In 2021, at COP-26 in Glasgow, Prime Minister Narendra Modi announced the ambitious target of India achieving net zero emissions by 2070. However, challenges are aplenty for the country which is a rapidly growing economy and a major victim of rising temperatures, resulting in massive energy requirements. Climate Action Tracker’s latest rating (as of September 2024) for India stands at ‘highly insufficient,’ despite several measures being implemented to encourage green efforts and increase renewable energy capacity, hinting at the need to do more.
Mahesh Ramanujam, CEO of the Global Network for Zero, talks to The Hindu about the role of MSMEs in achieving the net zero goal, significance of a transition plan when moving from coal to renewable energy and the importance of data and incremental measures in the journey to net zero.
Can you give an overview of the existing rating systems and what you are doing differently?
There are almost 87 rating systems. In my opinion, the differences between these rating systems are shrinking with maturity happening in the ecosystem. But the key challenge always comes to quantifying progress.
With Global Network, I don’t want to define another standard. It confuses customers and creates unnecessary barriers. Our programme is incremental in nature; we meet you where you are. Overnight net zero is not feasible and a programme should not be cost-prohibitive. We are trying to iteratively do it because net zero is a journey.
We follow the Greenhouse gas (GHG) protocol widely used by everybody in the world. The goal is to standardise, harmonise and scale. We are outcome based in all stages and keep data as the constant.
You have been working a lot with MSMEs. How important is MSME as a sector in achieving net zero goals?
There is no net zero without MSME, period. It is the hardest sector to crack.
In MSME, you’ve got family driven businesses, founder driven businesses and most importantly, businesses that are trying to become professional. They have got one foot in the door and one foot outside. It creates a very interesting pressure because they will always ask the question, how much does it cost and what is the return on investment?
MSME is a very important segment. Their scope 1 and scope 2 emissions is scope 3 emission for somebody else because they are the suppliers for bigger firms. The latter cannot reduce their scope-3 emissions without MSMEs transforming. This is the cyclical and integrated nature of this business.
That is why incremental measures are important. Instead of telling them to have platinum or silver rating as their goals, tell them to start with their emission systems. When they ask why, you tell them about the European regulation, the potential carbon tax and compliance issues, how to look at it from the cost benefit and efficiency point of view. These things resonate with them.
Instead of using the language of sustainability, I’d use the language of efficiency, money, cost, opportunity, differentiating yourself from the crowded population… That language resonates in this space.
Secondly, whatever we do for that has to be seamless with what already they do. And then we will finally link them to the underlying concept of GHG protocol.
What are your thoughts on the progress of sustainability efforts in India?
Our challenges are many. But I have a very healthy, optimistic view about how India has done sustainability. We are one of the largest net-zero players in the world. In terms of green buildings, we are fourth in the world. We are strong in renewable energy, batteries, and making things locally. So, good progress is happening. Green products and green awareness are there. But we are not showing the story in a more meaningful way.
You have to show how it helps the people, how it drives economic development and third, how it helps people move above the poverty line.At the end of the day in India, that’s a hard metric.
But I think we are on the right track and our progress on the ground is commendable.
We have net zero goals for 2070 and NDC targets for 2030. But coal consumption has not gone down drastically.
Unless a full reliable capacity of renewable energy is in place the coal consumption will continue.
The coal consumption continues as insurance. Secondly, although we are committed to adding 500 gigawatts of renewable energy by 2030, we have only 100 gigawatts of installed capacity and we are only installing 25 gigawatts a year. That is not enough to meet the whole demand. There is a massive demand supply issue. Also, jobs are connected to it. Unless you create a transition plan these things are going to be difficult. Nevertheless, the government is pushing to have 500 gigawatts by 2030 and even if we achieve it by 2031, we are still well ahead of the curve.
What are the major challenges currently in India towards decarbonization?
First is education. If you ask me what’s my personal carbon footprint, I might not know. That’s as elemental as it is.
The second barrier is the illogical notion that people must compromise their needs and move to sustainability. In India many people are rising from lower middle class to upper and above. Many of them have aspirations and want some luxuries. If you suddenly ask them to forget all that because sustainability matters, it is not practical.
So, what you need to tell people is that they have the power to get all of that, but make just one extra ask. See whether those are being produced sustainably. Because demand changes everything.
At a macro level, we must agree that Net Zero is a hard thing to do. You just can’t throw money at it and get it done.It is about changing practices and is going to take a lot of time.
Last but not the least, you also need to see who’s going to pay for it. Sustainability should be accessible. Secondly, even if you have the intent to do it, there is a cost of investment. Who is going to write that first check? Where is the capital coming from?
I think the opportunities are, very clearly, with the banks. What I’ve been telling for a very long time is that banks should not give incentives, they should penalize. For example, if I’m going to build a home and my interest rate is 9%, don’t give me an 8.5% discount for building green. Make the interest 9.5% for people who are not building green. Because banks will say they cannot lower interest rates, and they have their own money to make.
Second is insurance companies. Third is the government. The government can take a carrot and stick approach where they give incentives for companies to build green and put a carbon tax or increase the property tax for those who don’t. You need to innovate for sustainability. There are so many existing programs, you just need to add a dimension of green to it.
What do you think of AI as a challenge to sustainability?
AI poses one of the biggest challenges because you and I have started becoming dependent on AI the GPUs are taking enormous amount of processing capability. Unless you get to clean energy, this will further exasperate the existing problem. Your coal consumption will go up. If you don’t have sufficient renewable energy capacity to even meet the needs of today, how will you meet the needs of tomorrow which would essentially be an AI-driven culture?
The less talked about is cybersecurity which is also a big energy guzzler. 5G is another one and gig economy yet another. The only solution is to accelerate our efforts. We need more of technologies like nuclear, hydrogen, battery storage, solar and wind.
Then there is the national security concern. AI will get segmented eventually and you would not want your data repository to be shared across the border. Which means you will need to put your data centers inside the country which will pose a challenge for achieving net zero goals.
How do you view US’s withdrawal from the Paris Agreement?
It didn’t matter before, it doesn‘t matter now. I think we are way past proclamations and declarations. You might see a temporary slowdown. But that will force our people to think about how to really create value and make the proper business case for sustainability.
What are some policy actions that Indian leaders can introduce to give a boost to the existing efforts?
While we have a net zero policy, there is no net zero policy at the ground level, for example, in building regulations, factory regulations or product regulations. There is no net zero implication for GST. If you give a 0.5% discount on GST for doing net zero, you’d see so many changes happening. I’m sure there will be enough green washing too, but nevertheless, the good will outweigh the bad. Policies to actualize net zero and go hand in hand with all the other policies that are being defined to get to Viksit Bharat 2047 is a very important step the government can take. I feel that level of communication has not happened.
Last but not least, defense sector is booming. The sector needs a lot of energy. Signaling that the government is going to only do net zero projects in the sector will be a phenomenal progression.