We have seen two local events completely reduce global supply chains. The ship in the Suez Canal blocked traffic for a week, delaying 9 billion items every day. And a pandemic in Wuhan వు caused the global economy to shrink by 3.5% and 255 million jobs by 2020. Such incidents implicitly and vulnerably reveal the weakness of the business sector. Bill Gates, in his new book, How to avoid a weather disaster, The economic damage caused by climate change is estimated to be like a covid-scale pandemic every 10 years.
Indian industry has begun preparations for war against climate change. Climate Trends A recent survey of 400 large and small businesses in Maharashtra found that more than 70% believe that climate change will affect their profit, material supply and cost. Heavy rainfall, floods, water scarcity and drought are their main concerns. Indian companies are predicting more than the economic impact of weather hazards ₹7 trillion, the average risk ₹92 billion to the company as per CDP India 2021 report.
Many Indian companies have voluntary commitments on climate change, including renewable energy, energy efficiency, electricity, greenhouse gas emissions reduction and internal carbon prices. In a new report, the World Resources Institute India and the Confederation of Indian Industry (CII) found that the current climate commitments of just 50 leading Indian companies could reduce the country’s total greenhouse gas emissions by almost 2% by 2030 national estimates. Although the current emission reduction targets of over 90 are less than average on average,% of this emission reduction comes from large industries. The potential to do more in these industries is obvious.
Although the Indian industry has begun to take bold steps on renewable energy and electricity dynamics, all studies show that the industry cannot win the war against climate change without deep decarbonization. This will require major changes over the next 30 years. Here are three big things that the Indian corporate sector can do.
First, electrify all energy consumption as much as possible and convert the remaining fuel consumption to hydrogen. Today, the industry burns coal, gas, petroleum and fuel oil to generate heat. But in the next few decades, at least half of this will need to be replaced by pure electricity and hydrogen. The production of hydrogen from electrolysis rather than fossil fuels is currently in the research and development phase. Collective efforts, such as the central government’s new national mission on green hydrogen, will help reduce costs and create a reliable supply infrastructure for this critical technology. This is a reduction option with the biggest bang for the buck, which will reduce carbon dioxide by a billion tons by 2050 compared to business as usual. By comparison, India’s current emissions are 2.8 billion tonnes.
Second, increase the energy efficiency of industrial equipment. Although we have switched to renewable energy, wind and solar require rare land, it is important to distance capacity from available energy. While many leading Indian companies are the most efficient in the world, others should follow suit. Micro, Small and Medium Enterprises (MSMEs) have the potential to become energy-efficient but lack the capital to upgrade and require the help of large companies, their supply chains. Industrial fuel efficiency improvement could save 250 million tonnes of Indian emissions by 2050 and come at a much lower cost.
Third, material efficiency, product longevity and reuse. Fossil fuels are used not only for energy but also as components of materials and in industrial processes. Although we can use renewable energy to meet energy needs, there is nothing equivalent to materials. However, the circular-economic approach can reduce resource consumption by using low-energy and local materials, adding fly ash to cement, recycling scrap metals, and conserving recyclable construction waste and water. This will help India reduce carbon dioxide emissions by over 300 million tonnes by 2050.
Finally, since not all process emissions can be eliminated, invest in carbon capture consumption and storage. As the world adopts strong climate policies, the active actions of Indian corporates will help them to tap into new markets and prepare for the future economy. The finance industry can also drive the transformation process through its investments, promote innovations in disruptive technologies and reduce their costs. In doing so, the Indian industry also has a responsibility to look after the well-being of its workers and the communities living near its sites — equipping them with new skills and assisting them to adapt to weather hazards. But the challenge is very clear: without industry, the world would not win its fight against climate change.
These are the personal opinions of the authors. Deepti Swamy of WRI India contributed to this article.
Jamshed n. Godrej & Ulka Kelkar respectively, Chairman & Managing Director, Godrej & Boys, and Director, Climate, World Resources Institute India