The Role of Markets in Addressing Climate Change

October 09, 2014 New Delhi

India is responsible for a third of global GHG emissions and highly vulnerable to the impacts of climate change. The Indian Government promotes clean energy to tackle climate change, yet the complex energy supply system coupled with policy roadblocks hamper investments and subsequent returns in the clean energy sector for businesses. Beyond this the Government appears unwilling to take any substantial action to address climate change, citing the need to develop and to provide electricity to 400 million people short of dependable electricity.

However some major business groups in India have recognized the importance of sustainability for their bottom line and have put in place social and economic measures of sustainability independent of government regulations, suggesting that the need to develop and the sustainability agenda do not need to be in conflict. What determines how far the market will go in addressing climate change, and what are the wider social and development implications of the private sector lead sustainability practices, are key questions of our time.

ETI Dynamics, Oxford India Centre for Sustainable Development and Oval Observer Foundation are delighted to bring you a Sustainability Dialogue that will bring together relevant stakeholders from academia, government and private sector with the objective of exploring the shortcomings in the current policy landscape in India targeted at addressing climate change issues. The Dialogue will also explore the role of markets in developing and investing in sustainable models for utilization of clean energy and achieving greater levels of energy efficiency.

Over 30 participants representing the renewable energy, legal services, academia and research sectors participated in the Sustainability Dialogue organized by Oxford India Centre for Sustainable Development, Oval Observer Foundation and ETI Dynamics. The discussion was focussed on understanding the behavioural and structural roadblocks that act as a hindrance in investments in the clean energy sector in India.

The Dialogue generated a healthy discussion on the need for balancing government action through regulations and market driven initiatives in addressing climate change and sustainability. The lead discussants, Sanmit Ahuja ( Oval Observer Foundation & ETI Dynamics) and Dr. Alfred Gathorne-Hardy ( Somerville College, Oxford University) initiated the discussion by identifying major gaps in the market and government perspectives on the issue of sustainability.

Mr. Sanmit Ahuja presented case studies in the Water, Power and Smart Cities sector to establish the challenges for the industry and the ability of clean energy projects to generate profits. The discussion was carried forward by Dr. Gathorne-Hardy, who underlined key issues in the Indian market system particularly focused on the ability of clean energy to generate revenues in light of the complex supply system in India.

Upon setting the agenda for the dialogue, the participants dwelled on the current mindset in the market and the government to conclude that there is a dire need to increase awareness about sustainability issues across all sectors in India and eschew the ideology that sustainable development doesn’t translate into economic development. In pursuance of this there was a general consensus among the participants that regulations alone cannot achieve a climate friendly industry rather it must be complimented by an organic market driven approach, where the benefits are accrued by each and every person.

The Dialogue established that there is significant room for improvement in :

The management of funds in NCEF, which should only be used for Research & Development in clean technology.
The approach of the Banking sector in treating sustainability initiatives as externalities.
Providing access of global assets to the Indian consumer.
Convergence between CSR and sustainability initiatives.
Changing the mindset of stakeholders.
Multi-disciplinary outlook towards investment and policy planning in sustainable energy.

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