How Indian businesses can help in mitigating climate change

While the beginning of the Climate Change Conference in Marrakech was marked with apprehension post the US election results, it concluded with optimism and promise on climate action post the 2015 Climate Agreement.

Supporting speedy action for climate change mitigation and to facilitate countries for their "intended nationally determined contributions" (INDCs) under the United Nations Framework Convention on Climate Change (UNFCCC) process, the forum on Partnership for Market Readiness (PMR) brings together more than 30 countries to facilitate country-to-country exchange and knowledge sharing; fostering domestic action such as carbon pricing and other innovative instruments to reduce greenhouse gas emissions cost effectively.

As many as 40 countries, including seven out of the ten largest global economies, and over 20 cities, states, and provinces have a price on carbon.

Though the global climate meet is led and dominated by governments, it is the business community that would play a significant role in realising the promise to action.

Leading businesses foreseeing the future are building a carbon price into their business operations as a way to prepare for a low-carbon economy.

Internationally, a growing number of companies with varied business interests such as Microsoft, Cemex, Braskem and Ben & Jerry are working to adapt carbon pricing for their strategic objectives.

In India, there are a few policy instruments that prompt business actions which include the tax on coal to fund clean energy, the Perform, Achieve and Trade (PAT) scheme that has helped accelerate energy efficiency in large energy-intensive industries, and the Renewable Purchase Obligation (RPO) mandating a certain percentage of electricity to be generated from renewable sources.

To gauge the preparedness within Indian businesses in undertaking internal carbon pricing, TERI along with its Business Council (a consortium of Indian industries) and with support from the Carbon Pricing Leadership Coalition (CPLC) of the World Bank, undertook a study on "Valuation of Energy Costs in the Indian Context".

The study included extensive corporate consultations and deliberations, with 100-plus business leaders on internal carbon pricing, its challenges and opportunities.

These companies represented cement, oil and gas, chemical, automobile, textile, construction, IT, banking, power, manufacturing and mining sectors. It was interesting to find that about 17 per cent were already pricing carbon internally and another 40 per cent were planning to do so in the next 1-2 years.

Six Indian companies (TATA, Dalmia Cement, Yes Bank, Arvind, HCC and Mahindra) are signatories to the CPLC and currently preparing for a future price on carbon. Recently, Mahindra & Mahindra publicly announced a price on carbon of $10 per tonne, committing to reduce specific emissions by 25 per cent in the next three years.

The momentum on internal carbon pricing is rising among Indian businesses as they see it as a good tool and an accelerated push to become carbon neutral. However, it would be necessary for businesses to get it right, and more importantly, to include their entire value chain while attempting to reduce environmental risk and their carbon footprint.

This would require improved technical understanding and adoption of the carbon pricing process.

Undoubtedly, the jump on the bandwagon on carbon pricing will help Indian businesses in increasing both efficiency and profits, as well as meet the nation's new energy goals leading to a greener and better future.