OVERVIEW

127
 OVERVIEW

1. On 30 January 2010, the Ministry of Environment & Forests,

Government of India, communicated to the secretariat of the United
Nations Framework Convention on Climate Change (UNFCCC)
that it will endeavour to voluntarily reduce the emissions intensity of
its GDP (excluding the agriculture sector) by 20-25 per cent by
2020 in comparison to the 2005 level. In this context, the six sectors
we have studied assume a new importance. They account for
61.5 per cent of India’s carbon dioxide (CO2) emissions in
2008-2009. And, in the future their inevitable growth for India’s
growing economy will have major impacts on its emissions.

2. What the study clearly shows that there are relatively easy
options to reduce emissions in the short term in the Business As
Usual scenario. Therefore, even in the current situation, with the use
of technology being currently adopted by new plants across sectors,
the emissions intensity of the GDP from these sectors together can
easily be reduced to achieve the target of 20-25 per cent reduction by
2020. Nevertheless, what is needed is to speed-up the pace of
implementation of the different policy and regulatory changes,
already announced by the government, which will push the process
a little faster.

3. But what is worrying is that what we do today will constraint

and seriously limit any options for real emissions reduction beyond
2020. The technological pathways are being decided today.

4. In this context, what emerges in our study is that after 2020,

emissions intensity in most sectors will stagnate or there will be
marginal improvements. This has major implications for future
emissions reduction objectives because mitigation will cost big time
and need urgent solutions to reinvent growth.

5. What is also clear is that India’s current growth model has

other constraints – resources like land, water and even minerals.
It is our estimate that water consumption in just these six
industrial sectors will more than triple in next 20 years, because of
growth and because of technology choices, the study projects, we
will be making.

6. We estimate the additional land required for the six sectors to be

1.0-1.30 million hectares. This looks small. But given India’s
population density acquiring even this bit of land will be an
enormous challenge.

128 << CENTRE FOR SCIENCE AND ENVIRONMENT >>

 OVERVIEW
7. The land required for mines for the estimated coal and other
minerals the six sectors will require in next 20 years is equivalent to
the mining area that has already been leased-out for mining in last
60 years. Moreover, mostly all new deposits are in forest areas and
near habitations of people. The challenge of managing this ‘new’
balance will be severe.

POWER

1. Power drives the economy and is the single largest contributor to

CO2 emissions – in India and across the world. What is interesting
to note is that the biggest potential for emissions reduction that
exists is also in this very sector. But this option is very expensive in
the near term, for it means big time investment in new and
emerging technologies now, and replacing high carbon fuels.

2. But what is also clear is that investment in ‘negawatt’ – making

more energy by saving and through increased efficiency – could
add as much as 20 per cent to India’s gross power generation by
2020. This would require improved demand side management,
reduction in technical transmission and distribution losses and
reduction in power that the sector itself uses to produce power. All
this would mean serious commitment to regulatory changes in all
these areas.

3. In the Business As Usual (BAU) scenario, emissions intensity

reduction from this sector is 18 per cent by 2030. This is largely
because of improvements planned in the coal-based power plants. It
is true that India’s thermal power plants’ average efficiency levels are
better than global average. The country’s biggest power utility,
NTPC, operates at 34.5 per cent efficiency, one of the highest in the
world given the subcritical technology the company uses. This is
despite the constraints of poor coal quality and high temperature
and humidity.

4. In this scenario, 69 per cent power is from coal (which is roughly

equivalent to now). BAU also assumes all existing government
commitments on renewable energy – 20,000 MW solar energy,
40,000 MW wind energy and 20,000 MW biomass energy – are met,
as are its plans regarding nuclear energy (30,000 MW).

5. In the Low Carbon (LC) Scenario, emissions intensity can

reduce by as much as 35 per cent by 2030. But this will require
four-fold increase in gas-based power generation, 100,000 MW of
solar energy, 90,000 MW wind energy (including 50,000 MW of

<< CHALLENGE OF THE NEW BALANCE >> 129

FIVE COLOUR SPOT

 offshore wind) and 50,000 MW of biomass-based power generation.
Yet, the country will have to depend on coal for close to 60 per cent
of power generation.

6. This is assuming per capita power generation in 2030 will be

roughly 2,200 kWh (630 kWh in 2008-09), or one-seventh of the
current per capita power generation in the US. Clearly, such an
expansion of the sector, its environmental impact and the equitable
and affordable access of energy to all are critical in India. We cannot
accept energy-poverty of such large numbers in India.

7. But the low carbon growth will come at a huge cost. The country
will have to spend as much as US $60 per tonne of carbon dioxide
avoided in the low carbon scenario—this is three times the price of
carbon traded under the Clean Development Mechanism (CDM)
today. This is obviously massive and will put into question the issue
of affordability, when the country’s desperate need is to provide
energy to all.

STEEL

1. Steel will be a big problem sector for India. This sector will not
be able to reduce emissions intensity significantly because of the
technology choices it is making today – moving from blast furnace
process route to direct reduced iron (sponge iron). We project close
to 60 per cent of total steel will be produced using sponge iron in
which emissions efficiency gains are few.

2. In large parts of the industrialized world, emissions reduction

has happened because of the large use of steel scrap, which is not
available to us because of the “high growth-low steel base” nature of
our economy. In the US, as much as 60 per cent of steel is produced
from scrap. In India, in 2030, taking the best estimates, we will not
even reach 10 per cent of our steel being manufactured using scrap.

3. The sector has huge limitations in terms of raw material quality,

high ash coking and non-coking coal and high silica and alumina in
iron ore, which will limit its efficiency gains, even with the use of
current best available technologies. This is why, even the most
modern and best run steel mills in India emit 30 per cent higher
CO2 than the global best.

4. The study shows for further efficiency in energy consumption

and emissions control the sector will have to completely
re-configure its technology and raw materials.

130 << CENTRE FOR SCIENCE AND ENVIRONMENT >>

 OVERVIEW
5. Should all upcoming steel plants opt for the blast furnace
route by importing coking coal? Should they start importing scrap
at very high cost? Should we start investing in R&D from today to
improve the efficiency of sponge iron industry? These are decisions
that must be taken today.

ALUMINIUM

1. 80 per cent of India’s aluminium sector is already using global

best smelting technology. The remaining 20 per cent will upgrade
because they are uncompetitive. In this sector, the options to reduce
emissions are limited. So, the world over, companies are opting to
change the fuel itself in order to go low carbon — using
hydroelectricity, or, as in the case of Iceland, geothermal power.
But India has few such alternatives. Therefore, for us, the growth of
this sector — reaching 5 kg per capita or 6.5 million tonnes
production by 2030 — means the total emissions increase four-fold
in the Business As Usual scenario.

2. In the Low Carbon scenario, the emissions intensity reduces but

only if 30 per cent energy is sourced from renewables. This is tough.
In any case, emissions intensity stagnates after 2020.

CEMENT

1. Indian cement industry is one of the most energy efficient in the

world. This is because of the sector’s use of the modern technologies
and its relatively high use of flyash and slag for cement production.

2. India’s per capita cement production will increase four-fold to

630 kg in 2030, which is equal to what China consumes today. The
technology leapfrog options for the industry are limited. The saving
grace is if the sector adopts the best use of flyash and slag, it can
reduce its emissions intensity by 25 per cent in BAU by 2030. But
this will require new and tighter regulations.

3. In the LC scenario, emissions intensity can be reduced by 35 per

cent by 2030. This will require installing very expensive waste heat
recovery equipment in the plants. This technology is still in its
development phase and not widely used in any part of the world.

FERTILIZER

1. The country’s gas-based fertilizer (urea) industry is surprisingly

one of the best in the world. Compared to the global average of

<< CHALLENGE OF THE NEW BALANCE >> 131

 0.95 tonnes of CO2 emissions per tonne of urea produced, the
Indian industry emits 0.7 tonnes of CO2 per tonne. Some of the
Indian plants are considered cutting edge.

2. This sector’s options for reducing emissions through technology

induction too are limited. Massive R&D is required to increase the
energy efficiency further. The real option is to change the feedstock
— move the remaining and mandate the new plants to run on
natural gas and not on naptha or fuel oil. In fact, this industry can
grow and still reduce its total CO2 emissions by 2 million tonnes per
annum in 2020 with respect to 2008-09 levels, simply by changing
its feedstock. The most critical issue this sectors future faces is the
availability of natural gas. After all, from being self-sufficient in Urea
the country today has become import-dependent because of the
shortage of natural gas.

PAPER AND PULP

1. India’s paper and pulp industry performs poorly in terms of

energy use and its CO2 emissions are high as compared to the global
best. In part, this is because of the unique nature of the sector here.
In India, plants are small, use diverse raw material and produce a
variety of products. In this way, the sector has few choices to
reduce its energy use. Its only choice is to change raw material —
from diverse wood and non-wood sources to wastepaper and
market pulp.

2. The shift in raw material use has already begun. So we assume

in BAU emissions intensity reduces by 30 per cent by 2030. This
will happen largely because of the shift towards wastepaper —
50 per cent of paper production in 2030 will come from wastepaper,
compared to 38 per cent as of now.

3. In LC, emissions intensity can reduce by as much as 40 per cent

by 2030, but this will require retiring all old plants and major
investment in bringing in new energy-saving technologies. In both
scenarios, efficiency gains are possible, but only if we decide on a
policy that enables larger plants. But this is a very big ‘if ’.

LOW-CARBON ECONOMY: WHAT DOES IT MEAN?

1. Nobody really knows what a low-carbon economy is, or will be.

This is because in the current economic model, the technology
pathways are constrained. There is just so much any country can
do to reduce its emissions, unless it changes the way it does

132 << CENTRE FOR SCIENCE AND ENVIRONMENT >>

 OVERVIEW
business or the way it defines growth. This is the crisis and
challenge climate change has brought to the fore. This is why the
world is struggling to find an agreement on an issue which is both
obvious and serious.

2. Our study shows that India is no different from the rest of the
world. In fact is it at the bottom of the development trajectory — it
has a long way to go to meet its growth needs and the way ahead will
inevitably add to pollution. It will need the ecological space to
increase its emissions. But the problem is that the world has decided
that it will not share growth — the rich will not reduce and make
space for late entrants to industrialization, like India, to first emit
and then clean up, as they did.

3. So where do we go from here? The fact is that till 2020, India’s

current ‘commitment’ — 20-25 per cent reduction in emissions
intensity of GDP — is easy to meet. In fact, this is chicken feed. It is
about picking off low-hanging options, which will cost, but not
enough to be undoable. This is the easy part.

4. The tough part is what begins now for the future. The fact is that
in all high-polluting sectors, the technology options for emissions
reduction stagnate after 2020. There is no real way we can reduce
emissions, without impacting growth as we know it, once we cross
the current emissions-efficiency technology threshold.

5. The only real option, as we explain above, is for India to change

the fuel-mix — what we use to produce the energy that drives our
economy. But even this is theoretical. The options are limited and
what exists does so at a very high cost.

6. If we want to reduce our use of coal, we must invest big time in

solar or in biomass or off-shore wind. All this put together, all done
and all money spent, we will still not be able to substantially reduce
our dependence on coal. And remember that India has the challenge
to provide affordable power to massive numbers of people. So the
bottom line is that the going is tough.

7. It is for this reason that India (and all other late entrants to the
development game) must not give up on their demand for an
equitous global agreement. We know today that the Copenhagen
Accord, being pushed by the US and its coalition of the willing, will
change the framework built on equal burden sharing. They demand
that we take on the cost of the transition, even if we have not created
the problem in the past. They want to spin a deal, built not on their

<< CHALLENGE OF THE NEW BALANCE >> 133

 commitment to reduce emissions, but on the bribe that we can also
continue to emit. These are not acceptable.

8. But what our study shows is that the world has to seriously
rethink and rework its economic model for the future. Under all
circumstances today, the options for serious emissions reduction are
limited in the industrial model we belong to or want to inherit. The
world has to look for new ways to cut emissions and pay big time for
these. There is no easy picking here. There are win-win options, but
only if we consider that in all current options the planet is losing.

9. The study also tells us that India must reinvent its growth
pattern because it is in its interest to do so. It faces serious challenges
to get resources — from land, minerals or water — to drive
economic growth. These are limits to our growth. These limits can
work to our advantage, only if we can find ways of working beyond
the current model. We will have to find ways of doing much more
with less. We will have to find new win-win options — for instance,
growing biomass on people’s lands so that they get income and
energy. These options can be tried. We can become the laboratory of
the world’s development future. But first we must recognize the
limits. The limits in our mind.

134 << CENTRE FOR SCIENCE AND ENVIRONMENT >>