Role of Indian businesses in driving ambitious climate actionby e -
There is now growing consensus around a key finding first published by the IPCC in 2018: the world needs to reach net-zero carbon dioxide emissions by mid-century to meet the 1.5° C temperature target of the Paris Agreement, something which will require transformational changes across energy and transport systems, industrial technologies and processes, and lifestyles.
UN Environment’s Emissions Gap Report acknowledged the instrumental role of voluntary climate action from subnational and non-state actors in bridging the gap between countries’ current policy commitments and the level of ambition required to meet the above goal. More than 2000 businesses and more than 500 cities have already signed up to the Race to Zero campaign ahead of COP26.
Climate action by Indian businesses
Indian businesses are undertaking significant voluntary action on climate change. As many as 57 Indian companies have set or committed to setting Science-based Targets. Many others have set renewable energy and energy efficiency targets. Indian businesses are also increasingly putting an internal price on carbon to meet their climate targets, with 25 already pricing carbon and 33 more planning to do so in the next two years, according to CDP.
At the same time, the industrial sector is also a key contributor to national greenhouse gas (GHG) emissions: direct emissions (including fuel-use and process emissions) from the industrial sector comprise a quarter of India’s total annual GHG emissions. The industry also consumes more than half the total electricity produced in the country, which comprises another 40% of national GHG emissions. As India transitions from an agricultural to a manufacturing-based economy, the industrial sector is set to continue to grow, highlighting the need to decouple growth from emissions.
Given this context an important question to ask is: just how much is the overall emissions reduction impact of voluntary initiatives in the Indian corporate sector and what role can they play in driving ambitious emission reductions in India?
Potential impact from voluntary corporate commitments
In our new working paper, WRI India along with the Confederation of Indian Industry (CII) estimated the aggregate impact of voluntary climate commitments by the Indian corporate sector by applying the Non-State and Subnational Action Guide of the Initiative for Climate Action Transparency (ICAT).
Our analysis included 50 companies that have committed to time bound climate targets leading to quantifiable emission reductions, and whose emissions collectively comprised approximately 35 percent of total emissions from India’s industrial sector. Key results from our analysis are:
50 Indian companies included in this analysis can reduce their GHG emissions by 13.04 percent in 2030 through their existing voluntary climate commitments, relative to their emissions in the Reference Scenario. The Reference Scenario represents the company’s emissions in the absence of any voluntary commitments but accounts for emissions reductions that would take place independently of a company’s voluntary commitments, including applicable policy mandates such as the Perform, Achieve Trade (PAT) scheme, and extraneous improvements in technology or processes.
Existing voluntary climate commitments of these 50 companies can lead to a reduction of 1.74 to 1.95 percent in India’s aggregate GHG emissions in 2030 over and above national emissions projections that consider existing climate policies. Figure 2 depicts the potential impact of the voluntary climate commitments of these 50 companies on India’s current policy trajectories through 2030.
On looking at the emissions reduction impact of voluntary commitments by sector, we find that heavy industries such as Metals, Pulp & Paper, and Cement drive over 90 percent of the overall emissions reduction, despite their less ambitious emissions reduction targets on average, as compared to other sectors (Figure 3).
Although this analysis relied on voluntary corporate disclosures from past three years and could include a small but significant subset of Indian industry, it provides valuable insights on the quantitative potential of voluntary action by the industry in driving emissions reductions at the national level. It also provides greater understanding of the emissions reduction potential in different industrial sectors, and potentially reinforcing relationships between policy mandates and voluntary initiatives of companies.
Moreover, by enabling a better understanding of the impact of voluntary action in the corporate sector, evidence such as this can improve engagement between policymakers and industry, help in the formation of more effective emissions reduction policies for industry, and encourage greater climate action from a wider set of actors, creating a virtuous ambition loop that drives greater climate ambition in India.