Recent time witnessed Solar Energy Corporation of India (SECI) rising the upper tariff ceiling for its 10 GW of interstate transmission system (ISTS) connected solar photovoltaic power projects. This can be considered as a move towards the right path, factoring in lack of developer interest in recent solar projects. Although, Indian solar initiatives have earned commendation for making incredible growth trajectories (5 GW solar capacity in 2015, 10 GW in 2016 and ~24 GW in 2018), policy interventions are needed to protect and prioritize the solar industry for continued success.
GST is undoubtedly one of the bold reformations that promised to change Indian economic landscape for good. It has led to standardization of indirect tax laws, thus making them business friendly and intelligible for investors. Cascading of taxation was also removed by GST, which was the biggest problem with previous tax regime. All this significantly leads to ease of doing business in India.
However, aside from offering benefits, has also presented some challenges for nascent solar industry of India. Indian solar industry made incredible strides in recent years reaching 21 GW installed solar capacity in 2018 Q1 from a meagre 10 MW in 2010. New projects are being introduced, and investor interest in Indian solar sector is growing. In this scenario, policy reformations could have opened up even bigger opportunities for growing solar industry, leading India out of energy scarcity.
Curbing pollution and limiting global temperature rise is a necessity now. The Paris Agreement presented a platform from where initiatives for climate protection can be mutually taken by countries of the world.
However, consider these facts –
- Global energy supply through fossil fuels have reached from 6,100 million tonnes of oil equivalent (Mtoe) in 1977 to 13,700 Mtoe by 2014.
- Global energy related CO2 emissions are estimated to increase at an average of 1.0% from 2012 to 2040.
- From coal combustion alone, Asia’s CO2 emission is estimated to rise more than 2.2 billion metric tons in the future.
- Renewable energy (mainly solar) has reduced fossil fuel share by 22 per cent.
- 1 KW of green energy can reduce more than 3,000 pounds of CO2 annually.
We can come to a conclusion that green energy revolution is a necessity to stop climate degradation. And although it offers a reprieve from climate issues, countries working towards green energy transition is not enough to stop the spread of pollution from distorting the future of the world (dust and particulate matter (PM) may be reducing energy yield by 17-25 per cent annually in Northern parts of India and solar panels in Baghdad were seen to be producing less and less energy due to dust particles blocking the sunrays). We must take positive action towards reducing the pollution as well.
Carbon pricing or Pollution pricing can act as an efficient tool to reduce pollution, aiding green energy transition and climate restoration.
Carbon Pricing Or Pollution Pricing
Pricing pollution is quickly becoming one of the most important and promising methods of curbing pollution from the world. Business groups, investors- like The World Bank have made strides to encourage Governments and corporations to put a price on carbon to drive down emission, while speeding up green energy transition.
Why Supporting Pollution Pricing Is Necessary?
Price on carbon can shift the burden of the damage to environment and life through occurrences such as- health care costs from heat waves, damage to crops, damage to property and life due to droughts of flooding and sea level rise. By imposing tax on pollution production, these environmental issues can be reduced. The revenue generated from the taxation can be used to boost green energy transition, thus phasing out fossil fuels, which are the major contributors to pollution. This can serve as the most cost effective way of promoting climate protection and green energy generation. The carbon pricing can also support green energy market innovation through low-carbon drivers of economic growth.
Types Of Carbon Pricing
There are primarily two types of carbon pricing methods. Emissions trading systems (ETS) and Carbon Taxes.
Emissions trading systems (ETS)– are sometimes referred as cap-and-trade system, it imposes caps on the total amount of green house gas emissions and lowers the cap over time. Through this system, companies are extended emission permits. The purpose of ETS is to establish a market price for green house emission; and caps ensure that emitters keep to their emission levels, considering their pre-allocated carbon budget.
Carbon Tax– This system sets a price for carbon directly by establishing a tax rate on carbon content of fossil fuels or greenhouse gas emissions.
Depending on the economic and environmental standings, a country can select one of these components to restrict its carbon emissions. As it will promote green energy adoption, and climate betterment, carbon pricing will need additional policies for support.
- Some of examples of complementary policies include- setting fuel/energy efficiency standards for vehicles, buildings, heating and cooling systems.
- Offering tax breaks for energy efficiency improvements, auto feebates.
- Setting renewable portfolio standards and mandates for having a share of renewable energy within energy mix.
- Enforcing laws to stop de-forestation.
More than 40 countries like- The US, Germany, Chile, Brazil, and some of the EU countries have already implemented or in process of implementing these policies to support Carbon pricing.
Estimating that carbon pricing could reduce pollution by 80 to 90 million tonnes by 2022, US states like California have introduced state-wide policies in support of carbon pricing.
Climate awareness in Canada has seen nearly 97% of its residents to commit towards pricing carbon pollution. Provinces like Quebec and Ontario in Canada have implemented cap-and-trade systems- enforcing to get permits for carbon pollution, curbing the pollution rate.
India Walking Towards Success
To support solar energy growth in India, the country is also implementing supporting policies like carbon pricing. And as a result In 2017, 40 Indian companies out of 139 companies in Asia have put price on carbon.
Government of India’s initiative towards Perform-Achieve-Trade (PAT) policy for energy efficiency, and renewable energy certificate scheme have also supported carbon pricing. World Bank and the Government of India are working together to explore a domestic carbon market in micro, small, and medium enterprises.
Carbon pricing provides emitters financial incentive for choosing green energy solution as it will generate energy without levying taxes. And with the world, India is working towards restoring the climate by selecting green energy and initiatives that speed up transition from fossil fuel. However, considering the rapid growth of population and pollution, world wide efforts need to be increased to see expected results.
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Daily global CO2 emission level currently stands at 406.47 ppm (parts per million globally). Taking the hints from deteriorating environment, and identifying fossil fuel generation and consumption to be the primary reason for CO2 increase, the world is quickly adopting green energy. Since, global transport system plays a major role in adding to the CO2 levels, it is very important to bring the green energy utilization in transport systems as soon as possible. Since Solar energy has gained world wide acceptance due to its feasibility, easy to install, and reliability, solar energy growth and EV growth have become interconnected.
EV and Solar Energy Growth are Interconnected
Since India has made huge strides in renewable industry development, the country is considered to be an ideal platform for Electric Vehicle (EV) market growth. It is important to highlight that, 10 cities from top 20 most polluted cities in the world are in India, and a third of PM (particulate matter) pollution in India is from transportation sources. Additionally, in 2015-16 India’s crude oil imports are more than 80% amounting to $81.5 billion, and transport sector is the biggest consumer of crude oil with usage of 70% of diesel and 99.6% of petrol. Therefore, focusing on EV market growth depending on renewable energy (especially solar) would help India save billions of forex outflow, and reduce dependency in fossil fuels.
Global solar industry has grown immensely within last couple of years. In 2017, China added 52 GW of new solar installations, while US installed 12.5 GW, India ~6 GW, Japan 5.8 GW, Germany 2.2 GW, taking respective positions as World’s leading solar countries.
Government of India has made huge strides to solarize the country. However, efforts are sure to come up short if one of the most important component of growth ‘manpower’ is not enhanced to shoulder the new responsibilities.
It is important to note, that more than 200 million people in India still live without electricity, and since India’s solar mission is directed towards providing power for all, while benefiting from green energy transition, solar skill development efforts have to match or even surpass the solarisation goals.
Unemployment is a growing issue that is threatening to undone world’s efforts at transforming the socio-economic structure, in hopes of a better and sustainable future. And since India has 600 million people (more than half of its population) under 25 years, the country needs to make better and faster efforts at creating jobs. Fortunately solar has presented the solution with ease.
Solar industry has created 103,000 jobs in India till December 2017 and 1,017,800 jobs are expected be created within 2022. And not just in India-
- In US, solar energy is creating 13.7 jobs per million dollars spent, surpassing fossil fuels (coal, oil, natural gas) as it creates 12.1 jobs per million spent.
- Brazil has hopes of creating 60,000 to 90,000 new jobs by the year 2018.
- European Union is expected to create +1.25 million economy-wide renewable energy jobs by 2030, reducing 40% greenhouse gas emissions.
- Mexico is expected to create +134,000 jobs in renewable energy sector by 2030.
- United Kingdom can create +70,000 net employment in renewable energy by 2030.
- Renewable energy is expected to create 24 million jobs by 2030 globally.
Therefore, it is apparent that investing in solar skill development will solve the unemployment problem, while aligning India’s solar mission with a talented resource pool to complete it.
Government Initiatives are here but So are Challenges
Government of India properly understands the requirements at hand, and they have taken initiatives to build a capable work force. The Ministry of Skill Development and Entrepreneurship (MSDE) has worked towards to create qualification standards to create more green energy work force.
The Ministry of New and Renewable Energy (MNRE) has also made efforts to incorporate green energy education in various formal and in-formal training outfits. MNRE has also partnered with the United States to develop Solar Energy Training Network (SETNET), to make solar training programs in India more robust.
However, there are bureaucratic hurdles that limit the interaction between training institutes and industry. This is creating a huge gap between the demand and the available skilled resources. Besides the training systems currently are more focused towards theoretical understanding of different stages of solar development and lack of practical know how.
Additionally, high training cost also stands as a road block to quicker solar skill development.
Remedy to the Problems
- Education Should Be Comprehensive: while establishing new training programs and policies, Government of India should also focus on the coursework and make sure that it is industry focused and has substantial practical training processes. Government should arrange access to domestic solar manufacturers and EPC solution providers to the students, to allow them hands on practical knowledge on various solar development processes.
- Establishing Training Institutions: Policy makers need to mandate at least one solar training institute in every state to support state wise solar growth. And locations of these institutes should be identified through advertisement to raise awareness.
- Training Standardization and Certification: Training curricula should be standardized and certified to produce skilled resources, who can be easily hired across state lines.
- Reduction of Training Cost: Due to the solar boom and world wide acceptance of solar, demand for skilled solar employees is incredibly high in India. And so is the training cost. Government needs to reduce this cost or offer flexible education loans to encourage students into selecting Solar as a career.
- Utilizing International Platforms: India’s National Institute of Solar Energy (NISE), should utilize international platforms like ISA, to get acquainted with international best practices to develop skills.
India needs 1,116,400 skilled professionals in solar manufacturing, design, construction, maintenance, business development, and commissioning to reach its 100 GW by 2022 target. And although, India has shown incredible growth in solarisation, more focus is needed to boost solar skill development to reach the targets in sight. Otherwise the country may come up short in realizing its goals, which are suspected to transform the country.
Share your thoughts with me on this at @gyaneshc.