Plucking Carbon out of Built Structures

India is sparingly built. Satellite mapping of urban areas globally shows an average urban built-up area of 170 cubic meters per capita, with significant variation–600 cubic meters in the US versus 20 cubic meters in Bangladesh. The average for the Global South is 108 cubic meters, one-third of the average of 300 cubic meters in the Global North. India is at around 50 cubic meters. No surprise then that plucking carbon out of built structures has been limited to improving the efficiency of energy use since the late 1990s, initially in industry and then in commercial buildings.

Decarbonize energy to contain carbon emissions

Three-fourths of India’s emissions emanate from the use of energy of which 12 percent is from transport. This explains the government’s focus on electrifying transport and encouraging renewable energy–particularly solar power, which is about the only “natural energy resource” we are abundant in, relative to our population. India expects that the share in installed capacity of renewable electricity (RE) including large hydro and nuclear power, will increase from 34 percent (October 2022) to the planned 50 percent by 2030. The share of RE in electricity supply will increase from 28 percent in October 2022 to 40 percent by 2030. India’s decarbonization plan is not unique. In the 1980s, an abundant supply of natural gas—a cleaner substitute for coal or fuel oil and cheaper than nuclear energy till recently—drove much of the subsequent reductions in carbon emissions in Europe.

Stop transferring embodied carbon from coal to buildings

Buildings account for around 39 percent of global carbon emissions. The embodied emissions—those built into the mining, transport, and manufacture of construction materials—bricks, cement, steel, and glass account for around one-third whilst two-thirds are accounted for by the day-to-day operational needs—lighting, heating, air conditioning, ventilation, and maintenance. In India, the bulk of the operational energy needs is linked to the use of electricity for lighting and cooling.

In the Indian context of low operational energy consumption, the share of carbon emissions from built stock might be even higher than the global average, say in the high double digits. We do not yet have an inventory of such emissions or a mechanism for regularly monitoring and validating the assumed emissions. The Bureau of Energy Efficiency (BEE) monitors and regulates emissions. Its mandate, under the Energy Conservation Act 2001 was enlarged by an amendment in December 2022. Energy is now defined to include all forms of energy. Whether it would also include atomic energy remains unclear since it marches to a different beat because of its security implications.

The BEE will now prescribe and monitor energy conservation and carbon emissions standards for not only energy-using appliances and vehicles but also marine vessels, industrial units, establishments, and buildings with a minimum connected load of 100 kW. It will also likely issue energy savings certificates (ESC) to those entities which use less than the permissible volume of emissions. The Union government has yet to announce the scheme for ESC trading.

Why bother abating emissions in the acknowledged “hard to abate” sectors of minerals and metals which feed into embodied emissions in buildings? Commercially viable technologies such as  carbon capture and use or storage and green hydrogen are unlikely to exist before 2040 whilst nuclear fusion is a more distant hope. What makes it worthwhile to use scarce public funds for decarbonisation so early (net zero for us is achievable only by 2070) and especially at a time when inflation is above the norm and aggregate demand low cash-constrainedained consumers comprising 60 percent of the 250 million households.

Decarbonizing industry and buildings—four drivers

First, the projected 50-percent increase in population, over the next three decades shall feed into the demand for more built area. Second, growth in per capita income, as the economy expands towards the 2075 goal of a US$10 trillion economy—a three-fold increase over the present level of GDP—will generate demand for more built area. If we follow the trajectory of China, already a US$10 trillion economy, the built-up area should grow from 50 to around 200 cubic meters per capita—a fourfold increase. Third, energy technologies and industrial processes to support industrial decarbonization are still being developed globally. This presents an opportunity for our public and private corporations to collaborate internationally, acquire technology, develop skills, and create the institutional and business framework for industrial decarbonization.

Finally, decarbonizing manufactured products are key to remaining competitive in export. The European Union (EU) is to impose a carbon tax from 2030 on cement and steel imports. The scale of our protected domestic market provides rich pickings for Indian industry—often at the cost of product upgrades. Sans competitive exports, it will be impossible to create the “good jobs” required for our growing workforce.

Export of steel and steel and iron manufactures in 2019-20 (the last normal pre-pandemic year) at US$76.4 billion was around one-fourth of our exports of US$313.6 billion. Cement is presently produced mostly for the domestic market. Large-scale, export-oriented manufacturing can also reduce the traditional imbalance in our current account- imports exceed exports so how to pay for them? It can also reduce the compulsion to adjust our interest rates upwards, in synchronicity with global short-term trends to avoid capital flight to safe havens, even at the cost of hurting domestic economic growth.

Missing institutional framework for decarbonization

Rather than perpetually retrofitting the Energy Conservation Act 2001 (ECA) to the emerging needs of the energy transition, a new carbon management act would have been useful. There is weight in this argument.

The implementation body for the ECA is the BEE—an entity until recently affiliated only with the Ministry of Power. India has four other ministries which separately deal with energy—coal, new renewable energy, oil and gas, and atomic energy. A new carbon management act could have provided for a single autonomous regulator, specifically for mitigating carbon and regulating the market for carbon emissions, across all four energy ministries. An alternative is to merge all four ministries under a single Ministry of Energy. This is unlikely because of the enormous economic power it would vest in an energy Czar who would control twelve listed, large, energy public sector enterprises with a market cap of more than INR 6 trillion.

Oil and gas features in the central list where Union legislation rules but coal and electricity feature in the concurrent list of the Constitution where states need to buy-into Union legislative changes. Agriculture, animal welfare and land use, all in the State list and forests (concurrent list) account for 18 percent of carbon emissions. Under the circumstances, retrofitting might have been a good, if not the best option, preferable to the protracted process of enacting new legislation. Also, India chairs the G20 from December 2022. Being viewed as a “team player” by taking hard steps towards managing emissions is essential to gain credibility in that role.

Carbon abatement in industry

India has prior experience in incentivizing reductions in industrial carbon emissions. In the electricity sector, the Central Electricity Regulatory Commission, administratively under the Ministry of Power, regulates the market for tradable renewable purchase obligations (RPO)—a proxy carbon emissions abatement certificate. Retail electricity distribution entities are obligated to buy a minimum volume of RE or RPOs from the market. Since 2012 under the Perform Achieve and Trade scheme, applicable for 1,073 energy-intensive industries across 13 sectors, energy saving certificates (ESC) are earned for improving thermal efficiency beyond the prescribed standards. Cumulative CO2 emissions abatement accounts for 70 million tons. Since 2017, the ESC is tradeable. This experience in proxy carbon trading is now sought to be leveraged under the amended ECA.

India is taking active steps to remain a low carbon emission economy on per capita basis by greening the electricity supply, improving the efficiency of energy use and incentivizing producers and consumers to lower carbon emissions. Consolidating and expanding markets for the trading of carbon credits aligns with the global best practice of walking the tight rope between development and carbon mitigation. The institutional arrangements for managing the transition, especially in hard-to-abate sectors like buildings and industrial emissions remains nascent.

Union government-driven carbon regulation can break new ground. But enlarging the scale of carbon mitigation in line with our ambitious growth target requires carbon capture and reuse and low-carbon manufacturing technology development in collaboration with global partners by the domestic public and private sectors. Better enforcement of standards and norms is also crucial. Implementation and monitoring of emission standards remain with the state governments. Cities, particularly, where rubber meets the road, remain disempowered despite the 1992 constitutional amendments. Enhancing the capacity and the motivation of these agencies to reduce carbon emissions in buildings and industries requires urgent attention if the benefits of “sound and fury” progressive legislation are to be realized on the ground.

This opinion piece first appeared in orfonline.org December 22, 2022 https://www.orfonline.org/expert-speak/plucking-carbon-out-of-built-structures/

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s