NAPCC India and Climate Change

Introduction

India's per capita CO2 emissions are currently only 1.1 tonnes, when compared to over 20 tonnes for the US and in excess of 10 tonnes for most OECD countries. Nevertheless, India is the third largest emitter due to its sheer volume. The US and China account for over 16% each of the total global emissions, while India trails with just 4%, despite its very large population and its rapidly growing economy. (PM's office, Road to Copenhagen: India's position on Climate Change)

In the recent Copenhagen summit held in December 2009, India has pledged to cut down carbon emissions by 20-25% by 2020 over the 2005 levels. Though it is not legally binding and not subject to internal scrutiny, it is a matter of sustainable development as neighbor China has pledged an ambitious carbon emissions reduction of 40%. With India and China being considered as the probable future superpowers, development with sustainability becomes a very important parameter to stay ahead in the race.

The following are the eight core missions identified by India's first National Action Plan on Climate Change (NAPCC) in 2008. (Mention source)

1. National Solar Mission

The NAPCC aims to promote the development and use of solar energy for power generation and other uses with the ultimate objective of making solar competitive with fossil-based energy options. The plan includes:

* Specific goals for increasing use of solar thermal technologies in urban areas, industry, and commercial establishments;

* A goal of increasing production of photovoltaics to 1000 MW/year; and

* A goal of deploying at least 1000 MW of solar thermal power generation.

Other objectives include the establishment of a solar research center, increased international collaboration on technology development, strengthening of domestic manufacturing capacity, and increased government funding and international support.

2. National Mission for Enhanced Energy Efficiency

Current initiatives are expected to yield savings of 10,000 MW by 2012. Building on the Energy Conservation Act 2001, the plan recommends:

* Mandating specific energy consumption decreases are to become mandatory in large energy-consuming industries, with a system for companies to trade energy-savings certificates;

* Energy incentives, including reduced taxes on energy-efficient appliances; and

* Financing for public-private partnerships to reduce energy consumption through demand-side management programs in the municipal, buildings and agricultural sectors.

3. National Mission for Sustainable Habitat

To promote energy efficiency as a core component of urban planning, the plan calls for:

* Extending the existing Energy Conservation Building Code;

* A greater emphasis on urban waste management and recycling, including power production from waste;

* Strengthening the enforcement of automotive fuel economy standards and using pricing measures to encourage the purchase of efficient vehicles; and

* Incentives for the use of public transportation.

4. National Water Mission

With water scarcity projected to worsen as a result of climate change, the plan sets a goal of a 20% improvement in water use efficiency through pricing and other measures.

5. National Mission for Sustaining the Himalayan Ecosystem

The plan aims to conserve biodiversity, forest cover, and other ecological values in the Himalayan region, where glaciers that are a major source of India's water supply are projected to recede as a result of global warming.

6. National Mission for a “Green India”

Goals include the afforestation of 6 million hectares of degraded forest lands and expanding forest cover from 23% to 33% of India's territory.

7. National Mission for Sustainable Agriculture

The plan aims to support climate adaptation in agriculture through the development of climate-resilient crops, expansion of weather insurance mechanisms, and agricultural practices.

8. National Mission for Strategic Knowledge for Climate Change

To gain a better understanding of climate science, impacts and challenges, the plan envisions a new Climate Science Research Fund, improved climate modeling, and increased international collaboration. It also encourages private sector initiatives to develop adaptation and mitigation technologies through venture capital funds.

Preliminary calculations by Greenpeace show that on the basis of the NAPCC alone, India is on the pathway to deviate its GHG emissions by 12-18%, with a further potential to deviate GHG emissions by nearly 35% with more ambitious measures. (source: greenpeace.org)

Sector Selection

Out of the seven sectors suggested in the proposal, three sectors have been chosen for the study namely energy, electronics and buildings as these contribute directly to greenhouse gas (GHG) emissions in a huge manner. All the above sectors have governmental support as they fall in the first three missions as sketched out by NAPCC, 2008. These sectors are full of action at the global level as well as a move towards sustainability. With smart grid being considered as the greatest innovation of this century, even superseding the internet in collaboration with cloud computing, it would be interesting to study the above sectors in this light.

The race for green energy is on and China is leading the way in clean technologies. The USA government has aggressive plans to incentivize adoption of renewable energy such as solar, wind, etc. Gobal giants such as Google, Bill Gates are keen on entering the utility sector which could be the game changer in terms of scalability and convergence of technologies that can make green energy options affordable to the masses. The energy consumption of India and China are expected to shoot up due to both growth in the already exploding population and developmental economic activities. Thus it becomes crucial for India to promote green energy both the common man and the industrial consumers. (put numbers to support)

The electronics space is relatively mature in the green industry. Concepts like product life cycle assessment that takes into consideration the all the processes and materials used throughout the lifecycle of a product from its sourcing to its disposal are actively used to evaluate the impact of the product by leading manufacturers such as HP, Nokia, Apple etc. Products are also rated based on various parameters to arrive at their energy efficiency by use of labels such as Energy Star, their effective environmental impact using EPEAT. Even Greenpeace's guide to greener electronics has a quarterly update on rating leading electronics along with the criteria for the rating and detailed explanation. The guide ranks the 18 top manufacturers of personal computers, mobile phones, TVs and games consoles according to their policies on toxic chemicals, recycling and climate change. (Reference greenpeace.org) From a consumer's point of view these increase credibility and reduce risk.

India was the first country outside of the US to have a LEED certified building. Further it has two of the four buildings that exist outside the US with the LEED existing building certification, an internationally recognized green building standard set by the US Green Building Council (USBC). GRIHA (With the rapid growth in population, burgeoning new middle class, a faster rate of urbanization due to migration, and also the emerging breed of the super rich, construction and real estate business in India are one of the fast growing sectors. It is said that 40% of the GHG emissions are from buildings alone in the US. India, being an emerging economy, is heading the same way if sustainability is not incorporated in this sector. The Government has taken the lead by implementing guidelines for installation and operation of energy efficient government buildings across India as per A C Suri, Chief Engineer (West), Government of India.

According to a McKinsey Report, the Indian middle class is expected to grow from 50 million in 2005 to 583 million in 2025. This increase is expected to boost consumer spending from about Rs17 trillion in 2005 to Rs70 trillion in 2025. American Express predicts that India's millionaire brigade will balloon by 12.8% a year over the next three years and, according to consulting firm A.T. Kearney, the nouveau riche could spend US$30 billion on high-end goods by 2015. (Source: Euromonitor, 2008)

Thus real estate as an investment option is on the rise amongst both the Indian middle class as well as the rich. As for the poor, unless a viable sustainable option for living is provided, mushrooming of slums across the newly developing cities is inevitable. A large proportion of energy and water resources that goes unaccounted for would be spent on keeping such systems alive.

Thus exploring the above three sectors considering the macro perspective of India's growth strategy along with the fact that the Indian Government is open to facilitating green marketers in these sectors makes it exciting to explore these areas for new opportunities and formulating innovative strategies to make green marketing mainstream. This would have a trickledown effect in related sectors such as transportation, automotives, telecom, tourism etc as a result of knowledge dissemination of green technologies and its benefits to consumers as well as behavior change leading to mass adoption. These would also help reduce cost incurred due to economies of scale in the given sectors. Even sectors such as organic food and fabric would be indirectly influenced due to acceptance of the idea sustainability in farming practices.

Research Design & Methodology

Along with the originally proposed qualitative method of in-depth interviews with industry professionals, some non-traditional methodologies have also been incorporated to gain a holistic perspective. The author has joined communities specifically focused on ‘green' on LinkedIn, a social networking site for professionals as they are the experts who keep track of the latest trends in the green space and also are highly knowledgeable and open to discussion on the same. Daily discussion threads, news items etc have been followed over duration of two months. Apart from the experts in the green space, in order to get a balanced viewpoint from the professionals outside the green industry, the author has posted questions open to the complete network. Also analysis of blogs on ‘green' topics was carried out to gain insights on the current thinking by various groups such as the industry, academia, environmental activists and also consumers. Substantial secondary research has also been carried out to validate and support the primary research and also to facilitate formulation of recommendations.

Post data collection through the above mentioned tools, an analysis for common threads and the findings are segregated in findings applicable to green marketing independent of industries / sectors and those specific to the sectors under study.

Subsequent to the findings and the insights derived through primary research, secondary research is done to explore cases in point already implemented worldwide and if they could be replicated or modified to suit the Indian market conditions. In the concluding remarks, some of the upcoming projects in green marketing in India are discussed along with suggestions on the way forward using the insights derived from the study.

Primary Research

For the in-depth interviews with industry professionals, around 25 companies were contacts. These companies are from diverse sectors such as Energy, electronics, automotives, apparel, telecom, buildings, and CPG. Refer to Exhibit 1 for details. Lead generation was done through LinkedIn, a professional networking site, personal contacts and through snowball sampling. Request for interview was made through emailing the participants. Refer Exhibit 2 for sample template. The conversion rate was 28% with 7 responding positively to the request. Further interviews were conducted in person, over the telephone and via online chat. Refer Exhibit 3 for the broad discussion guideline used during the interview. It was customized for each interview depending on the sector and company in question.

Simultaneously, discussions over two green groups ‘Green' and ‘Greenbiz.com' and two green sub-groups ‘Green Advertising & Marketing' and ‘Green Marketing' on LinkedIn were monitored daily. Also questions opens to everyone on LinkedIn were posted on the author's home page. The author had limited the use of social networking sites to LinkedIn and excluded other popular SNS entities such as Facebook and Orkut as the study is focused on understand the industries' point of view alone and though consumers' take on the topic is most important, it is not the objective of this study.

Blogs have also been studies as they are medium of expressing one's point of view and thereby act as proxy interviews. In many cases there is a two way communication between the blog writer and the reader through comments. Blogs therefore form a rich source of information about opinions as well as act as powerful insight generation tools.

Electronics

Analysis

An interview with a Product Marketing Manager at a leading global electronics manufacturer led to a few interesting findings. In the B2B space, the topmost important factors influencing the purchase decision of a buyer are

* Nature of Relationship with the vendor

* Product features

* Price

* Referrals/Word of mouth

The emphasis here is greatly on relationship, as it is strongly believed to make or break a deal. Despite organizations being highly professional and process driven, the human element is most crucial in the last mile. In most cases the client interfacing person maintains a more personal relationship with the company's clients.

In the B2C space, the most important factors while making purchase decision are

* Product features

* Price

* Brand name

* Availability

* Word of mouth/Publicity

Here the product features becomes the top criterion for selection but nevertheless brand name is also important. The product features for a laptop most valued by the customers as the interview are lighter weight, longer battery life, noise mitigation and heat dissipation. If brand name can be viewed as a proxy for relationship with the customer, then the B2C and the B2B segments behave astonishingly similar.

At an elementary level, the Indian consumer doesn't seem to be placing any importance to the ‘green' aspect of electronics as perceived by the manufacturer.

In India, after sales service, which is an integral part of customer relationship building, seems to be not very seriously taken by industry as a whole. When asked how important is after sales service, the reply was that it depends on the geographical context. The refresh cycle in India is longer than in the US or UK. The refresh cycle can be defined as the time (in years) taken for a customer to replace the current product with a new product. In India it is typically 4-5 years while customers in the US or UK purchase new laptops every 2 or 3 years. Thus the profitability of the Indian customer is lower as compared to their UK counterparts and hence the service levels are comparatively lower as they are based on customer profitability which in turn converts into ROI.

When asked why most electronics marketers are reluctant to go the green way, the following emerged as some of the reasons

* No Tax savings by Government

Currently there exists only one tax umbrella in India and that is being located in a SEZ. In Europe and the US, environmentally friendly companies are provided various tax reliefs.

* Awareness of labels not very high in India

There are labels such as Energy Star to rate the energy efficiency of products and many companies do use these to authenticate their credibility. But the awareness level of labels is just average in India. Despite the simplicity and popularity the Energy Star, its acceptance is only slowly gaining traction.

Laptop manufacturers label their products for non-hazardous destruction while marketing to the Brazilian soil due to it being a legal requirement.

* Green marketing is a huge cost centre rather than an investment

When questioned why they don't use this label as a differentiator for all geographies or at least for the evolved western market, the cost of introduction was viewed as outweighing the benefits. Green marketing is experiencing a phase undergone by branding in its initial days.

* Fear of being branded as green washers

All electronics manufacturers provide detailed information on the product in their product guide which is usually a thick booklet with lot of technical jargon. Here how energy efficiency is achieved is also explained in detail. Despite discerning the fact that consumers rarely go through the dense docket, manufacturers are reluctant to openly communicate with their consumers about the benefits for fear of being called green washers.

Even a progressive company like Apple, highly regarded by the public for its green mindset, is resistant to the idea of sustainability reports for the same above reason.

* Lack of highly skilled technical support in India

IT solutions providers consider ‘virtualization' as one of the ways of greening their/their clients' infrastructure through maximum utilization of server time and space. It has the potential to minimize cost as well reduce energy consumption as the job of 2 or more servers can be done by a lesser number of servers using the concept of virtualization through software such as VMWare. The industry expert believed that the quality of labor pool in India is not at par with its other global counterparts and thereby is handicap in handling deployment and maintenance of a virtualization environment.

Thus investment in training of frontend employees becomes of utmost importance.

* Indian culture is inherently resistant to change and is laidback

Taking the example of children from the UK and India to illustrate the difference in cultures, the interviewee said “Both the children are rebellious and are hyperactive. But they would react completely differently to the statement ‘don't spit on the road because it is prohibited by the law'. The UK child would dare not go against the law while the Indian child would spit at best ignore the statement and continue behaving the way he is, spitting as usual or at the worst would start spitting more to spite the authorities.”

This insight is also substantiated by one of the TED talk speakers where he compares the Indian culture with the Western culture using local folklore to point out the difference between the two. He talks about Napoleon Bonparte's incidental meeting with the Himalayan monk who is experiencing ‘nothingness' while Bonparte is out there to conquer the world single handedly and on the mountain to hoist his flag as a lasting symbol of conquest.

The core philosophy of the monk is to be at peace with whatever one has. This sentiment is echoed even in the present day India but for the wrong reasons as can be seen at multiple instances such as

* Complacency with the existing systems

* The ‘Chalta hai' attitude of the common man

* High reliance on and awe for the unknown

This is what makes the Indian market unique and challenging. The same communication or marketing strategy used in the West cannot be applied in India successfully unless it is Indianized. To induce a behavior change, in this case to choose green electronics over others, conventional marketing tactics that simply talk about it being better than the others but is costly will not be valued by customers.

When asked what could make green marketing more attractive to marketers, the following emerged as some interesting findings:

* Government to provide customized tax reliefs

* Legal enforcement of certain kinds of labels eg: Brazil

* Mobilizing the Indian masses for the green movement through innovative and on the face communication

* Public campaigning by using powerful influencers such as movie stars and cricketers to promote ‘green'

* Government should incentivize ‘green' products

Findings

Even the leaders in the industry suffer from inertia and expect the government to take the lead by providing incentives to companies. The high custom duty levied on imported hybrid cars was looked upon as disapprovingly. The industry also believes that the general public can be mobilized by governmental organizations and NGOs through in environmental activism. But the electronics industry as such does not feel the onus to create such as awareness at its own cost.

A content analysis of various leading electronics manufacturers' websites revealed that at a corporate level, they have a separate sustainability section that is dedicated to GHG emissions reduction and details arranged chronologically on the actions being taken to reach their sustainability goals. Also a comprehensive explanation of why they consider certain activities as their move towards sustainability is stated. Refer Exhibits 4, 5 and 6 for a snapshot on the Dell, HP and Vodafone's sustainability sections from their websites. Also ratings by Greenpeace are respected by the industry as well as consumers thus serving as a third party validating interface between the two. Refer Exhibit 7 for the Greenpeace's Guide on Greener Electronics, December 2009.

Nevertheless there seems to be a worrying gap between strategy formulations and ground level execution. This was reinforced by the limited understanding of the product itself by the sales force at Daikin. This is a major weak link that greatly contributes to the ineffectiveness of green marketing in this sector.

Another reason that is a barrier to adoption is the higher initial cost incurred while opting for a greener electronics. Unless the consumer is convinced that value derived from using a green electronic device is far superior to that from a non-green product.

Case in point: CFL lamps adoption in domestic household sector through the Bachat Lamp Yojna

Today CFL is being adopted both by the urban middle class as well as by the rural masses. This was possible through successful public-private partnerships amongst the Government of India, private sector CFL manufacturers/traders and State Level Electricity Distribution Companies in a program called the Bachat Lamp Yojna. Players such as Philips Electronics India Ltd, Havells India Ltd, Reliance Industries Ltd and Wipro Consumer Care and Lighting took part in the program.

The BLYconcept (source: BEE)

Lighting accounts for almost 20% of the total electricity demand in the country, and contributes almost fully to the peak load as well. The vast amount of lighting in the country is provided by incandescent bulbs, which are extremely energy inefficient. Only about 5% of the electricity is converted into light, the rest is lost as heat. In recent years, energy efficient lamps have been introduced into the Indian market, with the Compact Fluorescent Lamp (CFL) providing an energy-efficient alternative to the incandescent lamp. A CFL uses only one-fifth as much electricity as an incandescent lamp to provide the same level of illumination. CFLs have almost completely penetrated the commercial market, and the sales of CFLs in India have grown from about 20 million in 2003 to more than 100 million in 2007.

However, penetration into households has been very limited, largely because of the high price of the CFLs. The price of CFLs were in the Rs.80-100 price range, whereas the incandescent bulbs were in the Rs.10-15 price range.

Initiatives to help decrease the price of CFLs to be comparable with that of incandescent bulbs was therefore necessary in order to enhance the penetration of CFLs in households. It is estimated that about 400 million light points in India today are lighted by incandescent bulbs; their replacement by CFLs would lead to a reduction of over 10,000 MW in electricity demand. This would not only reduce emissions by way of efficient end use of electricity, but would also result in the reduction of peak load in the country which currently faces a shortage of upto 15%. The price barrier, as indicated above, will be overcome by using the Clean Development Mechanism (CDM) revenue stream to enable faster penetration.

“Bachat Lamp Yojana” seeks to utilize the Clean Development Mechanism (CDM) of the Kyoto Protocol to bring-down the price of CFLs. The aim was to distribute high quality CFLs at about Rs.15 per piece to the households of the country. Under the scheme only 60 Watt and 100 Watt incandescent Lamps have to be replaced with 11to15 Watt and 20 -25 Watt CFLs respectively.

Under the BYL program, the following provisions were made to incentivize household to adopt CFL:

• Provision of CFLs with lumen output +/- 10% of the baseline ie (lumen output of 100 Watt & 60 Watt of Incandescent Lamps) at price comparable to those of Incandescent Lamps(i.e. Rs 15), in exchange for functioning Incandescent Lamps that are currently being used in the households. A maximum of 4 CFLs shall be replaced per household. These CFLs shall be compliant with the existing National Regulations in force.

• Free replacement of fused distributed CFLs, within 2 years for 6000 hour CFL and within 3 years for 10000 hour lamps, during the life of the CDM Project.

• Collection of fused CFLs through buy-back schemes, and arrangements for their safe disposal.

Marketing Case study: CFL lamps adoption in a residential complex in Mumbai

The incandescent bulb typically costs around Rs.10 that lasts for 3 months while a CFL bulb would cost anywhere between Rs.15 to Rs.130 depending on the wattage and lasts for 2-3 years.

For appealing to the urban middle classes a mix of medium and communication messages were used. Experiencing the product was crucial for the adoption of the technology. Information about the efficiency of the CFL lamp in terms of low power consumption, durability, brightness etc was communicated through mass media such as newspaper and TV. Initially the communication was targeted at the early adopters along with the message that it is smart to switch to a CFL and it is also cool to do so. At the point of purchase, the retailer played an important role in converting the sale through expert opinion and rationally convincing the consumer by explaining the economics behind the purchase and urging the customer to consider it as an investment rather that a one-time cost. Once it was adopted by this segment, the larger mass was targeted through pro-social behavior communication that emphasized on the fact that “your neighbor owns one”. Also the users of the CFL lamps advocated the savings experienced along with the improvement in the quality of lighting and the drastic reduction in the maintenance costs. The more skeptic customer simply had to see for himself that the technology works and he becomes an easy busy. For the laggards the motivation to purchase a CFL lamp was to be not left out when everyone else seems to own one. In most cases, though the younger generation consisting of teenagers did not usually involve themselves in the household purchases such as a lighting bulb, this generation was more receptive to the messages on saving energy and CFL's value proposition appealed not just to their environmental consciousness but also to their aesthetic senses. They formed an important influencer group along with peer group for the head of the family during the initial decision to try a CFL bulb.

Also it was observed that during subsequent purchases, current CFL users easily migrated to the higher priced options as they no more very price sensitive due to their reference price having shifted to a higher value. Providing a good ambience for children's education, for reading was one of the reasons for going for a higher priced Rs.100 CFL lamp. The lighting itself was considered to be cool and pleasant as compared to the bright lighting provided by the incandescent bulb. A tangible reduction in the electricity bill month on month constantly reinforced the fact that buying a CFL is a good investment.

Energy

Overview of the renewable energy sector

Analysis

Please be aware that the free essay that you were just reading was not written by us. This essay, and all of the others available to view on the website, were provided to us by students in exchange for services that we offer. This relationship helps our students to get an even better deal while also contributing to the biggest free essay resource in the UK!