Global temperatures continue to surge with each passing year –2023 was the hottest year since records in 1850, and then it was outdone by 2024. Emissions are estimated to be rising at 1.5% annually, far from the 7% annual reduction needed to limit global warming to 1.5°C. World and particularly India, is also facing acute water challenges with per capita water availability dropping 50% since 1950s to ~1,500 cubic meters annually, nearing the scarcity threshold of 1,000 cubic meters. The
Global temperatures continue to surge with each passing year –2023 was the hottest year since records in 1850, and then it was outdone by 2024. Emissions are estimated to be rising at 1.5% annually, far from the 7% annual reduction needed to limit global warming to 1.5°C. World and particularly India, is also facing acute water challenges with per capita water availability dropping 50% since 1950s to ~1,500 cubic meters annually, nearing the scarcity threshold of 1,000 cubic meters. The climate crisis effects are not limited to geography specific natural disasters such as floods and droughts, but its effect threatens the functioning of everyday life and economy, with severe impacts on agricultural productivity, food inflation, heat waves, labour productivity and more broadly quality of life. Biodiversity loss has been severe with 40% of mangroves lost in recent decades. With one-third of India's economy dependent on nature-based sectors like agriculture, fisheries and forestry, every fraction of a degree matters, amplifying risks and extreme weather impacts. Urgent, sustainable, pragmatic and economically viable strategies and policies are critical for mitigating and adapting to the realities of the climate crisis by bringing all relevant stakeholders together – the government, private companies, investors, and civil society.
The government realises this and has been proving policy support. We have made notable strides through various climate policies accelerating renewable energy adoption, driving energy efficiency in lighting, decarbonising the transport sector, advancing green hydrogen, setting net-zero targets, implementing biofuel blending programs, and most recently setting GHG intensity reduction targets for certain hard to abate industries. Enforcing Extended Producer Responsibility (EPR) guidelines are another area where we are not just tackling emissions but are also paving the way to build circularity across industries, while improving livelihoods, creating jobs and enabling sustainable, circular business models.
Talking further about the intersection of policy and climate action, one can divide climate actions into 3 broad buckets:
- Commercially viable climate action: Initiatives that deliver clear and tangible financial benefits and have a clear business case, with relatively mature technology, established and growing markets with returns sufficient for private capital to step in. Policy needs to support by removing obstacles to further accelerate progress, bring more capital in, especially global capital and encourage technology advancement.
- Compliance driven climate action: Actions where regulations and compliance enable the business case – e.g., hazardous waste management. While they may lack a financial case, they represent necessary actions for continued functioning of an industry and ensure a ‘social licence’ to operate, often linked to negative environment externalities such as water pollution, air pollution and biodiversity protection. Policy adherence and strict implementation with necessary compliance mechanism should be the focus here, updating regulations and guidelines to stay up to date with industry practice and learn from best-in-class global practices is required.
- Policy as an enabler of change: Actions where regulatory policies act as a catalyst for change by creating ecosystems that support solutions until they become commercially viable and scalable. Public-private partnerships and industry-specific approaches are effective in building policies and helping develop ecosystems to drive innovations and business model. The EPR regulations across the sector are an example here.
Enabling further policy to address these three archetypes can help us further accelerate climate action and shape pathways for sustainable development. For instance, areas like renewable energy, once in their infancy, now thrive due to consistent policy support that nurtured innovation and scalability over time. We discuss more such success and areas for future action below:
- Commercially viable climate action cover areas like renewable energy and energy efficiency, which are economically and environmentally value accretive from the outset. Lack of awareness around the benefits, higher upfront capital expenditure (capex) are a few deterrent factors for even more widespread adoption. Policies that reduce capex costs and provide affordable financing are crucial to accelerating these areas. The UJALA scheme, launched in 2015, which subsidised LED appliances, enabling sale of over 400 crore bulbs annually achieved this – there are talks of a programme to enable upgradation of air conditioning infrastructure as well. Looking ahead, guidelines to enable banks and NBFCs to finance the green transition can further act as a catalyst. Opportunities in energy storage infra. require similar interventions—addressing high costs for the underutilised pumped hydro energy storage potential (3.3 out 103 GW India Pumped Hydro Energy Storage) potential is currently operational, high upfront costs and limited domestic mfg. capacity for replacing ~90 GW of diesel-powered backup systems with battery storage, and regulatory gaps through incentives, technology transfer, and energy storage obligations to ensure grid stability could curb emissions, improve energy efficiency, and foster a domestic storage ecosystem.
- Compliance driven climate action is critical for mitigating environmental harm. The E-Waste Management Rules, 2016, exemplify this by mandating EPR, helping India (lead to an upward trajectory in e-waste quantity collected and recycled/ disposed (22% in F20 to 33% in F22) improve collection and recycling systems. However, there is a major opportunity to better here as India's waste economy is dominated by the informal sector, which remains outside the EPR framework, limiting recycling rates and compliance. The upcoming EPR guidelines that are covering new sectors such as plastic waste, battery waste, end of life vehicles, used oil, tyres, construction and demolition waste are all steps in the right direction. Expanding EPR to other relevant sectors and offering clear market mechanism for each of the sub-sector to invest and build circular business model will help us not only reduce our waste footprint but also spur job creation, create new business opportunities distributed across the country in MSME sector, create a reverse logistic demand and reduce imports for certain material.
- Policies are key enablers (coupled with public private partnerships) to foster ecosystems that support innovative solutions until they become commercially viable and scale. For example, India's EV initiatives—FAME series and PM E-DRIVE enabled the country to accelerate on EV transition with sub-sectors like e-3Ws penetration accelerating on its own. These initiatives supported technology development, demand creation, pilot projects and charging infrastructure till the business case became viable for it to scale. Similarly, in renewable energy, India is not the fifth-largest market for solar power globally. In 2012, GoI fostered a robust public-private partnership, making land accessible and allowing private sector to bring capital and sell via power purchase agreements (PPAs) to reliable off-takers bringing down average cost of large-scale solar electricity down by 80-90% over time. Today, India offers the world's cheapest solar power. Thematically, green financing although still nascent in India has a massive potential. Policies such as decarbonisation of steel (e.g. MoS directive on green steel), cement (e.g. ministry of environment, forest and climate change emission intensity targets), promoting investment in recycling and innovation in manufacturing will accelerate the shift further to a circular economy. Additionally, another key element is ‘Just transition’ which prioritises inclusivity as we undertake a green transition as a country, ensuring vulnerable communities’ benefit from climate action. PM-KUSUM scheme showcases this by empowering farmers through renewable energy access, with initiatives like 10,000 MW decentralised solar projects, 20 lakh standalone solar pumps, and solarising grid-connected pumps. It reduces fossil fuel reliance while boosting farmer incomes via surplus energy sales. Initiatives like this ensure climate action doesn’t hamper daily livelihoods and indicates a whitespace for green jobs – we expect ~4M green jobs this year and a potential for ~35M by mid-century.
India’s proven track record in policy implementation highlights its ability to drive transformative change through timely interventions. Policies have the potential to create systemic shifts, generate millions of green jobs, and stimulate economic growth through innovation and investment. India has demonstrated its capacity to leapfrog in multiple areas, such as the tech landscape in telecom (e.g., the shift from 3G to 5G) and advancements in digital payments through the integration of unique IDs with UPI. India is also poised to combine robust policy framework with collaboration to emerge as a global leader in sustainable development—successfully aligning economic growth with environmental stewardship.
This article is authored by Abanti Sankaranarayanan, chief group public affairs officer & member - group executive board, and Ankit Todi, chief sustainability officer, Mahindra Group.
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