Policy perspective into CC and Energy

Transition
Session 3, 18 October 2024
BM-2024
Term-2
XLRI Delhi-NCR
 Nature based solutions

• “Actions to protect, sustainably manage, and restore

natural or modified ecosystems, that address societal
challenges effectively and adaptively, simultaneously
providing human well-being and biodiversity benefits.”
(IUCN)
• NbS encompasses a variety of approaches, including
Ecosystem-based Adaptation, Ecosystem-based Disaster
Risk Reduction and Ecosystem-based mitigation (EbM)
• Protecting and restoring coral reefs and mangrove forests,
preserving grasslands, and sustainably managing forests
are all effective strategies for slowing the rate of climate
change and mitigating disaster risk
• Nature-based solutions such as green roofs, rain gardens,
or constructed wetlands can minimize damaging runoff
by absorbing stormwater, reducing flood risks and
safeguarding freshwater ecosystems

https://iucn.org/sites/default/files/2022-11/nbs-in-gbf-targets-brief-november-2022.pdf
Basic CC related policy/regulatory outline in Indian context

• NAPCC, 2008 • Energy Conservation Act, 2001 and PAT

• National Solar Mission Schemes
• National Mission for Enhanced Energy Efficiency • National Electric Mobility Mission Plan,
• National Water Mission 2020
• National Mission for Sustainable Agriculture • FAME (Faster Adoption and
Manufacturing of Hybrid and Electric
• National Mission for a Green India
Vehicles): subsidies and incentives for
• National Mission on Sustainable Habitat EV adoption, supporting both
• SAPCC consumers and manufacturers.
• INDC • National Adaptation Fund for Climate
Change, 2015
• National Green Tribunal Act, 2010
• SDGs: Goal 13: Climate Action
• M.K. Ranjitsinh and Others v. Union of India and
Others
• constitutional right to be free from the adverse
effects of climate change
 Few International and national policies and regulatory frameworks

Kyoto Protocol (1997):

3 mechanisms:
• International Emissions Trading
• CDM
• Joint Implementation
➢ Trading units used included the removal unit
(RMU), Emission Reduction Unit (ERU),
Certified Emissions Reduction (CER)

https://cdm.unfccc.int/Projects/DB/SQS1297089762.41/view?cp=2
• Paris agreement: Legally binding • Tata Power: plans to increase its share of
agreement under UNFCC; signed by 196 renewable energy generation to 80% by
countries. Aims to keep global warming 2030, increasing its investment in solar and
below 2 degree, as against pre-industrial wind power projects across India
levels.
• Key elements: NDCs; climate finance • Mahindra Group: committed to becoming
(developed countries committed to carbon neutral by 2040. The group has
mobilizing 100 billion $ per year by invested in renewable energy, electric
2020/2025 to support climate action; global vehicles, and energy-efficient operations.
stock take every 5 years)
• The Indian government aims to reduce
emissions intensity by 33-35% by 2030,
increase renewable energy capacity to 450
GW by 2030, and enhance forest cover to
absorb 2.5 to 3 billion tonnes of CO₂ by
2030.
EU Green Deal: EU's roadmap for making Europe the first • Indian steel manufacturers like JSW
climate-neutral continent by 2050. It encompasses several Steel are working to reduce their carbon
legislative measures aimed at reducing GHG emissions, emissions by investing in energy-efficient
promoting renewable energy, and encouraging sustainable technologies, adopting cleaner production
business practices.
methods, and exploring carbon capture and
Emissions Trading System (EU ETS) utilization technologies to meet EU
➢ cap-and-trade system for carbon emissions. standards
Businesses operating in energy-intensive sectors
must buy or receive emission allowances, and • Tata Steel: Tata Steel Europe has already
those exceeding their limits must buy additional begun aligning with the EU ETS by adopting
credits. low-carbon steel production technologies.
Carbon Border Adjustment Mechanism (CBAM)
➢ carbon price on imports of high-carbon goods (e.g.,
steel, cement) to prevent carbon leakage and
ensure that EU businesses are not disadvantaged
by foreign competitors with lower environmental
standards.
• Carbon Offsetting and Reduction Scheme for • IndiGo has committed to reducing its carbon
International Aviation (CORSIA)- global scheme emissions in compliance with CORSIA. IndiGo
developed by the International Civil Aviation has invested in modern, fuel-efficient aircraft
Organization (ICAO) to cap carbon emissions from and is exploring carbon offset programs to meet
international aviation. its obligations under the scheme.
• It mandates that airlines offset any emissions • Air India is subject to CORSIA’s emission
above 2020 levels by purchasing carbon credits reporting and offsetting requirements. The
from approved offsetting programs. airline is working to reduce emissions through
fleet modernization and improved operational
• CORSIA incentivizes investment in fuel-efficient
efficiency.
aircraft and sustainable aviation fuels (SAFs) to
reduce reliance on offsets and comply with
emissions targets
• International Maritime Organization • Shipping Corporation of India (SCI): upgrading
Regulations: The IMO has introduced measures its fleet to improve energy efficiency and reduce
to reduce GHG emissions from international emissions. The company is exploring the use of
shipping, with a goal to cut emissions by 50% by low-sulphur fuel oil and adopting energy-saving
2050 compared to 2008 levels. devices
• Energy Efficiency Design Index (EEDI): Ships • Essar Shipping has invested in modernizing its
are required to meet increasingly stringent fleet to meet IMO energy efficiency and carbon
energy efficiency targets. reduction targets. The company is actively
looking at alternative fuels and carbon-reducing
• Carbon Intensity Indicator (CII): Starting in
technologies to remain competitive
2023, the CII requires ships to improve their
carbon efficiency annually.
• Carbon Pricing Initiatives • India has not implemented a national carbon
tax or cap-and-trade system, it is exploring the
• Carbon Taxes: Governments impose a tax on carbon
possibility of carbon pricing
emissions, pushing businesses to reduce their
carbon footprints by shifting to cleaner technologies. • Companies operating globally are affected by
carbon pricing schemes in other countries,
• Cap-and-Trade Systems: Emission allowances are driving them to reduce emissions.
issued to businesses, which can trade them in the
market. Companies exceeding their emission caps • Reliance Industries has committed to
must purchase credits, incentivizing emissions achieving net-zero carbon emissions by 2035
reduction. and is investing in clean energy projects, such
as hydrogen fuel and renewable energy, to
• E.g. EU ETS: cap-and-trade system in the European reduce its exposure to carbon pricing
Union that covers energy-intensive industries
• Vedanta is exploring carbon capture and
• Canada’s Carbon Pricing Program: Canada applies utilization projects to mitigate its carbon
a carbon tax and a cap-and-trade system to regulate footprint
GHG emissions.
 RPOs and RECs

• Mandated under the Electricity Act (2003),

RPO requires obligated entities like DISCOMS
to purchase a minimum % of electricity from
renewable energy sources.
• But RE source is variable in different states
and thus the provision of RECs, which are
green tradeable certificates that allow the
obligated entity to meet their RPO without
actually procuring RE generated power. They
can buy equivalent certificates from the
national energy exchanges like IEX or PXIL.
https://www.ceew.in/cef/quick-reads/explains/what-are-rpo-and-rec

• Companies like Tata Power are working

aggressively on their renewable energy
projects to meet RPO obligations.
• Important for renewable energy developers
and corporates committing to 100% power
from renewable energy
 PAT (Perform, Achieve and Trade)

• Introduced in 2012, this was a competitive

mechanism for reducing energy use in large
industries (thermal power plants, cement,
steel, aluminum, pulp and paper etc.)
• Under PAT, Government shortlists industries,
limits the amount of energy they can
consume and defines a timeline for
achievement.
• These industries becomes the Designated
Consumers.
• Industries that achieve/exceed their targets
are issued Energy Savings Certificates
(ESCs) that can be traded with industries
that have not achieved their targets.
• Those that fail have to buy ESCs to comply
with the scheme.
Carbon Credit and Trading Scheme (CCTS)

• National framework for Indian Carbon Market Business Opportunities in India’s Carbon Market
being developed, through amendment in the (A) Renewable Energy Projects
Energy Conservation Act, 2022
• Wind, Solar, and Biomass Projects
• 2 key mechanisms: Compliance mechanism • Large-Scale Solar Parks and Wind Farms
(check emissions from energy use and industrial
(B) Carbon Credit Generation Projects
sectors) and Offset mechanism (as voluntary
action for controlling GHG emission) • Afforestation and Reforestation
• Waste Management and Methane Capture
• So, will combine Cap-and-trade and voluntary
markets (C) Industrial Emission Reduction
• Energy-Intensive Industries
• Implementation will start with a Pilot phase • Clean Technologies
• Gradually, a centralized National Carbon Trading (D) Financial Services and Trading Platforms
Platform will be created
• Carbon Trading Platforms
• NAPCC alignment • Carbon Market Consultants and Auditors
 India’s NDCs

• Propagate a healthy and sustainable way of living based on traditions and values of conservation and
moderation, including through a mass movement for ‘LIFE’– ‘Lifestyle for Environment’ as a key to combating
climate change
• Adopt a climate friendly and a cleaner path than the one followed hitherto by others at corresponding level of
economic development.
• Reduce Emissions Intensity of its GDP by 45 percent by 2030, from 2005 level
• Achieve about 50 percent cumulative electric power installed capacity from non-fossil fuel-based energy
resources by 2030, with the help of transfer of technology and low-cost international finance including from
Green Climate Fund (GCF)
• Create an additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree
cover by 2030.
• Better adapt to climate change by enhancing investments in development programmes in sectors vulnerable
to climate change, particularly agriculture, water resources, Himalayan region, coastal regions, health and
disaster management.
• Mobilize domestic and new & additional funds from developed countries to implement the above mitigation
and adaptation actions
• Build capacities, create domestic framework and international architecture for quick diffusion of cutting-edge
climate technology in India and for joint collaborative R&D for such future technologies
• Energy transition refers to the Energy Transition
global shift from traditional,
carbon-intensive energy sources
like coal, oil, and natural gas to
cleaner, renewable, and more
sustainable sources like solar,
wind, hydro, and bioenergy.
• It also entails increasing energy
efficiency, electrification of various
sectors (like transport and
industry), and integrating digital and
technological advancements in
energy systems.
• For countries, it involves
transforming the energy
infrastructure, investing in
renewable energy technologies,
modernizing grids, and
implementing policies that
encourage clean energy production
and consumption.
 Indian Scenario CARBON EMISSIONS:
• India's commitment to Net-Zero emissions by
2070 underlines the long-term strategy to transition to a
RENEWABLE ENERGY CAPACITY: low-carbon economy.
• India has set a target of 500 GW of renewable energy INVESTMENT IN CLEAN ENERGY:
capacity by 2030, including 280 GW of solar power.
• It is expected to need over $1 trillion in clean energy
• In 2023, India’s installed renewable energy investments by 2030 to achieve its energy transition
capacity stood at approximately 176 GW, which goals.
includes:
• In 2022, India attracted $14.5 billion in clean energy
• Solar Power: 72.62 GW investments, showing larger potential
• Wind Power: 43.20 GW
ENERGY MIX:
• Hydro Power: 51 GW
• Coal still dominates India’s energy mix, accounting for
• Bioenergy: 10 GW around 55-60% of electricity generation.
• Renewables account for about 40% of India’s • Aim to reduce this dependency by increasing the share
installed electricity generation capacity, surpassing of renewables and through efficiency measures.
government’s earlier target of reaching 40% by 2030, as
per the Paris Agreement. ENERGY EFFICIENCY:
• India’s solar power generation has seen a rapid rise • Initiatives like Ujala(distribution of LED bulbs) and
the Perform, Achieve, and Trade (PAT) scheme
Regulatory framework supporting energy transition in India
• National Solar Mission (as part of the NAPCC, 2008) • RPOs
• Target of 100 GW of installed solar capacity by • mandates power DISCOMs and large electricity
2022; revised to 280 GW by 2030. consumers to purchase a certain % of their
• Focus: Solar parks, rooftop solar installations, energy from renewable sources
and large-scale solar projects. • Target: 43% renewable energy by 2030, in India
• National Hydrogen Mission, 2021 • ISA, 2015
• India as a global hub for green hydrogen • Focuses on mobilizing investments, creating a
production and export by encouraging the global solar market, and improving solar energy
adoption of hydrogen across sectors such as infrastructure.
transport, industry, and power.
• Green Energy Corridor Project
• Target: Achieve 5 MMTs of green
hydrogen production annually by 2030 • Focuses on developing infrastructure to connect
renewable energy projects with the national grid.
• PAT Scheme
• Phase 1: Involves building transmission networks
• Under the scheme, companies that exceed their in 8 renewable-rich states.
energy-saving targets can sell energy-saving • Phase 2: Targets greater integration of renewable
certificates to those that fall short energy by expanding the grid capacity and
• Goal: Reduce energy consumption in key reducing transmission losses.
industrial sectors
• PM-KUSUM SCHEME • NATIONAL BIOFUEL POLICY
• Encourages farmers to install solar pumps and • Promotes the production of biofuels such as
small solar power plants. ethanol and biodiesel to achieve a target of 20%
ethanol blending in petrol by 2025.
• Target: 25.75 GW of solar capacity by 2024.
• Impact: Reduces oil import dependency and
• EV POLICY AND FAME II provides cleaner energy alternatives.
• Faster Adoption and Manufacturing of Hybrid • CARBON MARKETS IN INDIA:
and Electric Vehicles (FAME-II) encourages the
• Cap-and-trade and CDM etc. allows industries to
adoption of EVs in India by providing subsidies for trade carbon credits based in emissions.
EV purchases, building charging infrastructure,
and promoting electric public transport.
• Target: Achieve 30% electric vehicle penetration by
2030.
Class Exercise- 20 minutes +10 minutes

• Scenario Introduction:
• You are part of a team starting an EV business in Haryana, focusing on either manufacturing EVs or setting up a
charging network. Your goal is to identify key regulatory challenges and government incentives that will affect
your business plan.
• You must present solutions for overcoming these hurdles and leveraging incentives for success.
• Objectives:
• Identify and analyse critical regulatory barriers and government incentives.
• Propose strategies to leverage on government incentives and address the most significant regulatory
challenges.

1. Team A: EV Manufacturing Setup

2. Team B: Charging Infrastructure Setup
• Each team will investigate the most significant regulatory hurdles related to their assigned focus area and
propose key solutions.