Ethics in Production Management - 2. Process Issues : Optimization of Resources like Power & Water

 

1.    A.  Power

With a total energyconsumption of 553.9 Million Tonnes of Oil Equivalent (Mtoe)1 in 2017-18, India stood the third largest energy consumer in the world after United States of America and China. India also ranks highest in terms of growth rate of energy consumption in the world. India’s energy consumption is expected to grow fastest among global economies and account for 11% of global energy demand by 20402 . As India, submitted its Nationally Determined Contributions (NDC) target to United Nations Framework Convention on Climate Change (UNFCCC), intending to reduce emission intensity of its GDP, the role of energy efficiency would be crucial in complying with those targets. The Energy Intensity of India (at 2011-12 prices) decreased from 65.5 toe per crore rupees in 2011-12 to 55.8 toe/Cr Rupees in 2017-18, which is presented in Figure 1 .

 

 

This decline is attributed to the services sector having a growing share of the economy, and deployment of energy efficiency programmes among other factors. There have been multiple energy efficiency programs initiated in the country by Bureauof Energy Efficiency (BEE), as well as complimenting programs by other agencies and institutions, a direct consequence of which can be observed in the declining trend of India’s energy intensity of the economy. Energy efficiency activities span across major energy consuming sectors in India, viz. Industry, Transport, Agriculture, Commercial, Residential, etc. along with cross cutting mechanisms for realization of energy savings. Several omnibus schemes at the national, state and sectoral levels are in operation, to achieve the goal of energy efficiency in India. Major energy consuming sectors and prominent schemes in these sectors are presented in Figure 2

The Government of India is implementing reformstowards a secure, affordable and sustainable energy system to power a robust economic growth. The country has made huge strides to ensure full access to electricity, bringing power to more than 700 million people since 2000. It is pursuing a very ambitious deployment of renewable energy, notably solar, and has boosted energy efficiency through innovative programmes such as replacing incandescent light bulbs with LEDs (under the Ujala scheme). And it is addressing the serious health problems caused by air pollution for its major cities, providing 80 million households with liquefied petroleum gas connection (under the Pradhan Mantri Ujjwala Yojana scheme), thereby reducing the exposure from biomass cooking stoves, a major cause of respiratory diseases. India is also introducing important energy pricing reforms in the coal, oil, gas, and electricity sectors which are fundamental to further opening the energy market and improving its financial health. It is taking significant steps to enhance its energy security by fostering domestic production through the most significant upstream reform of India's Hydrocarbon Exploration and Licensing Policy (HELP) and building up dedicated oil emergency stocks in the form of a strategic petroleum reserve. The scale of these achievements is hard to overstate. Building on co-operation that goes back to 1998, India joined the IEA family in March 2017 when it became an Association member, a major milestone in our bilateral collaboration. This relationship has flourished since then with co-operation across all energy sector-related ministries. The IEA benefits greatly from this partnership given India’s importance in global energy markets and the remarkable insights it provides to other IEA members. The IEA has been conducting in-depth peer reviews of its member countries’ energy policies since 1976. As the IEA opens its doors to emerging economies, our in-depth policy review process is playing a bigger role in our bilateral collaboration with Association countries, and draws upon the unique expertise of the IEA family at large. In January 2019, a team of senior international energy experts visited India to discuss the challenges and opportunities of India’s energy sector with stakeholders from government, industry and academia.

Ensuring Indian citizens have access to electricity and clean cooking has been at the top of the country’s political agenda. Around 750 million people in India gained access to electricity between 2000 and 2019, reflecting strong and effective policy implementation. The IEA highly commends the Government of India for this outstanding result and supports its efforts to shift the focus towards reaching isolated areas and ensuring round-the-clock reliability of electricity supply. The government of India has also made significant progress in reducing the use of traditional biomass in cooking, the chief cause of indoor air pollution that particularly affects women and children. The government has encouraged clean cooking with liquefied petroleum gas. India continues to promote cleaner cooking and off-grid electrification solutions, including a shift toward using solar photovoltaics (PV) for cooking and charging batteries.

Reform of India’s electricity sector will need to be comprehensive to achieve these goals. The IEA welcomes the reforms proposed by the Central Energy Regulatory Commission (CERC) and progress made towards improved real-time markets. A country-wide wholesale market is very much needed as a backbone for the national grid. Key to this success will be building a joint vision and a common reform roadmap among a broad range of central government agencies, state authorities, system operators and utilities. India also faces the challenge of ensuring the financial health of its power sector which is dealing with surplus capacity, lower utilisation of coal and natural gas plants, and increasing shares of variable renewable energy. The government is working to improve the financial viability of the power sector. Faced with the challenge of some “stressed assets” in coal and gas-fired generation, it has been implementing a package of measures to enhance the economic efficiency of coal and gas supply for power generation and the availability of finance. The creation of a competitive wholesale power market will be vital for improving the utilisation of India’s generation capacity.

In India, the industrial sector accounts for nearly half of the nation’s commercial energy consumption. Energy costs typically make up a substantial chunk of production costs in many different industries (10%–40%); this is particularly true for energy-intensive industrial sub-sectors. In order to remain competitive in a globalized market and to overcome the challenges posed by ever-rising fuel costs and increasingly stringent pollution control norms, there is a dire need for all industrial units, whether large-scale plants or micro, small, and medium enterprises (MSMEs), to find ways to switch over to energy efficient technologies and practices.

India is amongst the fastest-growing major economies and the demand for energy has grown at a rapid pace during the last decade. The commercial energy consumption in the country has increased from 192 million tonnes of oil equivalent (MTOE) in 2000/01 to 397 MTOE. in 2013/14 (TEDDY 2015/16).

The industry sector isthe largest consumer of total commercial energy in the country. From 77 mtoe in 2000/01, the industrial energy consumption has increased to 184 mtoe in 2013/14 (TEDDY 2015/16). The National Manufacturing Policy envisages enhancing the share of manufacturing in gross domestic product (GDP) to 25 per cent, besides creating 100 million jobs by 2021. ‘Make in India’, the flagship initiative of the Government of India, is further expected to guide policy initiatives to promote and strengthen manufacturing in the country. In a business as usual scenario, this would result in an increase in industrial energy demand, leading to increased resource consumption. Industry in India is a highly diversified sector and consists of large as well as Micro, Small and Medium Enterprises (MSME) sub-sectors. Iron and steel, cement, fertiliser, petrochemicals, aluminium, etc., are among the energy guzzling large industries. However, the MSMEs too are an important component of Indian industries. It is estimated that over 51 million MSMEs contribute more than 33% to the total manufacturing output and provide employment to more than 111 million people in the country (MSME, 2017). Enhancing energy efficiency in manufacturing is seen as one of the key elements that can contribute to reducing energy requirements and the associated environmental implications. India’s Nationally Determined Contributions (INDCs) also emphasize on energy efficiency as the key to managing the energy demand. Increasing energy efficiency can be considered as one of the best ways to optimize rising energy demand without affecting growth.

The Energy Conservation Act, 2001, as a key policy intervention of the Government of India, provides a legal mandate for implementation of the energy efficiency initiatives through the institutional mechanism of the Bureau of Energy Efficiency (BEE) and State Designated Agencies (SDAs). Similarly, the National Mission on Enhanced Energy Efficiency (NMEEE), one of the eight missions in the National Action Plan for Climate Change (NAPCC), encompasses numerous initiatives for enhancing energy efficiency. Under NMEEE, Perform, Achieve and Trade (PAT) is one of the initiatives that focuses on improving energy efficiency of energy-intensive industries. This is a market-based mechanism that mandates Specific Energy Consumption (SEC) reduction targets to large industrial consumers of energy (known as Designated Consumers or DCs). Nearly 740 such DCs are participating in the PAT scheme presently and this number is likely to increase in the coming years with inclusion of more such consumers.

Compared to the large organized industries’ sub-sector, the MSME sector can be said to be almost synonymous with the unorganized sector. It also continues to use conventional technologies and operating practices that are inefficient and result in higher energy consumption. Foundry, brick, brass, refractories, forging, food processing, chemicals, ceramics, glass, secondary aluminium and steel, etc., are examples of sub-sectors where energy costs have a significant share in overall manufacturing cost. Several studies by national and international agencies have indicated that a potential of 10%–20% energy savings exists in many energy-intensive MSME sub-sectors. Lack of data on energy consumption and other operational parameters in MSMEs, on a national scale, limit focused initiatives on improving their energy efficiency. However, national agencies, such as the Bureau of Energy Efficiency and Ministry of Micro, Small and Medium Enterprises (MoMSME) as well as international agencies, such as GEF, the World Bank, United Nations Industrial Development Organization, United Nations Development Programme, SDC, etc. have initiated programmes, over the past few years, to support adoption of energy-efficient technologies and practices in this sector.

The Standards & Labeling Programme (link is external) is one of the major thrust areas of BEE. A key objective of this scheme is to provide the consumer an informed choice about the energy saving and thereby the cost saving potential of the relevant marketed product. The scheme targets display of energy performance labels on high energy end use equipment & appliances and lays down minimum energy performance standards. This covers air conditioners, frost free  refrigerators, tubular florescent lamps, distribution transformers etc..

Bureau of Energy Efficiency(BEE) has took up various policy and regulatory initiatives to enhance energy efficiency of building sector namely ECBC, support for energy assessment & retrofitting process and voluntary star rating programme for commercial buildings.BEE proposed ambitious targets for the 12th plan period,i.e. 75% of all new starts of commercial buildings are ECBC compliant by the end of the 12th plan period and 20% of the existing commercial buildings reduce their energy consumption through retrofits.

The Energy Conservation Building Code (ECBC) was developed by the Govt. of India for new commercial buildings on 27th May 2007.  ECBC sets minimum energy standards for commercial buildings having a connected load of 100kW or contract demand of 120 KVA and above. While the Central Government has powers under the EC Act 2001, the state governments have the flexibility to modify the code to suit local or regional needs and notify them. Presently, the code is in voluntary phase of implementation.About 22 states are at various stages of mandating ECBC, wherein most of building construction activities are happening across the country.

  

2.     B. Water

Indian standardspecification for water is ISO 10500, first published in 1983, the second revision of 2012 is available on the BIS website. Water quality is normally denoted in pH value. A pH level is a number that measures how acidic or alkaline a substance is. Alkaline water can neutralise the acid in your body.Normal drinking water has a pH of 7. Alkaline water has a pH of 8 or 9. For different purposes the quality of water is defined by Ministry of Water Resources, GOI.

India has about 18% of the world's population, but has only 4% of world's renewable water resources. With ever increasing population to support food requirement of more than 1.2 billion people irrigation water demand is increasing. The concomitant rapid urbanisation and industrialisation are also taking a heavy toll on the overall water demand scenario. In the result, the gap between water demand and availability has been progressively increasing. Unless the way the water is being dealt in use is seriously acted upon to catapult the prevailing poor water use efficiency, the available utilizable water resources would be inadequate to meet the future water demand of all the sectors. The bulk user i.e. the irrigation sector might be the worst affected one for; the water may be diverted to other competing sectors which give high returns/productivity. The silver lining is that in the bulk consumer sector i.e. irrigation sectorconsuming roughly about 80 percent, there lies tremendous opportunity of water savings. The prevailing water use efficiency in surface water resources schemes are typically low which can be substantially improved and water can be saved for the other purposes including the additional irrigation. This sector is the thrust area of MoWR, RD & GR which is also reflected in the National Water Mission (NWM) document. National Water Mission under National Action Plan on Climate Change has been unveiled by Hon’ble Prime Minister of India on 30th June, 2008. Five goals have been identified under the National Water Mission. One of the five goals of National Water Mission is to increase water use efficiency in all sectors of water use by 20% by the year 2017 i.e. by the end of 12th Five Year Plan. In the domestic water sector the loss of water on account of leakages in mains, communication and service pipes and valves is approximately 30 to 40% of the total flow in the distribution system. By reducing these leakages the wastages could be brought down to 10-12% of the supply. The industrial plants in our countries consume about 2 to 3.5 times more water per unit of production compared to similar plants operating in other countries. By putting conservation measures in place, the water can be saved in a cost effective manner. This highlights the need for a paradigm shift in approach from development to efficient management by making concerted efforts to achieve higher standards of efficiency in water use in all the three sectors. There is an urgent need and scope to make the systems more efficient and operate with optimal efficiency. Effective legislations needs to be brought out and enforced for treatment of domestic waste and industrial effluent discharge and its reuse so as to achieve high level of efficiencies in water use in these sectors also

The prospective water availability scenario is set to be the greatest challenge of the 21st century amongst all the users or sectors due to continued rising and competing demand, inefficient use, pollution, and added risks due to climate change. With its continuously declining per capita water availability (from about 5,177 m3 in 1951 to 1,545 m3 in 2011), India stands 'water stressed' and is close to being categorized 'water scarce'.

Despite an increasing and competing demand amongst various sectors, the water use in different sectors in India remains inefficient. Agriculture sector that consumes more than 80 percent of India's water resources has a very low overall average water use efficiency (about 38 percent). Likewise, water supply and distribution in cities in India are inefficient with high leakages/losses. Compared to international standards, Indian industries consume a relatively higher amount of water for production.

The Government of India in its National Water Mission (NWM) has proposed to develop a framework for optimizing water use efficiency by 20%. This would be possible by various sectors including industrial sector focusing on optimization and improvement of their water use efficiency.

Industries have amajor role to play in not only transforming their own policies and operations to enhance water use efficiency but also pivoting their role in reducing the growing stress on the water resources in the regional context, as well as their own value chains. In meeting this challenge, there is an opportunity to increase efficiency and productivity in a sustainable way. The key areas of interventions where Indian industries can play a major role include undertaking water conservation and efficiency improvement interventions within the industry and its entire value chain. These include an integrated industrial water management strategy which optimizes efficient use of water in the plant processes, increases water productivity, reduces losses, and promotes water conservation interventions.

The process of improvement in industrial water use efficiency not only requires various industrial sectors, specially water-intensive industries (such as Thermal Power Plants, Textile, heavy engineering, pulp & paper, steel etc.), to reduce their specific water consumption but also needs sharing of knowledge and best practices amongst them to assist the process of enhancing water use efficiency in other Industries. The process also needs to be facilitated and implemented with clear guidelines and identified benchmarks that would serve as a roadmap for the industries in attaining the goal of improving water use efficiency.

Global Reporting Initiative (GRI)

Optimum use of resources like power & water goes hand in hand with sustainanbility. Global Reporting Initiative (GRI) is an organization that provides a framework forsustainability reporting that can be used by all types of organizations. The GRI was formed by the United States based non-profits Coalition for Environmentally Responsible Economies (CERES) and Tellus Institute, with the support of the United Nations Environment Programme (UNEP) in 1997. It has its Secretariat in Amsterdam. Although the GRI is independent, it remains a collaborating centre of UNEP and works in co-operation with the United Nations Global Compact.

GRI’s Mission is to make sustainability reporting standard practice by providing guidance and support that enable organizations to report transparently and accountably, as drivers of the transition to a sustainable global economy.

A sustainability report provides a balanced and reasonable representation of the sustainability performance of the reporting organization, including both positive and negative contributions. Sustainability reports based on the GRI Reporting Framework disclose outcomes and results that occurred within the reporting period in the context of the organization’s commitments, strategy and management approach.

It’s about disclosure of organization’s economic, environmental, social and governance performance in credible way and subsequently helping them to identify business risks and opportunities to the organization due to these parameters.

The sustainability reporting framework and consists of three parts – (1) Sustainability Reporting Guidelines, (2) Sector Supplements and (2) The Technical Protocol – Applying the Report Content Principles.  All it provide guidance on how organizations can disclose their sustainability performance in true manner. Organization of any size and type can use this framework to assess their performance indicators in economic, environmental, and social domain.

Organization that creates their non financial report based on GRI sustainability reporting framework can be considered as credible output aligned with applicable standards and norms. Such report can be used to demonstrate organizational commitment to sustainable development. It can also qualitatively and quantitatively used to measure and compare organization performance based on environment, social and economic dimensions.