SDG-7: Affordable and Clean Energy

 SDG-7: Affordable and Clean Energy 

 

 

Why is energy important? 

Energy, by definition, is the very basis of life on our planet. All life forms need it to sustain themselves, albeit in different forms. All the progress that human civilisation has achieved can be attributed to how homo sapiens discovered, learnt, innovated, and improved the use of various forms of energy to reach heights of prosperity.  

Today, access to affordable energy is one of the necessities of life to ensure a happy prosperous society and sadly, we’re far away from the ideal picture. According to the UN, we have not provided electricity to more than 750 million people. Many of these numbers come from impoverished low-income regions like Sub-Saharan Africa. The other battle is being fought on the question of what energy is good energy? This brings us to the issue of clean energy where pollution and GHG emissions due to unsustainable energy production and consumption lead to climate change coupled with ecological destruction while we stare at a massive future energy crisis as fossil fuel resources shrink. Since energy availability, accessibility, and security is crucial for deciding humanity’s future, the UN has included “Affordable and Clean Energy” as one of the SDGs. 

SDG, what’s that? 

Far from caring about development in its independent sense, countries around the world felt the need to push for sustainable development, which means, according to the 1987 Brundtland Commission Report, the development that meets the needs of the present without compromising the ability of future generations to meet their own needs. 17 Sustainable Development Goals (SDGs) were set up by the UNGA in 2015 and are to be achieved by 2030. The goals are a list of interlinked global targets designed to achieve a sustainable future for humanity.  

One of them to be discussed in detail here is “Affordable and Clean Energy” which aims to ensure access to affordable, reliable, sustainable, and modern energy by transforming energy-consuming processes from basic ones like cooking to complex industrial production processes. This can be achieved by efficient use of energy which is extracted from clean and renewable sources and is feasibly accessed by everyone.  

Further breakdown of the SDG in focus is a list of targets that all signatories aim to achieve – ensuring universal access to energy services; increasing the share of renewable energy; doubling the global rate of improvement in energy efficiency; enhancing international cooperation to facilitate access to clean energy research and technology; promoting investments in energy infrastructure and expanding sustainable energy services in developing and underdeveloped countries. 

The Indian Scenario 

A country of more than a billion, India has one of the highest energy requirements in the world. Diversity means the country faces many issues in its energy production and distribution. While India is heavily reliant on coal-powered thermal power stations on the one hand, it has serious loopholes in its distribution and transmission system on the other, which has led to low electricity availability and consumption even after achieving a production surplus.  

Even after the government has recently claimed near completion of countrywide electrification, frequent power outages and bad power quality issues mar the initial excitement. Clean practices for producing and utilising energy are rarely followed or rarely enforced if written in the law. It is to be noted that India is still a developing country that is gradually pulling out millions of people from the clutches of poverty with time. This means that India’s energy requirements are destined to rise manifold in coming decades with rising incomes and expansion of industries as India chases the superpower tag. Concisely, catering to such a humungous future demand for energy is crucial for a sustainable tomorrow.  

India has enormous potential for renewable energy. If it plans to handle that future energy demand, it must work tirelessly to shift its overdependence from coal to renewable sources like solar and wind. Energy security is the asset of the future. Especially for a country that wants to exert geopolitical influence, achieving this SDG is more than just another goal and must be attended with utmost seriousness. 

Let’s talk about the corporates 

The industries and corporates use a major chunk, that is, approximately two-thirds of the global electricity demand. This puts them in a key position to progress towards adopting sustainable energy practices. Every company is eventually run by humans, for humans and this very fact places them in an elevated position of responsibility regarding their energy practices. Already, corporations have started focusing upon the SDGs as part of their CSR activities where, improving their image and capitalizing on it is usually the primary objective. A good example here might be of the well-known ‘Beyond Petroleum’ campaign of BP, an oil company, which was more about clever advertising than a serious move towards clean energy.1 

This SDG is as important for the future of industries as it is for the people. Transformation to clean energy and encouraging moves towards efficient energy practices will not only prove to be a huge cost saver for the companies but would also immune them against an impending energy crisis. Additionally, companies will hugely benefit from marketing the fact that if the customers use their product, it is helping them reduce global carbon footprint. Many companies have already realized the change in the winds and are increasingly focused towards achieving SDGs to aid them on both operational and marketing fronts. For an example, Wipro has announced its plans to go Net Zero by 2050 through a cross sector initiative. To reach there, Wipro plans to reduce carbon emissions through its activities, develop more efficient products and encourage sustainable practices among its customers and communities. Further, partnership among corporates is also necessary to drive moves towards clean energy in addition to the healthy competition among them to be more carbon neutral. 

Business Implications and Responses 

As the need for transforming towards clean energy is gaining steam, fuelled by rising proportion of aware and educated citizens, corporates are beginning to realize that going green is the way forward if they aspire to remain in market for long. Governments too are being increasingly pressurized by voters and NGOs to take hard steps towards curbing inefficient energy practices as irreversible climate and ecological change looms over us. 

Given the current scenario, major corporates have already integrated SDGs into their future strategies as part of their CSR. Additionally, many corporates are investing in innovative technology that will help them go green while also helping them cut their costs and overheads which shows that going green can help a firm cut its costs eventually while rebranding itself as a company that cares about saving energy and ensuring that energy needs are being satisfied for everyone sustainably. 

One of the major strengths of big firms is to bring about a massive disruption in old practices by their decisions. For example, if a company decides to go green, it can exert influence upon its competitors, its loyal customers and, up and the down the levels of its supply chain position. The result might be that the suppliers, buyers, or competitors might adopt the green practices to remain relevant.  

Let’s have a look at how some companies are performing on this SDG: 

Amazon Web Services 
Amazon is on track to be powered by 100% renewable energy by 2025, 5 years before its original target 2. In June 2021, Amazon became the largest corporate buyer of renewable energy in the US as well as Europe.3 4 It has total renewable energy resources to produce 10-Gigawatt energy. AWS has the largest set of enterprise customers and partner networks.5 Moving from on-premises to cloud is known to reduce carbon emission, varying from 50% to 97%.6  

Asian Paints 
As compared to the base year of 2012-13, Asian Paints has reduced specific energy consumption by 35%, and 57% of this consumption is sourced from renewable energy. The renewable energy sourcing of 57% beat the goal set by the company in 2015-16 (36%).7 However, it is observed that little to no improvement was made in the past year as compared to the previous. 

Microsoft 
Microsoft has charged its energy suppliers for carbon emissions from 2012, 3 years before UN set up the Sustainable Development Goals. It aims to source 100% renewable energy by 2025. It claims to be commitment to pursue Zero Carbon Certification from the International Living Future Institute. In its datacenters, Microsoft has installed grid-interactive UPS batteries, storing energy with up to 90% efficiency and reducing demand from the grid. It is also developing solar-powered irrigation networks in Kenya.8 

Standard Chartered 

SC has committed towards being net zero in its operations by 2030. In Nigeria, for example, it agreed a remote gas turbine power purchase contract to replace the use of on-site diesel generators, saving 3,500 tonnes of carbon annually. The bank has also facilitated $35 billion worth of project financing services, M&A advisory, debt structuring, transaction banking and lending services for renewable energy that align to our verified Green and Sustainable Product Framework.9 

Wipro 

Wipro aims to have net-zero carbon emissions by 2050. With 2017 as a base year, Wipro aims to increase renewable energy sourcing by 55% by 2022. Wipro’s electronics city campus was awarded the Greenco Silver Rating by CII-GBC (Green Business Center). Contrary to its goals, Wipro increased its energy consumption in 2020-21 by 1.5% as compared to the previous year.  

Analysis and the Path ahead 

When looking at trends around and just before the adoption of SDGs, the path ahead for companies must have seemed clear. What, if anything, has changed since before the pandemic, the point at which data collection faced interesting dilemmas to solve. The numbers until 2019 showed promise in the target to provide access to modern energy in the developing world and some concerns. In its much-commended rush to raise hundreds of millions out of poverty, the developing world fell behind on the proportion of renewable energy usage despite increases in installed capacity.  

We have seen a growing response from the private sector since 2015. BlackRock has started pulling levers on shareholder activism and pushed for more environmentally responsible choices in companies in the US, Europe and Asia10. Others, like Standard Chartered, face increasing pressure over its stance on climate change and its position as an investor Outside of financial institutions, resolutions have had more clarity. Companies like Microsoft, Amazon and Google have already made great strides. Google had already achieved carbon neutrality in 2007 and Microsoft in 2012. Both these companies aim for being carbon-free, and in the case of Microsoft, it removes all carbon it has created by 2050.    

In the developing world. Investment in RE capacity has come in fits and starts, and India and China have actually seen them RE use as share of total energy consumption reduce between 2000 and 2019.11 Much remains to be done, and big business is facing shareholder revolt and public pressure with regards to their efforts in tackling climate change. Energy giants like Chevron, ExxonMobil, and Shell recently faced scrutiny and legal action in their efforts to cut emissions.12 There are concerns over resource scarcity, operational impacts, reputational damage and uncertainty amongst many executives. 

There is evidence that corporations are right tracking themselves. Wipro announced its plans to become carbon neutral by 2050, and the Tata Group by 2030. 60 firms in total pledged to cut emissions by 2030, as laid down in the Science Based Targets Initiative. The developing world, as it grows rather than restructures, can avoid the West’s mistakes. It can build in a manner commensurate with the planet’s needs and do so while continuing to raise living standards. It also has native attachment to ecology to rely on in many parts of South Asia and Africa and can win hearts and minds if it combines economic prosperity, financial gains, and environmental responsibility. Efforts must be taken to transform action into words, and a push made to shed fossil fuels.  

For takers, there exists an INR 2500 billion opportunity in capitalising on the action against climate change, as per a CDP report. Resource efficiency, supply chain right-sizing, sourcing sustainable raw materials, and process efficiency gains are some of the benefits firms can derive from building back greener post-pandemic.13 On the other hand, losses upwards of INR 7000 billion are predicted if no actions are taken. With such stakes, it makes sense for businesses to not wait around for governments to take the lead in climate change, and use relationships with suppliers, investors, and customers to make a tangible impact in achieving the SDG on energy.