Category Archives: Policy

Curious case of Lithium-ion battery price

By Aditya Chhatre

The beginning of this millennium marked the shift towards institutionalizing energy transition towards renewable energy resources. This transition has largely manifested into the mainstreaming of solar photovoltaics and wind energy in the installed generation capacity. However, the transition would be incomplete without reliable energy storage systems. Within the on-going debate of the best energy storage technology, there are a dozen possible technology options. To achieve the short-term deadlines of 2030, it is important to rely on the existing matured energy storage technology – Lithium-ion (Li-ion) battery. (Read our past article to know the journey of Li-ion batteries). The investments and innovations have got the prices rolling down since 2010. However, since the second half of 2021 the prices are in a slack due to raw material shortages.

In the debate of batteries demand and supply, interestingly this time it is the supply which has caused the imbalance. Portable electronics industry in 1990s established the extensive use Li-ion batteries and now the electric vehicles (EV) market has yet again strengthened the acceptability of lithium-ion batteries since 2010. At present, more than 30 countries have announced ban on manufacturing of internal combustion engine (ICE) vehicles starting from 2029 and with such phase out policies of ICE vehicles, vehicle demands are foreseen to be tilted over to EVs. An additional application of batteries is the large scale battery containers used for grid stability and applications such as energy arbitrage. This has added on to the demand of Li-batteries. In the terms of cell capacity, there are plans to achieve over 3TWh production facilities by 2030 which stands at around 500GWh in 2020. This colossal future demand has induced stress in the supply chains of the raw materials for Li-ion batteries. It is a wakeup call for the battery industry indicating that the prices may not decrease every year henceforth and the mining of the required metals shall be crucial for energy transition.

The uncertainty of supply chains usually is hard to forecast but it is important to categorize these situations. These market dynamics occur in phases and categorizing it provides a better understanding of the scenario.

Effects of supply chain on battery prices

The electrochemical nature of Li-ion batteries and its improvements over decades have resulted in variety of Li-ion battery chemistries. The prices of these Li-ion battery types in such a dynamic market is often hard to predict. A recent study from McKinsey discussed the relation between the raw material shortages and its effect to the market in the form of a flow chart which can also be extended to Li-ion battery market as illustrated in Figure 1.

Fig 1. Flow chart of prices and raw materials

As seen in the flow chart, a new application leads to increase in the raw materials demand. If the supply chains are intact then the technology transition is smooth. On the other hand, if raw materials are not available, a process to enhance the supply chains would be necessary. Now, considering the nature of EVs, the driving range is usually the most important factor for comparison of battery types. This factor is governed by the energy density of the battery, which indicate the energy storage capacity. Batteries consist of mainly 3 components – cathode, anode and the electrolyte. Innovations and research usually have been focused on the cathode level. During the early years of the last decade, the cathode with Nickel-cobalt-aluminium oxide (NCA) and Nickel-manganese-cobalt oxide (NMC) with the metal ratio of 1:1:1 was commonly used. NCA and NMC batteries have an energy density around 200-260 Wh/kg and 250-300 Wh/kg respectively. Amongst them as NCA was a cheaper technology, it had a larger contribution than NMC.

Cobalt is a major material in both of the battery technologies. As of 2020 more than 80% of cobalt is mined in Congo. Depending on just one country for such an important battery metal has strained the supply chains for cobalt for the last 5 years. Moreover, the political instability of the country makes raw material availability prone to unforeseen situations. Due to the high demands along with these constraints, in the month of March 2018 the price of cobalt peaked to 93,750 USD/ton. This shortage of cobalt supply increased the overall NCA and NMC battery prices.

In such situations of raw material storage, concerns increase due to the unsure supply chain modifications. The prices start to soar which can cause instability in the market. These high prices are usually short lived if supply chains are successful to adapt to the new demand. However, an indication of change of market dynamics is when the prices continue to be high. This unstable situation usually follows the cycle in three phases as illustrated in the flow chart.

Phase 1: Reduce critical materials

Phase 1 of the scenario involves efforts put in to reduce the contribution of the vulnerable materials. The tension in cobalt supplies led to high nickel content battery technologies to gain market share post 2018. Nickel which was extensively used in steel production facilities was readily available and this got the high nickel batteries to be economical. The NMC batteries have also seen a technological shift towards less cobalt content from 1:1:1 metal ratio to 8:1:1. NMC Li-ion battery market share increased and as of 2020 stands at more than 60% of the Li-ion industry. But nickel being just 3 times more available than cobalt, the supply chains were strained to match the increased demands. These effects could be seen in the prices of nickel since the mid of 2021. The cost of nickel in Jan 2022 stands at 22,570 USD/ton which is the highest in last 10 years. The mining industry is currently in search of more nickel sources and also building refining plants to improve its supply chain. This has forced the Li-ion market to move to the phase 2.

Phase 2: Find trade-offs

The second phase starts with the change of technology away from the rare materials. The shortage of NMC batteries brought in the Lithium-iron-phosphate (LFP) batteries back in action. LFP batteries co-existed in the battery market. Even though LFP batteries were cheaper than NMC batteries, due to its lower energy density (150-200 Wh/kg) they were not used greatly in the EV market. Most importantly, to avoid supply shortages the markets started to rely on LFP batteries which consists iron and phosphorous which are comparatively abundant materials. Many automobile players such as Tesla declare in October 2021 to shift from NMC technology to use of LFP batteries in their standard models. Another application where energy density is not critical is the stationary storage grid applications and LFP batteries are quite dependable for such an application as well. Fig 2. Depicts the expected market share of these prevalent Li-ion batteries.

Fig 2. NMC, LFP, NCA Li-ion batteries production capacity

Even though, it seems that the LFP batteries have finally found its place, there are some concerns which should not be overlooked. Most of the phosphorous refining facilities are energy intensive and these refineries are highly concentrated in China. Knowing the electricity mix in China, the phosphorous refining could be an issue with high carbon intensive production. Additionally, the dwelling concerns of vinylene carbonate availability (an additive to the electrolyte) possesses risks for LFP batteries. If adequate measures are not taken in due time, these factors can cause LFP batteries prices to increase too and push the Li-battery market scenario in phase 3.

Phase 3: Alternate technologies

This is the phase wherein all sub technologies have been exhausted. A new technology shall be introduced to fulfil the application. In the case of Li-ion batteries, this would mean that new batteries such as sodium ion, solid state, silicon or air-based battery technologies shall evolve and come into effect. This shall start the loop of the phases again although with different raw materials.

Conclusion and path ahead

The erratic nature of Li-ion material availabilities is ought to affect the prices of batteries in the near future. The prices of NMC Li-ion batteries in 2022 are expected to remain high and be governed by the raw material availability. The focus of the investments has always been in supporting downstream activities such as EVs and their manufacturing facilities. Now, it is the need for the investors and OEMs, to divert investments upstream towards mining and refining activities.  

The supply chain has also suffered labour shortages due to COVID in western Australia. As Australia produces nearly half of the global lithium, COVID has delayed the supply chains improvement activities by 6 months. Also, as China holds the patents for LFP batteries, 95% of LFP batteries manufacturing has been confined in China and in the short term the prices of LFP batteries depends on China and its policies. However, in 2022, the patents held by China on LFP batteries expire. This allows more manufacturers from other countries to invest and contribute to the economy of scale of LFP batteries. These could lead to possible reduction of LFP battery prices from 2023 onwards.

These factors of technology, prices and raw materials, interact in a cyclic flow chart which test the technologies and ramp up the supply chains.

(Vidushi Dembi contributed in editing this article)

Achilles heel of Renewable Technology

By Aditya Chhatre

The first ever paper on the variations of atmospheric carbon dioxide contributing to long term climate changes was written in the year 1896 by a Swedish physicist Svante Arrhenius. For the analysis in this work, he uses the term ‘carbon acid’ to describe fossil fuels as a source of carbon emissions. The paper mentions fossil fuels to be a potential source for the carbon dioxide. Although later in his works, he articulates fossil fuels being the major contributor to global warming. As the electrical industry is highly based on fossil fuels, the concept of energy transition has carved its way in seeming as the unavoidable solution to most of the climate problems. Parallelly, research and development in solar and wind energy technologies had its advancements which created a sense of optimism. These renewable technologies with their high costs and having generation inconsistencies, were quite a dream to become reality in 1950s. But the urge to achieve energy transition has been only growing. Eventually, the price of electricity from renewable energy technologies dropped lower than electricity from conventional fossil fuel resources. Countries started to aim for targets of 70-100% share of renewables in their energy mix as fast as possible. Fossil fuel-based electricity is one of the largest contributors to carbon emissions. Also, various sectors such as transport, agriculture ought to increase the electricity consumption. Given these circumstances, energy modelling has been useful for forecasts future scenarios and requirements. We can call this century as the century for ‘Energy Transition’. Few countries have achieved and many are deploying solar and wind farms with their maximum capacity to achieve the transition. The global urgency is such that 2050 is set as the year to achieve carbon neutrality by most of the countries.

In these times where humans are trying to realign their carbon dependency, the focus has majorly been on energy resources such as solar PV, wind and batteries. Let’s look into the case of plastics – a light, durable and cheap product which turned out to be a game changer in our everyday life. Visiting grocery stores in 1950s, it was hard to find something which can keep the products more durable, increasing their shelf lives. 70 years later, it is really hard to find any product without plastic rapped around it in a grocery store. Immoderate amount of plastics made it difficult to handle turning the situation undesirable. Moreover, various types of plastics, made it worse for organized recollection. Recycling plastics has caught the eye of several start-ups but as the material is a composition of complex elements it makes it hard for the recyclers to separate the plastic which could be recycled in one facility. Countries such as US, Kenya, EU have banned the use of single use plastics. On the other hand, countries such as UK have tried introduction of tax on plastics bags with fines for breaking rules. It is a big task to get such a useful product out of the supply chain. There are lessons to be learnt for our energy transition. Renewable energy technologies are surely beneficial than the high carbon generation technologies. Concern here is to avoid the energy transition being the same story of starting a revolution with optimism and in 2050 finding a clueless heap of materials to deal with. This rapid change has vulnerabilities which are easy to miss out and it is better to assess and act on them. One of such weakness in the renewable industry is lack of circularity.

To have an estimate of the amount of recycling capacity needed, we have to look at the material requirements for individual energy resources. The material required for the different sources of energy are shown in Figure 1. Solar and wind power plants have the highest material use per Tera watt hours (TWh) of electricity production. Even though these power plants are not carbon intensive, they need a lot more material than conventional sources per TWh. After the designed life of a panel or a wind turbine, the challenge is recollection and then creating a business model which use the recycled material back in the economic chain. Renewables have a characteristic challenge when it comes to recollection of panels or turbine blades. Solar and wind power plants need much more space for the same amount of electricity generation than the conventional thermal power plants. The non-concentrated designs, increases costs and scheduling time to transport the waste to the recycling centres. Another thing which needs to be taken care is that the life of these resources is 20-25 years compared to the conventional plant of 40-50 years. Because of these reasons it is very likely that the solar panels, wind turbines and batteries have higher chances of being mishandled and landing up in the landfills without proper processing. It now becomes a need to increase the recycling capacities, ideally targeting recycling capacity to be consistent with the installed capacity. It is important for designers, policy makers and entrepreneurs to already align recycling techniques, predict the expected timeline and deploy the recycling facilities at necessary geographical locations.

Figure 1. Range of material requirements for various electricity generation technologies

Solar & Wind

Solar PV and wind power plant’s rising trend is expected to grow even further as the technology progress. As of now 629 GW of solar PV and 742 GW wind has been installed globally. To achieve energy transition, models recommend the growth to be 10-12 times of the current installations till 2050. The average life span of solar panels designed by the manufacturers is for 25 years. Also there have been cases, maintaining panels regularly, increased solar plants life up to least 30 years or even more in some applications. Recently, a study from Harvard reviewed the market PV panel replacement rate. The study shows that the utility and residential customers connected to the grid replace the modules after their mid-life period (15-20 years) which makes an economically beneficial decision considering the current technology improvements, panel prices and electricity prices. In 2021, we can expect that the panels from 1990-2000s have already started to be decommissioned and replaced. Similarly, the wind turbine blades which have a life of 15 years. Working on the yearly installation rate, Figure 2 shows the cumulative million tonnes of panels which are expected to be out of service till the year 2046. The graph gives a clear picture of the expected timeline and the quantity of the renewable waste. Solar panel and wind turbine blade waste is calculated according to the installations and assuming average weights. Also, wind technology saw an earlier installation phase even before the solar technology deployment started extensively. Therefore, we can expect a higher quantity of turbine blades as waste before high number of solar panels are decommissioned. But eventually, as solar plants have higher material to electricity densities than wind farms, solar PV waste would cross over wind waste around 2040. If renewable recycling processes are not in place, the waste would be 50 and 30 million tonnes till 2046 for solar panels and turbines blades respectively. To have a comparison, these quantities are way more than Australia’s one-year solid waste of 13 million tonnes. We can expect a boost from the year 2030 where we need to be prepared with the recycling  sectors supply chain which can handle this amount of the renewable wastes.

Figure 2. Solar and wind waste quantities 2021-2046 – (Self)

Photovoltaic panels have glass, aluminum and silicon as dominant materials. Project owners usually take the easy way to send the panel to a glass recycler who uses the glass and scraps the rest. Globally, photovoltaic panels are broadly of 2 types, Silicon based and Thin-film based. As silicon based solar panels are common, the processes are developed for its recycling and is comparatively less energy intensive than recycling thin film based solar panels. After removal of the glass the solar cells are retreated with thermal processes and the silicon is reused in the form of modules and other applications. Laws for collection of solar panels are inconsistent even in developed countries. Such as in US there exists a state wise plan which is not consistently stringent nation-wide . In 2012, EU WEEE included solar panels in their electronic waste category. According to this regulation, it is mandatory for the manufacturers and companies in EU to collect the panels after their use and put them back in the recycle chain. The companies are also allowed to charge extra for the post product life activities. This framework has helped the EU solar industry to recycle 80% of their panels. This is a great way to make the authorities responsible for handling the waste and making the recycling market profitable. Similar regulations are been drafted in various countries and would soon be implemented to make solar industry more circular.

Wind turbine blades are made up of composite materials which are highly durable and light. Apart from wind turbines, composites are also used extensively in sectors such as constructions, transport, aeronautics and electrical components. So, a viable solution for recycling composites will have a positive impact on all these sectors in the terms of circularity. There are composites recycling options such as solvolysis and pyrolysis. But particularly in the wind sector it is not possible to shred the blades on site because of size and feasibility of the cutting processes. This is the reason for high costs for transporting back the blades to the recycling centers. Freight costs being high, this makes recycling an economically non-viable leading to the convenient decision to dispose the blade in a nearby landfill. Currently unlike solar panels, there has been absence of recycling regulations and laws for wind turbine blades. Even countries within EU like Germany and France are still in the research stage to implement wind blades recycling policies mainly due to the site shredding blades and transport issue. However, a project, ‘zero waste blade research’ (ZEBRA), is a 24 months project launched in September 2020 for 100% recycled wind turbine blade. This project is been regarded as an opportunity to have a full-scale opportunity for achieving technical, economic and environmental solution necessary for recycling wind turbines and reducing the blades waste.  


The stagnant lead acid batteries market, have seen a steep rise with the advancement of lithium-ion technology in this decade. The demand of portable device and electric vehicles (EV) have bolstered the additional investment in the development of the technology. Along with it, the current trends of compatibility of batteries and renewable energy power plants for residential and grid applications has put pressure on its manufacturing capabilities. There are also questions to be answered about the end-of-life of such huge number of batteries. To consider the EV industry there are studies claiming the batteries after their life in an electric vehicle still have 70-80% capacity. These secondary applications of batteries are particularly used at charging stations or connected to the grid for ancillary applications. This improves life of EV batteries by at least 7-10 years. After a certain threshold there has be recycling tie-ups of battery manufactures for their specific battery type. The lithium-ion technology all together is a broad concept with different anode and cathode chemistries involved. Each battery application employs a different technology, which raises serious concerns over type of material used, its availability and recycling these new used batteries. Battery technology is still undergoing huge transformations; hence the topic of its recycling is still of secondary priority, but is nevertheless important.


We need a conceptual change where products need to have more recycled material percentage and use lesser raw material at the design stage focusing on energy efficiency and recyclability. This is a sectoral challenge where not only recyclers but manufacturers and customers have to play an active role together. Bad handling would weaken the advantages of using renewable technologies. For project owners and users, recycling can be a demanding extra step, which is also currently non-economical. We need to act pro-actively by taking steps such as not scrapping the panels, batteries and wind turbines blades to a convenient local with no expertise of recycling, but contact recycling authorities/companies and make this energy transition truly effective. There are scenarios wherein countries within EU have better recycling rate for batteries and solar panels compared to other developed nations. Hence, recycling rates are variable and eventually they would be less dependent on the technology rather more on the geographical location.

The volume of renewable waste is expected to increase exponentially and even go over the board from 2030 if recycling facilities are not in place till then. A business model should include the amount of renewable waste streamed back into the economy and in due course should make recycling profitable. Whether be it a company or a country the task is to have a 100% close loop system reusing and recycling materials. National and governmental policies are key to incentivize this market. It is crucial for governments and regulators to introduce and fund organizations working in this field to strengthen them to be efficient by the end of this decade. The recycling industry is that the sector will have a swooping growth as an effect of the market demand at the point when recycling of these products gets cheaper than mining the needed raw materials. This could be the point where market needs and the environmental needs meet.

Libertarianism and the environment

By Vidushi Dembi

Ever since the impact of human induced climate change transpired in the international community, governments have been the face of all the major action. It’s a tug of war between regulators that want to regulate everything and libertarians who want the freedom to choose and act as they please – how do we align these skewed incentives?

After the Earth reportedly experienced cooling between 1940-1970 as a result of a post- world war aerosol build up which led to increase in the Earth’s albedo, the late 1980s witnessed visible global warming and consequently early 90s began the mark of global recognition and prominent discussions on anthropological climate change. Climate models and predictions demonstrated the possible future scenarios, should humans continue with business as usual, with Intergovernmental Panel for Climate Change (IPCC) presenting multiple scenarios of our future on this planet ever since. The global movement didn’t originate only at the governmental level; civil society had also begun organizing itself primarily in the form of anti-nuclear movements across Global North. Several individuals with the likes of Donald Leal, Dennis Hayes, Sunita Narain emerged into limelight along with organizations such as Greenpeace and the radical ‘Earth Liberation Front’ (ELF).

Mertig and Dunlap in their paper described environmentalism as ‘one of the most successful movements in the US and Western Europe’. Meanwhile in Global South (environmentalism in the Global South is often viewed from the framework of Third World Approaches to International Law [T.W.A.I.L.] in International Environmental Law), lot can be discussed about when it originally started; nature and its conservation being an important part of people’s lives in countries such as India and Japan. Specifically for India, Ramchandra Guha mentions in one of his articles that it was ‘environmentalism of the poor’, initiated by communities that were dependant on these natural resources, depletion of which would cause not only environmental damage but social injustice. Across the globe there was also seen emergence of several ‘Green Parties’ in the political sphere, many of which have successfully evolved to prominence. However, global climate action was and continues to be largely dominated by the governmental sphere. Conference of Parties (COP), Kyoto Protocol, UNFCCC (even though it is a UN Organization, it depends on international governmental cooperation) and all the prominent names in environmental discussions are being steered by a global government collaboration.

In the early stages of the acknowledgment of climate change (arguably already materializing in late 1960s) the focus was on how environmental changes affected human health. Consequently, the world saw designing of several principle, treaties, and laws by the government for regulating related detrimental activities. Montreal Protocol regarding effects of CFCs on the ozone layer came into action all over the world in late 80s, Sweden became the first country to impose a carbon tax, the notable Agenda 21 came into being – we have plethora of such examples of international governments collaborating on global forums and then implementing (effectiveness of which is a discussion for another day) on each country level. Governmental regulation is the most prevalent method for climate action, and even though global collaborations have demonstrated some significant results, one is tempted to think if this is the only option, and more importantly, the most effective option we have. For one, libertarians sure aren’t happy with the state of the art.

Major critique of government dominated environmentalism

An easily observable issue with environmental protection purely via government regulations is recognising that climate change, pollution and environmental degradation are largely concomitant of undefined property rights. In case your neighbourhood is getting contaminated by the hazardous fumes by the nearby factory, or your city river which is frequented by significant number of citizens for its aesthetic value is being choked by the plastic litter, or the dam which powers you hometown is leading to a decrease in the number of fish on which your livelihood is based, the actors responsible for bringing these disruptions can always argue that the responsible company stood there even before your neighbourhood came about, there is no solely responsible source of plastic pollution in the river that can be tracked and nipped, and powering entire town is more important than one person’s livelihood, respectively. Rivers, air, nature; these aren’t owned by anyone privately and hence no one person has enough incentive for their maintenance. Everyone continues with the mindset that since it’s not their property and therefore not their job, their individual action is not going to change anything anyway and hence the pollution continues. Environmental degradation employs the classic ‘Tragedy of the Commons’ by Hardin, and can be supplemented with understanding of human behaviour via behavioural economics (V. Raghunathan provides the behavioural economics explanation for such behaviour with respect to India in his book ‘Games Indians Play’, which can be also extended for the case of environmental degradation).

Litigation in such cases becomes especially difficult due to the same reason; arriving at a ‘fair’ decision within a clearly marked system boundary is just too convoluted. Complications increase when there are multiple states involved, like in cases of transboundary water disputes. Some sort of resolution has been brought about by assigning boundaries to such resources (essentially establishing property rights) in cases such as fishing in international waters by forming associations, defining water boundaries, and allotting quotas. The process remains tricky, however a significant improvement has been observed over the earlier condition of having no boundaries defined and continuing with unsustainable fishing which often led to high fluctuation of fish prices.

Extending the same property rights rationale, public property being ill-maintained is quite a notoriously true observation majority of people will concur with. The plight of public parks, buses, monuments (frequently seen in India) raise a big question mark on the efficacy of government regulations and supervision on unclear property rights. Critics have also talked about high costs of environmental regulation along with its weak implementation. One can also argue that since such laws are a consequence of transnational decisions which then are implemented through the central government of the country, such broader decisions might not work effectively while getting implemented at the local level. Many critics suggest that since property rights lie under market institutions, cultivating a ‘new’ environmentalism taking in view characteristic of a market and an individual’s liberty would be a better pathway.

Enter Libertarianism

Libertarianism sees an individual as the fundamental unit of the society, individuals having the right to choose and make decisions while respecting the same values for other individuals. The rights of an individual are not provided by anyone else like the government but are inherent in human nature. This is not to say that no order or outright anarchy is the way of libertarians; this school of thought recognizes the importance of societal order (they recognise the existence of a libertarian paradox – the idea that to protect individual liberty we need the state to protect individual liberty which in turn will involve some violation of liberty) but believe that imposition of such order is not necessary since over the years the institutions we have developed came about spontaneously and not forcibly or as per some other-worldly plan.

Expanding this to environmentalism, the next line of thought would be then, if libertarians allow the right to choose and hence the corporation has the right to pollute, doesn’t that make libertarians climate change deniers or to say the least incompatible with science? Libertarians have been often accused of their apathy towards climate change with enough libertarian luminaries of the day contributing towards reinforcement of the allegation. Interestingly, many libertarians have argued that the popular axiom of pollution economics – that pollution is an externality and therefore leads to market failure – is in fact flawed, their version being that pollution is rather a by-product of absence of markets. Government with its profound power levels is more susceptible to corruption and succumbing to optics where it tends to focus on the more visible matters rather than long term issues such as climate, whereas free markets operate voluntarily without any powerful central entity to bribe in the first place.  

 The proposed libertarian version of environmentalism

Although not wholly representative of this side of argument, a major concept often discussed in the libertarian take of things is ‘Free Market Environmentalism’ (FME). FME is largely attributed to Anderson and Leal who wrote a book by the same name in 1991 which gave shape to this chain of thoughts. Market failures like pollution are often corrected through government regulation, but the libertarian way points out to the additional failure of the government. FME hence argues that defining property rights clearly and therefore allowing markets to come into play on their own without governmental intervention can circumvent the flaws with governmental regulation. Once the property rights are clarified (or should we even say the property is ‘privatized’), the stakes for the owner/ actor responsible are much higher and hence is a direct incentive for resource preservation. Such a system promotes the owners to optimize the property use and keep away or punish the ‘trespassers’. Since these property rights are also transferrable, the potential that it might be sold to some other way of resource use makes the actors more accountable towards preserving the property in question. One argument also says that since the philosophy of libertarianism stresses on the values such as responsibility and accountability, these can be used well in relation to environment protection.

Governmental institutions, according to certain economists, don’t have the appropriate incentive or even information for climate action. Context of environmental preservation can vary highly over geographies and demographics; hence decentralization becomes an important tool in implementing the regulations, absence of which can render huge shortcomings to the goal. Some popular methods proposed, some of which have already been employed in various parts of the world, are taxes (pollution/carbon taxes), tradeable permits (Cap and trade schemes) and quotas.

On the other hand, some have commented, notably Mark Sagoff in his 1992 critical essay ‘Free-market versus libertarian environmentalism’ that FME is not representative of the entire libertarian take but possesses quite some differences with libertarian environmentalism. Taking reference of Anderson and Leal’s work on FME, he notices that their version of FME considers economic efficiency as the supposed main goal of environment policy and disagrees with their observation that environment protection and markets do not go hand in hand (Anderson and Leal claim depletion of resources is necessary for economic progress) which clearly, like Sagoff points out, should not be considered as a principle. He discusses how libertarian environmentalism actually works on the same basis of the philosophy of libertarianism; pollution essentially is violating other’s individual rights and hence should be punishable. He suggests that environmentalists should adopt the libertarian way of treating pollution as a tort rather than as an externality.

Challenges to libertarian environmentalism

Continuing from Sagoff’s critique, the argument that market and hence economic progress mandates resource degradation is not necessarily true, especially today where we have well developed concepts already being talked about, for instance ‘doughnut economics’ and ‘circular economy’. Libertarians also need to argue against the allegation of their practices leading to only damage to the environment, when the truth is that free markets have enabled great innovations in several sectors such as food, energy, and water.

However, just as a dominant solution for libertarians for environmental preservation is property rights, a dominant problem for this argument is – you guessed it – property rights. Property rights allocation works great in case of certain resources such as land, however defining property rights in case of resources such as water and air still doesn’t work effectively. These resources simply cannot be assigned to actors as their ‘private property’ for them to preserve it. Another important aspect to note is market failure related to the nature of consumption and if appropriate rivalry of the goods is present for the markets to function efficiently. As Kolstad describes in his article, consumption of air, for instance, in a particular area by me doesn’t hinder the intake of air by you, such open source or ‘commons’ don’t make good rivals and hence even though markets trading these goods will function, it won’t happen effectively. Litigation of such cases – identifying definite culprits and providing ‘justice’ to the victims – will entail huge transaction costs, and hence polluting is the cheaper way out. Quotas, for instance trading schemes and fishing quotas, also run the risk of too much complicacy for the target audience to understand before compliance, since different states (e.g., multiple federal states of a country, or multiple countries involved in an international system) can adopt different approaches and regulations. For such an instrument to work successfully, as has been often suggested in case of emission trading schemes, there needs to be one common framework globally. Uneven standards over geographies can cause carbon prices to fluctuate frequently and set per unit carbon prices which are too low as compared to the social cost of carbon, therefore, making it uninteresting for the parties to participate in the trading.

Carbon taxes have been another prominent solution offered by this pathway. Based on the polluter pays principle, carbon taxes take care of the additional social costs generated by the respective source. The tax eliminates the conundrum of preserving the commons and provides an incentive to minimize pollution in order to save business expenses. The revenue raised can be further used for developing more mitigation efforts. Even though many countries in the world have successfully implemented it, a common critique that such taxes face are development of tax havens and subsequent shifting of industries to these havens thus affecting the economy of the taxed region. Not to forget such taxes are especially difficult to monitor and might also invite tax evasion. Another argument offered against such taxes is it allows the ‘right to pollute’ as long as you are able to pay for the damage you induce, which defeats the fundamental purpose of such a tax.

Quite some critics call out libertarians citing their fundamental philosophy, that they are hostile to market instruments where state is the authority assigning property rights (case in question being emission trading; however it is questionable if emissions trading really can be called property rights), hence contradicting their belief of rights preceding the state; and they of course have issues with the method of government regulation, so libertarians might as well declare climate change as a hoax. However, one can argue that this might not be a legitimate argument; if libertarians don’t have problems with state assisting with property assignment (e.g., when you have to buy an apartment), why would they specifically have a problem while assigning rights in this case?

Sagoff in his essay also discusses how the ‘libertarian assumption’ that state will always be inefficient, corrupt, inadequate and underinformed might not be true as we have examples where country governments have enabled environmental regulations effectively and impactfully. If the libertarian argument is how free markets are the remedies to everything and rely on pointing out flaws in the governmental method, the other side can also use the same blame game logic and start pointing out flaws in the market system; such argumentation doesn’t do any service to the cause.


While some call libertarianism the ‘natural home to environment protection’, there are plenty of arguments available suggesting libertarian ideology doesn’t go hand in hand with environmentalism. Viewing past the libertarians’ painted picture of ‘propertarians’ and economic development maniacs, one cannot deny the benefits of free market environmentalism and the relevance of libertarian ideologies of respecting all individual rights and therefore not polluting the commons (which is a result of an individual’s ‘right to pollute’ but leads to infringement of right to breathe fresh air by many others, which isn’t acceptable under the school of thought). There are multiple ways suggested, especially by Sagoff, how libertarian ideology could be useful to environmentalists. Government regulation has been the dominant pathway of climate action, even as it manifests extremely slowly since international environment law works entirely on consensus, which as one can guess is quite a herculean task to achieve. Free markets and the libertarian ways might be faster and more efficient; however, the fact of the matter remains that the main basis of the libertarian solution, the process of defining property rights, is not straightforward in case of open-access resources. Even if we manage to succeed in the endeavour somehow, suggested market instruments come with their own bunch of caveats. Pollution still remains a social cost which someone needs to take care of – and pushing this blame onto each other by calling other’s ideas intellectually inferior might consume the critical time that we have left to generate action.

(This article received valuable inputs from Divyanshu Dembi. Find his writings here.)

India’s Renewable Energy policy 2020

By Aditya Chhatre

India, currently nearing the population of 1.4 Billion, is a critical energy market in the global energy scenario. India’s growth is also closely linked with its growth in the demand of electricity. Satisfying the needs of such a growing country, India has made progress in recent years in implementing various reforms and energy policy objectives. Along with the need of generating additional energy, there are also other global challenges which India is bound to tackle. On the path of enhancing the energy system, the Indian government is focusing on energy security, energy affordability and energy transition to cleaner resources.

International Energy Agency(IEA) is a platform for global energy dialogues, providing analysis, policy recommendations to governments. It is an autonomous inter-governmental organization opening doors for emerging economies such as India, China and Russia. The main objective of IEA is to work with governments and industry to shape a secure and sustainable energy future for all. IEA broadens the focus on energy policy by extending support with in-depth policy review. This article is a review of the IEA report on renewable energy which highlights India’s current practices and further recommendations in the ambitious energy transition, policy development from international experience.


As of 2020, India has an installed grid capacity of 373 GW, with installed renewable energy capacity of 87 GW. By 2022, which would be the 75th year of India’s independence, the country aims to have 175 GW of installed renewable electricity capacity. Further plans pan out to be having targets of 275 GW up till 2027. Prime Minister of India also announced an ambitious goal of 450 GW in 2019 during the UN Climate Summit, New York.

Figure 1. Percentage Share of energy resources of electricity generation

Analyzing the trends of electricity from renewable energy resources, it displays an uneven trend from 1990 with 25% of share of renewables to approximately 21% in 2019. During the 1990s, strongly increasing electricity demand was met with increasing generation capacity with coal, oil and gas power plants. This reduced the share of renewable energy resources to 15% during the early 2000s. However, this trend has improved within the last 5 years wherein the rapid expansion of solar and wind power plants has kept the share of renewables above 20%. Government of India (GoI) has set on the individual targets to achieved 175 GW of renewable electricity installed capacity by march 2022, wherein wind and solar have the highest potential targets of 60 GW and 100 GW respectively.

Figure 2. India’s 2022 renewable energy targets

Finance and Policy

The roadmap for India’s renewable energy journey seems opportune, although there are many financial hurdles which needs to be carefully resolved. According to the IEA the hurdles of investments in renewables sector are mainly related to small size of energy projects, credit rating of the off-taker, the absence of clear business models for rooftop solar and the disaggregated markets. Having identified the sectors to work upon, GoI has executed various schemes and policies to tackle each issue.

Distribution companies (DISCOMs) are the roots of the growing tree when considering investment in solar. DISCOMs are the entities buying electricity from the generators and selling it to the customers. The financial stability of these bodies is a necessity to achieve solar PV targets. The finances of such entities are volatile in India because of the reasons such as poor metering and poor payment discipline. To address this issue GoI in 2015 had introduced UDAY scheme in which 75% of the utility debts were taken over by the state and in return DISCOMs were expected to improve their financial and operational systems and making grid more efficient. Although, this scheme’s success was varied across states, Maharashtra and Uttar Pradesh were the states which got the most benefit from the scheme. Many states like Kerala and Bihar are struggling even today.

When it comes to decentralized projects such as solar rooftop, irrigation solar pumps, mini-grids it is difficult to find funding from local banks. Local banks prefer to fund large scale projects such as utility, the reasons being fair, that the smaller customers usually lack framework and also it takes time to evaluate the valuation. Hence, even though there is huge potential in volume in such projects, it is not possible for local banks to fund small-scale projects. Acknowledging the problem in the system, RBI has included renewable energy projects in the priority sector funding and advised all public sector banks to provide loans to rooftop solar systems as home/home-improvement loans.

The markets in various Indian states are met with strong development risks. The development risks start with land acquisition problems in the states such as Jharkhand, Uttar Pradesh, Bihar and Odisha. These land issues may be due to outdated and disintegrated records. Further renewable energy projects face problems in availability of infrastructure in rural areas and then grid connection is always a risk to be considered while developing the project. The Green Energy Corridor was a project started in 2013 to get rid of these disaggregated markets by enabling intra and inter-state transmission. Also, the policy to relax transmission taxes for 25 years on commissioned renewable energy projects until 2022 has facilitated wind and solar power plants. India to overcome land acquisition and connectivity issues has implemented a concept of 47 solar parks with combined capacity of 25 GW across the country. Solar parks are expected to contribute approximately 50% of its total state solar installation. The instrument of solar parks has experienced some delays, so a similar strategy for wind projects will require high resourced land and its lack of availability will lead such a plan being a challenge for implementation for on-shore wind power plants.

Besides development risks, there are also operational risks of renewable energy projects which can also be an obstacle and hence needs pre-planning. The operational risks are closely related to the power prices. The prices from renewables are expected to be lower than INR 3/kWh by the states, but these expected prices may vary after the states perceive lower price in other states. In 2018, to protect national manufacturers of PV panels an import duty tax of 25% was imposed on the panels from China and Malaysia. This created cost uncertainties within ongoing projects for various developers. Increased investments and continuous R&D is helping to improve technology like Solar PV and Wind. This has an positive impact on the cost of the equipment and products. Although this reduction in cost could create chances of renegotiation of CAPEX for contracts leading towards changes or cancellations. In July 2019 the price drop of solar panels caused the government of Andra Pradesh to take a decision to cancel and renegotiate unilaterally the Power Purchase Agreements (PPA) in pipeline. Such unsteady prices may lead to delay or cancellation of PPAs. To avoid such scenarios, instead of the having the conventional ‘one plan forever’ approach, ‘portfolio approach’ to projects where we decide upon portfolio of plans within the process which evolve over time when preconditions change, could be enforced before the commissioning of the project. Along with it, long term equipment provider contracts and the sanctity of the contracts by the regulators should be taken care of. Moreover, rapid timelines and standardization of PPAs would help to speed up the projects.

Policies are the catalyst for implementing and driving the system towards achieving these levels of renewable energy installations. Policies are dynamic in nature and have to be regulated in a different manner for specific sectors. The continuous evolving policies and strong political support could enhance the growth of renewable electricity of India and help to meet the energy policy objectives. India has focused on some prime sectors which in a longer run will be helpful to uplift the share of renewables.

Utilities 1. Renewable Energy Certificates (RECs) were implemented in 2010 to increase the use of renewables and trade for discrepancy

2. In 2018, the renewable purchase obligations (RPO) obligatory criteria’s were raised from 17% to 22%

3. In 2019, hydropower sector included in renewables

4. SECI auctioned 47 solar parks with 25 GW combined capacity

5. Renewables energy projects commissioned until 2022 are exempted from transmission charges for 25 years
Rooftop Solar1. Target of 40 GW until 2022 in 100 GW solar target

2. Central financial assistance for residential, institutional, social and government buildings

3. Regulations implemented for net metering systems in 28 states

4. Agreement of CAPEX for governmental rooftop projects

5. 6.5$ Billion approval for promoting solar among farmers
Offshore wind1. Collaboration with European Union to find bottlenecks
Off-grid solar1. In 2015, Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) adopted to support decentralization

2. In 2017, Off-Grid and Decentralized Solar PV Programme implemented for lighting and water pumping application in rural areas

3. In 2018, Atal Jyoti Yojana (AJAY) implemented for installing 3 million solar street lights

4. In 2019, KUSUM scheme implemented to replace diesel pumps
Bioenergy1. Promotion of Biomass-Based Co-generation in Sugar Mills

2. Policy to instigate low-level biomass co-firing (5-10%)


After a comprehensive analysis of targets, energy policies, schemes and implementation burdens, IEA bottles down the review to the recommendations which could be beneficial and supportive to the Government of India in the journey of achieving energy goals and emerging as a leader in renewables. India needs an integrated strategy including electricity, heat & cooling demands and transport sector to tap the large potential of renewable energy in the country. Supporting distribution systems by incentives and standardization of rooftop solar projects will turn as a realistic business model strengthening the growth of the market. The business model also can be advised by including the best practices and learnings from the international and national players in the market. India should focus on complete implementation of the UDAY scheme which has proven financially strengthening the DISCOMs for some states and further also ensure the compliance of RPOs which increase the share of renewables in the grid. For building such a strategy, the intensive auction strategies of Solar Energy Corporation of India (SECI) which was a successful attempt, can be adopted to meet the goals of 175GW of renewables until 2022. The plan which India is working on till 2020 needs to be supported by also the longer agenda of 275GW and 450GW eventually, creating conviction and trust in this sector for investors.

The Norwegian success story of Electromobility

By Aditya Chhatre

Carbon Dioxide (CO2) once released into the atmosphere could stay around for 300 – 1000 years. Around one-fifth of the global CO2 emissions come from the transport sector (passenger + freight), in which 75% can be accounted to only road transport. Hence, popularizing electromobility could have a significant impact in reducing those CO2 emission and reduce environmental risks. Looking at countries with maximum number of electric vehicles, USA and China stand on top of the chart. But when it comes to market share of electric vehicles within a country then Norway is the winner by a large margin. The journey of EVs in Norway started in 2011 with share of passenger cars at just 1.6% and now Norway has the world’s largest market share for EVs with 61.5%. With this astounding success Norway has set a benchmark for all the aspiring nations to achieve better electromobility goals. A number of factors helped Norway to achieve this feat.

Secure Pre-conditions

Looking a few decades back, till the 1950s Norway’s economy was mainly dependent on fishing. In 1959, Shell – a Dutch oil and gas company – discovered little gas sources around Norway. With further explorations, one of biggest oil fields was discovered near the Norwegian waters. In 1972 Norway founded its national oil company ‘Statoil’, now known as Equinor. That is how the oil boom started in the country, and today Norway is the fourth largest oil producer in the world. After sufficing the domestic needs, natural gas and oil form a major part of their exports. With reference of electromobility, increasing the use of electric vehicles will reduce the domestic consumption of oil and gas. This was a perfect blend for an oil and gas intensive country, and promoting electromobility technology at home eventually increased the high-in-demand oil and gas exports globally, generating higher revenue for the country.

Norwegian state owns a major share in the company Equinor, so in a way Norway’s economy is significantly controlled by the state. The Norwegian administration was prudent enough in investing this oil wealth in a global fund called the sovereign wealth fund. Some other progressive countries, in particular China, Singapore, United Arab Emirates and many more varied countries, are co-investors in this fund. However, Norway has the largest of the all sovereign wealth fund which stands at $1.17 trillion providing a strong financial backbone. Moreover, the government uses only the interests/profits of this fund and not the capital for public use. It is the one of the few countries of the world which does not have a significant debt which makes it net a positive economy. Having a strong and stable economy allows a country to push new technological boundaries and bear the potential risk involved. The Norwegian government had ample scope to invest and take risks in new technologies such as electric vehicles.

Managing to manufacture such high quantities of vehicles could be tricky as setting up manufacturing factories and predicting the initial demand can be a tough task. Along with the imperative of economic security, Norway ranks at 119 globally with regards to population. Because of comparatively low population their demand-supply threshold is low. Taking into consideration lower population manufacturing facilities to meet the EV demand was manageable which made penetration in the country achievable compared to other highly populated countries.

EV attributes

It is only environmentally viable to adapt to EV and reduce combustion engine vehicles only if the electricity generated in the country has higher share of renewables; promoting EV and charging them from fossil-fueled electricity would not be as efficacious with regards to the aim of reduction of CO2emissions. In Norway, 98 percent of all electricity production comes from renewable sources. Hydropower is the basis of renewable energy sector of Norwegian industry with around 95% of the electricity generated in Norway being from flexible hydro power plants. There was a large installation of wind power as well in 2019. With such high shares of hydro and wind power, Norway is electricity surplus country. This surplus of renewable energy fits in perfectly for supplying added electricity demand from the EV market with clean electricity.

Even after all these pre-conditions which support the idea, its actual implementation is always a challenge. Charging infrastructure needs planning and high investments. Strategically, for establishing infrastructure for electromobility there is a dilemma between whether to increase the number of electric cars as a first step or the first step as making charging stations widely available. Norway targeted areas with higher population density to tackle this dilemma. The population in the country is concentrated in the southern part of Norway, with the counties of Oslo and Viken being the most inhabited regions of the country. Initial focus of developing the necessary EV infrastructure was laid in these regions. This made majority of the people familiar with the technology and eventually believe in it. Once the demand of cars increased in these regions, multiplying the infrastructure to other regions of the country was done with efficacious planning. Now, there are hardly any regions without charging stations to be found in Norway.

Governance and incentives

Technology alone cannot meet success; it needs favourable laws and incentives in the initial phase to have an exponential growth. It simultaneously needs to flatten the use of the previous technology in the market to replace it. Norway levied massive taxes on the ICE vehicles and reduced the sales and import tax on electric vehicles making it pocket friendly for the customers buying cars. Along with it, the government awarded free parking and free toll roads for EVs and such plans for electric vehicles turned out to be a much easier choice for the buyer for long term investment too. Commuting was also made faster by permitting EVs to access the bus lanes which has comparatively lesser traffic.

The investments and the plans for electromobility in gaining ground were implemented mainly between 2009 and 2011. Approximately 7 Million Euros were invested during these 2-3 years in building infrastructure for manufacturing and charging. Since then the percentage of market share of electric vehicles have seen constant growth by maintaining technological and governmental upgradations in the schemes and policies.

Figure 1 : Elements of EV Success for Norway


The efforts to make electromobility a success for Norway took focused efforts for longer than a decade. This EV success story for Norway continues to progress. The next goal for Norway is to have all new cars sold from 2025 be electric or hydrogen-fueled to achieve zero emissions. Learnings from Norway shows that transition from ICE to EV is surely possible. For countries looking up for implementing plans for electromobility, it is absolutely possible to adapt similar corresponding plans in their respective countries. The key fundamentals elements which need to be at place are share of renewable energy, revenue for the infrastructure and governance support for execution. An overall effort, wherein the fundamental, economic and systemic factors incorporate and evolve gradually for longer goals should be roadmap of all countries for transitioning the transport sector to a low emission sector with electromobility.

Reimagining India through the lens of Circular Economy

By Vidushi Dembi

Indians inherently are great consumers, as in, they consume the hell out of a product. Not great consumers in the true business sense though — homely jugaads like using finished jam bottles for storing spices, old t-shirts as the kitchen cloth and making bed sheets out of old sarees can sometimes act as real substitutes to consumerist behavior. Whenever a new item is purchased, its durability is a major criterion and its life cycle is charted prior to making the decision. Circularity hence is not entirely alien to our culture.

The concept of circular economy around the world as well is not new, it has been floating in the academic circles for many years. However, in the last decade or so it has gained traction as a real buzzword, and is today more relevant than ever. World population continues to grow, with standards of living continuously improving and consumerist behaviour driving the economic growth more than ever. Global North, that doesn’t have to care about population boom, continues to consume and discard materials at an unprecedented rate. Global South on the other hand, with its increasing population, standing at the threshold of the portals to western ideals of development, has begun its journey on the same path of take-make-waste, and India is a vital part of this narrative. Before Covid-19 pandemic hit the world, India was riding a roller coaster on its way as one of the fast-emerging economies of the world.

Societies today have multiple pathways to the ultimate coveted summit of ‘development’, which don’t have to be identical to the path taken by the industrialized economies. Pushing the envelope with the take-make-waste approach, circular economy offers an alternate, comprehensive and sustainable approach to development. 1.3 billion Indians, who the next census will tell if they have surpassed China in numbers of mouths to feed, continue to compete for the country’s resources. The country’s economic slowdown, now worsened by the pandemic, has aggravated the struggle. India would need to adapt a sustainable model of development to still be able to call itself an “emerging” economy, and a developed state in the future. Even though the per capita figures are small, according to the World Bank, India produces the most waste globally, with a 2016 estimate declaring the amount of solid waste generated as 277 million tonne per year. India is also the third largest emitter of greenhouse gases; even as per capita levels remain insignificant as compared to the top two emitters US and China. Elite imitation is not the only alternative for becoming a developed state, and surely not for sustaining the developmental status. We have the advantage of learning from history and hence designing India as per the framework of circular economy can help us avoid taking the same wasteful path and ensuring a sustainable future.

The concept of Circular Economy

Just like the aforementioned Indian households, circular economy believes in maximizing value. Rather than the conventional ‘cradle to grave’ approach where we use and throw products – whose true value remains unoptimized and continues to contribute to the growing pile of garbage, circular economy promotes the ‘cradle to cradle’ approach, where materials are kept in circulation for as long as possible. By designing products to be reusable and recyclable, it aims at eliminating waste. Focus is laid on building not only efficient but resilient systems. Other important concepts that it encompasses include bio-mimicry, regenerative design and performance economy. Ellen Macarthur Foundation (EMF), a pioneer in championing the concept, distinguish between the technical cycle — where techniques like reuse, repair and refurbishment are used as product recovery strategies, with recycling being the last option, and biological cycle — where consumption is allowed however regeneration of the utilized nutrients is also ensured with methods like composting. They describe the following as three main principles of the circular economy:

  • Designing out waste
  • Keeping materials and products in use in circular loops
  • Regenerating natural systems

Viewing India’s future through this lens reveals the relevance of the concept to the Indian scenario. Waste management particularly has not been our strength, and we therefore need better designed products which minimize the need of dealing with materials after their life cycle ends. Large part of India’s population is also dependent on agriculture as its main livelihood, hence a focus on, say, returning nutrients to the soil and support regeneration can be a game changer for the agro sector. With 7 Rs of Rethink, Reduce, Re-use, Repair, Refurbish, Recover and Recycle, it is evident that there are multiple ways of thinking beyond the conventionally talked about Recycling approach, which sure is a part of the picture but is not the only resort to optimizing the value chain. Cascading cycles ensure optimum use of materials, high utility, replenished natural resources, eliminating waste and hence ensuring prolonged and sustainable progress.

Source: Ellen MacArthur Foundation, SUN, and McKinsey Centre for Business and Environment; Drawing from Braungart & McDonough, Cradle to Cradle (C2C)

India’s current path of development

World Bank has pointed out in the past that India’s story is one of growth and achievement. Home to rapidly emerging middle class, India has shown a rather stable growth path. However, past few years have seen an economic slowdown. Even before the pandemic put a hold on global markets, and shocked Indians with -23.9% growth rate for Q1 FY 2021, India’s growth had already started to decline in various sectors like agriculture and construction. As India now focuses on gaining the traction back, this might be just the moment for integrating circularity in the economy.

Product optimization has remained crucial for the common Indian. Repairing, refurbishing and recycling supports an entire bunch of people employed in the informal sector which is critical in driving and supporting this concept. e.g. 60% of discarded plastic is recycled in India, which is much higher as compared to economic giants. However, majority of this is being handled by the informal sector and therefore doesn’t lead to institutional changes needed to achieve circularity systemically. The country employs more than half of its population in the agriculture sector, even though agricultural output and its contribution to GDP is not in proportion to the people employed. The agriculture sector has seen slowdown in the past years, even as India is faced with the challenge of feeding it growing population. Agriculture struggles to thrive along with the problem of soil degradation, which is due to natural as well as human-made causes. It also competes for water resources with millions of people living in lack of water and sanitation facilities. Where developed countries face the challenge of food wastage majorly in the consumer stages, food wastage in India is spread across the entire value-chain, with millions of tonnes of grains wasted in post-harvest and storing stages. In the 2020 Global Hunger Index, India stands at 94th position out of the studied 107 countries in the 2020, under the category of “serious level of hunger”. India still is a major global exporter in the sector, however, there could be an impending supply constraint in the future with India’s growing population and increase in per capita calorie intake. India is also urbanizing rapidly, which means cities are constantly under increased pressure for supplying resources to a growing population in a limited area. Cities are key drivers of economic growth worldwide, and even though official sources suggest a figure of 30% urbanized India, several studies suggest that the actual figures could be way more depending on the way urban areas are defined. Growing standard of living improves citizen’s purchasing power which pushes them to consume more. One could even take the liberty to claim that for the emerging middle class, acquiring of assets might be more like a status symbol than seeking real utility and optimization. India’s per capita material consumption however remains rather small as compared to other growing economies. Indian government with its initiatives liked Swaccha Bharat and Smart Cities mission are expected to help build the necessary framework and infrastructure. India is involved in many joint programmes with international governments like Germany for capacity building and idea exchange, however cost benefits of such schemes could be limited if an integrated approach is not adopted at a large scale. Rapid urbanization also invited problems like traffic congestion and pollution. India is home to some of world’s most congested and polluted cities, which seen on an Indian scale is a remarkable outlier, as only a little above 2% of the Indian population owns cars. There have been many initiatives by a number of state and city governments to tackle such issues, with cities like Pune gaining recognition for many of its successful initiatives. Government is increasingly recognizing the vitality of public transport infrastructure and is also trying to push electric vehicles in Indian markets. ICE vehicles might still rule the roost for a long time till some significant policy changes are introduced. Another growing sector is the electronics market, where majority of the demand is met through imports. Managing electronic waste however is becoming a nuisance as India generates two million tonnes of e-waste annually, with a mere 1.5% of India’s total e-waste getting recycled and almost 95% of it being handled by the informal sector. Metals constitute an important component of these gadgets, extraction of which is an energy intensive process. Unorganized handling of e-waste also poses hazard to the workers and the environment. Economic development also means more commercial and residential buildings being built in India, with studies stating that over 70% of the buildings in India estimated by 2030 are yet to be built. Construction and demolition waste contribute to one-third of India’s total solid waste. Building sector makes a large part of the pie of India’s greenhouse gases emissions, which means there is a huge scope of improvement in resource efficient buildings and cities. Sectoral analysis can be done of each segment of Indian economy, especially the ones driving the growth narrative, which ultimately will reveal great initiatives taken but have huge scope for improvement in setting the framework for sustaining the growth. The Covid-19 pandemic saw a rapid pile-up of the already gigantic mountain of plastic waste, with single use masks, gloves and other medical waste putting more pressure on the existing insufficient waste management infrastructure. Circular economy focuses on making economic growth independent from linear consumption of limited resources, and hence would enable Indian state to be a more resilient system.

The reimagined path of circularity

Propelling India’s economic growth needs constant resource supply. Our resources are only limited and the world’s growth is way too dependent on the linear, under-optimized model. Ensuring that materials in the society run as much as possible in loops will allow maximum utilization of resources therefore minimizing the amount of waste generated. Circular economy as a concept is fairly well known in the Global North, especially Europe, however utilizing it in India opens a door of brand-new possibilities. As India undergoes rapid modernization in its infrastructure and institutions, the time is appropriate now more than ever. The EMF in 2016 released a detailed study of such a framework in India and reported an annual value creation of ₹14 lakh crore (US$ 218 billion) in 2030 and ₹40 lakh crore (US$ 624 billion) in 2050 as compared to India’s current developmental path. As a result of eliminating waste, a cost benefit of 30% by 2050 has been indicated.

Keeping materials in loops would mean a cut in energy use and emissions to create virgin materials, which will have a significant impact on India’s carbon footprint. Concept of ownership also is redefined in such an economy, where we take products/services on lease from the manufacturer rather than owning them, and returning them back to the manufacturer once they are close to achieving their optimum performance in the first cycle. The manufacturer then takes the product in, repairs/refurbishes/recycles it and sends it back to the market starting another loop. With reference to this technical cycle, organized refurbishing, remanufacturing and recycling sector will lead to new job creation at a large scale. More than half of the world’s population lives in cities and the numbers are only going to increase, and same holds true for India as well. Promoting circularity in city planning would include optimum urban planning, space management (e.g. constructing vertically instead of horizontally in congested cities like Mumbai) and a resilient energy system. In energy sector India is hugely dependent on imports especially for oil and gas and promoting circularity through renewable energy available amply in the Indian mainland will be essential for an atmanirbhar Bharat. Building segment has ample room for cutting emissions which can be tackled using sustainable raw material and optimum design. World Economic Forum in 2016 had reported that adopting circular principles in the building segment could help many countries to achieve cost effective emission cuts and attain energy savings of more than 30%. Mobility sector also is a huge playground for the circularity concept, with public transport being key to developing a truly liveable city. With a huge population still without personal vehicles, this could be an ideal starting point to develop effective and diverse transport network to serve the large chunk of the Indian population. The EMF report indicates that the suggested circular development path could reduce total vehicle kilometres travelled by 38% in 2050, helping significantly in lowering congestion on roads. Looking at the biological loop of the circular economy framework, it would require efforts on eliminating nutrient leakage, with consumption allowed but with ensuring releasing the residues back to the ground using methods like composting and anaerobic digestion. The huge amount of losses throughout the value chain is taken care by ensuring shelf life of food is improved and residue/waste is used for regenerative process like making livestock feed and biofuels. Digitization of agricultural sector can enable farmers to be active participants and for developing an optimum process flow. There are certain successful programs already like that of ITC’s e-choupal, which is helping develop an efficient supply chain, with real-time information and customised knowledge enabling the farmers to take better decisions, align their yields with market demand, maintain high quality and ensure better productivity. Effective water management is achieved as continuous nutrient circulation prevents soil degradation and minimized food waste means decreased in the water wasted in making of the potential food. Total annual benefits of ₹3.9 lakh crore (US$ 61 billion) in 2050 with 31% less agricultural GHG emissions have been estimated.

Long story short

Parts of the circularity concept exist in the ethos of Indian society; however, their manifestation has largely been informally and unorganized at smaller scales. To enable circular economy in India would require a systemic paradigm shift from the linear model to the circular model to be able to reap the entire set of benefits. Businesses as well the government has taken note of the future possibilities of this pathway, and the government would need to make active policy changes in order to encourage circular behaviour in businesses. Multi-level governance is of key importance in this regard, and this would need more decentralization of power to local government as well to make significant impact. Each sector of India’s economy could operate in its own loops which then are connected in inter-sectoral loops forming a comprehensive framework. There are huge opportunities for bringing down the country’s carbon footprint, creating new jobs, and creating true economic and sustainable development. Circular loops would enable better, inclusive and healthier ways of living for the citizens. Awareness would play a major role in propelling the concept in the country, hence educating the conscious Indian youth beaming with ambitions and innovation could potentially be real advocates of the concept. Circular economy is not just an on-paper idea but an extensive structure which makes business sense along with real socio-economic benefits. The recent European Green deal has recognized circularity as a key concept for sustainable development. India today has a chance to be an early adapter in order to drive its transition as well as gain advantage over the conventionally industrialised economies for a better future.

Indian Government’s Plan to auction off 41 coal blocks to private sector

India standing in the forefront of developing countries has a continuous increase in energy demands. In the race of energy generation technologies, we have come a long way to rely on coal as the more dominant resource. India is the second largest producer of coal with 716 million tonnes after China with 3523.2 million tonnes [1]. Analysing India’s coal usage, with the reserves of 319 billion of tonnes of coal [2], India uses 966 million tonnes of coal every year [3]. Although, 246 million tonnes of coal are imported mainly from Indonesia, Australia, South Africa and Russia. [4]

On 18th June, 2020 PM Modi addressed the event in which 41 coal mines (later changed to 40) were auctioned for commercial mining. Currently India has 83 operational coal mines with producing around 450 Mt of coal with Coal India Ltd. (CIL) being the largest coal producer of India [5]. Here, the roadmap started in 2015, where changes were made to make the laws in the coal mining sector so that private companies carry out mining as a captive requirement not for sale or other purpose. But this news has come with a further change with the removal clause of captive use being removed.

Considering Coal as a sector, this story can be linked to the target of increasing the GDP by 10%. (Federation of Indian Chambers of Commerce & Industry) FICCI in 2019, bolstered the increase of revenue from the mining sector to achieve this target. The mining sector now contributes approximately less than 3% to the GDP, NITI Aayog wants it to be 25% [6]. Moreover, this sector also provides around 355-500 thousand jobs, which are bound to increase with this auction adding more 280 thousand. All in all, this is a big thumbs up for the economy. [7]

Regarding the future of energy, renewable energy is the clear winner because of the cost and increasing efficiencies. Also, foreign investment and acceptability is more in renewable energy so we should not expect FDI in the mining sector. Moreover, various countries in the world are moving away from thermal power plants in the next 15 years. Having all this in the background, digging more 41 coal mines could turn out to be a risk. It is true that coal is our base load, but we can surely get rid of old and not efficient power plants. Also, the quality of coal from India has higher ash content making it non-compatible with highly efficient boilers in thermal power plants (example: Mundra, India). This deal can be helpful for making India independent and reducing imports, investing the funds in your own country. But rather, there are hidden costs to make these 41 coal power plants operational, which is 33 thousand crore rupees [7]. This money could also be invested in the renewable energy sector and try to shut down some thermal plants.

Talking about coal and mining, the environment is always a major parameter. Even though India should already start it’s plan of shifting its dependency on coal and ideally no more coal mines need to be explored, this system is complex and India even actively striving to be a pioneer in renewable energy has no concrete plans of phasing out coal. Geographically, coal and iron are found in dense forest regions. Out of the 41 blocks, some of the blocks have a forest cover of 50-80% [8]. These can turn in a setback for India with the targets of reducing carbon emission. There also exist tribal communities in the marked areas which would need to be displaced. So, these 41 blocks have reserves of approx. 17 billion and if India needs the coal to compensate with the imports of .2 billion/year, then these reserves would last for around 85 years [9]. This shows that there are no plans of phasing out coal from the government, instead to rely on coal for a long time of 85 years. Also, on a longer run, we would still face similar issues after 85 years. We need permanent solutions for reducing our dependency on coal.

Practical solution for the current situation is balance and delineating a plan for an optimum solution. As of today, 67% of the allotted coal mines are not even operational[10]. Firstly, we need to align with the renewable energy capacity targets of 175GW till 2020 and 450GW till 2030[11] and secondly, expanding and optimizing the use of existing blocks to its maximum efficiency. We then would be in a better position to decide upon only some of these blocks for mining, which are not so densely forest covered and meet the demand of imports. This would suffice the energy demand along with preserving the biodiversity and the tribal communities living there.