Green Credit Rules and CBAM Blues – Issue #89
On the energy and climate front, last week saw 3 major developments: CBAM, electrolyser bids and critical mineral bids
News of the week
The first was on Carbon Border Adjustment Mechanism (CBAM). According to an Asian Development Bank study, reported Business Standard, manufacturers in India might face tariffs up to 10.5% when the EU’s CBAM comes into effect.
Two other reports on CBAM from last week are notable. One, as LiveMint reported, India wants the EU to postpone its CBAM rollout by four years. “Under the EU’s carbon control regime that kicks off in 2026, emissions should be reduced 2.5% in the first year and reduced every year after that, and eliminated by 2034,” the paper wrote, and quoted a government official as saying:“We will engage with the EU… and seek an extension in the carbon tax timeline to ensure that Indian companies do not lose out on that business.”
Indian companies need time, a second person told Mint, since “(decarbonisation) will require a lot of investment and upgrades in the ecosystem.”
The problem, however, with an extension is that it will hamper India’s net-zero and carbon reduction targets. As Mint reported, the carbon footprint of Indian steel mills is significantly higher than many other competing suppliers to the EU. “Industry data suggests that current carbon emission by the top five Indian steel makers stands at 2.5 mt of Co2 per million tonne of crude steel produced in blast furnaces, which is 9-10% higher than the global average,” the newspaper wrote. “It's also much worse than 1.65 mt of CO2 per of mt crude steel produced from electric arc furnaces.”
Given this backdrop, a second news report in Business Standard is worth flagging. Steel companies, it wrote, are tapping into the startup ecosystem for fresh ideas and breakthrough technologies—especially around sustainability and decarbonisation.
ArcelorMittal has created a fund that invests in startups working on decarbonisation. Tata Steel has Innoventure. This identifies promising startups and collaborates with them. “Around 40 startups are said to be actively carrying out their proof of concept experiments at Tata Steel’s plants in various areas – iron making, energy, CO2 (carbon dioxide), hydrogen generation, as well as new materials.” It doesn’t, however, take equity in these firms. “We let them free, we benefit by acceleration and they hopefully benefit by proof of case study and a platform for scaling up,” the firm told Business Standard.
More on big industry and decarbonisation. India’s maiden tender for electrolyser manufacturing has shortlisted eight companies. Amongst them, Reliance Industries, Adani Enterprises, and Larsen & Toubro. Of these, Reliance has already bagged PLI schemes for polysilicon and Advanced Chemical Cell (ACC) manufacturing. As for Adani, it, too, has won the PLI for polysilicon—and a firm linked to it has bagged one of the ACC batteries PLI.
Take a look at the list of bidders for the 20 critical mineral blocks and familiar names show up there as well. Vedanta, Coal India, NLC India, Ola Electric, Jindal Power, Shree Cement, Orient Cements, Rungta and Dalmia Group are amongst the bidders.
Between these two paragraphs, there is only one startup. The rest is all old money—or conglomerate money.
In other news, allegations of bias in Indian Oil’s tender for green hydrogen have resulted in the PSU cancelling the tender. As Mint reported, IOC attracted only one bid—and that was from IOC’s own JV with L&T and ReNew. “Around 50 players had participated in the pre-bid consultation,” said the paper. However, only one player submitted the bid due to a contentious clause. This resulted in six companies—Azure Power, Acme Group, Fortum India, O2 Power, Sprng Energy and SunEdison Infrastructure—approaching the Delhi High Court through their industry body (Independent Green Hydrogen Producers’ Association (IGHPA).
Shortly thereafter, the IOC cancelled its tender.
In other news, India amended its Green Credit Rules. With these, the government allows firms to erect tree plantations on degraded land—in return for green credits. Along the way, however, the government has described suitable land as “degraded land parcels” under state or Union Territory control, “encompassing open forests, scrub lands, wastelands, and catchment areas.”
Open forests, scrub lands and wastelands (however these are defined) have their own ecological functions. Dumping industrial tree plantations on these will come with its own costs.
Elsewhere, the Adani Group’s diversification continued. It has grabbed a dream plot of land in Mumbai. It’s also recasting itself into a military powerhouse. Less than a month ago, we had learnt that Adani had supplied military drones to Israel. It has now inaugurated two facilities to manufacture ammunition and missiles.
The flip-flop of western automakers over EVs continues. Ford now wants to retool its India plant into one for EVs. Just last week, remember, we had heard from western carmakers that the EV boom was petering out. And now, this.
Finally, the Supreme Court dismissed Vedanta’s plea to reopen its copper smelter in Thoothukudi, Tamil Nadu. The plant has been closed since May 2018 after 13 people were killed as police opened fire to quell a protest over pollution by the unit.
Climate news of the week
The summer continues to gather heat.
In Bangalore, things are getting dire enough for the state government to take over private water tankers.
Accordingly, it has told the water supply department to create an updated list of all borewells and tankers “for government takeover”. This is a dramatic shift. As we have been hearing, most private water tankers plying in cities belong to water mafias, and have political links. See this link.
There is also chatter that emptying of city lakes—as a prelude to desilting them—has exacerbated the groundwater crisis in the city. Also, elections are coming. And so, in keeping with the dictum that power cuts make for bad politics, state governments are rushing to procure more electricity than they usually do for summers. “Official data… shows that power distribution companies of Uttar Pradesh (UP), Bihar, Assam and Kerala have made arrangements for additional power supply this summer,” reported Mint.
Climate Long Reads
Last week was also the week Anant Ambani announced Vantara, his animal rescue and rehabilitation centre. Read this Newsclick report fisking several of the claims made during its launch.
Groundwater is under assault everywhere. Not only are cities like Bangalore hoovering it up, low-cost solar pumps too are extracting more groundwater than ever before (Yale). So are AI data centres (The Atlantic). What a time to be alive. Man’s earliest economic activity and his newest economic activity, both have an onslaught on groundwater in common.
The Shoah after Gaza. This by Pankaj Mishra is a mustered on the emerging structures of our world (LRB)
How Poor Kenyans became Economists’ Guinea Pigs, The Economist on Randomised Control Trials.
Pakistan's worst-case scenario arrives: Rigged elections and an economic crisis (Le Monde)
The False Promise of Carbon Capture as a Climate Solution. This is by Naomi Orestes, who wrote Merchants of Doubt, on the scientists who told us climate change is not a problem (SciAm)
The Collapse Will Be Normalized: As civilization collapses, the media will attempt to normalize things like war, famine, and genocide. Don't let them(Collapse Musings)
Inside the fight to stop LNG export projects in South Texas (Canary Media)
Cheap, clean energy could unleash the power of thermal storage (Canary Media)
Why women, once ignored, are being treasured in Krishnagiri (Mint)
Book of the week
The indigenous people of this planet share an eerily similar fate.
Again and again, outsiders have made contact; priests have followed; once (any) natural riches were discovered, that land was expropriated; attempts were made to “mainstream” these communities through settler villages and residential schools; once these communities lost touch with their traditional livelihoods, they subsisted on welfare, struggling with modernity, while others grew fat on their land. Be it the aborigines of Australia, the tribals of central India or those in Andamans, American-Indians, or the tribals of the South American rainforests, the story is the same.
In our book of the week, Paying The Land, graphic novelist Joe Sacco traces the impact of this many-fronted assault on one such community—the indigenous people of Canada’s north-west territories, where shale gas was found.
As this book review in The Guardian says, Sacco asks a complex question. “The question that drives Paying the Land is: what do you do? How do you break the dependencies—on oil and natural gas (the ninth largest reserves in the world), on alcohol, on welfare, on an external definition of who you are? Straight compensation and apology is a minimum, and a truth and reconciliation process admitted cultural genocide in 2015, but an influx of cash can be a death sentence to a serious alcoholic. And how do you deal with inevitable change?”
Check the book out.