INDIA: REMOVING CLEAN TECHNOLOGY BARRIERS

UNCLAS SECTION 01 OF 02 NEW DELHI 003603 SIPDIS SENSITIVE BUT UNCLASSIFIED SIPDIS DEPT OF ENERGY FOR TOM CUTLER, MARK GINSBERG DEPT OF COMMERCE FOR DAVID BOHIGIAN, JOE NEUHOFF, WILLIAM ZARIT, GREG LOOSE, LINDA DROKER E.O. 12958: N/A TAGS: SENV ECON ENRG TSPL TRGY EFIN BEXP IN SUBJECT: INDIA: REMOVING CLEAN TECHNOLOGY BARRIERS REF: A) 2007 NEW DELHI 3262, B) 2007 NEW DELHI 2078, C) 2007 NEW DELHI 2085 NEW DELHI 00003603 001.2 OF 002 ¶1. (SBU) Summary: Clean technology transfer to India faces several market and policy challenges. (Ref A) By raising awareness on the anthropogenic causes of climate change via television and reviving eco-labeling, a viable market can be created. In addition, manufacturers should look to partner with microfinance institutions involved in clean technology financing. Finally, from a policy perspective, more effort is needed to inform the Government of India (GOI) on the public costs of conventional energy and to emphasize the power of cooperatives. End Summary. Raise Climate Change Awareness via Television -------------- ¶2. (SBU) From a market perspective, the first step will be raising awareness among consumers and businesses on the impacts of climate change. The Times of India recently reported on a survey conducted by HSBC, The Hong Kong and Shanghai Banking Corporation, which found that Indians are more aware of the anthropogenic causes of climate change than the people of any other developing or developed country, citing a 60% awareness rate. However, the article clearly stated the findings were based on a sample size of 9,000 respondents across four continents, of which the Indian population was described as "urban mass affluent" - indicating those surveyed were not representative of India's population as a whole. These types of misleading figures give the public, or at least the urban affluent and middle class English readers of the Times of India, a false sense of complacency about India's eco-friendliness. ¶3. (SBU) In order to raise awareness among the population at large, New Delhi SciOffs are consulting on a project with award winning Indian documentarian, Nila Madhab Panda, to develop a multilingual television series on the potential effects of climate change on local communities. Panda had success in raising awareness on feticide in Orissa via a televised series in 2004, sponsored by USAID. The New Delhi Environment, Science, Technology and Health (ESTH) Office plans to develop a grant request to fund thirteen episodes of Panda's climate change series in seven local languages. While there are countless local and national newspapers, television is the one unified medium that is far reaching, with even the poorest households of the slums owning a set. Moreover, with India's literacy rate of 61%, television will be able to reach an audience much broader than print. Revive Eco-Labeling to Create a Market -------------- ¶4. (SBU) To help create a market for eco-friendly products and business practices, the GOI should look to better publicize its EcoMark scheme (Ref A),as the initial launch had virtually no publicity leaving consumers unaware. In addition, EcoMark differs from other foreign eco-labeling initiatives in that it requires quality standards in addition to environmental standards. At a time when the eco-friendly market is in a nascent stage, manufacturers will be reluctant to endure such a rigorous selection process. More importantly, Ecomark's steering committee lacked representation from environmental groups and the private sector, which were hallmarks of the successful eco-labeling schemes of Japan, Germany, Canada, and Sweden. To spur manufacturer interest in EcoMark, the GOI should look to financially reward companies that produce EcoMark products with incentives such as tax and excise duty concessions. For larger appliances such as washers and refrigerators, the GOI should look to offer rebates to customers to help with higher prices. Finally, for manufacturers doubting the potential of an eco-friendly consumer base in India, greater emphasis should be put on the value of green products in export markets, where developing country manufacturing practices are constantly scrutinized. Tech Firms Should Build Relationships with Indian Banks -------------- -------------- ¶5. (SBU) While financing options for the average Indian consumer have been limited, microfinance institutions and international aid NEW DELHI 00003603 002.2 OF 002 organizations have moved in to provide their services. Historically, microfinance loans were geared towards those that have an entrepreneurial spirit and were awarded based on an individual or group's business case. Today, more and more initiatives are combining microfinancing with clean technology proliferation, such as Selco India. (Ref A) In another example, the United Nations Environment Programme has aided over 100,000 people in 18,000 households in financing their solar photovoltaic electric home systems through the Indian Solar Loan Programme. The success of this initiative, based on innovative interest subsidies, has helped the growth of a credit market among India's poor and today there are 20 mainstream banks with over 2,000 branches providing solar financing to this previously ignored customer base. These initiatives typically establish an exclusive list of qualified vendors to provide technology. As the credit market flourishes in the vast rural and poor communities, both foreign and domestic technology providers should be vying for inclusion. Influence Policy through Public Costs of Conventional Energy -------------- -------------- ¶6. (SBU) From a policy perspective, as the GOI has been well aware of climate change risk from a normative perspective, more effort is needed to show the true impacts made on society and the environment. New Delhi SciOffs are working on an externality valuation initiative with the World Institute of Sustainable Energy (WISE), based in Pune, India. WISE has solid experience in policy advocacy studies and consultancy projects with the GOI, such as the drafting of the Model Renewable Energy Law for India that addresses the renewable energy gap in the Electricity Act of 2003. SciOffs will work with WISE to assess the public cost, which is made up of the social and environmental costs, of conventional versus renewable energy. The overall goal of the study is to help generate policy that is more favorable to renewable energy and clean technology growth and to eliminate the public perception that renewable energy is expensive since it may prove to be much cheaper in terms of long-term public cost. The New Delhi ESTH Office plans to develop a grant request to fund this data-rich study. Address Scale via Large Scale Procurement -------------- ¶7. (SBU) To address the issue of scale, the GOI could arrange for large scale procurement of clean technology which would bring down prices for end users as well as help manufacturers achieve minimum efficient scales. An example of this is the Bureau of Energy Efficiency's recent announcement that they will make energy-saving compact fluorescent light bulbs available at the same price as standard light bulbs, with the lost revenue offset by carbon credits under the clean development mechanism of the Kyoto Protocol. Cooperatives Create Economies of Scale -------------- ¶8. (SBU) If large scale procurement of clean technology is not feasible, the GOI should look to promote the formation of cooperatives among consumers and businesses. These cooperatives will increase buying power, open up financing options, and also serve as a platform for the sharing of best practices in energy efficiency. The Warana Cooperative, formed in 1978 in Kolhapur, Maharashtra, is illustrative. Still functioning today, Warana empowers the rural interior by bringing agricultural supplies such as farm equipment and fertilizers to farmers and consumer packaged goods to households at reduced prices. The Warana Wired Village Project, started in 1998, was a joint initiative between Warana, the GOI, and technology providers to build an IT infrastructure for 70 rural villages via internet-equipped 'facilitation booths'. By pooling orders these cooperatives are able to bring cost-prohibitive technologies to the masses and could be used as a model for the distribution of clean technology throughout rural India. WHITE