Clean electricity and hence renewable energy are the bedrocks of the ongoing – or forthcoming, depending on where you live – energy transition. Yet, the environmental, social and governance (ESG) issues arising out of renewable energy development are not often examined.
From land use changes affecting local biodiversity to labour injustice, renewable power projects can have serious and adverse socio-economic consequences. They risk entrenching energy injustice, since the direct and indirect benefits they generate do not benefit the communities they most impact.
Several organisations including World Resources Institute (WRI) India, Forum for the Future, The Energy and Resources Institute (TERI), Landesa, and World Wide Fund for Nature (WWF) have jointly launched the Responsible Energy Initiative to shine the spotlight on this issue, and are calling for a transition to not only renewable energy but responsible energy.
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Saksham Nijhawan is principal strategist, energy and climate change, at Forum for the Future, India.
“Many people are rooting for the rapid deployment of renewable energy (RE) in India, and believe that India can truly become one of the leaders in accelerating the energy transition and moving towards a resilient, low-carbon economy,” Nijhawan says. “None of us would like to see RE deployment slow down due to any land, technology, supply chain, workforce, or governance issues.”
While some may argue that it is inescapably true that there will be winners and losers when entire industries and economies are remade, Nijhawan emphasises that humanity has an opportunity to learn from the past and proactively put in place mechanisms that ensure that as the RE sector matures, it does so in a way that benefits all communities – including but not only shareholders – and contributes to ecological restoration beyond just conservation.
He admits that “few sectors have been able to do this in the past”, but holds out hope for a “truly pioneering” development of the RE sector that considers each person a ‘rights-holder’ rather than a ‘stakeholder’, adopts innovations and business models that truly value ecosystem services, and builds in circularity all along the value chain.
In this interview, Nijhawan explains why renewable energy should be responsible energy, and how economies can get there.
Tell us about some of the problems arising out of RE deployment in India.
India is a complex land – cultures, policies, power dynamics are incredibly nuanced. The RE sector has grown and is now at an inflection point where it is facing issues across social and ecological boundaries. Left unaddressed, the energy transition is on track to being a shallow transition, thus creating or exacerbating social and environmental risks, rather than reducing them.
For example, the race to the bottom on RE tariffs means there is less time and resources available to focus on sustainability, let alone justice and regeneration in the value chain. The search for ever-cheaper renewable energy means cutting costs, which almost inevitably means less scrutiny and transparency in the supply chain and thus a decline in environmental and social standards. Even when done with the best of intentions, rushed community consultations fall victim to structural power dynamics and risk reinforcing negative norms.
The market creation drive has included a relaxing of governance standards including the need for environmental impact assessments (EIAs) for RE projects. There is no shared view of what constitutes a negative impact in many areas, or the threshold for violation. Though many investors are working to improve the situation, accountability mechanisms in the value chain are weak.
The jobs provided by the coal industry and its peripheral sectors are physically not where the renewable energy investment is, so we also cannot rely on a direct swap to avoid joblessness, even if the skills needed were vaguely similar.
What are the ESG implications of RE deployment?
There are quite a few across the RE value chain, the critical concerns being:
- Increased ecological and social vulnerabilities resulting from land-use changes.
- Labour and human rights abuses – particularly in raw material extraction/mining areas, production and end-of life-stages of RE technologies take place, especially in the informal sector; climate mitigation responses vary based on influence, control and transparency.
- Impacts on local and regional biodiversity during the construction and operation phases of the value chain in particular.
- Risk of energy injustice, where direct and indirect benefits generated from RE systems do not benefit the communities they most impact.
- Rising volumes of non-recyclable and potentially hazardous waste.
- Impacts on livelihoods, culture and local practices and patterns, often unaccounted for and overlooked across the value chain.
- Potential of overlooked long-term land and marine use changes to significantly alter ecosystem services, such as the availability of safe water and food production.
These concerns are not exclusive or limited to the RE sector. Current value chains are incredibly complex and it can be hard to draw boundaries on where the impacts can be associated with RE and where they are associated with other allied sectors. However, this doesn’t mean the sector cannot act and set the benchmark.
How does the average consumer distinguish between propaganda from climate solutions deniers, who have vested interest in maintaining the status quo, and verified adverse effects of RE? For instance, are windmills really killing birds? Isn’t it perverse to talk up the harms of lithium mining when coal mining is doing much harm too?
I think the biggest giveaway for anti-RE propaganda are statements that do not have enough data and unbiased research behind them, and lack nuance and sensitivity. We all know about the issues associated with extractive traditional sectors, such as their impact on biodiversity and local communities. Countless stories and robust research have brought out the impacts the traditional sector has, along with contributing heavily to carbon emissions.
As a new sector develops, we need to learn from the mistakes and issues of the past and ensure we have mechanisms in place right from the get-go as the sector rapidly develops; while holding a long-term vision of the value we would like to create.
Traditional sectors like heavy industry and coal are not inherently regenerative, whereas RE began with a mindset of regeneration and abundance. Therefore, it presents an opportunity we haven’t had in the last 40 years to institute the right mechanisms from the get-go.
Traditional sectors like heavy industry and coal are not inherently regenerative, whereas RE began with a mindset of regeneration and abundance. Therefore, it presents an opportunity we haven’t had in the last 40 years perhaps to institute the right mechanisms right from the get-go.
Hence, it isn’t perverse to talk about the harms of lithium mining – and we need to be conscious that lithium mining issues aren’t exclusive to the RE sector. RE might be one of the major markets for lithium and thus, needs to ensure it is done in a responsible manner.
I would also emphasis that coal and traditional mining should continue to be under scrutiny, and more so as we put in place mechanisms for a transition away from fossil fuels. The traditional energy sector has reaped the benefits of minimal regulation for decades, and it now has the opportunity to ensure the transition away from it happens in a way that is just and equitable.
Coming back to responsible energy, you say RE must create value beyond tackling climate change. How?
Contributing to reducing emissions and thus limiting the impacts of climate change is incredibly important and crucial if we are to envision a future that is even remotely similar to the climate we are used to.
However, RE, like any other sector, has multiple engagement points with communities, workforce, and the environment. Hence, there are multiple opportunities to create value in a way that the sector inherently tackles the climate emergency. These could include:
Actively promoting universal rights: It could do this by respecting legal rights, cultural beliefs and traditions; understanding differential impacts on vulnerable groups and communities, and local power dynamics; learning from past mistakes and from other pioneering sectors; and considering each person as a ‘rights-holder’ rather than a ‘stakeholder’.
Nurturing resilient, thriving ecological systems: This would entail embracing innovations and business models that recognise the value of ecosystem services; understanding local biodiversity, traditions, and knowledge; building circular products and manufacturing systems; designing for longevity and adaptation; developing and implementing landscape-level strategies encompassing local and indigenous knowledge to support broader biodiversity and ecological health.
Championing participatory governance principles: For example, by making a commitment to open, accountable, and inclusive engagements with the communities we work with, and to consider the principle of free, prior and informed consent to be a bare minimum where indigenous peoples are affected; and intentionally creating the means for women, local peoples, youth, as well as marginalised communities to participate in collaborative decision-making where our operations and choices (current and future) affect them and their communities.
Building resilient communities and an inclusive workforce: This involves building adaptive capacity in communities and our workforce; creating avenues for sustainable livelihoods, and ensuring value is fairly distributed across our value chains and stakeholders; building trust with communities through inclusive conversations; recognising the agency of each rights-holder; contributing to creating energy justice for all; providing incentives for professional development and encouraging our supply chain partners to do the same. Promotion of universal healthcare and education, and participatory decision-making in the development, disaster prevention and management of the area could help build the adaptive capacity of communities and the workforce. Shared-ownership structures that share risks and benefits fairly could ensure equitable distribution of value.
What would a “just and regenerative” energy system for India look like?
A responsible renewable energy system is one that goes beyond the traditional boundaries of sustainability of ‘do not harm’ and ‘put back what is taken’, towards actively working to renew and restore natural systems. It challenges the notion of ‘incremental change’ with ‘transformational change’, to transform power patterns and shift from an extractive economy to a circular economy.
Such a system respects and works with cultural diversity, building on India’s rich history of participatory decision making, and contributes to building resilient communities. This means going much beyond ensuring that financial contracts with land-owners are respected, towards planning for the economic resilience of those families.
It also embeds circularity, transparency and fairness in the supply chain right from the get-go, adopting business practices and mechanisms to embed these characteristics in the system, going much beyond compliance and the bare minimum.
What makes you optimistic that such a system can be created, given India’s historical inequities of gender, caste, region, religion, ethnicity, and so on, that pervade all social, political and economic activity?
It is important to understand why we are bringing the focus on responsibility in the RE sector. One might argue that there are other sectors with much worse impacts and track record of significant ESG issues. RE has the potential to be good for everyone – it has its basis in regeneration through the sun, wind, and water. It has the potential to be inherently good – while playing a critical role in decarbonisation – and proactively ensuring every citizen benefits from it. The scrutiny on traditional and heavy industries should and will continue.
I am fiercely optimistic because we do not have the luxury of time. As we work hard towards rapid decarbonisation, we are facing increasingly adverse impacts of climate change. Unfortunately, these impacts will be equally adverse on the RE sector (including on the workforce and communities associated with its development) as they will be on any other sector. The RE sector finds itself in a unique landscape, one that other industries haven’t faced before: it is being counted upon for rapid decarbonisation and yet, it faces climate impacts. On the plus side, it also has over seven decades of learning from traditional sectors on what can catastrophically go wrong if the right mechanisms are not put in place.
Lastly, the vision of what transformational action can create makes me optimistic, as it brings with it the opportunity for true sustainable development that lasts for all. Transformational action finds alternative development pathways to those built on continuous growth, explicitly dismantling systems of oppression and manifesting profoundly different human-environment relations. Stepping towards that distinctly different system will require significant effort, but the opportunities that will come with a deep transformational transition are vast and too meaningful to be sacrificed in the name of political acceptance or speed.
With the largest investments in RE coming from large corporations, is there a danger of policy and regulatory capture to suit those benefiting from the status quo? What are organisations such as yours doing about this?
Policy and regulation have an incredibly important role to play in not only building a favourable ecosystem for consistent RE deployment, but also to do it in a way that is socially just and environmentally safe.
However, we also know that while there are a lot of expectations from policy and regulations, it is very hard for policymakers to get it right – we want regulations, but not too intrusive; we want progressive policies, but also ones that ensure financial safety; we want rapid change, but have historically not responded well to significant policy change. Consistent engagement with policy makers and regulators, an understanding of the complex systems and expectations that policymakers deal with, and empathy with the mandate of policymakers will be important. We need to demonstrate the direction that policy and regulation can evolve in. Without demonstrating industry action, and with only policy briefs, we can only do so much to support policy and regulation to evolve.
On the point of policy and regulation developing to suit those who benefit from the status quo – it can only be countered by demonstrating pioneering, status-quo challenging and promising action to guide policy evolution. Policymakers in India are incredibly capable and forward-looking, we need to ensure the industry builds confidence to enable the policymakers to evolve the policy landscape.
Please describe some such pioneering actions.
Our partner TERI is working with RE companies in Rajasthan and Madhya Pradesh to develop, test and implement multiple land-use models where communities can use the land on which solar power plants are built for agriculture. Communities will primarily grow cash crops such as herbs, root vegetables, and medicinal plants. This work would include developing participatory ownership, community investment, and benefit-sharing models that could be “retro-fitted” on existing RE plants.
WRI, as part of its ‘circularity in RE value chains’ initiative, is developing an innovation challenge wherein it will test and incubate solutions to embed innovations in manufacturing and development of RE. Some innovation needs include increasing the recyclability of solar panels to more than 80 per cent, enhanced focus on critical minerals such as lithium, nickel, cobalt, and manganese, and supporting circular domestic manufacturing.
What does your responsible energy campaign expect to achieve – in the next year, in five years, and in 20 years? In India, and globally?
As part of driving action and demonstrating the art of the possible, we are working across six initial areas of the RE value chain to embed responsibility and transparency. We are working with investors and financiers on developing pioneering investment mechanisms to support responsible RE, by working with developers to understand how they can enhance sustainability mechanisms, working with manufacturers and innovators to support innovations to make RE systems circular, and working with procurers of RE, especially for captive plants, to demonstrate circular approaches.
We’re also exploring multiple land-use and benefits-sharing models with communities, and are working to develop participatory decision-making methods specific to the RE sector.
The initiative has always had ambition to work beyond India in regions where RE development is picking up pace, using India as the leading example and embedding responsible RE principles in other regions, too. In 2023, we have launched the initiative in Southeast Asia with the Philippines being the first country. We expect to see path-breaking action in the region, addressing specific regional issues over the next two to five years. We also aim to explore what responsible energy transition in the Northern and Central American region might look like, being conscious of the historical issues of exclusion and racial bias.
Our aim is to see an RE sector that sets the benchmark for other sectors to follow, by being ecologically safe, rights-respecting and socially just, contributing to rapid decarbonisation towards an under-2°C pathway. This will be enabled by a transformation of our individual understanding of what value is, by restructuring markets and challenging traditional power dynamics.
We’ve talked a lot about ‘just transition’ as an outcome, but the process of getting there is vital. How is the vision for transition set? Who shapes it? How can we use the opportunity transition brings to build an economy that creates and shares value differently? These are all key questions.
This article has been edited for clarity.