or more to action); sadly, this is a lose-lose position for all!

Fourth, India’s administrative and political system severely limits climate-related initiatives and innovation. The gap between commitments, and plans and actual execution is perhaps most magnified when one considers how (inconsistently and slowly) India's states are adopting and implementing NAPCC and related plans and initiatives (State Action Plans on Climate Change - SAPCC), not only on energy but also areas such as water management and agriculture, and maybe equally importantly, creating capacity and capabilities at the state and grassroots levels to tackle the range of climate issues and associated financing and public-private mechanisms! Further, Indian cities and mayors - where many climate innovations have been happening around the world - have limited authority or incentives to innovate and tackle climate issues (and have to wait for central and state initiatives and budgets to trickle down to the city). Most Indian universities and research institutions are only now waking up to climate related topics.

An Honest View from some Indian and Global Executives

I had the opportunity to have casual conversations with more than two dozen Indian and global executives - from banks, manufacturers, retailers, automakers, investment funds, public sector companies, and consultants - about their views on sustainability, CO2 emissions, investments and financing, regulations, COP and IPCC etc.

Irrespective of their personal views (which are reflected in the first and second groups in a preceding section), these executives acknowledged that while sustainability and a net-zero carbon footprint is part of their corporate goals, it is not yet a top priority and there is a long way to go.

Overall, they articulated four key themes. First, it is a long journey: it is perhaps more challenging for India than many other countries to achieve the sustainable transformation that is needed - renewable energy, clean transportation, changes in product design and supply chains, circular economy and recycling, substitutes for plastic, protecting the forests and water resources, changes in agriculture and soil practices, and so on (www.brookings.edu/research/managing-climate-change-a-strategy-for-india). Not surprisingly, the private sector is even further behind; though several Indian companies have started making net zero commitments (net zero by 2040 or so by most of the top-20 Indian companies), and a few have invested in commercial climate-related opportunities (solar and renewable power, green H2, carbon sequestration and recycling, EV and batteries, organic pesticides, etc.), real plans and progress are slow even for the top-20 companies and almost non-existent for the rest! My discussions with executives highlighted the reasons for this, mainly - lack of awareness, lack of reporting and measurement, contradicting profitability priorities of investors and boards, no current or expected forcing regulations, awaiting government aid and largesse, and others - along with the discussion points below. This inadequate and inconsistent response by business is a global occurrence, as the recent 'rankings of global companies with the most "green" revenues' shows - with Apple topping the list (https://www.asyousow.org/reports/2023-clean200-investing-in-a-clean-energy-future) for significant revenues enabled by recycling of materials and end-of-life-management, but heavily criticized for many activities, such as making it difficult to repair its devices!

Second, there is no shortage of ideas and innovations, even if core R&D is not quite focused on climate issues yet. The traditional IT-driven innovation has evolved into a broader set of innovations, as was evidenced during COVID, with innovations and breakthroughs for ventilators, COVID tests, vaccine development and others. Dozens of climate related start-ups and several scale businesses (in EVs, batteries, digital platforms, carbon extraction, agriculture, and others) have emerged (it was indeed interesting to see Bill Gates drive through town on a 3-wheeler electric vehicle (https://timesofindia.indiatimes.com/auto/news/watch-bill-gates-riding-the-mahindra-treo-electric-3-wheeler-why-he-did-it/articleshow/98445507.cms). These innovations and entrepreneurs see success in coming years if the private sector broadly supports such innovations and consumers at large begin to voluntarily adopt some of these - the challenge is doing so at scale - without waiting for government support for every aspect.

Third, the economic model is not there yet: it costs more to be sustainable, most customers are not (yet) likely to pay more, shareholders do not (yet) accept compromises to profit objectives, and internal and external systems are not yet able to adequately measure and report on CO2 and other sustainability metrics (also see https://www.pwc.com/gx/en/industries/industrial-manufacturing/publications/sustainability-in-manufacturing.html). In speaking with a BU President of a large global FMCG company with significant India operations, he acknowledged that the BU was (too) slowly replacing older products (responsible for significant CO2 and chemical pollution as well as use of plastics). He reiterated that while he and his team would keenly adopt and drive more sustainable products and practices, balancing profitability and sustainability goals was a significant challenge and something had to change to make it possible - regulations, consumer preferences, true industry action, or others!

Finally, most of the Indian executives were of the opinion that voluntary commitments and actions could deliver only marginal actions and outcomes: neither regulations nor societal pressure have moved into high gear yet! As an example, reforms are needed to enable separation of power generation from distribution, and allow private sector participation which will enable greater competition, capacity, customer service, and innovation (see, e.g., https://www.strategy-business.com/article/Tata-Powers-pursuit-of-a-renewable-future-for-India.

Another executive, from the real estate sector pointed out the crazy traffic on the road (see picture below), and expressed frustration that the government was unable to put in place regulations to phase out older vehicles, say 10+ years (though he felt 7+ years was a needed solution), and perhaps using a "cash for clunkers" approach like Germany and others had done a few years ago.

An Indian auto industry CEO said while he and his company were keen to improve fuel efficiency (and Li-Ion batteries and H2) as well as reductions in Scope 1, 2, 3 emissions, he hoped the Indian government would regulate and enforce strict CAFE-like standards very soon, and catch up with the EU!

The Sustainable Wedding of the Future in India

Now, let’s change gears and consider a societal perspective.

I attended two weddings (for which I confess I did not personally quite achieve net-zero, but hope to do so next year), and during and after each of the two weddings, I had conversations with about two dozen friends and acquaintances, with my wife serving as a sounding board. These 25 or so people were from the top-20% of the Indian population, and hence represent mostly the first and second groups described in a preceding section.

Before I discuss my observations about sustainability at these weddings, I must say that most Indian weddings combine a mix of tradition and ritual with grandeur and celebration, and the outcome is a beautiful and happy celebration, even if it is sometimes a bit over the top! Over the past couple of years, I have come to enjoy weddings, both for the happy event itself and the opportunity to meet and reconnect with friends and family!

More broadly, a discussion about sustainability at weddings is a lens for how societal behavior can be expected to change - for starters, a wedding is a difficult context for a discussion about sustainability, but if people are willing to entertain that, applying some of the principles of sustainability to daily living (e.g., McDonough and Braungart in The Upcycle, 2013) may not be that far off!

From a sustainability perspective, the discussions at these 2 weddings identified a few key areas to consider - transportation, lighting and air-conditioning, food, hotel services, and use of plastic. In both weddings, we saw dozens of cars and SUVs waiting (some of them idling with the engine running) to transport guests. The wedding venue (hotel in both cases) was very luxurious and the lighting was beautiful, but the hotels did not use renewable energy (in contrast, I was pleasantly surprised to observe that one of the government owned guest houses I stayed at used solar power to run lighting and heating of all rooms, and fed-in excess electricity into the grid!).

The food and drinks were excellent, with multi-cuisine food stations and a lot of variety - but also a lot of wasted food.

When it came to hotel services, again, these were "7 star" and beyond, with a lot of beautiful bedcovers, robes and towels (with most guests opting to have their sheets and towels replaced every day). Both weddings also made sure that guests were not short of anything, which included several (plastic) water bottles in each room and available throughout the hotels (the photo below is typical and one sees the same in offices and airlines … the boon and curse of single use plastic).

Everyone I spoke with were in general agreement that future weddings ought to be (more) sustainable, and that such a "sustainable" wedding of the future would perhaps have all or most of the elements below:

●?????Encourage guests to take trains and avoid flying if possible; if flying, consider buying carbon offsets

●?????Minimum number of (electric) vehicles used, at least for hotel fleets, and hopefully for personal vehicles as well

●?????Wedding venue (hotel) could have its own renewable power source (generally solar, maybe for water and room heating) to supplement the grid; further, ensure energy efficiency by having motion sensors or similar in rooms and hallways

●?????Plan for the food such that waste is minimum, and any excess is planned to be hygienically distributed to the needy via shelters and food kitchens

●?????Adopt "green" principles when delivering room services (replacing towels, changing bedsheets, and even managing water consumption)

●?????Similarly, adopt a "zero plastic" policy, e.g., for water bottles or other uses (one of the hotels we stayed in Rajasthan in February impressed us with their "zero plastic" policy)

I looked up what some hotels around the world were doing, and came across some simple "green hospitality" ideas - https://ecobnb.com/blog/2021/05/green-hospitality-eco-friendly-steps-hotel/ .

The discussions also evolved into a broader consideration of avoiding over-the-top weddings as well as redefining "luxury" so that it did not always mean excessive consumption and waste (a "sustainable" Indian wedding should not be an oxymoron). What is a reasonable balance between being totally sustainable (say, zero CO2) and personal satisfaction and happiness? Some of this may sound pretty difficult in today's consumer-driven consumption economy, but perhaps a necessary change, even though it sounds like trying to impose such values on others who may be unwilling! Also a topic for a future discussion … is a carbon tax on weddings around the corner?

Let's wrap it up

The above is a non-exhaustive view of the situation in India. I was able to capture some representative facts and views from three perspectives - government and policy makers, business and investors, and from a societal lens. I am sure I missed a lot of factors and nuances. Fundamentally, there are very deep and systemic challenges for India in making a economic-political-social-climate transition of this magnitude, and we all need to recognize that, while at the same time let’s understand that there is an urgency about things, though not quite Armageddon ... yet!

Let me try and summarize several facts and observations in a dozen bullet points:

1. It is great to see the Indian government’s commitments, but it is time now to give these some teeth and see regulations, enforcement, and accountable execution ... and reduce India's "say-do" gap.
2. It is also good to see some corporates leading the way, but there is a long way to go beyond opportunism and lip service, and expand awareness and prepare for anticipated regulations - perhaps that role can best be played by Indian industry associations.
3. While every individual is affected - and there are many that are complaining - there is a lack of a "persistent social voice" - the many NGOs working in this area need the support of climate vigilantes.
4. India has historically lacked long term planning and execution due to political and electoral swings, and this needs to change, both for the sake of the climate but also for overall economic progress.
5. There is an over reliance on the central government to lead the way; true, the government needs to regulate and enforce, but a persistent social voice (outside of the election process) is needed at a higher decibel level.
6. The Indian government is clearly concerned about the balance between climate and economic progress, but at the same time, needs to be ahead in terms of planning for regulations.
7. The individual states (except for a few) are mostly behind on every aspect of climate change commitments and plans, and that needs to change very soon.
8. Innovation in India is alive and kicking and needs to be unleashed at the climate challenge and related issues.
9. The investment approach needs to recognize the portfolio of possibilities - government-led investments, supplemented by private investments and philanthropic capital, along with global capital under the purview of mechanisms such as the Loss and Damage Fund agreed at COP-27.
10. The current trajectory of climate actions is based on government investments triggering projects and implementation, from which large corporates are the immediate and largest beneficiaries - but it is important to ensure the participation of mainstream India - small and medium enterprises, farmers, factory workers, and so on.
11. Many of the shifts and changes require a new set of skills and capabilities - for all stakeholders - e.g., central, state, and city planners need to take an ecosystem view of urban planning; climate reporting will need standards, baselines, goals, systems and such; new regulations will need assessments and projections coupled with implementation education and enforcement; etc.
12. Last, but not the least - perhaps just as we did for COVID - a broad and common understanding of climate and effects will be needed through awareness campaigns and education, to embed behavioral change in society.

Overall, a glass half empty for now (not half full) ... there is a lot that's being done but a lot more that needs to be done and could be done!

?

Key References:

Ahluwalia, Montek Singh and Utkarsh Patel (2023), “Managing climate change: A strategy for India”, Chapter 4, Keys to Climate Action: How developing countries could drive global success and local prosperity, Brookings Institution, February 16, 2023

Bloomberg (2021), “CFLI India”, Climate Finance Leadership Initiative, Bloomberg, September 2021

Climate Action Tracker (2022), “India Country Summary”, November 15, 2022

Gaffney, Owen et al. (2021), “Attitudes to planetary stewardship and transformation among G20 countries”, The Global Commons Survey 2021

Government of India - Ministry of Environment, Forest and Climate Change (2021), National Action Plan on Climate Change (NAPCC), December 1, 2021

Government of India - Cabinet of Ministers (2022), Updated Nationally Determined Contribution (NDC), August 3, 2022.

Lahiri, Ishadrita, “70% Indians Worried About State Of Nature; 90% Want To Do More: Survey”, The Quint, August 17, 2021

Sharma, Gaurav, Saurabh Annadate, Baerbel Sinha (2022), “Will open waste burning become India's largest air pollution source?” Environmental Pollution, Volume 292, Part A, 1 January 2022, 118310

Yow, Michael, Matthew Malinsky, Toby Heaps, and Andrew Behar (2023) “Carbon Clean 200?: Investing in a Clean Energy Future - 2023 Performance Update”, As You Sow (https://www.asyousow.org), 2023