By Dr Rahul Tongia, Senior Fellow, Centre for Social and Economic Progress; Adjunct Professor, Carnegie Mellon University; and Senior Fellow (non-resident), Brookings Institution
Global pressure for action on climate change has prompted various efforts by individuals, companies and nations to limit greenhouse gas emissions, especially CO2 emissions. But are such measures as effective as we claim (or hope) they are? It is one thing when an entity wants to falsely claim they are green, perhaps as part of image-building, but a more subtle problem is when they are unaware of just how “un-green” they might be. Part of this challenge is the difficulty in measuring, but even more challenging are systemic issues that can lead to greenwashing. Many stakeholders are not malicious, and may even be operating under standard frameworks and mechanisms, but the onus lies on governments, regulatory bodies and experts to decipher what is real and what is not.
People who purchase electric vehicles (EVs) may think they are being green, as these vehicles are often labelled “zero emissions vehicles” in some quarters. However, EVs run on electricity, which results in emissions elsewhere. If you charge your vehicle overnight, you are not using solar power! Similarly, many entities (and upcoming green hydrogen production in India) are allowed to “bank” or offset renewable energy through discoms. This practice is what enables the Kochi International Airport to be the “world’s first 100 per cent solar airport”, despite having no storage. It over-generates solar midday and utilises it in the evening and overnight.
The most egregious examples of greenwashing often involve offsets, including voluntary offset markets. These are often of poor quality and very cheap. This is why corporations rush to them and proclaim themselves as “carbon neutral”. An energy major is even touted the world’s first “carbon neutral” liquefied natural gas shipment.
But what are they doing? They are not removing CO2 from the air (termed carbon dioxide removal, or CDR). They typically are not even engaged in afforestation, which biologically removes CO2, but over a long time frame. instead, there are offsets being sold where people are paid for not cutting down a forest! Who cares if that forest was not going to be cut down anyway, or if there was a risk of a forest fire burning it down? The minimum qualities any reasonable offset should meet are additionality, permanence and leakage avoidance (for instance, saving one set of trees simply means another gets cut down elsewhere).
It is not additional when someone claims to be engaged in climate finance by giving a loan for a solar panel in a developing country. First of all, that panel would likely have been built anyway – given that solar power is very cheap. Second, for the poor, and especially as part of the promised $100 billion support pledged at COP15, the wealthy should not provide loans. The poor need grants or, at best, soft loans.
There are many forms of greenwashing, and many of them depend on the framework used for accounting. In a recent Centre for Social and Economic Progress (CSEP) study, “Properly Defining ‘Green Electricity’ is Key to India’s Broader Energy Transition“, I wrote about how these frameworks vary and are useful for different metrics and accounts. As the figure shows, offsets rely on consequential emissions accounting, but this only applies at the margin. In contrast, attributional emissions accounting applies to the total.
As the CSEP paper expands, while banking renewable energy may work in the short run under consequential emissions accounting, it does not work either in the long run or in aggregate for reducing emissions. At best, as long as it displaces coal during the day, it prevents the growth of emissions but does not lower emissions. Moreover, because it is additional coal supply for the evening, it could be responsible for emissions under attributional accounting.
The consequential displacement of coal will happen until India becomes surplus in renewables, at which point renewables would be curtailed and would no longer be displacing coal. On the other hand, as long as India is not surplus, adding extra solar is something that discoms should do (independent of the airport or similar large users) – so we have to question the additionality. There is also a parallel question of attributing green practices on the consumer side – a discom should procure green power for all its users, not just “green users”, unless they paid the premium for truly green power with 24×7 or on-demand deliverability.
Even worse is the economics of such an arrangement. First of all, the discom must have enough peak evening power to deliver it back to the airport. This is not scalable, neither for India’s 2030 green hydrogen ambitions (with approximately 125 GW of renewables required for 5 million tonnes per year of green hydrogen) nor for the larger renewable energy ambitions by 2030 for the grid (for example, 280 GW of solar). Second, the time-of-day differential value of solar means that during mid-day, the discom is getting solar, which it could procure via large bids for under Rs 3 per kWh. However, in the evening, the cost for peak power procurement may escalate to Rs 6-Rs 10 per kWh. To emphasise how this does not add up, consider what the discom must do with the surplus power. It will be given to another user. That said, the user and the airport cannot both be green, since additional coal was required to meet the demand during non-solar hours.
The concept of banking does not only risk greenwashing in the abstract term – norms surrounding “greenness” can have immense implications for global compliance and exports. Other countries will have their own norms to measure the emissions associated with the electricity that feeds hydrogen electrolysers and seek green power with additionality, deliverability and timely matching (for instance, hourly matching). In India, permitted banking involves monthly averaging. Meanwhile, Europe has already notified in some global green hydrogen/ammonia tenders that it requires dedicated additional renewable energy.
How do corporations think about green power? It is much trickier than just saying “I am buying a bunch of renewable power” because historical norms were only on an energy (kWh) basis. But we know that we cannot average this out. A data centre with a flat demand over the day cannot run only on solar without storage, which is presently very expensive. The good news is that techniques such as oversizing and blending (hybrid) renewable energy designs with wind and solar can provide solutions. They can even raise the plant load factor to 50-70 per cent without significantly raising costs. The downside is that they have limitations.
Corporations want “green power” at reasonable costs. If we do not recognise and regulate systems properly, they will increasingly pay for dodgy offsets and not-so-green “green power”. We need to ensure that we become green not just for legal compliance but also in spirit. Further, laws should incorporate deep science for accurate emissions accounting. It is not easy, but with volume, innovation and support, it can be done. The good news is that India’s timeline for 100 per cent decarbonisation is far enough away that we can start with the lower-hanging fruit of partial and near-full decarbonisation before advancing towards full decarbonisation. This may not sound as enticing as labels claiming 100 per cent green, but an authentic 70 per cent green is better than a fake 100 per cent green.
