Maximizing the benefits of energy-use is more productive than merely conserving it: Kirit S. Parikh and Vijay Kalra

Reading time: 3 minutes
21 April 2016

Article originally posted on The Hindu Business Line.

This week India will join 195 nations in signing the Paris Agreement, which makes it clear that global economies are committed to moving towards a thriving, low carbon future.

Change is already under way in India with regard to climate change mitigation. And ‘energy productivity’ is emerging as a new business opportunity. Defined as getting more economic output from each unit of energy, it is set to transform energy consumption across India’s manufacturing sectors.

Energy productivity recalibrates the focus of business leaders away from energy conservation and towards how energy can best be utilised to maximise societal, environmental and economic prosperity. Gains at the company level also add up to increasing the economic well-being of the whole of India in GDP terms.

The International Energy Agency (IEA) estimates that energy productivity improvements could generate approximately an additional ₹18 lakh crore (US$18 trillion) in global GDP between 2012 and 2035. And according to a report from ClimateWorks and Fraunhofer ISI, energy efficiency policies across Brazil, China, Europe, India, Mexico and the US can reduce costs by up to US$250 billion a year making energy productivity one of the least-cost decarbonisation pathways.

KEY TO GROWTH

Earlier this year, Make in India week in Mumbai positioned the country as a global manufacturing hub. Yet, according to the IEA’s 'India Energy Outlook' released in 2015, putting manufacturing as the focal point of the growth model implies a large rise in the energy needed to underpin India’s development. Energy productivity needs to be a key ingredient to India’s growth strategy.

To mobilise bold business action, The Climate Group in partnership with the Global Alliance for Energy Productivity and with support from ClimateWorks, is rolling out EP100, a new campaign which showcases the world’s most influential businesses committed to doubling energy productivity by 2030. EP100 is also an action of We Mean Business, a coalition of organisations working with thousands of the world’s most influential businesses and investors.

One company that has been quick to embrace energy productivity is Mahindra & Mahindra Limited, the first leading Indian business to join EP100. A new focus on energy productivity means that Indian companies can better understand the value proposition that comes with using energy smarter. Widespread adoption of energy productivity, however, requires business leaders and policymakers to overcome commonly held misperceptions that prevent the adoption of low carbon, energy-efficient technologies and practices.

A COSTLY MYTH

A prevalent myth is that energy productivity is too expensive. While this may have been true in the past, it is certainly not the case in India’s digital and technology-powered economy. Take LED light bulbs, for example. Although the initial purchase price is more than traditional incandescent light bulbs, LEDs last longer and consume energy more productively, thereby reducing the cost of electricity to provide light. So, despite higher initial costs, LEDs help save energy and money in the long run.

India’s Intended Nationally Determined Contribution sets a goal that non-fossil electricity generation capacity will be 40% of the country’s expected total capacity in 2030. The country has also pledged to aim for a 35% reduction in carbon intensity by 2030, from 2005 levels.

By joining the EP100 initiative to improve energy productivity, India’s most influential businesses will be at the forefront of helping the country deliver on its climate ambitions.

Kirit S. Parikh is the founder of IGIDR and chairman of the Integrated Research and Action for DevelopmentVijay Kalra is the chief of manufacturing operations, automotive division, Mahindra & Mahindra Ltd.

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