Current Affairs 2021: Renewable Energy Country Attractiveness Index Or RECAI and its importance for India

Current Affairs 2021: Renewable Energy Country Attractiveness Index Or RECAI and its importance for India

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Updated on Nov 23, 2021 18:42 IST

Renewable Energy Country Attractiveness Index Or RECAI and its importance for India.

RECAI_Index_Ranks

RECAI_Index_Ranks

In Ernest & Young's 58th issue of ‘Renewable Energy Country Attractiveness Index’ (RECAI), India has managed to hold on to the 3rd rank. The Index positions the top 40 nation markets on basis of their renewable energy investments, transactions and deployment opportunities. The United States Of America holds the first rank while China is placed second. France has moved up to the fourth position while the United Kingdom slide down by one at the fifth position. Germany has climbed to the sixth position and Australia has clinched the seventh position. Japan, Brazil and Spain hold the eighth, ninth and tenth position, respectively. This year, Indonesia has been added to the Index for the first time. 

This comes at a time when environmental, social and governance issues (i.e., not just profitability but social and environmental concerns have to be considered by the companies who are responsible for utilizing their resources to tackle negative climate actions) are being given precedence in light of the Paris Agreement, 2015 and the recently concluded COP26 at Glasgow.

PPA Index

RECAI has introduced a novel PPA Index which has underscored a company’s power purchase agreements (PPAs) [essentially, it is a contract between the seller {one which generates electricity} and the buyer {one which is looking to purchase electricity}], as an evident primary factor for clean energy growth and transition. Basically, a country’s growth potential in a corporate PPA market is assessed and accordingly ranked. India has managed to clinch the sixth position among the top 30 PPA markets.

How India retain its rank in RECAI?

US maintains its first rank on RECAI mainly due to the recent developments announced by President Joe Biden where he has outlined a Clean Energy Revolution framework entailing, implementation of the Green Deal, achieving net-zero emissions and a 100 per cent clean energy economy by no later than 2050, secure trillion-dollar funding for green Energy and revamp the existing arrangements to build a more modern and sustainable infrastructure for a clean energy future

China and India remain unchallenged in their ranks at second and third position, respectively, due to conducive regulatory and financing circumstances prevalent in their markets. The renewable energy market conditions have been advantageous for both nations. To top that, remarkable technological expansion has aided in allowing emphasis to be given to self-sustaining suppliers involved in the clean energy transition drive. 

Broad-ranging policy decisions announced by both countries and substantial investments made have made an impact in clearing obstacles for the renewable energy industry, allowing it to thrive. The initiative to coalesce bulk volumes of variable resources may put considerable exertion on grid infrastructure. The fundings needed to enhance and scale-up energy transmission infrastructure across the world will be a fundamental problem.

Somesh Kumar who is a Partner and National Leader, Power & Utilities, EY India, was quoted when he declared that, India was at a critical juncture in August 2021 in terms of tackling the climate crisis. The overall installed renewable energy capacity (excluding large hydro) crossed the 100 GW breakthrough.

Relevance of Renewable Energy Country Attractiveness Index For India

The relevance of this index for India lies in the phrase “Sustainable Development.” The chief intention for utilizing renewable energy in India is to facilitate economic growth, enhance energy access and security, and alleviate the impact of climate change. Sustainable development in India would entail the usage of modern renewable energy that is affordable, sustainable and dependable. 

What is the need for any such action and indices? Statistics like that of the World Resource Institute Report 2017 reports that India is accountable for approximately 6.65% (which has increased to 6.8% by 2021) of total carbon emissions, globally. India, after the United States of America and China, is the third-largest producer of greenhouse gases. It is responsible for 2.46 billion metric tonnes of carbon produced worldwide. These concerning numbers are the reason why there has been a push for effective and immediate action by environmental lobbyists. 

Recently, the National Electricity Plan under the aegis of the Ministry of Power (MoP) has undertaken a 10-year framework to provide electricity all across the country and that power is proficiently supplied at an inexpensive cost. India by 2022, aims to achieve 175 GW of renewable energy inclusive of 5 GW from small hydropower plants, 10 GW from bio-power, 60 GW from wind power and 100 GW from solar energy. 

Under the Paris Agreement 2015, India as part of its Nationally Determined Contributions had pledged to cut down greenhouse gas emissions to 33%-35% by 2030, significantly enhance forest cover to lower carbon dioxide and augment non-fossil fuel power capacity from 28% to 40% in 2015. It has also been agreed to try keeping the increase in the Earth’s mean surface temperature to “well below 2°C” compared with pre-industrial levels, to no more than 1.5°C.

In the recent Glasgow COP26 Summit, India had announced its pledge to achieve net-zero carbon emissions by 2070, lessen the carbon intensity of the nation by less than 45 per cent, diminish the total predicted carbon emissions by 1 billion tonnes by 2030, arrange 50% of energy requirements from renewable energy by 2030 etc. It had also announced its One Sun One World One Grid (GGI-OSOWOG) joint initiative with the United Kingdom at COP26.

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This is where the relevance of RECAI comes into play. How has India fared in terms of promoting renewable sources of energy as an alternative to the conventional fossil fuel-driven energy, has it effectuated all or most of the renewable energy source projects it had inaugurated, has it sufficiently designed renewable energy-centric policies, programs and legislations, has it revamped its infrastructure and markets to make renewable energy more attractive especially for foreign investors, has it enabled employment opportunities, especially for the youth, in the renewable energy sector. These are the parameters that are taken into contemplation before ranking an economy. Accordingly, India’s milestone accomplishments, future visions, green investments made, employment opportunities created in this sector of generating and deploying renewable energy have been considered before ranking it third on the RECAI list.

This goes on to show that India is taking its commitments made in COP21 and thereafter seriously. The climate crisis is a matter of extreme distress and every possible effort had to be made to constructively address it. Judging based on the parameters mentioned, it is decided how far a country has come in terms of fructifying its commitments made. This allows for some transparency, accountability and responsibility – whether the commitments are actually fulfilled or merely remain lofty promises. However, the fact that India is making efforts in the right direction clearly shows in the RECAI rankings.

Image Courtesy:  Ernst & Young

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