Newsletter - April 1, 2020
COVID, climate present the case to reshape the world’s food supply structures
When Indian Prime Minister Narendra Modi announced the 3-week lockdown in response to the global COVID 19 pandemic last week, the first concern that needed to be addressed was that food supplies would continue unhindered and no one would go hungry. Within days, finance minister Nirmala Sitharaman came out with immediate relief measures assuring one kilogram of pulses per month per household and five kg of wheat or rice per month per person to 800 million people for the next three months over and above what they have been getting through other sources.
Far from being only India’s headache, the global pandemic has exposed the vulnerabilities of the food supply chains across the world as movement of goods and labour grind to a halt. While prices of staples have thus far withstood the COVID disruption and remained stable, the Food and Agricultural Organisation has vocalised fears of food supply disruptions in April and May that could trigger an increase in food prices. Consulting firm Fitch Solutions have also highlighted “risks at all levels of the supply chain, from production to trade.”
The current chaos in global food supply chains due to the pandemic is adding to stress that was already created by other environmental disasters unfolding around the world such as the locust outbreaks in Africa, the Middle East, and South Asia. Even without the additional shocks of events such as the current pandemic (which are also projected to increase in frequency), the Inter-governmental Panel on Climate Change (IPCC) has projected significant increases in food prices as yields of major crops fall due to increasing temperatures. The risks to food supply and security from the current combination of threats, including the high probability of prolonged droughts in Australia, South Asia and Africa, highlights the need to stress the importance of building resilience into global supply chains as a part of the climate change response.
For India, while current foodgrain stocks stand at 77.6 million tonnes (MT) of staples and around 3 MT of pulses, more than three times the minimum buffer to be maintained, the current lockdown is exposing vulnerabilities in the food supply chain. According to community survey platform Local Circles, food supplies in India started getting hit even before the lockdown was officially enforced. According to their data, the percentage of customers unable to buy essential goods through e-commerce services between March 20 and March 22 was 35%, and it shot up to 79% in the March 23-24 period. At the retail store end, 17% of customers were unable to buy essential goods on March 20-22, and 32% on March 23-24. The situation has only gotten worse. News reports from several states point to a constricted flow of food supplies amid arbitrary police action.
What’s more, the lockdown is likely to adversely affect the Rabi crop harvest amid labour shortage, lack of transport facilities and closure of mandis, despite government notifications allowing discretionary agricultural work. In parts of the country, the shortage of food supplies in the market, coupled with a shortage of cash, has seen a return of the barter system. The fear now is that if the COVID battle turns out to be a prolonged one, the effects could very easily spill over to India’s Kharif crop cycle, with limited flow of agricultural inputs expected to affect sowing and yield.
While global supply chains have been severely affected by the limited flow of goods, Europe and the US are bracing for a massive agricultural hit as labour shortages loom as a result of strict travel restrictions. In Southeast Asia, major palm oil producers have closed operations for fear of transmission among workers. As countries respond to disruptions in food production and supplies, there has been a move to stockpile domestic produce. Vietnam, the world’s third-largest exporter of rice, and Kazakhstan, the ninth-largest exporter of wheat, have both suspended all exports of food grains in order to shore up their stocks. According to the World Bank, such measures between 2006 and 2008 led to a 45% increase in rice prices and a 30% increase in wheat prices.
But it’s not just the pandemic that’s negatively affecting food security around the world. In Africa, the Middle East and South Asia, locust invasions that date back to 2018 are devastating crops and threatening food security. The invasion of biblical proportions could affect the food security of over 20 million people and is threatening a famine in parts of Africa with rising food prices. The current health crisis is likely to make the locust invasion worse as supplies of vital pesticides get hit and governments struggle to cobble up finances to fire-fight on two fronts simultaneously.
Current global supply chains, especially those of food, are complicated networks of myriad links. Disruption in even one could bring the entire system to a halt. A new study published this fortnight shows how prolonged climate disruptions in one region of the world could see a large-scale collapse of the global food order and subsequent sky-rocketting of prices. This vulnerability is a feature of our current civilisational lock-in in which stresses on one front increase pressures on other fronts such as supplies of oil and water, and large-scale cooperation across the world without which the system could not exist. The COVID pandemic, linked to biodiversity and habitat loss, and the locust invasion, linked to weather disturbances in the Arabian Peninsula in 2018, give us a primer of the kind of disruptions climate change holds in store for our economic system.
The impacts of climate and environmental change on society and economy are likely to be non-linear with a series of tipping points that multiply individual impacts several fold. While mitigating technologies such as renewable energy, electric mobility and emission reducing interventions in industry have been central thus far to climate action, the need to increase adaptive capacity and resilience in networks have by and large gone under the radar. The current shocks to global food supply should be a timely reminder for governments to refocus efforts towards adaptation, not only in production but also in logistics and storage, which must start with the strengthening of local, regional and domestic supply chains in order to culminate in robust food sovereignty and security that goes beyond merely record volumes of food grains in buffer stocks. Unfortunately, this would also require a comprehensive rethink of current global economic structures. The preservation of societal and civilisational order might well depend on it, but whether governments are brave enough to confront this challenge, only time will tell.
Is the ozone layer healing? Study says it is
In some good news this fortnight, the southern jet stream – a powerful wind that determines the western hemisphere’s weather patterns and ocean currents – seems to be returning to its normal trajectory as opposed to moving southwards as it has been since 2000.
A new study published in the journal Nature put this down to the global cooperation on ozone-depleting chemicals. They are hopeful that this finding would mean there is still some hope to reverse some of the damage done to climate systems, but only if governments ensure prompt and unified action.
Earth’s deepest ice canyon vulnerable to melting, study finds
The Denman Canyon in East Antarctic, which is the deepest land gorge on Earth and is filled with ice, is vulnerable to melting, a new NASA report found. The report stated that retreating and thinning areas of the glacier suggest an erosion by warm ocean water. This is significant because if the Denman Canyon were to melt completely, it would raise the global sea surface by 1.5m.
While on the topic of melting ice, another study linked climate change with rapid permafrost degradation in the western Russian Arctic. The study, which focused on seven sites in the region, observed an increase in both air temperatures and ground temperatures since 1970 as well as increased precipitation leading to a lowering of the permafrost table, by up to 8m.
Bihar to use drones to monitor its embankments during monsoon
In a move aimed towards swift action in case of a flood, the Indian state of Bihar will use drones to monitor embankments during the monsoon season. A detailed proposal will be made soon as the Bihar government wishes to start the process this year itself. Officials said 12 drones are to be deployed in phase 1 of the programme.
NASA releases 3-D view of methane as it travels from sources into atmosphere
Methane is the second-largest contributor to greenhouse warming, NASA’s new 3-dimensional portrait of the gas has confirmed. The map also reveals the diverse sources of the gas on the ground and its behaviour as it moves through the atmosphere. NASA said it was important to trace the movement of the gas to mitigate emissions where it is possible.
UN shifts focus from climate change to coronavirus
Climate change will take a back seat as the novel Coronavirus becomes top priority for the globe – that was the message sent out to reporters by UN chief António Guterres. While global warming and achieving the Paris target will still be on the agenda for countries, all resources will be directed towards battling the pandemic, Guterres said in an online press conference.
The coronavirus has put a giant question mark over developing countries’ plans to step up their climate action this year, with meetings being postponed and resources being allotted to the fight against the pandemic.
They were to submit tougher climate action plans ahead of the Cop 26 in Glasgow to be held in November. Officials, however, said the summit may have to be postponed because of the pandemic, but they have not given up hope yet.
Coronavirus scare: Inject capital for power gencos, suspend NPAs, FICCI tells govt
Inject capital for power gencos payments and suspend Non-Performing Assets (NPAs), the Federation of Indian Chambers of Commerce and Industry (FICCI) said in a note to the government amidst the coronavirus outbreak.
The pandemic has already hit the power industry and reports have shown a 26% drop in power consumption in less than ten days since March 18, 2020. This, after it had grown at 10.8% in February this year. Distribution companies have been given a three-month moratorium on payments to power producers in an effort to ensure 24×7 electricity supply during the lockdown.
Russia’s revised climate action plan doesn’t impress experts
Russia’s revised climate action plans drew criticism from experts as it allows greenhouse gas emissions to rise to 2030. According to the new plan, by 2030, emissions would be up by 51% of 1990 levels. While this is definitely more ambitious than the existing target to limit 2030 emissions to 75% of 1990 levels, experts called it ‘baby steps’ and said it meant ‘no real progress’.
UK to co-chair climate change initiative established by India
The UK will be the first co-chair of the Governing Council on the India-led global Coalition for Disaster Resilient Infrastructure (CDRI), which was established by Prime Minister Narendra Modi. The group links governments, the UN, banks and private sector groups to help infrastructure systems develop resilience to climate and disaster risks.
US coronavirus stimulus package: No boost for oil producers, but no climate action either
Amidst plummeting crude prices, the Trump administration sought $3 billion from Congress to top up the country’s strategic petroleum reserves, which is a potential boost to the country’s oil producers. While acknowledging that falling crude prices benefitted consumers, he also said ‘it hurts a great industry, and a very powerful industry’. But this found no mention in the $2 trillion coronavirus relief package that was released this past fortnight.Despite the Democrats pushing for the inclusion of climate action in the relief package, it also found no mention in the final legislation. The Democrats wanted a provision that would have required airlines to cut emissions to 50% below 2005 levels by 2050 – which the industry has already voluntarily committed to – to be included in the package. But it found no mention. Instead, the airline industry got a $25 billion boost.
Satellite images show much cleaner air over India and the world during Coronavirus lockdowns
While Indian cities figure among the list of the most polluted cities in the world due to their poor air quality, the ongoing nationwide lockdown has seen many cities record massive improvements in air quality. European Space Agency (ESA) images have shown nitrogen dioxide (NO2) levels drop sharply across the country as the impact of the lockdowns around the world were caught on satellite. Nitrogen dioxide, a pollutant emitted generally by motor vehicles, dropped sharply during the lockdown period in parts of China, and then gradually rose again in the past few days when the restrictions were eased.
In Delhi, as vehicles went off road, PM2.5 plummeted by nearly four times. HT reported that Kanpur’s air quality index (AQI) was a moderate category at 193 last Friday. It improved to 62 to reach the satisfactory category on Monday. The AQI of Lucknow, which was 235 on Friday, improved to 118 (moderate) on Sunday. Kolkata, which had an AQI of 123 (moderate), fell to 76 (satisfactory). Mumbai AQI was 82 on Friday, which fell further to 54 on Sunday.
COVID19: Cities with high levels of air pollution at greater risk
Residents of cities with high levels air pollution will be more vulnerable to impacts of novel coronavirus disease, air pollution experts have warned, adding that cities such as Kolkata must avert the third stage of community infection. Experts said Kolkata’s average exposure level was the highest in the country, because of the city’s compactness. Consider this: Kolkata and its surrounding areas, which have recorded 9 cases so far, also witnessed very high air pollution levels for more than two decades. During last winter, the city also recorded a poorer air quality Delhi for many days. If the city begins community transmission, it will be very difficult to curb the disease, experts said. Lung ailments like chronic obstructive pulmonary disease (COPD) were found in old patients who were infected by the virus, reports suggest. Doctors said the immunity of those living in cities with high air pollution is compromised by toxic air, making residents prone to respiratory diseases.
Covid19: Car makers want top court to extend deadline for sale of BS IV cars
Car dealers have asked the Supreme Court to extend the deadline to allow them to sell the older BS IV fuel compatible cars. According to experts, March will likely be the worst ever for Indian automakers. The industry has plummeted to its lowest in about four years. Sales in the last month of FY20 are expected to have dropped 40-80% across segments in a drop that’s been deepened by coronavirus lockdown. Car makers call it a dark hole with no visibility of how to plan for the next month. Sale of two-wheelers has dropped by over 45% while trucks have taken the biggest hit with dispatches at 25,000-30,000 units, down by over 70%.
COVID 19 impact: RE project deadlines extended, could delay projects by 6 months?
Following a national lockdown, the Centre, last week, extended deadlines by up to three months to complete renewable energy projects that are under construction. Extensions shall be given case-by-case depending upon the length of the lockdown and time required for remobilisation of work. Earlier, the government had agreed to consider the pandemic-related disruption in the supply chains as Force Majeure. Now, developers don’t face risk of penalties, fines and encashment of bank guarantees for missing project deadlines.
The industry expects commercial operational dates (CODs) to get delayed by six months, particularly the projects that were expecting modules to arrive between January and March. Experts also believe it may potentially delay rooftop solar targets of 40GW by 2022, considering it is only at 3GW today. Rooftop is expected to be impacted more because during social distancing, installers can’t be allowed at homes and factories are closed. Grid-connected solar is less likely to be hit as it is classified as an essential service.
The Centre has also asked states to allow free movement of RE material and staff during the nationwide lockdown. The ministry has requested states for a waiver under Section 144, nationwide lockdown, or any other limitation on the number of people to assemble at project sites and other related locations where it may be required for operation and maintenance activities of renewable power generation.
DISCOMS get 3 months moratorium to clear dues, outstanding dues rise nearly 32% to ₹88,311 cr in Jan
The government has given DISCOMs a three-month moratorium for paying dues to power generating companies (gencos) following a national lockdown till April 14 to contain the spread of coronavirus. The penal charges for late payment of dues have also been waived. The overdue of solar and wind energy producers stood at ₹6,618.20 crore in January.
Total dues the DISCOMs owe to power producers rose nearly 32% to ₹88,311 crore in January 2020 over the same month previous year, reflecting stress in the sector. DISCOMs in Rajasthan, Uttar Pradesh, Jammu & Kashmir, Telangana, Andhra Pradesh, Karnataka and Tamil Nadu owe the largest share of dues. DISCOMs owe a total of ₹76,192 crore to state and private power generating firms, 39% of the total is owed to state firms 25.94% to private firms. State firm NTPC has to recover the maximum overdue of ₹11,007.50 crore, while among private generators, DISCOMs owe the highest overdue of ₹3,421.68 crore to RKMP (RKM Powergen Pvt Ltd).
Energy demand drops during coronavirus lockdown, RE gains ascendance
Over the past week, India has witnessed a sharp drop of 25-40% drop in peak energy demand compared to the same period last year. According to data provided by national grid operator Power Systems Operation Corporation Ltd (POSOCO), the country’s total power generation dropped 25% over the past 10 days and over 30% compared to the corresponding period last year. The fall in demand has seen India rely heavily on non-fossil fuel sources of energy. India’s share of non-fossil fuel energy in its mix is currently between 27-29%, up by 7-10 percentage points since the third week of March when the share hovered around the 20% mark.
Last month, the sale of renewable energy certificates (RECs), which are market-based financial instruments, rose over 64% to 21.42 lakh units in February compared to 13.02 lakh the same period last year owing to high demand, according to official data. One REC is created when one megawatt hour of electricity is generated from an eligible renewable energy resource.
1,000 MW solar rooftop projects stuck because of Haryana discoms ?
Are Haryana DISCOMs blocking ‘open access’ rooftop solar projects because it threatens their monopoly? That’s the charge of the developers. They say ‘open access’ allows them to supply power directly to customers through the grid without routing it through a DISCOM, but they do need the concerned DISCOM’s approval. Developers allege the DISCOMs are resisting the scheme because they lose revenue without being an intermediary. Around 1,000 MW of rooftop solar projects are unable to transmit power because distribution companies are not giving them the required connectivity, rooftop developers’ lobby, The Distributed Solar Power Association alleged. They plan to approach the Haryana Electricity Regulatory Commission against the DISCOMs that have been reported as declining to comment.
Committee on energy sceptical about ministry meeting 2022 solar target
The Standing Committee on Energy, in its latest report, has said the Ministry of New and Renewable Energy (MNRE) has a lot to do to meet the 2022 renewable target. As on January 31, 2020, renewable energy accounted for 86.32 GW, with 23.42% of the total market share. Government said that the target for solar power was 8,500 MW for FY2019-20, and the ministry has achieved 5,885 GW as on January 31, 2020. According to the ministry, the total target for solar power as on January 31, 2020, was 100 GW, out of which the installed capacity as on January 31, 2020, was 34.03 GW. Out of this, 23.88 GW is under development, and 39.47 GW has been tendered. The total installed capacity and projects under the pipeline are 87.38 GW.
The ministry, however, said developers were facing constraints related to land acquisition, evacuation infrastructure, and issues with state policy for development of solar and business environments.
Earlier, the power minister had said DISCOMs were reluctant to buy renewable energy, because they have to curtail equivalent amounts of power from thermal power generating projects. Even if the DISCOM purchases solar at ₹2.44 per KWH, it still has to pay an extra ₹1.60 as fixed cost of power to thermal power generators. For the DISCOM, the total cost of power is ₹4.04. Solar is also intermittent in nature and is not available during peak hours, said the power minister.
New study proves EVs pump out less CO2, results hold true across 95% of the world
A new study comes as a major thumbs up for EVs, as it proves that driving them emits less CO2 than their petrol or diesel counterparts — and this holds across 95% of the world. There are regional differences though, based on the source of electricity used to charge the vehicles. For example, EVs emit 70% less CO2 in France and Sweden, which get most of its power from non-fossil sources, while the gap shrinks to 30% for the UK, where natural gas is still a major player.
The study’s methodology covers all significant automotive markets, and it predicts that by 2050, every second car (presumably being sold) could be an EV. If achieved, this could lessen global CO2 emissions by up to 1.5 gigatons every year.
EV sales plummet in China, but Tesla the sole exception
The coronavirus pandemic has pulled China’s EV sales down by 77% over last February, with only 11,000 units sold in the month. Its three strongest performers, BYD, BJEV and NIO, posted sales declines of 80%, 66% and 56%, respectively.
However, with its “contactless test drives”, Tesla sold 3,900 units in February, which was an improvement over the 2,620 units it sold in January. The figures may improve even further as the Chinese government is urging regional administrations to increase their EV sales — which may come at a significant increase in EV subsidies.
Energy storage market contracts in Europe over covid-19 disruptions
Europe’s grid-connected energy storage market contracted to 1GWh in 2019 (over 1.47GWh in 2018) due to fears that the then-developing covid-19 pandemic would stymie growth for renewables. The grid-connected storage sector is key to bringing more renewables online, but it relies on time-taking government approvals and engineering tenders for renewable projects, several of which are currently stalled.
However, the region’s off-grid storage solutions market continues to flourish, and the EU is reportedly planning a clean energy (stimulus) package that should revive growth for large-scale storage projects.
USA’s XNRGI inaugurates li-ion battery plant in Gurgaon
USA’s XNRGI has inaugurated its 240MWh/year High Temperature (HT) lithium-ion battery manufacturing plant in Gurugram (Gurgaon), and it aims to especially cater to India’s fast growing e-rickshaw market.
The firm says its batteries can be charged to 80% of their capacity in two hours, and are designed to operate temperatures exceeding 55°C — which makes them ideally suited to Southeast Asia, MENA (Middle East and North Africa) and the central and southern parts of North America.
Coal power’s share grows in India despite shrinking capacity, IEEFA says new capacity “unviable”
The Boom and Bust Report 2020 has found that 47.4GW of coal capacity in India under various stages of construction was cancelled in 2019, and only 2.9GW of new capacity was proposed. However, 8.8GW of new capacity is now under construction — but heavily reliant on public funding as the private sector is increasingly staying away from coal power.
Yet, even though India’s net coal capacity is steadily shrinking, its share in total power generation has reportedly improved, even though IEEFA’s new analysis predicts that all new non-pithead coal capacity will be financially unviable.
Coal now most expensive fuel, yet may figure heavily in China’s economic recovery
Coal has now become the world’s most expensive fuel, after crude oil prices dropped to under $27/barrel. Last updated, coal was trading at $66.85/metric ton, which is the equivalent of oil at $27/barrel. The dirty fuel, however, continues to attract financiers, although its fate post-coronavirus may be unclear as progressive economies are now likely to push for more renewables.
Yet, as China emerges from its covid-19 battle, its government is reportedly planning to spend as much as $7 trillion to revive the economy, and coal is expected to be a major benefactor. According to Global Energy Monitor, the sector may be looking to add up to 99 GW capacity through 2035. If it does, its output could exceed the rest of the world’s coal power generation combined and render all global climate action useless.
China has already approved more than 6 GW worth of new capacity, and the fuel figures as a tool for energy security in its 14th five-year plan, which runs till 2025.
India to push for coal-bed methane despite fears of local resistance
India’s coal ministry is eyeing a surge in the country’s coal-bed methane (CBM) output as it gets ready to use the fuel for residential energy demand. The country has an estimated CBM reserve of 92 trillion cubic feet (TCF) — the world’s fifth largest — and Coal India plans to extract 1 million metric standard cube metre (MMSCM) per day by 2023-24.
However, Tamil Nadu has recently cancelled CBM licences awarded to ONGC (along with its licenses to drill for oil), which would have allowed it to drill in the Cauvery Delta basin, after strong protests by the local farming community. India’s CBM reserves are spread across 12 states, including Jharkhand and West Bengal, and the possibility of more local protests has already been acknowledged as a point of contention, as the procedure to extract CBM involves drilling a large number of wells to get to the gas deposits.
Major victory for Sioux tribe as US judge repeals permit for DAPL
A US federal judge has repealed the permits for the Dakota Access Pipeline (DAPL) after ruling that the concerns and analyses of the pipeline’s potential hazards by the Standing Rock Sioux tribe — whose home territory it would have passed through — were ignored by the US Army Corps of Engineers (USACE). The tribe had raised concerns over potential oil spills, the abysmal safety record of the DAPL’s parent firm, Sunoco Logistics, and the pipeline’s leak detection systems.
The USACE has been ordered to do a complete impact assessment of the DAPL and take into account every concern raised by the tribe before deciding on whether to proceed. The Standing Rock Sioux tribe, on its part, maintains that the pipeline should be axed.