CONTENTS
- Balancing Competition and Sustainability for India
- Powering India’s Future
Balancing Competition and Sustainability for India
Context:
Markets are at the heart of the economy, having evolved from the barter system to today’s digital platforms. The dynamics of supply and demand largely dictate pricing and consumer preferences. Climate change disrupts the supply side, causing an imbalance between supply and demand, which affects consumer demand and the overall economy.
Relevance:
GS3- Inclusive Growth, Environmental Conservation
Mains Question:
For India, to reach its pledged state of net zero emissions, every economic sector must contribute to greener means of production. Discuss. (10 Marks, 150 Words).
Corporate Sustainability Reporting:
- In 2023, the Securities and Exchange Board of India introduced a framework for corporate sustainability reporting.
- The updated Business Responsibility and Sustainability Report requires companies to account for the environmental impact of their value chains, promoting transparency, combating greenwashing, and ensuring that sustainability benefits extend throughout the value chain.
The Competition and Sustainability Scale Globally:
- Globally, competition authorities have raised concerns about the need for competitors to offset potential drawbacks of being early adopters of change while also achieving sustainability goals.
- Many authorities were hesitant to incorporate sustainability considerations, fearing that competitors might use it as a pretext for collusion.
- Nevertheless, authorities should focus on encouraging companies to jointly pursue sustainability goals and assess cooperation where enterprises can demonstrate the aim of achieving sustainability objectives.
- Japan’s Anti-Monopoly Act introduced guidelines to assist private businesses in engaging in horizontal collaborations for a “green society.”
- These guidelines indicate that most activities aimed at environmental sustainability are unlikely to restrict competition, and they often have pro-competitive effects that can benefit consumers.
- The European Commission recently released a draft of revised guidelines on horizontal agreements, which now include a specific section on sustainability agreements.
- Concerns will only arise if these agreements impose serious competition restrictions by object or create significant negative effects on competition contrary to Article 101(1).
- The goals are to tackle climate change, reduce pollution, limit natural resource use, and promote resilient infrastructure and innovation.
The Competition Commission of India (CCI) and Sustainability:
- While many countries worldwide are incorporating sustainability policies into competition law through cooperation among competitors and guidelines, the Competition Commission of India (CCI) might also consider integrating sustainability policies into its evaluations.
- India has committed to achieving net-zero emissions by 2070, but in 2023, it ranked fifth in global warming contributions.
- The CCI chairperson, Ravneet Kaur, recently mentioned that the CCI will explore sustainability policies for markets.
- During the pandemic, the CCI issued an advisory acknowledging that COVID-19 disrupted supply chains and noted that businesses might need to share information to ensure fair distribution of products and services.
- The Competition Act, 2002, has safeguards to protect businesses from sanctions, and the CCI only considered businesses necessary to address COVID-19 concerns.
- The CCI could release advisories exempting collaborations aimed at sustainable goals or greener technological innovations when necessary and proportionate.
- Under Section 49(3) of the Competition Act, 2002, the CCI can take measures to promote competition advocacy and awareness and participate in formulating economic policies related to competition and sustainability.
- The CCI could focus on sustainability policies and enterprise collaboration for greener innovations, releasing guidance notes on sustainability agreements and exemption methods under the Competition Act, 2002.
- In the U.K., the Competition and Markets Authority launched a market study into the electric vehicle charging sector to explore the development of competition alongside innovation, choice, lower prices, investment, and quality improvements.
- A similar comprehensive study on green initiatives and market feasibility would benefit the Indian market.
- In 2011, the TRAI released recommendations that sustainability practices be included in the proposed National Telecom Policy, promoting an environmentally friendly telecom sector.
- The CCI might consider incorporating sustainability practices into the National Competition Policy in the future.
Way Forward:
- Competition cannot be separated from sustainability. Addressing climate change requires adopting new technologies that reduce resource consumption and promote innovation through sustainability policies.
- For India to achieve its goal of net-zero emissions, every economic sector must adopt greener production methods.
- The CCI can implement competition policies that enhance innovation while taking environmental concerns into account.
- Competition policy should incorporate sustainability economics while addressing market failures and collective action challenges.
Conclusion:
By issuing guidelines, the benefits of sustainability can outweigh potential negative impacts on competition. Including sustainability considerations in evaluating cooperation among competitors can significantly enhance sustainability in markets.
Powering India’s Future
Context:
In her seventh consecutive budget speech, the Finance Minister outlined measures that underscore India’s dedication to transitioning to clean energy. These measures include developing policies for pumped hydro storage and creating energy transition pathways to support nuclear energy and improve energy efficiency. However, the recent record-breaking summer heatwaves, which increased power demand, highlight the challenges posed by a growing economy and a warming climate.
Relevance:
GS3- Environmental Conservation
Mains Question:
Discuss a roadmap for investing in a cleaner, flexible, and resilient power grid that will help our economy grow sustainably and create jobs in the clean energy sectors. (10 Marks, 150 Words).
Milestones Achieved:
- For the current government, energy security and the clean energy transition have been priorities. This focus is evident from three significant milestones India has reached in the past decade.
- First, near-universal electrification was achieved through the Saubhagya scheme, with independent surveys by the Council on Energy, Environment, and Water (CEEW) indicating that about 97% of households were electrified by 2020.
- Second, the country experienced a five-fold increase in installed renewable energy (RE) capacity, making India the fourth-largest globally in RE capacity.
- Third, there was a 40% reduction in aggregate losses of power distribution companies (discoms), reaching an all-time low of about 15% in 2022-23.
Associated Challenges:
- However, India faces challenges in rapidly decarbonizing its power system while ensuring quality and affordable power for consumers. Additionally, India’s power sector must brace for stronger headwinds.
- Annual electricity demand has been growing by 7-9% each year since the COVID-19 pandemic, with peak demand increasing even faster.
- Climate change-induced weather extremes exacerbate these challenges. Discoms find it difficult to meet unplanned surges using affordable options and existing network capacity, leading to power outages.
Way Forward:
Raise Targets for Renewable Energy and Storage:
- To address these concerns, the government must raise targets for renewable energy and storage systems beyond 500 GW by 2030.
- Despite past efforts to add renewable capacity, its share in India’s power generation mix is only 13%.
- Previous power supply shortages and anticipated rising energy demand have led policymakers to consider new coal capacity.
- Instead, we should aim to increase the share of renewables in India’s power generation mix and scale up storage solutions. Renewables and storage can support peak demand, are cost-competitive, and can be built more quickly.
Accelerate the Deployment of a Diverse Range of Clean Energy Resources:
- Second, accelerate the deployment of a diverse range of clean energy resources. In 2023 alone, China added 300 GW of solar and wind capacity, while the European Union added 73 GW.
- As of March, India’s cumulative renewable capacity was 144 GW, with another 128 GW in progress. This comparison underscores the need to rapidly and extensively deploy clean resources.
- This requires tapping into the renewable energy potential in more states, speeding up grid connectivity, and ensuring access to suitable, conflict-free land for timely project commissioning. Diversifying from solar energy to other clean technologies would also help India meet its evolving demand.
Improve Energy Availability:
- Third, implement measures to improve energy availability. During FY23, only 6.3% of India’s power generation was procured through power exchanges, with the rest sourced through bilateral agreements.
- The low liquidity (volume being traded) in the power exchange presents risks of price volatility. This limits both buyers and sellers from relying on the exchange for power procurement and value recovery, thus constraining our ability to integrate renewables at scale.
- India needs innovation in bid designs to attract renewable energy developers to sell power on the exchange, along with setting up capacities for long-term contracts.
- For example, under the RE Implementation Agency-led bidding process, RE developers might be required to allocate part of the project capacities for merchant sales, in addition to the bid quantum for long-term contracts.
Effective Maintenance and Utilization of the Coal Fleet:
- Fourth, ensure effective maintenance and utilization of the coal fleet. Even as more renewables are added, coal continues to play an important role.
- CEEW’s analysis of MERIT data shows that in FY24, over 210 GW of coal capacity generated about 80% of the power during non-solar hours.
- However, more than 40 GW of coal capacity was unavailable for nearly 60% of the time that year due to planned maintenance or technical faults.
- State regulators must revise norms to enable timely maintenance of the coal fleet and compensate for investments to make select coal plants flexible.
Accelerate Digitalization:
- Finally, accelerate digitalization to enable discoms and consumers to actively participate in India’s energy transition.
- Smart meters can help discoms accurately forecast power demand, improve network planning, and integrate renewables cost-effectively. Over 11 million smart meters have already been installed in India, with half located in Bihar and Assam.
- However, India is still far from its target of 250 million smart meters. Discoms need to overcome their hesitation and look to Bihar and Assam for inspiration, as they are already experiencing benefits such as reduced losses and timely bill delivery through smart metering.
- It is crucial to prioritize consumer privacy and system preparedness against cyberattacks in regulations and digitalization efforts.
Conclusion:
All eyes are on the Indian government to deliver in this critical decade. Investing in a cleaner, more flexible, and resilient power grid will help the economy grow sustainably and create jobs in the clean energy sectors.
