Ensuring Environment Protection For Sustainable Economic Growth


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Indian Industry has started appreciating the concept of sustainable development. More and more companies are migrating away from the “business as usual” approach; as these companies strive to achieve long-term sustainability, they are realising the need to integrate social and environmental issues into business decisions. Confederation of Indian Industry (CII) has always been voicing its concern for the growth of Indian industry with due consideration to environmental issues and sustainable solutions. This issue of Policy Watch focuses on various challenges faced by the Indian industry with regard to environmental regulatory compliance and has outlined some specific recommendations to overcome those challenges.

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Ensuring Environment Protection For Sustainable Economic Growth

  1. 1. 1policy watch this IssueInside Message From the Director General........... 1 Chandrajit Banerjee, Director General, CII Policy Barometer.......... 9 Industry Voices........... 12 CEO Speak............................................................................................2 August 2013, Volume 2, Issue 4 Policy T he next decade is likely to see two facets of development gaining prominence. On the one hand, industrial growth will play a vital role in resolving some of the major challenges faced by societies–supporting economic growth, meeting basic needs, lifting millions of people out of poverty, facilitating mobility and social interaction. On the other, environmental pressures in the form of changing climatic conditions, scarcity of natural resources and so on are likely to increase, turning the spotlight firmly on the quest for sustainability. In spite of a wide range of environmental regulations and policies in place, India still faces many environmental issues such as resource depletion (water, mineral, land, forest, biodiversity etc.), environmental degradation, loss of resilience in ecosystems and livelihood security for the poor. The Economic Survey 2012 by the Government of India acknowledges that India ranks 125 out of 132 countries in the Environmental Performance Index (EPI). As the country’s population and economy continue to grow, so do the challenges. All human activities including business cycles derive resources from the natural environment in one way or the other, and therefore, it is in the interest of all stakeholders that the quality of the natural environment and biodiversity is maintained and conserved. The key requirement is continued adoption of technology and scientific management of resources, continued increase in productivity in every economic sector, entrepreneurial innovation and economic expansion. To address the environmental challenges, the three key stakeholders: civil society, Government and industry need to play their own unique role. The first guides society and cautions us that the planet is endangered. The second creates an enabling environment for implementing solutions through appropriate policy interventions. But the ultimate responsibility of devising and actioning the solutions rests with industry. We need to consider the growth requirements of our country vis-à-vis the challenges of sustainability and therefore, the real challenge is of accelerating economic growth while placing equal importance on regenerating – and not just preserving – the environment. The Confederation of Indian Industry (CII) has always been voicing its concern for the growth of Indian industry with due consideration to environmental issues and sustainable solutions. It was during the first Rio Summit in 1992 that CII initiated sustainability services for its members. At that time, CII had to develop a business case for environment management as then industry could not see value in being environmentally conscious. Twenty years hence, CII takes pride in the efforts of our industry members to create solutions that help India and the rest of the world not only reduce the environmental impact of human activity, but also regenerate environment. CII has been proactively working on these issues to find sustainable solutions through the involvement of all relevant stakeholders. It has a national level Environment Committee under the chairmanship of Mr Arun Bharat Ram, Past President, CII and Chairman, SRF Limited, with membership from diverse industrial sectors. The Committee, along with various stakeholders, is spearheading policy advocacy to create an enabling ecosystem for an effective environmental regulatory regime in the country. CII is actively organizing various capacity building programmes for its industry members to build awareness on the latest amendments and trends in environmental legislations, encouraging them to adopt best available practices and technologies for the protection of the environment. In this issue of Policy Watch, we focus on the various challenges Indian industry faces with regard to environmental regulatory compliance, along with CII’s suggestions to overcome those challenges. I hope continuous time-bound efforts and ongoing reforms will help India tackle major environmental issues in a planned and systematic way. n Chandrajit Banerjee Director General Confederation of Indian Industry Arun Bharat Ram, Past President, CII; Chairman, CII National Committee on Environment and Chairman, SRF Limited Pradeep Dhobale, Co-Chairman, CII National Committee on Environment and Executive Director, ITC Limited Dr Nik Senapati, Co-Chairman, CII National Committee on Mining and Managing Director, Rio Tinto India Private Limited Kamal Meattle, Chief Executive Officer, Paharpur Business Centre Focus: Ensuring Environment Protection For Sustainable Economic Growth
  2. 2. 2 policy watch CEOSpeak With growing awareness amongst general public about conservation and protection of the environment and an active judiciary, business organizations need to consider environmental protection while formulating their long-term business strategies. What are your views in this regard? For long-term sustainability of business processes, we need to ensure sustainability of the natural environment. Indian businesses are increasingly recognizing their impact and dependency on the natural environment. Besides providing key inputs for business processes, the natural environment also receives unused resources and energy as byproducts. To ensure a sustainable supply of natural resources, businesses are required to take care of their impact and dependency on the natural environment and adopt efficient processes, thereby reducing wastage of precious natural resources. Globally, there is a new breed of investors known as responsible investors. They specifically look at long-term sustainability parameters of a business before investing in it. These parameters are broadly classified in the domains of environmental, social and corporate governance.As businesses have an ultimate objective of increasing shareholders' value, the concept of long-term sustainability essentially fits into the framework of valuation of a firm to its shareholders. On the regulatory front, we have seen a wide range of regulations from the Government for environment protection and conservation. The active role of judiciary, especially the National Green Tribunal (NGT), is catalyzing adoption of the concept of environmental protection and conservation by the industry. But we must also ensure that enough safeguards are built in the system so as to avoid creating barriers to the growth and development of the industry. Despite the wide range of environmental regulations notified by the Government of India, we have not been able to achieve the desired level of environmental quality. What are your views on the efficacy of the current regime of environmental regulations in India? After independence, our economy has grown in an appreciable manner. However, we need to analyse whether the existing command and control regime is able to support the next level of environmental regulation or do we need an innovative approach for prevention and control of pollution considering the carrying capacity of the environment to maintain long-term sustainability. With increasing pollution levels in air and water across all the tiers of cities, the current regime of the environmental regulatory framework is being criticized on the grounds that it is unduly rigid, cumbersome, and costly; fails to accommodate and stimulate innovation in resource-efficient means of pollution prevention; fails to prioritize risk management wisely; is patchwork in character, focuses in an uncoordinated fashion on different environmental problems in different environmental media often ignoring functional and ecosystem interdependencies and relies on a remote centralized system that lacks adequate accountability. While acknowledging its past accomplishments, the existing system appears to be reaching its inherent limits and seems no longer capable of ensuring sustainable environmental protection at tolerable social cost. The CII National Environment Committee is actively working on providing inputs to the Ministry of Environment and Forests (MoEF) to enhance the efficacy of the current environmental regulations. It is specifically looking into the issue of the next generation of regulatory standards. Future regulations can be designed to be more effective Business for Environment Arun Bharat Ram Past President, CII; Chairman, CII National Committee on Environment and Chairman, SRF Limited
  3. 3. 3policy watch CEOSpeak and SMART by including certain market- based instruments. These could go beyond compliance and provide inherent benefits to those who would do ’extra’ to curtail their emissions. Some of the major issues with respect to the current command and control regime are as follows: a) Need for Market-based Regulatory Instruments: Our current environmental regulations come under criminal laws which imply a ’prohibit and punish’ regime. Under criminal law, the companies are either subject to compliance or non-compliance and not to the extent of compliance with the standards, thereby resulting in the absence of any incentive for business organizations to go beyond compliance. The command and control regime stresses static economic efficiency. It ignores dynamic efficiency gains resulting from the adoption of environmentally sound technologies/clean technologies which would result in saving material, energy, lowering pollution, improving product quality and greater market access etc. There is a need to shift from substantive law to reflexive law. Reflexive law aims to create incentives and procedures to induce people to continually assess their actions and adjust them to society’s goals. b) Need for Institutional Strengthening: The State Pollution Control Boards (SPCBs) have the prime responsibility of implementing and monitoring the environmental regulations in their respective states. Very often, it has been highlighted that the SPCBs don’t have adequate technical manpower as well as financial resources to undertake compliance monitoring in an effective manner. c) Ineffective Monitoring/Verification of Compliance: In the country at large, due to the absence of online monitoring of point sources of pollution, neither industry nor pollution control boards are able to monitor compliance effectively. Despite the best efforts by the industry, the spot/ grab sampling provides only a snapshot of the compliance at a particular time but doesn’t provide overall compliance, leading to ambiguity in reporting. d) Technological Barriers: On account of an increase in the quantity of waste as well as variation in its quality, there is a need for upgradation of technology, depending upon changes in the product or the process. More emphasis should be given on process technologies rather than end-of-pipe treatment technologies. e) Lack of Directional Clarity: Industry usually takes capital investment decisions keeping in view the long-term policy environment. Currently, since there is no long-term road map for the review of regulatory standards, the industry is finding it difficult to take such decisions. Further, it is also adding risk complexion to the projects in hand. India is the President of Conference of Parties (CoP) to the Convention on Biological Diversity (CBD) for a two year term till CoP-12, to be held in October 2014. What are the enabling factors for businesses to actively engage with the Government for biodiversity conservation? The industry is an important stakeholder in biodiversity and how companies manage their impact and dependencies on biodiversity is increasingly seen as relevant to their bottom- line performance. CoP-11 vide its decision XI/7 on Business and Biodiversity has inter alia called upon businesses to adopt practices and strategies that contribute to achieving the goals and objectives of the CBD and its strategic plan. The MoEF has a Biodiversity Conservation and Rural Livelihood Improvement Project (BCRLIP) which aims at conserving biodiversity in selected landscapes, including wildlife protected areas/critical conservation areas while improving rural livelihoods through participatory approaches. The development of Joint Forest Management (JFM) and eco- development in some states are models of new approaches to provide benefits to both conservation and local communities. The probable role of industry in such initiatives needs to be incorporated, especially for business organizations using ecosystem services in one or the other operation in the value chain. On a voluntary basis, there have been many initiatives by Indian industry for the conservation and protection of biodiversity but the enabling factors for the businesses to actively take it to the next level are: i) Policy Support for Public Private Partnership Model: Industry needs a clear policy by the Government of India for adoption of a Public Private Partnership (PPP) model for conservation and protection of biodiversity. We are seeing an increasing number of good examples of partnerships that cross the boundaries between the public, private and non-Government spheres to bridge public financing gaps for various types of projects. Why not biodiversity conservation projects? This will help to ensure long-term sustainability of voluntary initiatives of the industry in biodiversity conservation and protection. Further, it will also encourage industry to locate some of its operations near the sources of raw material and employ local people, thereby providing them livelihood. ii) Tools forValuation of Biodiversity and Ecosystem Services: An appropriate tool for assessing the valuation of ecosystem services to the businesses needs to be brought out by the MoEF. There are certain tools developed by international organizations working in this domain but a customized tool as per the requirement of Indian conditions needs to be prepared. iii) Clarity on the First Use of Bioresources Needs to be Spelt Out Clearly: Globally more than 1.3 billion people depend on biodiversity and on basic ecosystem goods and services for their livelihood. Biodiversity values are implicit in general rather than being explicit. The industry needs clarity on the rights of first use of bioresources so that biodiversity conservation efforts can be planned accordingly. n
  4. 4. 4 policy watch CEOSpeak In its Sustainability Report 2012, ITC stated that it is a Water Positive, Carbon Positive and Waste Recycling Positive company. What are the policy bottlenecks faced by ITC while planning and executing environment friendly projects? In line with the Government of India’s National Action Plan on Climate Change (NAPCC), ITC has adopted strategies to address climate change related impact and accordingly developed mitigation and adaption plans. Our approach has been to integrate these plans with our business strategies. I would not say that there have been policy bottlenecks in executing these programmes. However, the potential to which these initiatives can be scaled up can be enhanced substantially with certain policy changes.Take the case of the afforestation initiative. There is a need to introduce appropriate amendments to the Forest (Conservation)Act, 1980, and related rules to permit industry to use degraded forest land for afforestation linked to the end-use of such wood. An enabling policy framework that encourages public private partnerships (PPP) for the development of degraded forestlands would serve the multiple objectives of Pradeep Dhobale Co-Chairman, CII National Committee on Environment and Executive Director, ITC Limited Achieving Sustainability Through An Enabling Policy Framework enhancing the competitiveness of the Indian paper and paperboard industry, reducing import dependence, creating sustainable livelihoods in rural India and contributing to the national objective of enhancing the country’s green cover. The multi-stakeholder partnership model proposed some years ago by the Ministry of Environment and Forests (MoEF) needs to be reactivated. Involvement of industry in Joint Forest Management (JFM) as a partner is another area which can help scale up afforestation. Agri-businesses can play a crucial role in soil and moisture conservation and the promotion of sustainable agricultural practices. However, there is no Government mechanism which recognizes that businesses can play an important role in these areas, both to meet national priorities and ensure sustainability of agri-supply chains. A multi-stakeholder partnership is strongly recommended to implement Government programmes on watershed development and increase the resilience of agriculture to global warming and extreme climate episodes. These partnerships can unleash synergies for more efficient and large scale implementation of such programmes because it will bring together (a) the scale and resources of the Government programmes, (b) the mobilizing skills of the NGOs and (c) the project and financial management capabilities of the private sector. What are the key measures that the Government needs to take to ensure effective participation of the business community in the conservation and protection of the environment? In my opinion, the Government needs to move away from a prescriptive and mandating approach. Industry feels that the legal system of our country needs to give a helping hand to the organizations doing more than meeting their regulatory compliance requirement. Conservation and protection of environment can be built into business models as demonstrated by ITC but there is a need to incentivize such an approach. Under the present legal system, we can’t have economic instruments in place which have a specific focus on the extent of compliance. The National Environment Policy, 2006, notes that ‘although criminal sanctions, if successful, may create a deterrent impact, in reality they are rarely fruitful for a number of reasons’. Civil law offers flexibility and its sanctions can be more effectively tailored to particular situations i.e. the concept of carrying capacity of the environment can be take into account under civil law. We need to look at innovative and inclusive approaches towards conservation and protection of the environment. Can we
  5. 5. 5policy watch CEOSpeak Achieving a Net Positive Impact evolve a green rating for business entities and then incentivize top rated companies in terms of faster project clearances? Can we evolve REC (Renewable Energy Certificate) and PAT (Perform, Achieve and Trade) type mechanisms for water consumption? Or even for discharge parameters related to effluents and emission? Another way of incentivizing industry is to provide additional benefits like entitlement for import of raw materials at a 50 per cent concessional rate of duty, full exemption from excise and VAT for products made with specified clean technology and accelerated tax depreciation at 150 per cent of the normal depreciation rates under income tax laws for investments in environment-friendly technology. n There have always been concerns about the operational impact of the mining industry on the natural environment and biodiversity. How does Rio Tinto see the connect between biodiversity and sustainable mining operations? Rio Tinto owns and manages more than 110 operations around the world and the concept of sustainable development is integrated into all aspects of our business through our corporate and operational policies, standards, strategies, programmes and performance indicators. Our aim is to have a net positive effect on biodiversity, which means minimizing the impact of our business and contributing to biodiversity conservation through sustainable mining operations. Our approach to driving environmental performance across the group is pro-active, risk management based and leadership driven. This ensures that a region ultimately benefits from our presence. However, this does not mean we can be all things to all people, and before we begin work on any project, we carefully research expectations Dr Nik Senapati Co-Chairman, CII National Committee on Mining and Managing Director, Rio Tinto India Private Limited that the communities have as well as the areas of concern for them. While we don’t always have the skills internally to address these issues, we do address them. One way we overcome this lack of internal skills to address these issues is by working in partnership with respected community, environmental and non-Governmental organizations. Rio Tinto has about 20 such global partnerships. Rio Tinto is committed to the conservation of threatened and endemic species and high priority conservation areas and supports local, national and global conservation initiatives. By way of example, whilst Rio Tinto’s developing Bunder diamond project in Madhya Pradesh is still in pre-feasibility stage and some years away from getting to production, our commitment to sustainable development began in 2004 on day one of the project. Whilst the Madhya Pradesh region presents many social, economic and environmental challenges, enormous research is being done with the help of the State Forest Research Institute to assess the impact of the developing project on the local environment. This has led to initiatives such as scope for positive change. For example, we work closely with the state forest department for annual plantation drives, large scale eradication of the invasive plant (lantana) and forest regeneration programmes. How do mining companies balance their commercial considerations with environmental considerations? Mining companies with a true commitment to sustainable development have figured out that local land, biodiversity and social development issues are closely intertwined
  6. 6. 6 policy watch CEOSpeak and that gains are possible on a number of fronts when companies take the time to understand the environment in which they operate and work in true partnership with local communities and organizations to address local environmental issues. In other words, no blundering in, in big boots and telling communities what’s good for them.This type of work needs to be built on regular conversations, careful observations and steady relationship building. Balancing environmental considerations with commercial considerations is a given for Rio Tinto. The company has developed some very successful strategies for engaging with local communities to develop conservation and biodiversity programmes that will protect the needs and interests of these communities in the long term. The Bunder project provides many examples such as working with the local Government to supply water to the region, cattle breeding initiatives, vegetable cooperatives, harvesting rain water, developing local plant nurseries and baseline flora and fauna studies. The gratifying result is that well-considered environmental initiatives provide the opportunity for real social and economic gains. The most ideal outcome is to leave behind a community that is much stronger and more resilient than when the company first arrived. As someone who has watched this process at work, I have to say it’s a very gratifying business result. The mining industry provides key inputs to other industrial sectors of an economy. What are the key policy issues faced by this industry during the appraisal of mining projects for environmental clearance? India is a very mineral rich country with great potential for mining to contribute significantly to the socio-economic development of the country. A large part of the mineral resources lie in forest and community lands. The policies currently in place to enable an investor to explore these resources and develop them are plagued by severe procedural delays and uncertainty. As an example, the time period to go from a reconnaissance permit to applying for a mining lease could be as much as 10 years or longer. The environmental and forest department clearances are very cumbersome and time consuming. Acquisition of land, especially forest land, is also a big challenge. These aspects are not friendly to international investors who might prefer to invest in more friendly jurisdictions even though the potential in India is huge. What are your views on the Environmental Impact Assessment approvals process? Environmental Impact Assessment (EIA) appraisal needs to be understood as a tool for decision making rather than something required to meet legal obligations. It helps to identify the environmental, social and economic impact of a project prior to decision making. Early stage assessment with a wider perspective is important to predict environmental impact so that this can be mitigated by proper project planning. It is important to address livelihood issues and biodiversity conservation through community engagement. Properly conducted EIA also reduces conflicts by promoting community participation, informs decision makers and helps lay the base for an environmentally sound project. Rio Tinto is working to enhance biodiversity outcomes through consultation, constructive relationships and partnerships with key stakeholders. n
  7. 7. 7policy watch CEOSpeak The creation of infrastructure is one of the prerequisites for the expansion of a nation’s economy. In the current economic scenario, to bring the industry back on the growth path, infrastructure development is one of the priority areas for the Government. In your opinion, what should be the key initiatives towards creation of sustainable infrastructure? Conventional buildings consume 40 per cent of the world’s resources, including 12 per cent of its water and up to 40 per cent of the energy we use. By the year 2050, residential, institutional and commercial buildings are expected to consume as much as 38 per cent of global energy production and release about 3,800 megatons of carbon in the atmosphere. The ecological impact of urbanization has become a major justification for a new development paradigm: sustainable green cities. Sustainable architecture is the only way forward. Sustainable or the ‘Green Building Movement’ is gaining momentum as it provides benefits that conventional buildings do not. These benefits include energy and Moving Towards Green Infrastructure Kamal Meattle Chief Executive Officer Paharpur Business Centre water savings, waste reduction, efficient resource management, improved indoor environment, greater employee productivity, reduced employee health costs and lower operations and maintenance costs which are instrumental in reducing the environmental impact of buildings. Green building activities result in the reduction of operating costs by 25-30 per cent. Green projects offer a proven Return on Investment (ROI) of up to 44 per cent. The green certification also helps enhance asset value. However, sustainable architecture is not the sole subset of green infrastructure. Emphasis should also be laid on the creation of efficient public transport with connectivity up to the residential pockets of cities. At present, more than 1,200 cars get added to the roads of Delhi on a daily basis resulting in traffic jams in almost every arterial road network. While running or spending idle time in the traffic, motor vehicles add air pollutants like Particulate Matter, Respirable Particulate Matter, Carbon Dioxide (CO2 ), Carbon Monoxide (CO) etc to the environment. To build the cities of future, the Government needs to carefully plan the public transport system. The metro train is the fastest mode of transportation in cities. It is a convenient and economical way to travel. However, since it is not very well connected with all the residential areas, a majority of commuters are compelled to use their own cars, leading to road congestion and increase in air pollution. Last-mile connectivity is missing and it is suggested that the concept of ‘door-to-door public transport service’ should be brought into effect. Last-mile connectivity will help in reducing the number of vehicles that run on Delhi roads, hence bringing down the level of pollution caused by them. Sustainable infrastructure and connectivity around it can play a key role in catalyzing or retarding environmental challenges. Sustainable development represents a balance between the goals of environmental protection and better infrastructure and economic development, leading to human progress. ‘Green‘ is a new buzzword in the infrastructure sector, with new projects being planned as green projects keeping in mind the energy and water requirements of the buildings. What should be the policy direction to encourage such environment- friendly projects? A study reveals that two-thirds of India is yet to be built and that will happen in the next 20 years. The construction industry in
  8. 8. CEOSpeak 8 policy watch India is growing at a rate of 9.2 per cent as against the world’s average count of 5.5 per cent. Sixty per cent of human population will be living in cities in the next 15 years so we will need over 10 million new homes each year. In urban areas there is a growing preference for working and living in air-conditioned spaces; thus, the need for more energy, water and waste management in buildings of all sorts. I would, therefore, like to suggest the following: • Promotion of Energy Efficiency: As per some estimates, if energy efficient techniques are applied to just 10 per cent of the buildings constructed in cities every year, India can expect enough savings to light 20 million rural households. The Government of India should make the Green Standards and Energy Conservation Building Code (ECBC) mandatory for every project proposed to it. • Retrofitting in the Existing Buildings Should be Encouraged: It does not matter how much area one puts into use for greenery or how many energy efficient technologies one uses if it contributes to an ever increasing demand on the infrastructure sector in terms of energy and water, then the purpose of going green is defeated. Incorporation of least important features, which add to the overall impact of the building in terms of demand for energy and water should be avoided in the design. • Promote Rainwater Harvesting: Rainwater harvesting should also be one of the obligatory clauses in the policy. The National Capital Territory (NCT) of Delhi annually receives on an average 611 mm of rainfall i.e 61,100 liters of water/ 100 sqm. Out of this, 36,660 liters of water is available for rooftop rainfall water harvesting.An analysis done based on the rainfall availability and demand supply gap shows that even 50 per cent of the rainwater harvested could help in bridging the demand supply gap. Rain water is better for landscape plants and gardens as it is not chlorinated. It also helps in increasing the water table. • Provide Incentives to Green Projects: Benefits in terms of tax rebates / breaks, increased Floor Area Ratio (FAR) etc should be given to those residential and commercial buildings that follow the green standards/guidelines by Indian Green Building Council/Energy Conservation Building Code. Most of the commercial buildings have a High Volume Air Conditioner (HVAC) system i.e. they have artificial air circulation. There is scientific evidence of the deterioration of employee efficiency in case the indoor air quality is not maintained properly. What are your suggestions on the policy front to address such indoor air quality challenges? Indoor air pollution is the second highest killer in India. Indoor air may be up to 10 times more polluted than ambient air depending on the internal housekeeping standards of the buildings. This may lead to eye irritation, respiratory symptoms, lung impairment, asthma, headache and more. Considering the fact that indoor air pollution affects employee health and productivity, the only solution in sight seems to be the ’natural way’ of combating these challenges. Plants like Areca Palm, Mother-in-Law’s Tongue and the Money Plant combat indoor pollutants and drastically improve the Indoor Air Quality (IAQ). They are easily available and maintainable houseplants. Instead of working just as beautifiers, plants can do wonders in terms of bringing down power costs. It is suggested that growing the right kind of toxin removing plants should be encouraged as it is one of the easiest way to curb indoor air pollution. Paharpur Business Centre (PBC) has hands- on experience in this. We grow our own fresh air with the help of more than 1,200 toxin removing plants that are grown indoors. As compared to other buildings, a reduction of up to 45 per cent of CO2 , 93 per cent of Particulate Matter, 99.99 per cent of Volatile Organic Compounds (VOC) and fungus count has been observed. Such IAQ numbers have been practically achieved in a 5,000 m2 building of PBC in Nehru Place - one of the more polluted areas of Delhi. Although state factories rules specified certain limits for some of the pollutants, it does not take into account all the parameters, especially for buildings with the HVAC system.The Government may consider framing a separate policy to regulate the IAQ. Use of pollutant-free indoor materials like low VOC paints should be encouraged through proper policy initiatives. The Government may consider to mandate monitoring of IAQ in commercial buildings. Regular inspection and audits for IAQ and materials used inside the buildings will help in enhancing the IAQ. However, the most important thing is to generate awareness amongst project developers and the occupants of buildings on the benefits of good indoor air quality and the hazards caused due to indoor air pollution. n
  9. 9. 9policy watch Policy Barometer Need For A More Proactive and Pollution Abatement Centric Approach India is the seventh largest country in the world by geographical area and has a population of over 1.1 billion people, up to 65 per cent of which is under the age of 30. This gives it a demographic dividend in terms of a young work force and together with the improving quality of life of its middle class, makes the country a hotspot both from an investment point of view as well as its market potential. However, there is a need to look at development from the lens of sustainability as well since it is important to ensure availability of resources and opportunities for future generations. The historical conference on Human Environment, held in Stockholm from 5th June to 16th June 1972, was the first global recognition that the environment was endangered and that Governments and industry would have to collectively put in effort to protect the environment. After the Stockholm conference, India provided constitutional sanction to environmental concerns through the 42nd Amendment1 in the Constitution of India. Specific legislations on environmental matters started with the Water (Prevention and Control of Pollution) Act of 1974. It was followed by a parallel enactment called the Air (Prevention and Control of Pollution) Act of 1981 and an umbrella legislation called the Environment (Protection) Act of 1986. After that, a wide range of environmental regulations have been notified to regulate various types of emissions, industrial discharges and management of waste, with the recent E-waste (Management and Handling) Rules, 2011. The effective implementation of these environmental regulations require processes, procedures and institutions at the Centre, State and District levels with the capacity to plan, implement, monitor and enforce compliance, as it is primarily a Government- centered command and control regime. Despite a strong policy and institutional framework and some successes, environmental degradation has not been arrested on a large scale. Deforestation, soil erosion, water pollution and land degradation continue to worsen and are hindering economic development in rural India while rapid industrialization and urbanization in India’s booming metropolises are straining the limits of municipal services and causing serious environmental problems. However, there is a paucity of evidence about the efficacy of environmental regulation in India. This is quite evident from India’s poor environmental performance.According to the Environmental Performance Index by the United Nations, currently India ranks 125 out of 132 nations and it is also the 3rd largest emitter of carbon dioxide in the world. After India gained independence in 1947, the country’s economy has grown in an appreciable manner. However, what needs to be analysed is whether the existing command and control regime is able to 1 Article 48A of the Directive Principles of the State Policy directs the State to endeavour to protect and improve the environment and to safeguard the forests and wildlife of the country. Further, Article 51A(g) of the Constitution states that it shall be the duty of every citizen of India to protect and improve the national environment including forests, lakes, rivers and wildlife and to have compassion for living creatures.
  10. 10. 10 policy watch Policy Barometer support the next level of environmental regulation or an innovative approach for pollution prevention and control, considering the carrying capacity of the environment and hence maintaining the long term sustainability, is needed. This requires moving beyond the conventional ’do no harm’ approach at the project level to a more proactive ’do good’ approach at both the project and national levels. However, India’s current environmental regulations come under criminal laws which imply a ’prohibit and punish’ regime. The Ministry of Environment and Forests (MoEF) is currently running a pilot project- Emissions Trading Scheme - launched in March 2011, which is based on a self- regulatory mechanism. It is an innovative instrument for environmental regulation, where the Central Pollution Control Board (CPCB), the State Pollution Control Boards (SPCBs) of Gujarat, Tamil Nadu and Maharashtra, outside experts and a team from the Massachusetts Institute of Technology (MIT) and The Abdul Latif Jameel Poverty Action Lab (J-PAL) are participating to run this pilot project. Emissions trading schemes have great potential to lower pollution while minimizing costs for industries. The benefits of such schemes come from two sources. On the industry side, units are able to choose for themselves the cheapest way to reduce pollution. In comparison, traditional command and control regulations do not allow for differences across industries. Mandating the same standard everywhere will generally miss the best opportunities for abatement. On the regulatory side, an emissions trading scheme, once established, will provide a self regulating system that makes pollution control more efficient. In the longer run, the reduced costs of compliance can also make it easier to introduce new regulations that increase environmental quality. The role of regulator will change to becoming a facilitator of the regulatory regime. Seen from the lens of environmental sustainability, it takes care of the natural carrying capacity of the environment and hence helps in bringing down the overall level of pollutants. But the irony is that under the present framework of environmental regulations, it is not possible to have economic instruments in place which have a specific focus on the extent of compliance. The National Environment Policy, 2006, notes that “the present environmental redressal mechanism is predominantly based on doctrines of criminal liability, which have not proved sufficiently effective, and need to be supplemented.” On the other hand, civil law offers flexibility, and its sanctions can be more effectively tailored to particular situations i.e. the concept of carrying capacity of the environment can be taken into account under civil law. Therefore, there is a need to bring in economic instruments to support the existing environmental regulatory framework. The various Economic Instruments (EIs) for the regulation of environmental pollutants are fiscal incentives, capital/ interest subsidies, tax exemption, eco labelling, bank guarantees etc. Another major policy challenge is the streamlining of the Environment and Forest Clearance process in the country. Some of the major issues and CII’s suggestions are listed below: 1. Delay in Decision Making on Project Proposals for Environment and Forest Clearances: A time-frame for completion of each stage of the clearance process has been provided in the 2006 Notification. However, it has been observed that sanctity of deadlines is not maintained. It therefore defeats the purpose of defining timelines in the 2006 notification, which weren’t there earlier. As a result, projects continue to suffer due to delays both at the MoEF level as well as the state level. Another critical issue (as seen in UP and Punjab) is that it takes inordinate delays in re-constituting the state level Environmental Impact Assessment Authorities (SEIAA) after the term gets over. In the meantime, all project applications remain stagnant at the state level (such as in UP) or are transferred to MoEF, resulting in project piles ups and delays. Therefore, the specified timelines should be met while the project appraisal process under Environmental Impact Assessment (EIA) Notification is on. Also, the constitution/reconstitution of the state level Expert Appraisal Committees needs be done in a time bound manner. 2. Need to Be Pollution Abatement Centric and Not Production Capacity Centric: Currently, the categorization of projects to apply for prior Environmental Clearance (EC) is defined under EIA Notification 2006 on the basis of production capacities of the project. The production capacity is also one of the major criteria considered by the respective State Pollution Control Boards during the grant of subsequent Consent to Establish and Consent to Operate.
  11. 11. 11policy watch Policy Barometer The MoEF and SPCB should allow for any reasonable addition in production capacities that results from technological upgrades and efficiency measures implemented by the company to get the best utilization of the assets without compromising on the environmental impact. The criteria of such relaxation should be based on the extent of reducing adverse environmental impact of the project activities within the acceptable limits of emission/effluent discharge. For many industries, achieving zero effluent discharge is very difficult and creates additional impacts such as increase in energy consumption and generation of large amounts of solid waste. The focus, therefore, should be on the reduction of fresh water use per unit of product by benchmarking and utilization of treated effluent by other downstream users. For example, treated effluent meeting standards applicable for discharge on land use can be used for irrigation purposes. 3. Providing Room to Clean Technologies: The industry is willing to explore the enhancement of productivity and throughput without corresponding increase in emission levels through the use of clean technologies. In fact, in many cases, such initiatives reduce the net environmental impact of industries. Projects based on waste elimination through re-cycling or end- use are an example. It was proposed in 2009 to exempt such initiatives from the provisions of Environmental Impact evaluation and public hearing but such notification was withheld due to opposition from many non- Governmental organizations. As a result, the manufacturing industry is discouraged to carry out initiatives based on innovative clean technologies, including the Clean Development Mechanism. Environmental legislation must follow a 'carrot and stick' strategy otherwise environmental regulation will replace industrial licensing and controls as the new hurdle to industrial growth. It is suggested that while MoEF pursues EC cases it must accord the approval allowing for a 10 to 15 per cent increase over the baseline production capacity due to technological or productivity enhancement. It may follow a self-certification process where the manufacturing unit is only required to furnish the reasons and the environmental impact of its activities. Automatic approval is deemed to have be granted to the manufacturing unit unless the MoEF responds with a query or raises objections to certain issues within a prescribed time period after receipt of the application. Although there have been efforts from the Government to bring in more accountability, transparency and streamlining of processes leading to bringing in more efficiency, the real challenge lies in making them effective. There is a pressing need to consider the growth requirements of the country vis-à-vis the challenge of sustainability and therefore, real achievement for the environmental regulatory regime shall be to bring down pollution levels in the natural environment without creating barriers to industrial growth. On the policy front, the concept of inclusive and sustainable growth needs to be embedded in the agenda of various Government policies and initiatives. The key driving factors for such initiatives should be the creation of employment opportunities and promoting sustainable growth by ensuring environmental sustainability through green technologies, energy efficiency, optimal utilization of natural resources and restoration of damaged/ degraded ecosystems. n
  12. 12. The increasing challenge for environmental protection and conservation can be overcome by deployment of suitable technology. Indian Industry has been making all efforts for meeting the notified emission limits from time to time to comply with the evolving regulatory framework in India. A clear roadmap of environmental standards and emission norms, which can be implemented over the next 10-15 years, needs to be developed jointly by the Government and industry. This will help in preparing an implementable technology roadmap without compromising the competitiveness of Indian Industry, whilst taking into consideration environmental imperatives. Ashish Aggarwal Vice President – Government & Public Policy, Cummins India India is on a path of progress. Electricity and reforms in the power sector will play a crucial role in India’s development. With mass urbanization and increasing population, there has been a rising demand for electricity in the nation, making the growth of the power sector inevitable. In a notable achievement, for the first time in its history, India is set to achieve its electricity capacity addition target for any Plan period. This impressive feat has been possible through advancements in power sector in terms of capacity and availability. But as we look forward, there is a need to ensure that development is not achieved at the cost of sustainability, because there is an inescapable link between energy use and the environment. It is far more efficient to take environmental impact into account at the time an electricity system is planned, expanded, and reformed rather than after the environmental damage has occurred and large, vested financial interests resist change. Sunand Sharma Co-Chairman, CII National Committee on Power and President – ALSTOM International, India & South Asia and Chairman, ALSTOM India Limited In the past, both Central and State Government agencies have made several attempts to simplify the procedure for obtaining clearances. Despite this, there still remains much to be desired for them to become more efficient and effective and ensure work is conducted in a transparent and coordinated manner. A close follow-up for timely completion of the process would be essential to cut delays in project implementation. Secondly, only a giant policy push will ensure that different categories of waste can go to the cement industry for co-processing. As of today, a large quantity of industrial waste remains unutilized in our country. The world over, co-processing has been well-recognized as a major waste management option. Not only does this offer a solution to a variety of so-called ‘hazardous‘ and ‘non-hazardous’ industrial waste but also helps in achieving savings in precious fossil fuels required to be burnt in cement kilns. Like several other countries, if our aim too is to attain around 20-30 per cent Thermal Substitution Rate (TSR) by co-processing of combustible wastes in cement kilns from the present level of <1 per cent, then extra efforts would be required by both the Central and State Governments to play the role of an effective facilitator. An enabling regulatory environment with necessary amendments made in the existing legislation would ensure creating a quick and smarter permitting process. Ajay Kapur CEO – Ambuja Cement 12 policy watch Industry Voices Copyright © 2013 by Confederation of Indian Industry (CII), All rights reserved. No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of the copyright owner. CII has made every effort to ensure the accuracy of information presented in this document. However, neither CII nor any of its office bearers or analysts or employees can be held responsible for any financial consequences arising out of the use of information provided herein. However, in case of any discrepancy, error, etc., same may please be brought to the notice of CII for appropriate corrections. Published by Confederation of Indian Industry (CII), The Mantosh Sondhi Centre; 23, Institutional Area, Lodi Road, New Delhi-110003 (INDIA) Tel: +91-11-24629994-7, Fax: +91-11-24626149; Email: info@cii.in; Web: www.cii.in For suggestions please contact Priya Shirali, Corporate Communications at priya.shirali@cii.in