The framework for India’s sovereign green bonds, which aims to spur investments in clean technologies while minimising risks for investors, addresses the difficulty of raising capital but might be introducing new problems in doing so .Read more
The Reserve Bank of India (RBI), which oversees the country's debt, is preparing to sell its first ever batch of sovereign green bonds as early as this month.
India’s Green Bonds framework comes with a lot of promise, but also grey areas
The framework for India’s sovereign green bonds, which aims to spur investments in clean technologies while minimising risks for investors, addresses the difficulty of raising capital but might be introducing new problems in doing so
India released the framework for its Sovereign Green Bonds scheme last month. The objective of the scheme, announced first by finance minister Nirmala Sitharaman in the 2022 budget speech, is to fund public sector projects with climate action merits. The scheme has been hailed as a “commendable step”, but comes with caveats.
The framework not only includes CNG-based public transport as a “green” project, there is a wide range of projects that are listed as eligible for green loans, but it is not as easy to establish their green credentials. But does the framework include robust project selection and verification processes that have a basis in science and align with globally accepted practices, rather than being determined by financial institutions, bureaucracy and political interests?
The sovereign green bonds are expected to attract market investments (loans) to fund green projects, on low interest rates termed as “greeniums”. The move is seen as “solidifying” India’s commitment towards its Nationally Determined Contributions (NDC) targets and building “credibility” with global climate investors.
Interdisciplinary environmental research agency run out of Oslo, the Center for International Climate Research (CICERO), analysed India’s green bond framework and certified it as being aligned with the International Capital Market Association (ICMA) Green Bond Principles (2021). The framework allows payments of principal and interest on bonds without subject to the performance of the projects. In short, investors do not bear any project-related risks as opposed to standard bonds where principal and interest is repaid at maturity. The risks are borne by the government, since de-risking is a prerequisite to drive green investments from capital markets.
How the bonds work
The Reserve Bank of India (RBI), which oversees the country’s debt, is preparing to sell its first ever batch of sovereign green bonds as early as this month. Private firms can buy the certified green bonds and receive periodic interest on these bonds. What the government earns from the selected projects is slated to help pay back the principal amounts of the bonds along with interest.
The government aims to issue bonds worth Rs. 16,000 crore ($1.94 billion). The framework defines a ‘green project’ as that which encourages energy efficiency, reduces carbon emissions and greenhouse gases, promotes climate resilience and/or adaptation and values and improves natural ecosystems and biodiversity, according to sustainable development goals (SDG) principles. A green finance working committee headed by chief economic adviser V Anantha Nageswaran will select government projects for green financing. Nageswaran, in an interview to ET recently, said India is witnessing the revival of private capital expenditure. Comparatively, there is no paucity of finance for fossil fuels. Coal mines have been opened to private companies with a single-window clearance for commercial mining. India has decided to invest Rs.400,000 crore in the coal sector in the coming decade.
Box: What projects are eligible for green financing?
– Solar, wind, biomass, hydropower energy projects with storage
– Energy saving installations in government buildings, LEDs to improve public lighting, new low-carbon buildings as well as energy-efficiency retrofits to existing buildings.
– Projects to reduce electricity grid losses
– Projects of climate observation and early warning systems
– EVs in public transportation, subsidies for electric vehicles, including building charging infrastructure
– Environmentally sustainable management of agriculture, animal husbandry, fishery and aquaculture, forestry management, including afforestation/reforestation, certified organic farming projects, coastal and marine environment projects, biodiversity preservation, including conservation of endangered species, habitats and ecosystems.
Bonds framework ‘good’ but it comes with pitfalls
CICERO found the framework to be good, but not without pitfalls. It found that while the framework stated that exposure to physical climate change risks will be considered by the Green Finance Working Committee (GFWC), it has not indicated specifically how this cross-cutting consideration will be implemented. What specific climate-resilience screening criteria will be used in project selection has not been disclosed.
CICERO’s shades of green report found some expenses include risks of locking in emissions, adding that “investors should be aware that there are lock-in risks associated with several projects, such as financing new buildings with fossil fuel heating or water heating, expenditures that could indirectly support the expansion of thermal coal power generation and expenditures to support natural-gas-based public transport. Expenditure on railway infrastructure, although electric, may allow for transporting larger amounts of industrial freight to heavily emitting industries, with overall emissions increasing.”
The assessment report also noted that subsidies to support the expansion of renewable energy, such as wind and solar power, may be given to large power generation companies that are heavily involved in coal-based power generation.
CNG labelled ‘green’
Just as the European Union included natural gas and nuclear energy in its taxonomy as sustainable sources of energy, India has allowed investments/expenditures on “a relatively cleaner Compressed Natural Gas (CNG)” as an ‘eligible expenditure’ when used in public transportation projects only.
Subsidies for private transportation using CNG are neither envisaged nor included, the framework states. Analysts pointed out that in India, public transport includes buses and trains and even individual point-to-point options such as autos, taxis, and app-based Ola and Uber. The inclusion of CNG will keep the investors at bay, they warn.
Shantanu Srivastava of IEEFA said green taxonomies should not be diluted with the inclusion of assets that can be labelled as non-green by some investors such as gas or nuclear energy, even if they were low on emission compared to oil or coal. If taxonomies do include low-emission transitional assets, then they should be labelled as such—brown taxonomy rather than ‘green’. Why would pension funds or private equity funds with mandates to invest in green assets invest in bonds that include non-green assets?
Projects that are not allowed include new or existing extraction, production and distribution of fossil fuels, including improvements and upgrades; or where the core energy source is fossil-fuel based, nuclear power generation, direct waste incineration, alcohol, weapons, tobacco, gaming, or palm oil industries, and renewable energy projects generating energy from biomass using feedstock originating from protected areas, landfill projects and hydropower plants larger than 25 MW.
The need for independent auditors
According to the framework, members of the GFWC will evaluate the projects for eligibility. According to the document, “climate specialists” from Niti Aayog will guide the GFWC on matters of environmental and social relevance as well as the representative from the Ministry of Environment, Forest and Climate Change. The finance ministry will oversee the process of evaluation, including the economic viability of projects. Ministries that are currently not part of GFWC will also be consulted for generating awareness towards sustainability and green projects within their purview, to identify new projects, the framework states.
Srivastava said the framework does not include independent third-party audits of project selection process, management of proceeds and reporting on allocation and impact of the proceeds. “Sovereign issuers have complex information flows and decision-making structures to support their green bond transactions,” he writes, adding that clarity on the robustness of the process would be desirable for investors.
There is little information on what happens to unassigned funds? The framework says: “Unallocated proceeds, if any, will be carried forward to next year for investment in eligible green projects only. It will be endeavoured that all proceeds are allocated within a span of two years from the date of issuance.”
The framework also lacks clarity on whether SGBs will refinance existing projects. Srivastava warned that corporates who have raised green bonds have overwhelmingly used them for refinancing operational projects. The framework does not clearly state if, and in what proportion the bond proceeds will be used for financing compared to refinancing.
Bonds can’t achieve what taxes can
According to Rohit Azad, assistant professor at the Centre for Economic Studies and Planning at Jawaharlal Nehru University, financing public sector projects through debt alone has its limitations. Bonds and loans allow polluters to use the money to diversify their brown businesses, thus failing to rein in greenwashing and emissions. What carbon tax can achieve, bonds cannot.
For example, if big emitters from the private sector are taxed, the revenue generated can be used to fund technology and infrastructure to reduce their emissions, but the same cannot happen with green bonds, Azad added. “Global warming is not just a problem of the supply side alone, it is also an issue of demand [consumption] and large consumers should be taxed for their emission-intensive businesses and lifestyles to manage the demand side. Is that kind of emission control possible through bonds?” he asked.
Secondly, it’s common for fossil-fuel businesses to invest in green bonds, or own renewable energy companies. “Where is the taxation on the brown side of the same company? In fact, bonds allow them to diversify their portfolio, while taxation helps control the fossil fuel side of operations,” he added.
Either form of financing, bonds or taxes, are fine as long as the burden is not falling on the poor, or those least responsible for emissions. Arguing for taxation over bonds in the EU taxonomy, economist Thomas Piketty wrote that bonds radically shift the decision-making centre of economic policy towards the central bankers, and that high-ranking civil servants take decisions behind closed doors, which affect millions of European citizens.
Greeniums biased towards European investment firms?
According to a Bloomberg report, a 2022 Federal Reserve paper found that green bonds have a yield spread that is eight basis points lower on average compared to conventional bonds. But this so-called greenium in corporate bonds is biased toward investment-grade European firms rather than those with the best projects. Foreign investors can buy India’s green bonds through the Fully Accessible Route, the report said.
Lastly, can green bonds, which are loans with fixed returns minus risks, be labelled as climate finance? Or is it more accurate to see them for what they are—debt instruments that allow private investors a slice of the decarbonisation pie. While there isn’t anything inherently wrong with this as far as instruments of debt go, the transfer of all liabilities onto the public is hardly compliant with the principle of fairness that ought to be a requisite characteristic of global climate finance.
Cool it down: The World Bank came up with a low carbon cooling plan for India, with biggest opportunities in cooling homes and commercial buildings. Photo: WikimediaCommons/Govt of India
India likely to experience heatwaves beyond human survivability limit: World Bank
India could be one of the first countries to experience heatwaves that break the human survivability limits, according to a new report by the World Bank. According to the report, “Climate Investment Opportunities in India’s Cooling Sector”, the country is recording higher temperatures that arrive early and leave late. The report also warned that the rising temperatures are likely to impact economic productivity.
The World Bank also came up with a “cooling plan” for India. It found that low-carbon cooling could lead to investment opportunities of more than $1.5 trillion over the next 20 years. The biggest opportunities would be in cooling homes and commercial buildings, which could eliminate 200 million tonnes of carbon dioxide-equivalent emissions annually by 2040, the report found. It urged the government to boost the production of energy-efficient cooling systems that are also affordable.
Permafrost on Tibetan plateau decreased by 15.5% since 1980s: Study
A new study mapped the permafrost degradation that has occurred on the Tibetan plateau between 1980 and 2020. The study, published in ScienceDirect, found that the permafrost area on the TP has decreased by 15.5%, and the regionally average active layer thickness (ALT) has increased by 18.94 cm in the 2010s compared to the 1980s. According to the study, the permafrost area is decreasing at a rate of 60,000 sqkm per decade. The ALT, which is the top permafrost layer that thaws and refreezes every year, was 19cm thicker in the 2010s than it was in the 1980s.
Ocean temperatures across Great Barrier Reef reach record heat levels
Ocean temperatures in Australia’s Great Barrier Reef witnessed record heat levels in November. This has sparked fears of a second summer in a row of mass coral bleaching. The Guardian quoted an expert saying this level of heat accumulation so early has never been seen before, but a “well-timed cyclone” could prevent another bleaching event.
Australia’s environment minister, meanwhile, said the government will lobby against the Great Barrier Reef being added to UNESCO’s list of endangered world heritage sites. The minister said any criticisms on the government not taking enough climate action were outdated. The minister was referring to a report by the UN’s International Union for Conservation of Nature, which urged the government to take urgent action to save the world’s largest barrier reef.
Brazil’s Bolsonaro ends term with 60% increase in Amazon deforestation
Official data showed deforestation in Brazil under the Bolsonaro government dropped 11.27% compared to the previous year. But according to environmentalists, the Bolsonaro rule is responsible for the most amount of destruction in the Amazon in the past 34 years. According to official data, between August 1, 2021, and July 31, 2022, 1,568 sqkm (4,466 square miles)—equivalent to the size of Qatar—was cleared. This is less than the 13,038 sqkm—the highest since 2006– cleared during the same period last year. But Bolsonaro’s overall term of four years saw a 59.5% boom in deforestation rates—the highest in a presidential term since 1988. The deforestation rate when he took office was 7,500 sqkm.
More than 100 million people forcibly displaced this year, finds UN
More than 100 million people were forcibly displaced in 2022, according to the United Nations Development Programme (UNDP). The report highlighted how the displaced had no access to decent work or a stable source of income after being displaced. The report also found more than 59 million people forcibly displaced within their own countries due to conflict, violence, disasters and climate change at the end of 2021. The report concluded that long-term development action was needed in order to reverse internal displacement. According to the World Bank, climate change could force more than an estimated 216 million people to move within their own countries by 2050.
Site in Hawaii that measures global CO2 levels shuts down after volcano eruption
An important carbon dioxide measurement site in Hawaii was shut down after a volcano, Mauna Loa, erupted in the region. The site has been monitoring global CO2 levels since 1958. The Mauna Loa Observatory is situated on the northern flank of the volcano. According to officials, power lines to the observatory have been cut and an access road to the site is inaccessible. Measurements from this site have become a crucial benchmark in the escalation of the climate crisis.
Southwestern North American megadrought is affecting Earth’s upper atmosphere: Study
According to new research, the Southwestern North American (SWNA) megadrought caused a 30% change in gravity wave activity in Earth’s upper atmosphere in the 10 years after its onset in 2000. This is likely because of less rain that is causing fewer storms, and therefore fewer waves, the research stated. The SWNA megadrought still continues even 22 years later. Some experts believe human-induced warming of the Earth’s atmosphere may have contributed more than 40% of the severity of the megadrought. Gravity waves are important because they drive the global circulation of the upper atmosphere and affect space weather and satellite orbits.
A major issue at Montreal will be the availability of finance and the mobilisation of resources toward implementing the Global Biodiversity Framework . Photo: UN Biodiversity/Flickr
15th Biodiversity COP kicks off in Canada, fate of the Global Biodiversity Framework hangs in balance
Government delegations have landed in Montreal, Canada for the 15th Conference of Parties under the UN Convention on Biological Diversity (CBD COP15). This is the second instalment of the CBD COP15, which had to face multiple delays due to COVID-19, and follows the first instalment which was held in Kunming, China last year. While the first part saw parties adopt the Kunming Declaration, agreeing in effect to negotiate a post-2020 Global Biodiversity Framework (GBF), what shape this framework will finally take has been left for delegations to thrash out at Montreal at the current session.
The GBF will replace the Aichi Biodiversity Targets set in 2010, which governments have been found to have woefully missed. The draft text for first ever such global framework, includes 22 action-oriented targets and four goals proposed for the current decade with a view to help humans “live in harmony” with nature by 2050. These targets range from pollution control, reducing the introduction of alien invasive species and the responsibilities of commercial interests towards protecting ecosystems. A pledge to protect 30% of the world’s land and oceans by 2030, commonly referred to as the 30 by 30 goal, is widely seen as the basis for the GBF.
A major issue at Montreal will be the availability of finance and the mobilisation of resources toward implementing the GBF. According to a report by the UN Environment Programme, Investments to protect the world’s ecosystems need to reach $384 billion a year by 2025 to guard them from the effects of climate change effectively. This is more than double the amount of investments currently ($154 billion). The report also found governments are spending $500 billion-$1 trillion a year on subsidies for fisheries, agriculture and fossil fuels, which could potentially damage biodiversity.
While the GBF is seen as an important step in accelerating conservation efforts, it has also been subject to criticism from activists for running the risk of mass evictions as well as being to slow a process considering the rapid rates ecosystem degradation and species loss.
Wild Life (Protection) Amendment Bill adopted after passing Rajya Sabha
India’s WildLife (Protection) Amendment Bill, which was tabled for the winter session of Parliament, passed the upper house through a voice vote on Thursday. The bill, which is now set to become law, has caused trepidation among India’s conservationists who see the law as opening the gates for commercial development in India’s forests and protected areas.
Indian govt approves building temporary shacks, structures in coastal regulation zones
India’s environment ministry allowed temporary shacks and structures to be built on beaches during non-monsoon months. It also allowed manual removal of sandbars across intertidal areas along coasts. The decisions were made keeping a tourism boost in mind, environmentalists said it is important to consider the fragility of coastal areas, especially amidst the growing climate crisis. The draft notification to bring in these amendments was issued by the environment ministry on November 1, 2021.
Vanuatu releases draft resolution at UN court seeking climate justice
The Pacific Island nation of Vanuatu published a draft UN resolution requesting an advisory opinion from the International Court of Justice (ICJ) regarding countries’ legal obligations regarding climate change. The country said 100 countries back its call to seek advice from the ICJ. The island nation is grappling with rising sea levels and powerful cyclones that are crippling its economy. While the ICJ’s orders are not legally binding, its opinions could strengthen climate lawsuits and negotiations undertaken by countries vulnerable to climate change.
Adivasis at bottom rung of India’s development pyramid, finds Tribal Development Report 2022
India’s tribal communities are 8.6% of the country’s population as per the 2011 Census, but they are the least developed in the country as they have been pushed away from alluvial plains and fertile river basins, into the harshest ecological regions, according to a new report released November 28, 2022, DTE reported.
The Tribal Development Report 2022, launched by the Bharat Rural Livelihood Foundation (BRLF), claims to be the first-of-its-kind since 1947. The report said of the 257 Scheduled Tribe districts, 230 (90%) are either forested or hilly or dry. But they account for 80% of India’s tribal population.
In 1988, the National Forest Policy, for the first time, explicitly recognised the domestic requirements of local people, according to the report. The policy emphasised safeguarding their customary rights and closely associating Adivasis in the protection of forests. But the movement towards a people-oriented perspective has not been matched by reality on the ground, DTE reported.
Update land records to include FRA titles allotted, MoEF&CC directs states
The Centre directed states to record settlement rights in revenue and forest records within three months. Digital information on the record of rights (RoR) under The Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, or FRA will also be integrated in the PARIVESH portal and other web GIS platforms of central and state government departments. The revenue and forest departments will prepare a final map of the forest land that was vested to communities under the FRA, DTE reported.
Illegal mining in Aravallis: 38 fresh sites under scanner
According to a report by a National Green Tribunal (NGT) panel, FlRs related to illegal mining have revealed 38 additional sites—37 in Nuh and one in Gurugram—where the illegal activity has been reported in addition to 16 places highlighted by the Aravalli Bachao Citizens Movement. While according to a report by a joint committee formed on the orders of the tribunal to look into instances of illegal mining in the once ecologically rich Aravalli mountain range, Reafforestation in the areas ravaged by extensive mining in the Aravallis in Haryana is likely to be “very difficult and highly cost-intensive” on account of slopes, poor soil depth and nutrient deficiency since mining removes the fertile topsoil.
Largest anti-ESG divestment: Florida pulls $2 trillion worth of assets from BlackRock
The US state of Florida is set to pull $2 billion worth of its assets from managed by BlackRock Inc. The state’s chief financial officer said Florida was opposed to the asset manager’s environmental, social and corporate governance (ESG) policies. While the move is unlikely to create any major impact for the BlackRock, which holds $8 trillion in assets, it shows the increasing trend of the company’s falling popularity amongst Florida’s Republican leaders.
Clean commute: Given the worsening air quality, the government has banned the use of diesel auto rickshaws in areas around the capital Delhi. Photo: wikimediacommons/Buiobuione
Air quality commission panel lifts curbs, diesel autos banned in Delhi NCR
The Commission for Air Quality Management has lifted the stage three of the graded response action plan (GRAP) in the National Capital region, which means ban on construction, demolition, and BS-IV petrol and BS-III diesel vehicles will now be removed. The NCR’s air quality was recorded as “very poor” on December 7, morning. The overall Air Quality Index (AQI) of Delhi stood at 323 at 8 am, better than 354 at 4 pm on Tuesday.
Earlier, the government banned the use of diesel auto rickshaws in areas around the capital Delhi, in its efforts to tackle some of the worst city air quality in the world. No new diesel-powered rickshaws will be registered in the areas surrounding the capital in the states of Haryana, Uttar Pradesh and Rajasthan from January 1, the government said.
CPCB: Don’t use central funds for air quality monitors in 131 cities
HT reported that the Central Pollution Control Board (CPCB) has made central government funds off limits to air quality monitors in the country. CPCB wrote to 131 non-attainment cities (which did not meet the particulate matter standard for 5 years) asking them to stop procurement of Continuous Ambient Air Quality Monitoring (CAAQM) systems using Central funds.
CPCB’s order is expected to impact air quality monitoring in cities with shortage of real-time monitors, including several cities in the Indo-Gangetic Plains (IGP) that record high air pollution levels. There are 374 CAAQMS in the country according to CPCB, reported the newspaper.
“We are not sure how many cities have placed work orders for more procurements. This direction has to be followed by all non-attainment cities that were getting funds for air pollution control,” a CPCB official told HT,
In the IGP region, some cities have between two and five real time monitors. Kanpur, for example, has four monitors; Punjab’s Bathinda has one station; entire Jharkhand has one station; Gurugram and Faridabad have only four stations.
Air pollution kills almost a million children in the womb every year: Study
Nearly a million children die in the womb every year worldwide because of air pollution, according to the first global study. Air pollution was already known to increase the risk of stillbirth but the research is the first to assess the number of foetal deaths. According to the study, fine particulate matter in China kill 64,000 children in the womb every year. This is despite almost over a decade long fight against air pollution by Beijing.
An analysis of 137 countries revealed that 40 percent of stillbirths in Asia, Africa and Latin America in 2015 were caused by exposure to particles smaller than 2.5 microns (PM2.5), which are mostly produced by the burning of fossil fuels. China ranked fourth in terms of the number of PM2.5-related fetal deaths.
In 2015 India, recorded 217,000 the largest number of PM 2.5-related stillbirths, followed by Pakistan and Nigeria, the study found. More than 2 million stillbirths were recorded in the studied countries in 2015, of which 40 percent were linked to PM2.5 exposure exceeding the WHO guideline level of 10 μg/m3.
Dirty air caused Bangladesh 4.4% of its gross domestic product: World Bank
Air pollution caused economic loss to Bangladesh as much as 4.4% of the country’s gross domestic product, the World Bank study said. The study pointed out that in 2019, air pollution caused 78,145 to 88,229 deaths. Dhaka was the most polluted and Sylhet was the least polluted city in the country.
Sites in Dhaka, Bangladesh’s largest city, with major construction and persistent traffic have fine particulate matter equivalent to smoking 1.7 cigarettes a day, it said.
By leaps and bounds: The said capacity will include 8,120 circuit kilometres of high voltage DC transmission lines, 25,960 circuit kilometres of 765 KV AC ones and much more.
Centre unveils Rs. 2.44 trillion transmission system upgrade for planned 500GW RE capacity by 2030
The Centre released a comprehensive plan to evacuate planned renewable capacity of 500 GWs by 2030 at an estimated cost of $29.64 billion, which is about Rs. 2,44,000 crore rupees. The power transmission system to evacuate the said capacity will include 8120 circuit kilometres of high voltage DC transmission lines, 25,960 circuit kilometres of 765 KV AC ones, 15,758 Km of 400kV lines, 1052 circuit kilometres of 220 KV cable, Mercom reported.
Transmission system to evacuate 10 GW of offshore wind power in Gujarat and Tamil Nadu will also be built at the cost of 280 billion rupees. After the setting up of the transmission system the interregional capacity is expected to increase from the present 112GW to 150 GW by 2030.
Centre also plans to install 51.5GW of battery energy storage systems by 2030. Fatehgarh, Bhadla, Bikaner, Chavda, Anantpur, Kurnool, offshore wind setups in Gujarat and Tamil Nadu, and Ladakh have been identified as potential renewable energy generation centres for which transmission systems will be built, reported Mercom.
Indian Railways (IR) plans to achieve net zero carbon emission by 2030
The government informed Parliament that Indian Railways has set 2030 as its target year for net zero carbon emission. To achieve that it will have 100% Electrification of the Broad Gauge (BG) Railway network. The railways have commissioned about 142 Mega Watt (MW) of solar plants (both on Rooftops and on its vacant land) and about 103 MW of Wind power plants have been commissioned so far. The railways plans afforestation of railway land to increase carbon sink. It is also issuing Green Certifications of various industrial units, railway stations and other railway establishments. Environment Management System (EMS): ISO 14001 certification of various railway stations has also been done, the government said.
Further, IR has decided to progressively procure renewable energy to reduce energy consumption through conventional sources.
Global renewables capacity to double in next five years: IEA
The international fossil fuel energy crisis has sped up the installation of renewable energy power globally with total capacity growth worldwide set to almost double in the next five years, according to a new report from the IEA. By 2025, renewable power will overtake coal as the largest source of electricity generation and helping “keep alive” the possibility of limiting global warming to 1.5°C, the IEA said in its Renewables 2022 edition.
The Russia’s invasion of Ukraine has forced the countries to increasingly turn to renewables such as solar and wind to reduce reliance on imported fossil fuels, whose prices have spiked dramatically. Global renewable power capacity is now expected to grow by 2400GW over the 2022-2027 period, an amount equal to the entire power capacity of China today, IEA report noted.
After falling steadily, battery prices rise for the first time since 2010: BNEF
After falling continuously since 2010, average prices of lithium-ion batteries have risen to $151/khw in the current year, which is a 7% rise compared to the previous year. The BNEF report says prices will start dropping again in 2024, to as low as $100/kwh by 2026.
The price hike has been attributed to surging raw material costs and battery component costs, and rising inflation. Battery prices were the cheapest in China at $127/khw, while packs in the US cost 24% higher and in Europe 33% higher compared to China.
China plans to launch silicon futures, will prices stabilise?
China will launch industrial silicon futures and options contracts on the country’s newest exchange, Reuters reported. The move is expected to reduce price volatility of silicon used in most of the world’s solar panels. The so called world’s first industrial silicon contract, will be listed on the Guangzhou Futures Exchange which was set up last year to focus on materials like lithium and rare earths used in renewables energy technology.
China is the global leader in silicon production, with annual capacity of about 5 million tonnes. Prices shot up to more than double in 2021 on supply disruptions due to China’s power shortages and as demand from solar power projects soared.
EU solar suppliers call for help as U.S. offers huge aid to its own industry
Taking cue from the US, European solar manufacturers have called for greater government support in scaling up solar equipment production to rein in shooting prices. President Biden recently announced the Inflation Reduction Act (IRA) which includes new tax incentives to boost domestic solar manufacturing. European companies are urging the European Union to act now as the bloc has hiked RE targets (EU aims to double solar capacity by 2025) and manufacturers are mostly dependent on Asian equipment. The EU is looking for a speedier exit from its dependence on Russian oil and gas following Russia’s invasion of Ukraine.
80% of the annual 200 GW global solar manufacturing capacity is located mostly in China, where large factories and low labour costs have driven prices below European and U.S. levels. Many solar projects were delayed due to logistics issues following the pandemic, highlighting Europe’s reliance on Asian supplies.
A market for all : Officials pointed out that one of the focuses of the policy is to avoid monopoly over the battery swapping ecosystem.
Proposed battery swap subsidy unlikely to be linked to EV standards
The government is unlikely to link the subsidy for battery swapping to adherence of standards. Official sources say that the battery swapping policy has already been finalised and will be notified shortly. The industry has voiced concerns around the interoperability as the existing electric vehicle manufacturers are opposed to homogenous swapping standards. The development of interoperable Indian standards will ensure a level playing field to all the manufacturers as any manufacturer can design their product as per the requirements mentioned in the Indian Standards.
In response to this, another official pointed out that one of the focuses of the policy is to avoid monopoly over the battery swapping ecosystem. The interoperable standards will offer the customer convenience of easy access to battery swap stations at the nearby market, parking lots, or fuel stations preventing monopoly of any particular service provider.
Biden proposes rewriting US biofuel law to decarbonise transportation
The Biden administration is planning to rewrite the 17-year-old US biofuel mandate, according to Bloomberg. This includes a plan to encourage use of renewable natural gas to power electric vehicles, which could potentially benefit Tesla Inc. and other automakers. The Renewable Fuel Standard was initially designed in 2005 to push more ethanol, biodiesel and other plant-based alternatives into vehicles. Now the proposal for rewriting it has invited public feedback on an array of changes to the mandate. This could lead to a shift from one narrow focus on gasoline, diesel and other liquid fuels to a broad aim at decarbonising transportation.
The proposal said that the measure “will set the stage for further growth and development of low-carbon biofuels in the coming years”. During the transition, “maintaining stable fuel supplies and refining assets will continue to be important to achieving our nation’s energy and economic goals as well as providing consistent investments in a skilled and growing workforce.”
EV firms taking subsidies are facing stricter auditing
The department of heavy industries has increased the audits of all-electric vehicle manufacturers taking the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) subsidies.
This step was taken considering a high number of complaints received regarding the violation of localisation criteria and quality norms. According to the report, disbursement of subsidies was also slowed down to ensure compliance with localisation criteria and to greater scrutiny. Subsidies of about Rs 500-600 crores have been put on hold by the department of heavy industries and certain companies could be asked to return subsidies received in the past. However, a decision was yet to be taken by the government.
Switzerland’s proposed emergency measures to tackle energy shortage includes limits on EV use
Switzerland, which depends heavily on imported energy from France and Germany, is in the process of putting together emergency responses for possible energy shortages during the winter. Far from a blanket ban on EVs, as has been reported in several places on the internet, the draft emergency measures includes limitations on EV use in the the third stage of the four-stage proposal. “The private use of electric cars is only permitted for absolutely necessary journeys (e.g. exercising one’s profession, shopping, visiting the doctor, attending religious events, attending court appointments),” the draft reads.
Carbon out, nuclear in : Nuclear power pivot will heavily hinge on the deployment of small-scale modular reactors or SMRs technology, which is still relatively new. Photo: Getsuhas08wikimediacommons
NTPC planning to turn to nuclear power to drive its decarbonisation strategy
Decarbonisation plans at India’s largest power producer, National Thermal Power Corporation Ltd (NTPC), will reportedly involve a foray into nuclear power. NTPC’s nuclear power pivot will heavily hinge on the deployment of small-scale modular reactors or SMRs, which it will use to build a capacity of 30-40 GW by 2040. While SMR technology is still relatively new and its economic competitiveness is untested, it does have the benefit of bringing down capital costs and is likely to be easier to customise for grid requirements.
G7 price cap on Russian oil comes into force
The price cap planned by G7 countries over the last six months on Russian seaborne oil came into force early this week. The cap, set at USD 60 per barrel, aims to limit Moscow’s funding of the Ukraine war, but Russia said it refused to abide by the cap. The cap is in addition to other embargoes on Russian oil enforced by the EU, US, Canada, Japan and the UK. The cap allows Russian oil to be transported overseas using only G7 or EU tankers and financial institutions, and only if the oil is purchased at prices matching or below the price cap. While Russian authorities have expressed that it has no plans to adhere to the price cap, the cap itself is only slightly lower than the current market price for Russian crude which is hovering around USD 65 per barrel and is unlikely to cause too much distress to the Russian crude oil market. Following the enforcement of the price cap, Turkish authorities have intensified checks of insurance for oil tankers passing through the Bosphorus and Dardanelles Straits, causing a traffic jam in the critical sea routes.
Brazil’s incoming govt to scrap Bolsonaro’s plans for new gas power plants, pipelines
The incoming Brazilian government is looking to cancel the gas power plants and pipelines planned by the current Bolsonaro government. The new environment minister, Marina Silva, tweeted that the incoming government was considering reversing these decisions. The Bolsonaro government had announced last year its plans to build 8GW of gas power plants in the country’s north-east along with pipelines for supply. Silva tweeted a quick calculation of how much these projects would cost and concluded that scrapping them would save the incoming Lula Da Silva government $22 billion during its four years in power.
Major oil and gas companies set to explore electrification of North Sea operations
BP, Equinor and Ithaca Energy, operators of the three largest oil and gas fields in the North Sea, signed an agreement earlier this week to study the feasibility of electrifying offshore production in the area. Electrifying offshore platforms would help cut GHG emissions from oil and gas production but could be a complicated prospect due to rough weather conditions in the West of Shetland region where the fields are located.
