Here's how we can save the planet and keep the economy growing
Syed Munir Khasru
December 10, 2023
With Prime Minister Narendra Modi announcing the launch of the green credit initiative at COP28, the urgency of equitable and inclusive green energy transitions can hardly be overstated. Under this scheme, green credits will be attributed to pro environmental activities and treated as tradable commodities. These credits can then be sold on domestic market platforms. This comes at a time when unprecedented climate events in the Global South highlight the need to balance ecology with economic growth. Key industries, like steel and energy, need to cut emissions to limit global warming to 1.5°C while creating green jobs, reskilling and enhancing community support.
Role of industry in climate change
Industries account for nearly one-third of global energy consumption and around 23 per cent of direct greenhouse gas emissions. Energy-intensive heavy industries like steel, cement, chemicals, and oil and gas are especially carbon-intensive. For example, the steel industry alone accounts for 11 per cent of global carbon dioxide emissions. The Indian steel industry is the second largest in the world and is aiming to achieve net zero emissions by 2070.
China’s water crisis is a complex issue that demands urgent action across all sectors. Current policies are inadequate for the scale of the problem. Comprehensive transformational strategies and investments in sustainable water infrastructure are needed to avert catastrophic effects in the country.
To align these emissions with the Paris Agreement and COP goals, industries must significantly enhance energy efficiency, adopt renewable sources like green hydrogen, embrace circular economy practices tailored to Indian conditions and deploy suitable low-carbon technologies across industrial value-chains. In India, schemes like Perform, Achieve and Trade (PAT) have resulted in 92 million tonnes of emissions reductions while enhancing industrial competitiveness in the first two cycles.
Developing nations often fear that stringent climate policies may undermine competitiveness, industrialisation prospects, and growth. However, well-designed industrial policies can unlock co-benefits like improved resource productivity, energy security, job creation in growing green sectors, and domestic technology development. Just transition aligned with India’s NDC targets and development priorities offer valuable guidance on how industrial policies can be shaped to balance environmental sustainability and equity goals.
It encompasses social inclusion and dialogue, and respect for the rights and needs of workers and communities impacted by decarbonisation. By integrating just transition into industrial policymaking through dialogue with leading businesses, industry bodies can gain public acceptance. India’s national hydrogen mission and state-level renewable policies showcase this approach.
Green industrial policies
India can craft supportive industrial policies to enable equitable transitions in multiple ways. Green technology adoption can be incentivised by offering competitive subsidies, financing schemes and tax benefits for investments in low-carbon equipment and innovations. Simultaneously, stringent performance standards around energy utilisation and emissions thresholds could drive urgent upgrading across industrial clusters.
Dedicated programmes are essential to hand-hold small businesses on their sustainability journeys towards green compliance, water stewardship and clean energy uptake. Reskilling at scale is pivotal to worker security; large public campaigns in tandem with private sector commitments can ease labour market transformations. As high-emission sectors decline, supporting alternative livelihoods for vulnerable communities, including crafts persons via social protection funds, merits priority.
Circular economy approaches to minimise resource use and waste could also unlock economic opportunities in the Global South. Phasing out fossil fuel subsidies while shielding marginalised demographics and justly transitioning energy systems will require dexterous policy reorientation. Accessible climate financing like green bonds, R&D grants and blended capital for industrial assets will fast-track progress. Ultimately, institutional strengthening through specialised coordination agencies, technocrat upskilling and climate mainstreaming will crystallise the vision of an equitable, low carbon and competitive Indian economy.
Wider consultation for inclusive decision-making
The government needs to proactively consult industry leaders, labour unions, local communities, civil society organisations and other stakeholders to incorporate different perspectives into policy decisions on just green transitions that align with “sabka saath, sabka vikas”.
Developing countries especially need differentiated responsibilities, financial support and capacity building assistance from the global community to enable inclusive industrial transitions. Industrialised nations and multilateral institutions have an obligation to provide technology transfer, concessional financing and technical expertise to support capability enhancement in the developing world.
Just transition policies developed through wider participation have the potential to be holistic, equitable and politically acceptable. The Global South must partner with workers, industries and communities, and cooperate internationally to aid climate protection and equitable sustainable development through green industrial policies.
The path ahead for India and the Global South
With supportive industrial policies, emerging economies like India can leapfrog to resource-efficient, low-carbon and circular production systems. India recently launched the Production Linked Incentive (PLI) scheme for solar PV manufacturing and green hydrogen to boost domestic capacity and exports, in line with the “Atmanirbhar Bharat” vision. Several states have undertaken initiatives as well, like formulating dedicated climate action plans aligned with growth priorities.
India and other developing countries cannot drive this transition alone. Climate-friendly technologies remain expensive. Policy and implementation capacities need strengthening. Significant public and private investment are essential across infrastructure, innovation, and industrial assets. Industrialised nations and multilateral development banks have a responsibility to support developing countries through technology transfer, concessional finance, and capacity building.
With concerted domestic actions and global solidarity, emerging economies can transform industries to realise their development aspirations while prioritising sustainability. The challenges are considerable, but so are the local and planetary benefits. By putting equity at the heart of industrial policies, a just transition can be charted to more sustainable, resilient and inclusive economies. This can be further strengthened by PM Modi’s green credit scheme, which promotes voluntary activities by corporates and businesses like tree plantation, water conservation, sustainable agriculture, and waste management.