Energy Efficiency

Enhancing prosperity through resource efficiency in India

We need to enhance resource efficiency and promote the use of secondary raw materials as a strategy to minimise the potential trade-off between growth and sustainability

 
By Ajay Mathur
Last Updated: Tuesday 18 June 2019
Used cardboard polyethylene and plastic pressed into bales at finished products warehouse. Photo: Getty Images
Used cardboard polyethylene and plastic pressed into bales at finished products warehouse. Photo: Getty Images Used cardboard polyethylene and plastic pressed into bales at finished products warehouse. Photo: Getty Images

Forming the backbone of economic development, natural resources help us meet basic needs while fulfilling aspirations for better living standards.

Rising consumerism has accelerated demand for natural resources, raising sustainability concerns. India consumes an estimated seven per cent of globally extracted raw materials per annum.

Between 1970 and 2017, demand increased from 1.18 billion (bn) tonnes to 7.4 bn, and India emerged the world’s second-largest consumer of materials. India’s resource extraction per unit area is one of the highest in the world (1,579 tonnes/acre) compared to the global average of 454 tonnes/acre.

The compound annual growth rate in domestic material consumption has almost doubled between 1970 and 2000.

The situation is complicated by India’s slow resource productivity, compared to nations like Germany and China. Low resource utilisation increases virgin resource demand, triggering high environmental burden and production costs.

India’s average material cost in total production cost is over 70 per cent vis-à-vis 40-50 per cent in developed economies. India’s average recycling rate is low (20-25 per cent), compared to other countries (as high as 70 per cent).

Limitations in finance, and technology know-how and access impede improved productivity and material recovery.

There are daunting challenges in meeting these growing material demands — rising costs; shrinking geological availability; risk of material exhaustion or uncertainty of their long-term abundance; social license to operate that arise from equity; distributional challenges; and the associated uneven access to natural resources.

India is already a net importer of resources, dominated by fossil fuel imports and critical materials, thus increasing our economic vulnerability to geopolitical and economic risks.

Enhancing resource efficiency and promoting the use of secondary raw materials has emerged as a strategy for minimising the potential trade-off between growth and sustainability. This strategy can stabilise raw material supply for industry, reduce ecosystem pressures, and create green jobs.

Resource efficiency yields significant cost benefits by reducing virgin raw materials extraction, import dependency and energy and process materials.

Legislation

Countries are increasingly introducing legislative frameworks to adopt resource-efficient trajectories.

China enacted the Circular Economy Promotion Law (2009), the Circular Economy Development Strategy, and Immediate Plan of Action (2013). In 2013, China also introduced the Circular Economy Development Strategy and Immediate Plan of Action, and identified sector-specific development targets.

Japan established the Fundamental Law for Establishing a Sound Material-Cycle Society (2000) to overcome growing waste generation and resource scarcity.

South Korea adopted policy instruments to transform a linear economy into a circular one.

Related policy actions are the resource efficiency programme, energy recovery programme and recycling technology programme.

Austria, Denmark, Finland, Germany and the Netherlands have dedicated national strategies for material resource efficiency, while France’s Circular Economy Roadmap will be put before Parliament in 2019.

Belgium and the United Kingdom have established regional resource efficiency strategies. Sweden, lauded for its recycling revolution, aims to achieve zero-waste by 2020.

For India

A strategic resource efficiency framework will help establish the right direction of public thinking and reflect the government’s commitment to facilitate transition.

Creating multi-stakeholder collaboration platforms will enable exchange of ideas and their deployment, eventually generating new business models, resource efficient products, and demonstrating success.

Simultaneously, standards for new products will be crucial for consumer acceptability and demand. Greater demand will provide economies of scale, reducing prices.

New business models for resource efficiency will offer attractive opportunities for businesses and financial institutions, thereby enabling greater employment growth and diversity.

Facilitating such processes through regulatory frameworks and innovative economic instruments will attract interest from different industries and geographies.

Prioritising sectors and materials for resource efficiency improvements is equally essential in bringing the desired economic transition.

It is critical to measure improvements across sectors: a target-based approach is warranted across selected lifecycle stages for achieving productivity, recyclability, specificity of content of recycled materials in newer products, and standards for recycled, reused, refurbished and remanufactured products.

While technological development and innovation play an important role in adopting circularity during the production phase, behavioural change promoting lifecycle thinking at the consumption phase is key to the adoption of a circular economy. An integrated resource efficiency policy can bring in the desired transition.

An institutional mechanism is the need of the hour that will facilitate, monitor and review the implementation of various policies and programmes across sectors and product life cycles and periodically propose necessary course corrections.

The mechanism needs to develop resource efficiency measures across the life cycle to avoid burden shifting across stages, sectors and resources, keeping in mind ease of implementation and minimising transition costs, serving as a repository of best practices and business models.

Ajay Mathur is the director-general of The Energy & Resources Institute

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