India’s Future Needs for Resources Dimensions, Challenges and Possible Solutions November 2013
Institute for Energy and Environmental Research Heidelberg GmbH
The Energy and Resources Institute
Consortium IFEU – Institut für Energie - und Umweltforschung Heidelberg GmbH (Lead of Consortium) Jürgen Giegrich, Claudia Kämper, Axel Liebich, Chistoph Lauwigi
TERI – The Energy and Resources Institute Dr. Ligia Noronha, Dr. Shilpi Kapur, Arpita Khanna, Ipsita Kumar, Dr. Trishita Ray Barman, Aastha Mehta, Souvik Bhattacharjya, Ankit Narula, Akshima Tejas Ghate, Priyanka Kochhar
Dr. Monika Dittrich – Independent Consultant
SERI – Sustainable Europe Research Institute Stephan Lutter, Dr. Stefan Giljum
Wuppertal Institute Prof. Dr. Raimund Beischwitz, Henning Wilts, Susanne Fischer
GIZ – Deutsche Gesellschaft für Internationale Zusammenarbeit Dr. Dieter Mutz, Kristin Meyer, Dr. Ashish Chaturvedi, Enrico Rubertus, Dr. Detlev Ullrich
Contents
A.
Introduction
1
B.
Resources: What are we talking about?
3
C.
General drivers of demand in India
6
D.
Current and future dimensions of India’s resource requirements
10
D.1
Rationale and approaches for efficient use of natural resources
12
D.2
Past and current material requirements in India D.2.1 Methodological and data-related preliminary remarks D.2.2 Past and current material consumption in India
15 15 16
D.3
Future material requirements D.3.1 Where will the materials come from?
19 22
E.
Key raw materials within the sectors
33
E.1
Chromite E.1.1 Trends in production, consumption, and trade E.1.2 Supply security concerns for chromite
34 34 35
E.2
Molybdenum ores E.2.1 Trends in production, consumption, and trade E.2.2 Supply security concerns
37 37 37
E.3
Limestone E.3.1 Trends in production, consumption, and trade E.3.2 Supply security concerns
38 38 39
E.4
Copper ores E.4.1 Trends in production, consumption, and trade E.4.2 Supply security concerns
40 40 41
E.5
Cobalt ores E.5.1 Trends in production, consumption, and trade E.5.2 Supply security concerns
43 43 43
E.6
Conclusion
45
F.
Concept of life-cycle thinking to analyse resource efficiency
46
G.
Challenges and solutions in the hot-spot sectors – automobile construction, and renewable energy
47
G.1
Automobile Sector G.1.1 Introductory description of the sector in general and in India G.1.2 Development of automobile sector worldwide and in India
47 47 47
i
ii
G.1.3 G.1.4 G.1.5 G.1.6 G.1.7
Economic relevance of the sector Requirements of natural resources Drivers of demand in the sector Specific description of selected technical aspects Meeting resource efficiency
48 49 49 50 51
G.2 Housing Sector G.2.1 Introductory description of the housing sector in general and in India G.2.2 Development of the housing sector worldwide and in India, and implications for mineral consumption G.2.3 Economic relevance of the sector G.2.4 Requirements of natural resources in the housing sector G.2.5 Drivers of demand in the sector G.2.6 Specific description of selected technical aspects G.2.7 Meeting resource efficiency
59 59
G.3
Renewable Energy Sector G.3.1 Introductory description of the sector in general and in India G.3.2 Development of the Renewable Energy Sector Worldwide and in India G.3.3 Economic relevance of the sector G.3.4 Requirements of natural resources in the renewable energy sector G.3.5 Drivers of demand and future prospects G.3.6 Description of selected technical aspects G.3.7 Meeting resource efficiency
75 75 76 77 77 78 80 81
G.4
Conclusions from the case studies
86
H.
Resource efficiency in the context of Asia
H.1
India 89
H.2
Resource-effeciency policies around the world
89
H.3
Europe 2020 strategy
90
H.4
UNIDO: Green Industry Initiative
91
H.5
Germany’s Raw Materials Strategy
92
H.6
Germany’s Resource Efficiency Programme (ProgRess)
92
H.7
Japan’s resource agenda
93
H.8
Korea’s resource approach
94
H.9
Taiwan
95
H.10 9. Further initiatives
96
I.
Findings and Conclusion
97
J.
Outlook and Recommendations
99
59 61 61 64 65 67
88
References
100
Image Source
109
Annex I
110
Annex II
113
Annex III
115
India’s Future Needs for Resources
Abbreviations
ANS
Adjusted Net Savings
EITI
Extractive Industries Transparency Initiative
BEE
Bureau of Energy Efficiency
BGS
British Geological Service
EU
European Union
BIS
Bureau of Indian Standards
FAO
Food and Agriculture Organization
BREEAM
Building Research Establishment’s Environmental Assessment Method
GARC
Global Automotive Research Centre
GDP
Gross Domestic Product
BRIC
Brazil, Russia, India, China
Cafe
Corporate Average Fuel Economy
GEF–UNDP Global Environment Facility–United Nations Development Programme
CAGR
Compound Annual Growth Rate
GHG
Greenhouse Gas Emissions
CASBEE
Comprehensive Assessment System for Building Environmental Efficiency
GIZ
Deutsche Gesellschaft für Internationale Zusammenarbeit
CEA
Central Electricity Authority
GRIHA
CMCR
Centre for Macro Consumer Research
Green Rating for Integrated Habitat Assessment
CIA
Central Intelligence Agency
GWEC
Global Wind Energy Council
CIPEC
Intergovernmental Council of Copper Exporting Countries
IEA
International Energy Agency
ifeu
CO2
Carbon Dioxide
Institute for Energy and Environmental Research
CP
Cleaner Production
IMF
International Monetary Fund
CPWD
Central Public Works Department
IPCC
CSE
Centre for Science and Environment
Intergovernmental Panel on Climate Change
C-WET
Centre for Wind Energy Technology
KBA
Kraftfahrt-Bundesamt
DEMEA
German Material Efficiency Agency (Deutsche Material Effizienz Agentur)
LCA
Life Cycle Assessment
LCV
Light Commercial Vehicle
DGCA
Directorate General of Civil Aviation
LEED
DG ENV
Directorate General for Environment
Leadership in Energy and Environmental Design
DIREC
Delhi International Renewable Energy Conference
M&HCV
Medium and Heavy Commercial Vehicle
MNRE
Ministry of New and Renewable Energy
DMC
Domestic Material Consumption
MOEF
Ministry of Environment and Forests
DRC
Democratic Republic of Congo
MFA
Material Flows Accounting
ECBC
Energy Conservation Building Code
NAPCC
National Action Plan on Climate Change
EIO
eco-innovation observation
NATRiP
National Automotive Testing and R&D Infrastructure Project
Abbreviations
iii
SNA
System of National Accounts
SRREN
Special Report on Renewable Energy Sources and Climate Change Mitigation
NRDC-ASCI Natural Resource Defense Council – Administrative Staff College of India
SOx
Sulfur Dioxide
SUV
Sport Utility Vehicle
NOx
Nitrogen Oxide
TC
Treatment Charge
OECD
Organisation for Economic Co-operation and Development
TEPA
Taiwanese Environmental Protection Administration
OEM
Original Equipment Manufacturer
TERI
The Energy and Resource Institute
OPC
Ordinary Portland Cement
TMR
Total Material Requirement
PPC
Portland Puzzolan Cement
UBA
PPP
Purchasing Power Parity
German Federal Environmental Agency (Umweltbundesamt)
PSC
Portland Slag Cement
UN
United Nations
PVC
Polyvinyl Chloride
UNEP
United Nations Environment Programme
RC
Refining Charge
UNIDO
R&D
Research and Development
United Nations Industrial Development Organization
RE
Resource Efficiency
USGS
United States Geological Survey
RECP
Resource-efficient and cleaner production
VAT
Value Added Tax
RPO
Renewable Purchase Obligation
Wbcsd
SCV
Small Charter Vehicle
World Business Council for Sustainable Development
SERI
Sustainable Europe Research Institute
WEF
World Economic Forum
SIAM
Society of Indian Automobile Manufacturers
WTO
World Trade Organization
NCAER NGO
iv
National Council of Applied Economic Research Non-Governmental Organization
India’s Future Needs for Resources
A. Introduction
Natural resources are essential for our survival. Agricultural land provides us with food; a sufficient supply of clean and potable water sustains life; and raw material of various kinds is needed for shelter. Natural resources are required not only for meeting our basic needs, but also for fulfilling our aspirations for a better quality of life, for higher standards of living, for comfort and ease, and for economic and social well-being. Every society depends on natural resources like biogenic and mineral raw materials, on energy sources like fossil fuels and solar and wind energy, and on clean water. The environmental media and ecosystems are also understood as being natural resources, with their biodiversity, the different functions of their land areas, and their services. They constitute the essential elements that keep our economy functioning and guarantee an increase in the well-being of mankind. Consequently, we need to devote more attention to resource use, since global demand for various goods and services is increasing, but the resources available to us are finite and limited. Industrialized countries already have high levels of resource consumption, while emerging countries need resources to provide appropriate living standards for their populations. Coordinated and collaborative efforts are required to ensure both availability and conservation of natural resources. Industrialized countries need to demonstrate how they intend to maintain their living standards in the face of considerably reduced resources, and emerging countries need to determine how their economies can continue growing through the most efficient use of scarce natural resources. In this context, GIZ initiated activities with Indian and European partners to understand the significance of the discussion for emerging countries in general, and for India in particular. The perception of managing natural resources efficiently and sustainably is a key consideration in taking future decisions. With a supposed yearly growth rate of 8% of GDP, India’s middle class is poised to grow tremendously in the near future. But among the 1.2 billion Indians are millions of poor people who are also striving for a better life. These developments will have consequences for consumption patterns in daily life. Food and nutrition, housing, mobility, communication, and leisure time are only a few areas that will change in terms of both quantity and quality. Physical and economic constraints might become increasingly important in the future. While the European Union in general, and Germany in particular, have adopted appropriate resource policies to maintain their wealth, it is also important for India to participate in the discussion on resource use and to identify its own areas for action. For the European Union, as well as for India, what is on the agenda is not only the availability of natural resources, but also the environmental conditions under which they are used. Under the project “India’s Future Needs for Resources Dimensions, Challenges, and Possible Solutions”, leading Indian and European research institutes came together, with the support of GIZ, to raise awareness among stakeholders in India and Germany. It was decided to first concentrate on the use of raw materials and to shed light on the different areas that will play a crucial role in the development of India, and thus determine the use of natural resources. A sectorwise approach has been adopted, and current situations and possible areas of development have been examined in the three sectors short-listed for the study, i.e. mobility, housing, and electricity generation. Clear visions and specific numbers will help us in understanding the challenges faced by a society like India and hopefully lead to fruitful discussions and effective preparations for appropriate policies and measures. These visions Introduction
1
and numbers will also help in emphasizing the responsibility of political leaders and social representatives of an industrialized country like Germany, which is a partner in this project. They should be aware of the future needs of a society like India, and base their decisions concerning industrialized countries on a just and fair collaboration between different regions of the world. The focus of interest in the debate over natural resources is mostly on raw materials. All countries fear the decreasing availability of materials like fossil fuels, rich metal ore deposits, and high-quality minerals. And all countries will be affected, whether they depend on domestic extraction or on imports. This is the reason why this study starts with an in-depth examination of raw materials. Other natural resources are also mentioned briefly, but they require further investigation in greater detail elsewhere. Water was identified by the participants of the GIZ workshop1 as the natural resource with the highest constraints and with the most awareness of its importance in India. An economic perspective on the management of resources is, therefore, one particular approach, but the environmental aspects must not be neglected. The use of raw materials is always related to the destruction or intensive use of land, thereby having a negative impact on ecosystems and biodiversity. It also affects people living in the vicinity of raw material deposits. Furthermore, the production of goods from raw materials needs energy and potentially emits pollutants, thereby affecting air, water, and soil. The capacity of taking up pollutants of these media is limited. The pollution of an environmental medium could lead to the loss of its service function as a natural resource within its ecosystem. More careful analyses must be carried out to address these concerns in the future. Besides the focus of the three case studies mentioned above, this exploratory project seeks to adopt a broader perspective. It necessarily has to start by paving the ground for a common understanding, along with clear and unambiguous definitions of the key terms and concepts. What are natural resources? What are raw materials? Which criteria are applied to measure their efficient use? These are some of the questions that will be addressed in this study. Further, it is crucial to investigate the evolution and growth of total material use along the development path of India. This demonstrates the dimensions of material demand in the future as one example of the use of natural resources. A breakdown of total material use into different single materials offers some insights into the specific problems of the availability of key materials and economic dependencies related to them. Finally, general key drivers and developments are considered before the three case studies are presented. The general picture, as well as the examination of mobility, housing, and energy generation by wind power, is restricted to a more or less careful analysis of the status quo or current situation; an assessment of possible future developments; a study of alternatives for action; and an analysis of the consequences of material and resource demands. Some specific resourceefficiency strategies have been examined for the case studies, but these are not intended to be exhaustive or complete. Resource-efficiency policies in Asia and Europe are examined briefly. This is followed by a short concluding summary on the main findings and the preliminary recommendations in the final chapter. This study will contribute to the setting of agendas for natural resource policies in India and in other parts of the world, and that it will offer a useful basis for conducting further studies and actions.
1
2
The workshop was conducted on May 23, 2013, in Jacaranda Hall, India Habitat Centre, New Delhi. The event generated a multidisciplinary discussion on different aspects of resource efficiency. The proceedings of the workshop are available at http://www.teriin.org/ files/resource_initiative_proceedings-23May2013.pdf (last accessed: 08/02/2013)
India’s Future Needs for Resources
B. Resources: What are we talking about?
The word “resource” seems to have a clear and straightforward meaning. But a reading of different reports and policy papers makes it obvious that various issues are involved in defining the term. The use of different resources, the inconsistent use of the phrase “raw material”, and an unclear scope of the expression “natural resources” lead to confusion, and thus indicate the need for clear and unambiguous definitions. The following definitions are suggested in an attempt at finding a common ground to aid understanding, to help read the report, and to facilitate subsequent discussions. The word “resource” originates from the Latin word “resurgere”, which means to pour out of something or to protrude. Resource is normally used in an economic context and encompasses many different aspects like human resources, financial resources, natural resources, and time resources. A resource can be defined as follows: A resource can be a material or an immaterial good from which benefit is produced. It is commonly understood as a means of production, a means of finance, soil, raw material, energy, people, and time. In the social sciences, a resource can refer to an ability, a character trait, or a mindset (psychology); or to education, health, and prestige (sociology). Source: http://de.wikipedia.org/wiki/Resource; as of September 2013
Outside the economic context, the word resource is used in various fields and has a certain meaning specific to that discipline. For example, in psychology, resource means capabilities or character attributes, and in sociology, it means education, health, or prestige. The word always connotes an asset or capital that is good for or that can be used for something. In the context of the discussion about natural resources, different definitions exist. A widely accepted definition is found in Thematic Strategy on the Sustainable Use of Natural Resources of the European Union, published in 2005: Natural resources are: • Raw materials such as minerals, biomass, and biological resources • Environmental media such as air, water, and soil • Flow resources such as wind, geothermal, tidal, and solar energy • Space (land area) Whether the resources are used to make products or as sinks that absorb emissions (soil, air, and water), they are crucial to the functioning of the economy and to maintaining our quality of life.
Resources – What are we talking about?
3
This definition offers a broad understanding of the concept of natural resources which entered into policy making in Europe and in the United Nations Programme. It has been further developed and expanded by including the idea of ecosystem services, which are the services provided by nature to human society, e.g. pollination of plants by bees. On this basis, the definition of natural resources has been developed further by the Roadmap for a Resource Efficient Europe. It states the following as an objective for a strategy for sustainable resource development: All resources are sustainably managed, from raw materials to energy, water, air, land and soil. Climate change milestones have been reached, while biodiversity and the ecosystem services it underpins have been protected, valued and substantially restored. Following this understanding, various natural resources can be identified:
It should be noted that this understanding differs considerably from the very narrow definition of resource or natural resource that is used in the context of geology. The United States Geological Survey, for instance, defines a resource as follows: A concentration of naturally occurring solid, liquid or gaseous material in or on the Earth’s crust in such form and amount that economic extraction of a commodity from the concentration is currently or potentially feasible. This narrow definition based on a geological point of view is the reason why the word “resource” often leads to misunderstandings. Starting with the broader definition of natural resources, it is clear that raw material is just a subcategory of natural resources, which can be subdivided again into different types of raw material. The following figure offers a possible way of characterizing raw materials.
4
India’s Future Needs for Resources
A raw material can be defined as: Raw material is a substance or a mixture of substances which have not been subject to any treatment besides its detachment from its source. It is gathered because of its utility value and directly consumed or used in production processes. Suggested by UBA Texte 01/12
Consequently, the word “material” can be understood as any substance or mixture of substances that is used in the economy as a raw material, a semi-finished material, a finished product, or waste. Finally, “resource efficiency” is defined as: Resource efficiency is the relation of a certain benefit or result to the input of required resources.
benefit (product, function) resource efficiency = ---------------------------------------- input of (natural) resources If the same benefit (numerator) is generated by a decreased input of natural resources (denominator), resource efficiency is met. The same accounts vice versa if more benefit is generated by the same input of natural resources. (Glossary of the German Federal Environment Agency, 2011)
Figure 1 depicts the concept of resource efficiency as it is adopted in this study. The selected resource-efficiency options in the case study have been chosen in line with this concept. Figure 1: Concept of resource efficiency as adopted and used in this study
Creating more with less
Resource efficiency Minimizing impact on environment
Transform waste into resources
For further clarification of this term, the following should be considered:
• • •
Resource productivity is synonymous with resource efficiency, but is used more widely at a macroeconomic level. Benefits can be technical, monetary, aesthetic, cultural, etc. For the evaluation of resource efficiency, it is necessary to have a quantifiable benefit.
Resources – What are we talking about?
5
C. General drivers of demand in India
Structural changes in a society also lead to transformations in consumption patterns and lifestyles, which then impact resource consumption patterns. India is witnessing dynamic transformations due to its rapid economic growth, which is characterized by five main interlinked factors. These factors act as drivers of demand and have a strong impact on resource consumption. These drivers of demand are: ‒‒ Growing population ‒‒ Expanding industrial and service-related production ‒‒ Rising (average) income ‒‒ Growing middle class and/or expanding cohort of middle class ‒‒ Increasing urbanization Growing population After China, India has the second largest population in the world, with 1,224 million people (2010). It has the highest population growth rate amongst the BRIC countries. Projections show that until 2050 this growth rate will still be positive in contrast to numerous Western countries with already negative current growth rates. By 2025, India will become the most populated country in the world. Figure 2: Growth of India’s population (actual and projected) compared to China and Europe
Source: UN Population Statistics, 2012
6
India’s Future Needs for Resources
This increase in population would lead to a sharp rise in absolute consumption levels, and hence the need for improving resource efficiency will assume great importance. Due to the high saving potential in populous countries, and the opportunity of changing the development path towards a resource-efficient economy, addressing resource efficiency in India makes perfect sense. Expanding industrial and service-related production Although the agricultural sector is still dominant in terms of employment, the industrial and in particular the service sectors are increasingly contributing to employment and to GDP. In 2000, the agricultural sector still contributed nearly one-fourth of GDP, but its share fell to around 14% in 2011 [UNStat, 2013]. In contrast, the service sector is contributing increasingly to GDP, accounting for 58% in 2011. Some Indian companies in the IT and IT-related service sector, and also in other sectors such as pharmaceuticals, are among the world’s leading companies. These companies are contributing increasingly to rising income and growing employment in the Indian economy. Rising (average) income India has demonstrated faster and more stable growth than most other countries in the Dow Jones list of emerging economies in the period 2006–11 [IMF, 2012]. With an average GDP growth rate of 8.28% in the period from 2004–05 to 2011–2012, India has been considered an emerging economy [Ministry of Finance, 2012]. In 2010, India’s GDP ranked fourth after that of the USA, China, and Japan (World Bank, 2012). Per capita income (at constant 2004–05 prices) increased by a remarkable 81.5% between 1990 and 2005. However, the average per capita income of Rs. 37,851 (at constant 2004–05 prices) was still low in 2011 [Reserve Bank of India, 2011]. Growing middle class Given the past growth rate in India, it can be assumed that this economic growth will continue to lift people out of poverty and that real incomes will continue to rise in the country. Rising incomes worldwide drive aspirational consumer behaviour accompanied by high resource consumption. This holds true in particular for a rising middle class as observed in India. Figure 3: Growth of GDP in India
Source: World Bank, 2012; projection based on national targets.
According to a report by McKinsey [McKinsey Global Institute, 2007], in 1985, 93% of the population’s real annual household income was less than Rs. 90,000 a year, but by 2005, this number had dropped to 54%. If this growth path continues, this number would be 22% in 2025. This increase will be seen especially in the urban areas and amongst the middle class in India, which, both in their own ways, are growing at a rapid rate. The average rise of incomes in India will increase the potential of consumption and further trigger resource use in the country. General drivers of demand in India
7
A study by India’s National Council of Applied Economic Research (NCAER) titled “Who constitutes this middle class in India?” has been at the forefront of attempts aimed at estimating the size of the middle class in India and studying their consumption patterns. According to NCAER’s definition, the middle class comprises two sub-groups: “seekers” with an annual household income between Rs. 200,000 and Rs. 500,000, and “strivers” with an annual household income between Rs. 500,000 and Rs. 1 million at 2001/2002 prices. Most recently, in a NCAER–CMCR publication, Shukla (2010) rescaled this survey using national accounts data and found that the Indian “middle class” had doubled in size over the decade 2001–2010, growing from 5.7% of all Indian households in 2001/02 to 12.8% of all households in 2009/2010. This was equivalent to about 28.4 million households with a total of 153 million people by 2010 [Shukla, 2010, p. 202]. In terms of middle-class consumption expenditure (in 2005 PPP $ billions), India is currently ranked 12th in the world. However, thanks to the country’s current growth path, the Indian middle class will be the third largest consumer in the world by 2020, with a share of 13% of world consumption, and will be the largest consumer by 2030, with a share of 23% of world consumption [Kharas / Gertz, 2010]. By 2050, it will have the largest middle class in the world [Kerschner / Huq, 2011]. Figure 4: Global Share of Middle Class Consumption
Data source: Kharas / Gertz, 2010.
The middle class has the most significant impact on the consumption patterns of a country since it enjoys considerable purchasing power. Typical energy-intensive consumer products and services, such as cars and dwellings, are available for, and affordable by, those with middle-class incomes. In an emerging economy with a large cohort of the middle class, overall consumption patterns will change dramatically and become resource intensive. A society with a majority of poor people is not able to purchase typical consumer products or services because the main concern is the struggle to survive. In such a society, the consumption of resources is very limited, and people tend to be more efficient in their resource use as they value these far more than people in a more affluent society. If resources are more affordable, their valuation might decrease and their wastage might increase, as can be observed in the Western “throwaway” mentality. Increasing urbanization Besides witnessing a trend of rising population, India is also facing increased urbanization, similar to the situation in other emerging economies. Indian cities are already home to roughly 340 million people, and by 2030, there will be an estimated 590 million people living in cities (40% of the estimated population of India). Cities, which accounted for around 58% of India’s GDP in 2008, will account for nearly 70% of GDP by 2030 [McKinsey Global Institute,
8
India’s Future Needs for Resources
2010]. India has eight metropolises with more than 5 million inhabitants: Mumbai, Delhi, Kolkata, Chennai, Bangalore, Ahmedabad, Hyderabad, and Pune (see Figure 4). However, compared to the BRIC countries, India had a relatively low percentage of urban population (31%) in 2010. India’s urban growth rate has remained high since then, and is expected to continue to be so until 2050 [UN Population Statistics, 2012]. The migration trend from rural to urban areas creates huge pressure on infrastructure, housing, and other goods and services, which, in turn, leads to a larger demand for resources in cities. At the same time, cities also have the potential to use resources efficiently since urban density means that there is a high concentration of people, money, and goods. Hence, efficient distribution and reuse mechanisms can be developed and implemented. Figure 5: Selected Indian cities by population
Source: TERI 2013; based on data from the Ministry of Home Affairs, 2011.
General drivers of demand in India
9
D. Current and future dimensions of India’s resource requirements As noted in the introduction, human survival and well-being are based on the use of natural resources. Humans use biotic materials to satisfy basic needs such as food and clothing. Humans also use non-renewable materials for dwellings, communication, and social interaction, as well as for the manufacture of commodities that make life more pleasant. While material consumption in industrialized countries has remained at high levels during the past few decades, the relatively less industrialized countries are also increasingly emerging as large consumers of materials. Global material use increased sharply from around 35 billion tonnes in 1980 to more than 67.8 billion tonnes in 2009 [SERI, 2012]. Out of these 67.8 billion tonnes of renewable and non-renewable materials used globally, India consumed around 7.1% or 4.83 billion tonnes while hosting around 14% of the global population. If India continues the impressive economic development of the past few decades, it will more than triple its resource demand until 2030 – using as much materials as all the OECD countries combined consume at the present time. Material productivity is usually measured as gained income per used tonne of materials [OECD, 2007]. Currently, India is gaining 716 dollars2 per tonne of consumed materials. During the last three decades, India increased its material productivity by nearly 2.9% per annum starting from a very low level (to compare: material productivity increased by an average of 2.3% each year during the past three decades in all Asian countries). If India continues to make improvements in material productivity, it could gain around 1,306 dollars per tonne of consumed materials in 2030. To compare: all OECD countries are currently gaining 1,768 dollars per tonne on an average of consumed material, and many OECD countries have improved their material productivity faster than India has during the past few decades. It is interesting to note that on the adjusted net savings (ANS) indicator (“The Changing Wealth of Nations: Measuring Sustainable Development in the New Millennium” [World Bank, 2012]) India ranks below Germany ($412 billion) with an ANS of $380 billion; China ranks above both; and the USA ranks below all three. ANS are equal to net national savings plus education expenditure and minus energy depletion, mineral depletion, net forest depletion, and carbon dioxide and particulate emissions damage. A caveat is in order here, namely that ANS does not take into account any net exports of natural resource services, so that a country high on the ANS indicator may seem unduly sustainable despite importing substantial amounts of these services. On the ecological footprint indicator, although both India and Germany are ecological debtors, their ecological footprints overshoot their respective bio-capacities. Germany has consistently overshot its bio-capacity much more than India has. Figure 6 tracks the per-person resource demand (ecological footprint) and the bio-capacity in China, India, and Germany since 1961.
2
10
Here and in the following: GDP in dollar in constant terms of 2005 and in purchasing power parity as provided by the World Bank, 2011.
India’s Future Needs for Resources
Figure 6: Ecological footprint and biological capacities of China, India, and Germany from 1961 to 2009 2.5
Global Hectares per capita
2.0
1.5
Ecological Footprint
1.0
Biocapacity 0.5
0.0 1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
A) Ecological footprint and bio-capacity of China
1.0 0.9 0.8
Global Hectares per capita
0.7 0.6
Ecological Footprint
0.5 0.4
Biocapacity
0.3 0.2 0.1 0.0 1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
B) Ecological footprint and bio-capacity of India
Global Hectares per capita
7.0 6.0 5.0 4.0 3.0
Ecological Footprint
2.0
Biocapacity
1.0 0.0 1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
C) Ecological footprint and bio-capacity of Germany Source: http://www.footprintnetwork.org/en/index.php/GFN/page/trends/ (last accessed 09/02/2013).
Hence, even as material demand and material productivity influence and shape the challenges confronting India, and the way it deals with these challenges regarding the use of its resources, the country would be wise not to follow the path taken by developed nations in the past, especially in the context of exploiting its natural resource base. It may make more sense for India to adopt ways to save, reuse, and recycle resources, and thus become resource efficient, right
Current and future dimensions of India’s resource requirements
11
at this historical juncture of its growth story before it starts resembling the Western economies, which possess greater economic wealth but have less sustainable wealth. As we argue for resource efficiency later in this report, the ANS and ecological footprint indicators seem to point towards an alternative future for India where it may be possible to sustain a healthy economic growth rate without compromising its natural resource wealth by incorporating a comprehensive resource-efficiency plan into the economic processes and planning of the country. India is one of the most resourcerich countries in the world [World Bank, 2006, 2012], but also one of the most populous. For three decades, India’s net import of resources has increased [Dittrich et al., 2011, 2012; Giljum et al., 2010; Singh et al., 2012]. India is one of several developing countries “taking off”, competing with the other emerging economies and with high-consuming industrialized countries to gain access to more resources. Generally, all countries increase pressure on the natural environment, ignoring natural limits and being incapable of distributing advantages and burdens internationally in a fair way other than the manner in which the market mechanism currently does. In other words, the sustainable use of natural resources is back on the international development agenda, and India has to prepare itself for the future. India is at a crossroads: should it emulate the traditional development model with its principles of extraction and high levels of resource use at any price, or should it adopt a smarter model with its principles of responsible mining and resource efficiency? Our report argues for the latter course of action, pointing to numerous business opportunities, economic gains, and well-being.
D.1 Rationale and approaches for efficient use of natural resources Internationally, global competition has given rise to strategic concerns due to resource nationalism and vulnerability of supply. Rising and volatile commodity prices hamper the achievement of development goals and stall economic planning. Since 2000, prices have been on an upward trajectory due to soaring demand, briefly interrupted by the global financial crisis.3 Despite increased investments in extraction, corporate mergers, capital flows to mining companies, and a boom in non-conventional fossil energy carriers, the situation after 2013 is likely to remain uncertain. Newly discovered mineral deposits are generally low in concentration and yield. Quite often, they are located in inaccessible regions, where new transport infrastructure will have to be put in place, or where the exploitation of these deposits is in conflict with the use of valuable forests or other ecosystems. Similarly, offshore drilling and mining presents all kinds of challenges. Conflicts over access to raw materials and use of land and water resources are featured in the media almost on a daily basis, along with reports about social unrest triggered by the rising costs of basic goods. For many countries, there seems to be a significant linkage between resource abundance and low scores in the Human Development Index. At the same time, sustainability issues are a matter of growing concern. The media addresses social issues such as the use of child labour in the extraction of raw materials, thereby raising public awareness. One consequence of all these stress factors is extreme price volatility. At the same time, the incentives for making a quick profit in illegal markets are increasingly tempting. An estimated 20% of the world market in coltan4 – metals used in mobile communications – is traded illegally. These challenges, in turn, expose manufacturing industries around the globe to risks and uncertainties. Thus, a new economic rationale is needed, one that enables market participants and civil society to adopt a more efficient use of natural resources, emphasizing the economic, socio-political, and/or the environmental dimensions:
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•
The current transition in several emerging economies from an agrarian to an industrial society involves a two- to fourfold increase in material and energy flows. Currently, most of these countries show relatively low material and energy consumption per capita, despite witnessing rapid economic growth during the past decade. But, at the same time, many of them are already approaching their limits in terms of domestically available resources, and have become net importers of raw materials, especially of strategic resources such as iron, steel, bauxite, copper, and fossil fuels that are required for the creation, operation, and maintenance of infrastructure, and for the supply of an industrialized country. The economic development of these emerging economies and developing countries will rely
3
Especially for metals, minerals, fuels, fish, timber, and biomass, see de Groot et al., 2012.
4
Stands for: columbium (niobium) and tantalum; see data, Bleischwitz et al., 2012.
India’s Future Needs for Resources
increasingly on their capacity to gain further access to these strategic resources, both domestically and on the world market [UNEP, 2011a].
•
During the past few decades, developing countries competing in the world market have expressed concern over the low prices offered for their raw material exports by a few industrialized countries. One response to this issue has seen an increasing number of economically successful emerging economies start to process raw materials into semifinished or finished goods. This has had a significant impact on the global demand for raw material imports used in manufacturing industries, leading to changes in prices and shifts in power relations. As the European Commission’s Raw Materials Initiative [European Commission, 2008] notes, a major concern for many industrialized as well as emerging economies today is ensuring the secure supply of raw materials, dealing with the increasing expense of procuring them, and grappling with the need for reducing potential market-distorting influences.
•
Several studies, e.g. those of the EU Eco-Innovation Observatory [EIO, 2012], other EU studies [Bleischwitz et al., 2011; Bleischwitz, 2012; Bringezu / Bleischwitz, 2009; Kemp, 2011; Meyer, 2011; Oakdene Hollins / Defra, 2011], as well as a recent McKinsey report [McKinsey, 2011], show that companies that succeed in improving their energy and resource use optimization are likely to develop a structural cost advantage; to improve their ability to seize new growth and job opportunities; and to reduce their exposure both to energy, resource, and environmentrelated interruptions to their business and to resource price risk. These tangible benefits are partly available within the country pursuing such strategies along with some key technologies (see Figure 7) and are partly available internationally. Opportunities especially for benefiting from “low-hanging fruits” – that is, measures that are simple to implement and that require either no monetary investments or have payback periods of around one year – are documented and widespread. Empirical analyses of the cost-saving potentials of implementing these measures in fields of action that do not require any investments show annual average company savings of €134,000.5 From a societal perspective, the resource-saving potentials in these 15 fields add up to a global total of $3,58 trillion by 2030 [McKinsey, 2011]. Figure 7: Resource-Saving Opportunities by 2030
Source: Own figure based on McKinsey, 2011
•
Extraction, processing, and each phase in a product’s life cycle or lifespan entail substantial harm to the environment. Worldwide demand for products, and thus for natural resources, is increasing steadily. One reason for this increase is the growth of global population, continued high levels of consumption in the developed world,
5
http://www.environmental-savings.com/index.php (last accessed 09/20/2013). Current and future dimensions of India’s resource requirements
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and rapid increases in the size in emerging economies. Currently, the world economy uses more material resources than have ever been used in the entire course of human history. This imposes an unprecedented level of pressure on the environment, leading most notably to climate change and loss of biodiversity. Estimates of the global “ecological footprint” reveal that at the current level of resource use, we have already overshot the capacities of global ecosystems by 50%. If humans continue with their current patterns of consumption, they will irreversibly damage the planet’s natural environment, thereby jeopardizing its ability to provide these resources and endangering the ecosystem services on which humans are dependent.
•
Furthermore, the consumption of energy, water, and raw materials is interlinked. Extracting and processing raw materials, for example, often involves the use of large volumes of water and of amounts of considerable energy. A recent report by the Organisation for Economic Cooperation and Development [OECD, 2012], for example, notes that the production of one tonne of copper emits seven tonnes of CO2 and uses 70 tonnes of water. Thus, encouraging resource efficiency and eco-innovation may also have synergies with other environmental and social policies, which makes this a win-win situation for the resource-efficiency objective. The European Commission’s Flagship Initiative summarizes these synergies as follows: o “Increasing recycling rates will reduce the pressure on demand for primary raw materials, help to reuse valuable materials which would otherwise be wasted, and reduce energy consumption and greenhouse gas emissions from extraction and processing. o Low-carbon technologies reduce emissions and often bring benefits in terms of air quality, noise and public health. o Improving energy efficiency reduces the need to generate energy in the first place and the need for infrastructures. This, in turn, eases pressure on land resources. o Jobs created in sectors linked to sustainable growth are often more secure, with high potential for exports and economic value creation. o Action on climate change and energy efficiency can increase energy security and reduce vulnerability to oil shocks. o Improving the design of products can both decrease the demand for energy and raw materials and make those products more durable and easier to recycle. It also acts as a stimulus to innovation, creating business opportunities and new jobs.” [European Commission, 2011]
In summary, countries that look at resources in a comprehensive way, and that seek to improve the efficient use of energy, raw materials, and other natural resources, will have more options for further economic development, become more competitive, reduce dependence on imports, and help mitigate other environmental and social problems. A key lesson for all manufacturing processes downstream is to address the business dimension of using materials, energy, and water, and of processing food. Given that resources have a price (even if negative externalities are not properly accounted for) and price expectations are generally upwards, businesses do have incentives to undertake manufacturing at the lowest possible material costs. German manufacturing firms report shares of materials in their gross production value of 40-45%:6 European companies report similar shares [EIO, 2012]. Accordingly, the potential for cutting these costs through process innovation is high. The German programme DEMEA reports average savings per company in the order of some € 200,000, with increases of marginal returns to sales of 2.4%. Similar experiences are found in the UK and in other EU member states. It may be assumed that a majority of manufacturing companies have strong incentives to engage in efforts to save material purchasing costs. They need to make resource efficiency a core element of their strategy and business models. Early barriers are lack of attention, information deficit, absence of financing, and uncertainty about future demand [EIO, 2012, p. 63ff; McKinsey, 2011, p. 118ff]. Many of these early improvements will be on-site at the level of individual companies and at the level of incremental process innovation, rather than address the entire life cycle of products or material flow systems. 6
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In 2011, the cost structure in the manufacturing industry in Germany had a share of material-related costs of 44.6%. Only 16.8% of the costs were related to staff and only 2.1% to energy [Destatis, 2012].
India’s Future Needs for Resources
Given that most business operations are value chain oriented, it is increasingly good management to monitor the flow of materials along value chains and to establish material stewardship [ICMM, 2007] where by-products could be reused and recycling offers tangible benefits. The resource nexus offers potential benefits of reducing operating costs through improved internal management of water, waste, energy, materials, carbon, and hazardous materials in an integrated manner. Indeed, this can and should be combined with efforts to reduce environmental impacts. While these strategies will improve the return on capital, other strategies can improve growth and contribute to better risk management [McKinsey, 2011; World Economic Forum, 2012]: ‒‒ Guide investment decisions at portfolio level based on resource trends and risk analysis ‒‒ Develop new products and services with resource-efficient features able to attract customers ‒‒ Manage risk-of-operation disruptions (be it from scarcities, climate change, regulatory changes, etc.). A life-cycle approach helps to identify more tangible benefits and to prioritize key initiatives such as the resource efficiency of buildings, thereby increasing the yields of large-scale farms, reducing food waste, reducing municipal water leakages, and ensuring higher overall efficiency rates in end-use products such as vehicles. As the World Economic Forum points out, ambitious businesses will seek to transform demand through interactions with the consumer and transform value chains through new business models [World Economic Forum, 2012]. It is worth noting that many emerging economies are on the verge of entering the market for such eco-innovation. Walz [2010] points to the catching-up competencies of countries such as South Korea; Singapore provides favourable conditions and high absorptive capacities for eco-innovation technologies; and countries such as Brazil and Malaysia show a promising specialization for renewable materials and recycling.
D.2 Past and current material requirements in India D.2.1 Methodological and data-related preliminary remarks Making comprehensive assessments of the resource requirements of various countries is a challenging task. Usually, water, land, and material requirements are assessed separately, because of the different units and dimensions involved. In the following paragraphs, the study focuses on material requirements. With regard to materials, the methodological framework of material flows accounting and analysis (MFA) was developed in reaction to the fact that many persistent environmental problems, such as high material and energy consumption and related negative environmental consequences (such as climate change), are determined by the overall scale of industrial metabolism rather than the toxicities of specific substances. Since the early 1990s, when the first material flow accounts at the national level were presented (for example, in Japan, Environment Agency Japan, 1992), MFA has been a rapidly growing field of scientific and policy interest, and major efforts have been made to harmonize methodological approaches developed by different research teams. Today, the MFA methodology is internationally standardized and is improved at regular intervals, and methodological handbooks are available, for example, those from the European Statistical Office [Eurostat, 2001, 2011, 2012] and the OECD [2007]. For MFA, at the national level, two main boundaries for resource flows have been defined. The first is the boundary between the economy and the domestic natural environment from which raw materials are extracted. The second is the frontier to other economies, with imports and exports as accounted flows. In general, four major types of resources are considered in MFA studies: biomass (from agriculture, forestry, fishery, and hunting), fossil energy carriers (coal, oil, gas, peat), minerals (industrial and construction minerals), and metal ores. A further category, “other”, consists of traded products that cannot be allocated to any one of the four types of resources in terms of their weight (tonnes). The compatibility of MFA with data from the System of National Accounts (SNA) enables a direct relation of material flow indicators with economic performance indicators, such as GDP. These interlinkage indicators quantify the ecoefficiency (or resource efficiency) of an economic system by calculating economic output (measured in monetary units) generated per material input (in physical units), for example, GDP/DMC. Resource-efficiency indicators are thus
Current and future dimensions of India’s resource requirements
15
suitable tools for monitoring the processes of de-linking or de-coupling of resource use from economic growth. In the following paragraphs, this methodology will be used (further explanations of MFA are provided in Annex I). Based on this methodology, several assessments of material use in India are available. Two pioneering studies were commissioned by UNIDO [2010, 2011], and these focus on material use in selected Asian countries and in selected emerging economies, respectively. Both studies cover Indian material use and productivity between 1980 and 2005, and were also published as working papers [Dittrich et al., 2011; Giljum et al., 2010]. Singh et al. [2012] use another dataset and present a longer historic perspective on Indian material use starting in 1961 and ending in 2008. It should be noted that the dataset used by Singh et al. [2012] shows slightly higher values on material consumption than the dataset presented by SERI and Dittrich. As mentioned above, methodological and data-related improvements are still common in the assessments of material flows analysis. Thus, in the following paragraphs, the most recent and updated dataset (covering the year 2009) on Indian resource use will mainly be used. The dataset is provided by SERI [SERI, 2012] concerning extractions and by Dittrich [2012] concerning physical trade. The data are taken mainly from international sources such as FAO (biomass), BGS (metals and minerals), IEA (fossil fuels), and UNComtrade (trade).7
D.2.2 Past and current material consumption in India Per capita consumption of materials in India has changed during the past few decades. According to Singh et al. [2012], per capita consumption of materials remained at a low level of less than 3 tonnes per capita a year, and even fell slightly between 1961 and 1980. This is evidence of the fact that population size increased at a faster rate than the rate of absolute material consumption. Thereafter, per capita consumption of materials grew faster than population size. Also, per capita consumption of biomass declined, while consumption of non-renewable materials increased, in particular non-metal minerals (Figure 8). According to Dittrich and SERI [Dittrich et al., 2012], per capita consumption totalled 4.2 tonnes per capita in 2009; according to Singh et al. [2012] it amounted to 4.3 tonnes per capita in 2008. Figure 8: Per capita consumption of materials in India, 1980–2009
Sources: Dittrich et al., 2012; SERI, 2012; World Bank, 2012.
Per capita consumption of materials in India is still low compared to the rest of the world. With an average of 4.2 tonnes per capita, India ranked 151st out of 193 countries in the world in 2009, consuming less than half of the global average of around 10.0 tonnes. In comparison, in the same year, average resource consumption per capita in OECD countries was about 15.7, while it was around 3.5 tonnes in least developed countries [Dittrich, 2012; SERI, 2012; World Bank, 2012]. 7
16
The aggregated data are available at www.materialflows.net, including a detailed description of data sources and applied methods.
India’s Future Needs for Resources
In absolute terms, India’s material consumption amounted to 4.83 billion tonnes in 2009, compared to 1.70 billion tonnes in 1980 (+184%, Figure 9). It should be stressed again that the amount is a conservative estimation; Singh et al. [2012] calculated that India’s material consumption was more than 5 billion tonnes in 2008. The greatest increases can be found in the consumption of non-metal minerals, while the absolute consumption of biomass has stagnated. Thus, the share of renewable resources in absolute material consumption declined from 79% in 1980 to 43% in 2009. Figure 9: Absolute consumption of materials in India, 1980–2009
Sources: Dittrich, 2012; SERI, 2012.
In 2009, India was the third largest consumer of materials after China (with 21.5 billion tonnes) and the USA (with 6.1 billion tonnes). In that year, India accounted for 7.1% of global material consumption; 10.6% of global biomass consumption; 6.6% of global fossil fuel consumption; 5.8% of global non-metal mineral consumption; and 2.3% of global metal consumption, while hosting 17% of global population. India’s material consumption in the past few decades exhibits a pattern typical of countries during the development process from an agrarian or solar energy-based society to an industrial or fossil fuel-based society where usually the consumption of non-renewable materials increases, in particular the consumption of minerals and metals required for building infrastructure and the consumption of fossil fuels for energy supply (e.g. [Dittrich et al., 2012; Krausmann et al., 2009]. India can be considered as a country in the first stages of transformation, with a high share of biomass consumption, reflecting the high share of the rural population working in agriculture (Figure 10). Typically, the demand for minerals and metals is exceptionally high when countries construct large parts of their infrastructure. This is currently happening in China where not only buildings, but also the transportation, communications, and supply infrastructure have been built up in a short period of time. Industrialized countries that already possess massive and advanced infrastructure mostly have high levels of consumption of fossil fuels (depending on their main energy sources), but a medium level of consumption of minerals and metals, required for the maintenance of their built spaces.
Current and future dimensions of India’s resource requirements
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Figure 10: Typical material consumption pattern during a development process and country-specific examples
Sources: Stylized facts, own figure based on Krausmann et al., 2009 and Dittrich et al., 2012; country examples based on Dittrich, 2012 and SERI, 2012.
In India, availability of data on the consumption of key resources like biomass, metals, and non-metals is an important issue. The Mineral Yearbook, published annually by the Indian Bureau of Mines, under the Ministry of Mines, Government of India, contains data on the production and consumption of major metallic and non-metallic resources. However, a detailed data review, as well as interaction with stakeholders, revealed that many of the production and consumption figures are not updated, and hence may not reflect the actual consumption of these resources. Most often, the consumption estimates given in the Mineral Yearbook do not include the inventory adjustments made by the manufacturing companies (i.e. resources actually used for production) and there may be under- or overestimation of resource consumption. Biomass is an important resource and serves as a key input for various industries, and provides formal and informal employment, particularly in rural areas. Yet assessment about biomass consumption has been very poor. The last official estimate that is publicly available is from 2005. According to estimates by the Biomass Resource Atlas of India, the total biomass generated (forest and wasteland) was 666.56 million tonnes while the surplus production was 249 million tonnes. Since then, there has not been any official revision in the estimation of biomass availability, although certain studies have estimated biomass generation in India. Data related to the consumption of metals and non-metals have been compiled from Indiastat. The compilation of data on the consumption of resources covers those resources that had time series data. Metals included bauxite, chromite, copper, iron ore, lead concentrate, manganese ore, zinc, tin, and dolomite. Non-metals included glass/ceramic, graphite, marble, apatite, asbestos, barytes, chalk, dolomite, feldspar, fire-clay, gypsum, kaolin, kyanite, limestone, magnesite, mica, phosphorite, pyrites, rock salt, sillimanite, steatite, sulphur, varmiculite, and calcite. India has a good inventory of data on energy production and consumption. The Ministry of Petroleum and Natural Gas (MOPNG) compiles and annually shares all oil- and gas-related data, while the Ministry of Coal publishes the coal production and consumption figures in its annual publication, Coal Statistics. The Ministry of Statistics and Programme
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India’s Future Needs for Resources
Implementation (MOSPI) compiles all the data pertaining to energy production and consumption, and imports and exports, and presents these data in the form of ‘Energy Statistics’. Figure 12 uses the data related to domestic fossil fuel consumption from ‘Energy Statistics’. It is important to note here that the estimates are for domestic consumption and include resources embedded in imported items. Figure 11: Consumption of various resources (million tonnes) between 2006 and 2011
Source: Compilation by TERI, 2013
Analysis of secondary data collected from various sources reveals that India’s consumption of resources has increased significantly. Consumption of fossil fuels (including coal, natural gas, and petroleum products) increased by a CAGR of 4.2% between 2000 and 2011 [TERI, 2013].Consumption of metals increased at a CAGR of 10% between 2006 and 2011, while non-metals increased by a CAGR of more than 6%. The combined resource consumption in 2011 was 1.7 billion tonnes (including biomass), while the consumption in 2006 was 1.5 billion tonnes [TERI, 2013]. The annual growth rate in consumption was almost 3% during the period.
D.3 Future material requirements The structural changes faced by India as an emerging economy – rising population, rising industrial and service-related production, rising middle class, rising income, rising urbanization (see chapter C) – will change the resource demand significantly in the country. The need for food, water, energy, minerals, and metals will clearly increase in the coming decades. To estimate India’s future resource demand in detail, the overall patterns of resource use during the development process, as explained above, are useful but not sufficient. In addition, one has to make several further assumptions about the past dynamics of India’s material use and also take into account the dynamics and consumption levels in other countries as references. It should be noted that the study of the interlinkages between material use and the economic and social spheres of societies is a young and still evolving field of scientific enquiry, with several openended questions. Many of the differences in the performances of countries regarding material use have been explained only partly but not yet sufficiently (e.g. [Steger / Bleischwitz, 2011], [Van de Voet et al., 2005]). Nevertheless, some important and general linkages influencing the dynamics of material use are already known (e.g. [Dittrich et al., 2012; Krausmann et al., 2009; Steger / Bleischwitz, 2011]): ‒‒ The dynamic of biomass consumption is predominantly linked to the growth of population size. Further influencing factors are changes in diet, increasing use of paper and paperboard, and changes in energy carriers, both from fuel wood to fossil fuels, and from fossil fuels to renewable energy carriers.
Current and future dimensions of India’s resource requirements
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‒‒ The dynamic of mineral consumption is predominantly linked to per capita income until a specific level of income (around US$11,000).8 Hence, consumption increases at a slower pace than per capita income. Mineral consumption is dominated by the consumption of construction minerals; thus, with rising income, the demand for improved and larger housing units, and for the accompanying infrastructure, increases. ‒‒ The dynamic of fossil fuel consumption is predominantly linked to economic growth, reflecting the demands of both the productive sector and the private sector. Other influencing factors include changes in the structure of energy sources and changes in taxes and subsidies. ‒‒ The dynamic of metal consumption also depends on rising per capita income, which is in turn linked to rising demand for construction, metal-based goods, and increases in demands from the industrial sector. Furthermore, the dynamic of metal consumption has to consider the opening and depletion rates of sources in metal-extracting countries. In order to assess the spread and dimension of the future demand of India’s material requirements, one can distinguish three different scenarios. A pessimistic scenario envisages a slowdown in economic growth; the ineffectiveness of poverty- reduction strategies, resulting in high population growth; and a depleting resource base because of the absence of technological improvements in production techniques. In contrast, an optimistic scenario assumes a very rapid process of catching up, with economic production of two-digit growth ra‑tes, as observed in China; and a rapid reduction of poverty, resulting in low population growth. In between the two extremes is a third scenario, which uses projections of economic development made by the Government of India, linked to some improvements in poverty reduction. In order to assess the nature and scope of the required materials, no resource constrains will be assumed in the optimistic and medium scenarios. Table 1 lists the main assumptions of the three scenarios. Table 1: Main assumptions of the three scenarios Slowdown of development process
Continuing current dynamic
Fast catching up
Population size
High population growth [UN Population Statistics, 2012]
Medium population [UN Population Statistics, 2012]
Low population growth [UN Population Statistics, 2012]
Resource base
Stagnation and/or depletion of sources, no new sources and technologies are found/ developed
New sources and technologies are found and developed in the next few decades according to demand
New sources and technologies are found and developed in the next few decades according to demand
Economic production and consumption
Low growth of production, in particular in industrial and service sectors, resulting in average GDP growth rates of 5 % p.a. in analysed period. Further slight decline in food consumption per capita
Medium GDP growth rate of 8% p.a. as projected by Indian government until 2030; thereafter slow down to an average of 5% as projected by TERI9
High GDP growth rate of 12% p.a. as observed in other emerging economies (in particular China) during the following 10 years; thereafter, slow down to 8% p.a.
(biomass consumption decrease from 1.8 in 2009 to 1.6 in 2030, thereafter stagnating)
Stagnation in food and biomass consumption Medium increase in food and biomass consumption (biomass consumption increases from 1.8 in 2009 to 2.0 in 2030 and 2.1 in 2050)
8 Cement use linked to the further use of sand and gravel is the main factor in mineral consumption; Allwood and Cullen [2012] observed a threshold of around $11,000 in a cross-country study. 9 TERI uses these GDP assumptions in most of its modelling exercises, and the same is also being used by the Planning Commission of India for its own analyses. Based on this modelling assumption, TERI’s estimates of future consumption of energy will be published in a forthcoming publication on the ‘energy security outlook’ of India.
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India’s Future Needs for Resources
The three scenarios result in different dimensions of future material requirements. It should be stressed that the scenarios are aimed at providing a sense of the dimensions of the required materials, not exact values. While the pessimistic scenario results “only” in a doubling of material requirements until 2030, the optimistic scenario leads to a quadrupling of material needs (Figure 12). The medium scenario lies in between, with a tripling of the material requirements compared to 2009, up to around 14.2 billion tonnes until 2030. Forecasting the scenarios until 2050, it is predicted that India’s requirements of materials will be between around 17 billion tonnes at a minimum, and around 47 billion tonnes at a maximum. Figure 12: India’s past material demand and future projections until 2050
Source: Projections based on data from Dittrich, 2012; SERI, 2012; World Bank, 2012; UN Population Statistics, 2012.
Following the medium scenario, it is estimated that India would require around 2.7 billion tonnes of biomass, 6.5 billion tonnes of minerals, 4.2 billion tonnes of fossil fuels, and 0.8 billion tonnes of metals in 2030; per capita consumption would reach around 9.6 tonnes in that year, which is nearly the current global average. Figure 13: Future material consumption by material categories in scenario continuing current dynamic
Source: Projections based on data from Dittrich, 2012; SERI, 2012; World Bank, 2012; UN Population Statistics, 2012.
Current and future dimensions of India’s resource requirements
21
Based on the accumulated analyses of the material requirements until 2030, it is estimated that India would need 188 billion tonnes of materials (to compare: India extracted between 1990 and 2009 66 billion tonnes); 51 billion tonnes of biomass (1990–2009: 37 billion tonnes); 81.6 billion tonnes of non-metal minerals (18 billion tonnes); 45 billion tonnes of fossil fuels (8 billion tonnes); and 10.5 billion tonnes of metals (2.6 billion tonnes) between 2010 and 2030. Global scenarios predict that global material consumption would more than double until 2050 (up to around 160 billion tonnes) if all countries and all humans in the world were to catch up to the lifestyle of Western countries during the first half of this century, and if no further improvements in resource efficiency are made at all [Dittrich et al., 2012; UNEP, 2011b]. Following this scenario, India, hosting 17% of the global population in 2050 according to UN projections, would account for 17% of global consumption, which would equal around 27 billion tonnes. Figure 14: Global resource use by world regions in the past three decades and future prospects
Based on the assumption that all regions will catch up to the average OECD level of 2008 by 2040, legend for both figures. Sources: Dittrich, 2012; SERI, 2012; UN Population Statistics, 2012.
D.3.1 Where will the materials come from? Like most countries, India meets most of its demand for resources domestically. Currently, around 97% of all materials consumed are extracted within India, while only 3% are net imports. Thus, India is, on the whole, self-sufficient (but not with regard to all materials; see below). The net imports in physical terms equalled a net trade value of US$161 billion in 2011 [UNComtrade, 2012]. However, net imports increased substantially in the past few decades, at a faster rate than the rate of domestic extraction. In 1980, India imported less than 0.2% of its material consumption requirements. Extraction per area10 in India, which could be used as a rough estimation of environmental pressure, is already the highest in the world, with 1,579 tonnes per sq km land area compared to the global average of 454 tonnes per sq km (Data based on SERI, 2012 [extraction] and CIA, 2012 [country area]). In the light of increased material consumption in India, and also globally, a key question arises: from where should these materials be sourced? Materials come either from domestic resources (option A), or can be imported as raw materials or as finished goods (option B). Both sources have advantages as well as limitations, as described in the following paragraphs.
10 In contrast to productivity per unit area, which usually quantifies the used production of specific agricultural goods, extraction per unit area includes all extracted materials (all biomass, including feed and forest, all minerals, and all fossil fuels) and thus quantifies the overall average pressure on the domestic environment, including not only agricultural land but also forests, watersheds, as well as industrial and settlement areas. It should be noted that the indicator does not specify the particular pressure on single ecosystems or regions.
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India’s Future Needs for Resources
Option A: Increased exploitation of domestic sources Here are some facts with regard to option A: Increased exploitation of domestic sources: ‒‒ Due to insufficient exploration, it is not known if India could satisfy its future demand domestically (see also chapter E on key materials). India has a land mass of around 1.8 million sq. km. However, only 3% of this land mass has been mapped geo-physically and 4% has been mapped geo-chemically.11 ‒‒ The technical constraints include lack of effective technologies for underground mining and for the extraction of by-products. As a result, huge amounts of resources remain unexploited. Figure 15 shows differences between resources versus extractable reserves versus effective extraction of selected industrial minerals. Figure 15: Resources, reserves, and production of selected industrial minerals
Source: Indian Bureau of Mines, 2012.
Many of India’s mineral reserves lie under dense forests and some are located in the watersheds of its rivers, which are also inhabited by indigenous communities. Mining activity, over the years, has led to large-scale destruction of forests, to displacement of millions, and to loss of livelihood for many. Owing to deteriorating socioenvironmental conditions, opposition of tribals and of other local communities against mining has increased in the past few years. For instance, beach sand mining in the state of Andhra Pradesh has led to opposition from various groups of fishermen and from other communities, as the mining has a detrimental impact on the sea, which is their main source of livelihood. The considerable overlap between forest cover and mineral resources is seen in Figure 16, which plots the two together. Further, increasing mining in forest areas would conflict with India’s National Action Plan on Climate Change, in particular with “Green India”, which focuses on the preservation and expansion of forests in order to use them as CO2-sinks.
11 Assuming reserves and production remain constant at 2011 levels, iron ore would last for approximately 29 years and bauxite for approximately 46 years. http://mines.nic.in/writereaddata/filelinks/12277536_strategic_plan_final%20draft%20v%208.pdf (last access: 09/20/2013) Current and future dimensions of India’s resource requirements
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Figure 16: Forest areas versus mineral resources
Source: CSE, 2007.
‒‒ As seen in Figure 16, the locations of minerals resources in India overlap largely with forest areas. Mining thus leads to huge loss of forest cover, destruction of biodiversity, and damage to the natural ecosystem. Around 60% of coal resources, for instance, are located in forests [Ministry of Coal, 2005].12 Similarly, 61% of current chromite mining leases are in forest areas. With the rise in the demand for materials, the need for mining in forest areas will further increase, leading to far greater destruction of forests, biodiversity, and ecosystems. The Ministry of Coal [2005] has estimated that the requirement of forest land for coal mining will increase from 22,000 hectares (i.e. 15% of the current total land requirement) to 73,000 hectares (i.e. 25% of the projected total land requirement) by 2025. ‒‒ Mining involves activities like drilling, blasting, excavation, construction of haul roads, movement of heavy earth moving machinery (HEMM), etc., which results in dust emissions, fugitive emissions of particulate matter and gases such as sulfur dioxide (SOx), nitrogen oxide (NOx), methane, carbon dioxide, carbon monoxide, etc. The release of greenhouse gas (GHGs) emissions compounds the problem of climate change. According to estimates, the minerals industry contributes to around 32% of total GHG emissions of India [Majumdar, 2009]. In 2007, CO2 emissions from the minerals industry were estimated at 131 million tonnes. The metals sector contributed 12 Ministry of Coal (2005), “Coal Vision 2025”, 70 pp.
24
India’s Future Needs for Resources
about 122.7 million tonnes of CO2 emissions (ibid.). In particular, the iron and steel industry, cement plants, manufacture of sulfuric acid, and smelting of copper, zinc, lead ore, etc. are significant contributors of CO2 and also SOx [Garg et al., n.d.]. ‒‒ Mining also leads to significant degradation of land, which is perhaps the most serious environmental externality resulting from the operations. The problem is compounded because of the emphasis on open-cast mining in India, which causes much greater land degradation than underground mining. In India, large tracts of land are left degraded as a result of activities like excavation, stacking of waste dumps, discharge from workshops, and construction of tailing ponds. In Jharia, in Jharkhand state, for example, a total of 75.77 sq. km of land has been affected due to fire (17.32 sq. km), subsidence (39.47 sq. km), excavation (12.68 sq. km), and dumps (6.30 sq. km) [Singh et al., 2007]. The area of land affected due to waste resulting from the production of minerals such as coal, limestone, bauxite, and iron ore is given in Table 2. Table 2: Mineral production, waste generation, and land affected in 2005–06 Mineral
Production (million tonnes)
Overburden/waste (million tonnes)
Estimated land affected (ha.)
Norms used (land in ha/1 million tonnes of ore)
Coal
407
1493
10175
25
Limestone
170.38
178.3
1704
10
Bauxite
12.34
7.5
123
10
Iron ore
154.4
143.9
1544
10 Source: Sahu, 2011
‒‒ Mining activities also lead to stress on water resources, whose availability and supply are limited in India. They not only use a lot of water, but also affect the hydrological regime. The major hydrological impact of a large and deep open-cast mine is on the groundwater regime of the region. Many mining regions in the country confront the problem of overexploitation of groundwater resources, resulting in the lowering of the water table. The release of mining waste into local water bodies leads to water pollution, which effects local communities. The Damodar River in Jharkhand and West Bengal, for instance, has been severely polluted due to coal-mining activities. Similarly, mining in the mineral-rich Jaintia Hills district of Meghalaya has created an acute crisis of drinking water as the major rivers in the region have been contaminated and declared unfit for human use.
Option B: Increased imports As seen above, the increase in domestic extraction raises serious questions about whether, and to what extent, it is possible, feasible, and advisable to continue along this path, that is, increased domestic extraction. In the following paragraphs, the strategic option B, that is, increased imports, will be analysed in terms of the challenges and risks it presents: ‒‒ Although the extent of global reserves is not fully known, scientists estimate that several resources have already reached the highest level of their extraction or will peak in the next few decades. They predict that future extraction would be limited or would be uneconomical due to, for example, deteriorating ore grades and increasing efforts required to extract the resources in the face of increasing energy and water prices. Examples are oil and copper (see also chapter E on key materials). ‒‒ Many emerging economies are pursuing strategies for promoting their downstream industries and for preserving their domestic reserves for future use. This is apparent in the proliferation of government measures that distort international trade, especially in raw materials. These include quantitative export restrictions (quotas), export taxes, reduction or cancellation of VAT rebates, mandatory minimum export prices, and stringent export licensing requirements.13 Materials such as gallium, antimony, cobalt, copper, chromium, germanium, indium, manganese, 13 As per the notification made to the WTO (by seven countries), out of the total export-restriction measures adopted for mining products, 94 were automatic licensing, 1,001 non-automatic licensing, 746 quotas, and 60 prohibitions. Export restrictions on natural resource products represented a large share of all notified restrictions, and all the restrictions fell fairly under GATT (World Trade Report, Trade in Natural Resources). Current and future dimensions of India’s resource requirements
25
molybdenum, nickel, platinum, palladium, rare earths, tungsten, titanium, and tantalum are all subject to tradedistorting measures. ‒‒ Even if resources were available from abroad, the question of affordability is an important factor. Scientists assume that resource prices on the world markets will increase further. India as a net-importing country in physical terms has a negative monetary trade balance. In the past few years, India’s monetary trade deficit has increased. In 2009, for example, India’s trading deficit amounted to more than US$ 89 billion [UNComtrade, 2012]. If global resource prices continue to increase, and given the ongoing weakness of India’s currency, India’s imports will become even more expensive, widening the existing trading deficit even further. ‒‒ As explained with regard to an increase in domestic socio-environmental pressure, increasing imports implies shifting the environmental burden to a place abroad. At best, tribals and valuable ecosystems are not affected, or are affected to a small extent. At worst, tribals without rights are affected and ecosystems without any protection are destroyed. ‒‒ While India is, on the whole, still self-sufficient in renewable materials, it is already import dependent in nonrenewable materials, in particular with regard to petroleum and specific minerals and metals. For example, India imports 70% of its petroleum and 95% of its copper. With regard to several minerals, India is completely dependent on imports (Figure 18). Figure 17: Import dependencies in the case of selected raw materials
Sources: Dittrich, 2012 and TERI, 2013, based on values from Indian Bureau of Mines, 2012.
However, high import dependency exposes the country to geopolitical and geo-economic risks stemming from changing dynamics in the international minerals market, in particular if ‒‒ the reserves and production areas are concentrated in a small number of politically unstable countries. For instance, only two or three nations account for over 70% of world production of silicon, rhenium, chromium, indium, molybdenum, lithium, tantalum, and tungsten. The concentration of production in the hands of a small number
26
India’s Future Needs for Resources
of producing nations may increase the potential of supply disruption due to local disturbances in the producing countries, politically inspired embargoes, or cartel actions that raise prices by limiting supplies.14 ‒‒ r esource-rich nations use their resource base as a tool to attain political objectives. This is evident from the recent incident wherein the Chinese banned exports of rare earths to Japan in retaliation for the detainment of four Chinese fishermen whose boat had collided with Japanese patrol boats. ‒‒ I ncreased concentration of resources at the level of producing companies, as observed, for example, in the case of various metals. The decreasing number of competitors, coupled with the growing size of the remaining firms in the industry, makes it more likely for potential market power to exist. Market power may allow a powerful firm or a group of firms to raise prices opportunistically to take advantage of a weak buyer. Thus, supply may be prone to pressure from the opportunistic behaviour of companies. ‒‒ M any mineral-rich nations are facing violent conflicts because of competition to control mineral resources, inequitable allocation of resource revenue, and social and environmental externalities resulting from mining activities. Indeed, mining-related conflicts have become a permanent feature of the political landscape in many resource-rich countries such as Indonesia, the Democratic Republic of Congo, and Peru, where encounters between mining companies and local communities are increasingly characterized by public protest, violent conflict, and the notable absence of state intervention.
Option C: Increased material efficiency As we have seen, both options A and B have their limitations and risks. As in the case of India, several other countries and regions are re-orientating and analysing their options. One of the most promising options, improved resource efficiency, is being promoted in several countries (see also chapter H). However, a major challenge in India is determining how to reduce poverty and improve the quality of life in a way that requires as few resources as possible. Using resources in a more efficient manner would be a major part of such a strategy. Some facts about India’s resource productivity are given below. In 2009, India gained 716 dollars (in purchasing power parity and in constant 2005 terms) per tonne of used material. The global average was much higher at 953 dollars in the same year [Dittrich, 2012; SERI, 2012; World Bank, 2012]. Resource productivity at a macroeconomic level depends on various factors. An economy with large resource-intensive sectors such as mining, construction, and agriculture has usually lower resource productivity values than an economy with large service and research sectors, which are, by and large, less resource-intensive. Furthermore, the mix of energy sources largely influences resource productivity; coal as a main energy source is less resource efficient than, for example, gas or water. Thus, rather than comparing the absolute levels of resource productivities of various countries, the improvements and productivities of sectors should be the focus. Global improvements in resource productivity, defined as the average economic value gained per used tonne of material in an economy, were around 27% between 1980 and 2009. Against this background, India has shown a remarkable growth in resource productivity, with more than three times the global average (+98%; data based on Dittrich, 2013 [trade]; SERI, 2013 [extraction]; and World Bank, 2012 [GDP]). The highest increases can be observed after India began its liberalization and economic reforms in 1991. However, India’s improvements are lower than those of China and Germany, 118% and 139%, respectively, during the same period. It is interesting to note that resource productivity in Germany and China shows more fluctuations during the same period; in Germany, resource productivity dropped after the reunification; and in China, it dropped after the 14 The attempts of producing countries to create mineral cartels [e.g. Intergovernmental Council of Copper Exporting Countries (CIPEC)] in the 1970s met with little success. However, this does not mean that cartels will never succeed. Two of the conditions for the success of cartel control of production and prices (at least in the short run) do exist for quite a few non-fuel minerals. These conditions are a limited number of suppliers and inelastic demand, as indicated by their essentiality for certain industries, with, at least for the present, no very good substitutes. Current and future dimensions of India’s resource requirements
27
country’s entry into the WTO. In both cases, one factor that influenced the decreases was the massive enlargement of the resource-intensive construction sector. Figure 18: Improvements in resource productivity* in India, China, and Germany, as well as the global average between 1980 and 2008
Sources: Calculation based on Dittrich, 2012; SERI, 2011; and World Bank, 2011. * measured as GDP (ppp, const. 2005) per DMC.
As explained above, national assessments of material productivity have to be analysed further in order to understand the dynamics of this phenomenon. The next step is usually an analysis of material productivity by sectors. Within the scope of this study, this was done for India for the years 1997 and 2007 based on a multi-regional input output (MIRO) methodology, as explained in the following paragraphs (see also Annex II). For analyses of environmental issues in a global context and for calculations of comprehensive environmental and resource indicators, input–output models are being applied increasingly by researchers, statistical offices, and international organisations [Giljum et al., 2013; Wiedmann et al., 2011; Wiedmann, 2009]. Input–output models are comprehensive models that integrate economic data for an entire economic system (one country or several countries). They are also flexible tools that allow the integration of environmental data (either in physical or monetary units) as production inputs equal to, for example, labour or capital. One of the most important applications of input–output analysis is the calculation of the total input requirements for a unit of final demand. By doing so, one can assess not only the direct requirements for the production process of the analysed sector, but also all indirect requirements resulting from intermediate product deliveries from other sectors. Thus, the total (direct and indirect) input necessary to satisfy final demand (e.g. private consumption or exports) can be determined [Leontief, 1936, 1986]. If an input–output model includes data on natural resource use (e.g. material inputs, water use, land use) or GHG emissions, the total (direct and indirect) requirements of natural resources or the total emissions to satisfy domestic final demand, such as private or government consumption, can be determined. These results can be disaggregated to economic sectors or products/ product groups, following the level of disaggregation in the economic core model. The results of the calculations show that in India the “agriculture and forestry” sector has remained the sector with the highest direct and indirect material input due to India’s large agricultural production. However, the construction sector and the sector group “wood/metal/chemical products” – hence the main manufacturing sectors – have been catching
28
India’s Future Needs for Resources
up significantly in the same period. Both sectors are not only the most dynamic ones in terms of physical growth, but are also the second and third largest in terms of material input. Figure 19: Material input in India by sectors, 2007
Source: SERI, 2012
Material productivity improved in several sectors in India during the past few years while it stagnated in others. While the value added per unit of used material remained stable in the agricultural and forestry sectors, it improved in particular in the service and business sectors, followed by the mining and quarrying sector. Figure 20: Material productivity in India by sectors, 1997 and 2007
Source: SERI, 2012.
Comparing India’s productivity with the productivities in other countries sheds light on the potentials for improvements given the existing or current technologies. For instance, the construction sector in Germany is twice as resource efficient as the construction sector in India. Although the scope for making a direct comparison is limited Current and future dimensions of India’s resource requirements
29
(due to the different structures of the sectors and the different kinds of construction methods followed, among various reasons), the difference can be taken as a rough indication that if India were to construct its infrastructure and houses in a resource-efficient manner similar to the way that Germany does, it could save half the amount of materials used in the sector, 900 million tonnes in 2007, more than 5 billion tonnes in 2050, and more than 125 billion tonnes between 2013 and 2050. Following this rough estimation, using half of the amount of construction materials, including cement, could save – again based on a rough estimation – half of the amount of emitted CO2 and half of the amount of extraction material and imports of construction minerals, etc. Of course, the rough estimations should be analysed in more detail to provide a deeper appraisal of the savings (see chapter G). A rough comparison of the manufacturing sectors in India and Germany in terms of their input costs for material and energy and sectoral economic outputs15 suggests that Indian manufacturing companies have remarkable potentials for achieving resource efficiency. In Germany, the manufacturing sub-sectors together have a material and energy cost share of 45% [Destatis, 2012]. In India, the material and energy cost share for the same sub-sectors is 71% [Government of India, 2012]. Figure 20 provides further sector-related details. Regarding a sectoral output of Rs. 35,597 billion (2,058 billion in 2009 $), Indian firms could realize huge monetary savings and decreased material costs if they increased their resource-efficiency capabilities and lowered their use of materials. Taking the average 45% material cost share of German manufacturing companies as a very rough benchmark, Indian companies that produce more resource-efficiently could have the potential to save around Rs. 8,888 billion (514 billion in 2009 $) material costs, which would correspond to around one-third of all costs for materials and energy in India’s manufacturing, and to onequarter of total manufacturing output. Figure 21: Resource-efficiency potentials in India’s manufacturing sub-sectors
Source: Own calculation based on Destatis, 2012; Government of India, 2012a.
Indeed, such benchmarks need further analysis. They will also have to reflect the structures of industry, their value chains, price distortions resulting from subsidies, etc. German manufacturing, however, does not operate at its resource15 The costs of material and energy are taken here as a proxy for de facto resource use. Since this is a monetary indicator reflecting market prices, one should complement the accounting for physical values, including the hidden flows and their environmental pressures (with indicators such as Total Material Requirement [TMR]), see e.g. Kundu / v. Hauff, 2008. Sectoral resource use data in a physical unit of measurement for Indian manufacturing are not yet available.
30
India’s Future Needs for Resources
efficiency frontier either. The potentials of resource efficiency have by no means been fully exploited as yet. Thus, even incremental improvements could lead to quick material and cost savings for India’s companies16 [EIO, 2012]. These incremental material-efficiency measures could comprise changed production process parameters (e.g. temperature, proportioning, shuffling), the optimization of production processes (e.g. batch sizes, set- up times), new production elements or technologies (e.g. cartridges, filters, application technology), alternative production methods (e.g. for coating, grease removing, segregation), as well as the qualification and training of employees (e.g. team-building measures, definition of responsibilities, offering of incentives), etc. [Fischer / O’Brien, 2012]. Assuming that companies from the Indian and German manufacturing sectors are on a comparative level in terms of deploying relevant technologies,17 an extrapolation of material savings that are derived from a dataset from the German Material Efficiency Agency (DEMEA) [EIO, 2012] could result in material cost savings for Indian companies from the seven selected manufacturing sectors amounting to Rs. 60,855 million (3.518 million in 2009 $). Most of these savings in Germany have a payback period of less than one year. Table 3: Extrapolation of additional incremental resource savings for selected sub-sectors in India Sector NACE
10
11
22
25
28
31
32
Resource-saving potential
Food products
Beverages
Rubber and plastic products
Fabricated metal products
Machinery and equipment
Furniture
Other manufacturing
in % from total sector output
0.44
0.18
1.01
0.62
0.88
1.99
0.36
in Rs. million
18,099
593
12,666
6,708
15,010
1,835
5,944
60,855
in current 2009 international $, million
1,046
34
732
388
868
106
344
3,518
Sum
In a survey of the managers of top manufacturing companies in India [Bhattacharya et al., 2012; Confederation of Indian Industry / The Boston Consulting Group, 2012], the question regarding the future focus of governmental and industrial action in order to boost the manufacturing sector had no reference to resource efficiency. However, improving the business environment in order to enhance resource efficiency, and to support the better use of resources, has the potential to make a key contribution to green growth [OECD, 2012] and thus to support the transformation of the Indian manufacturing sector into a “resource champion of the East”. Hence, it should be of interest to policy makers and business people.
16 On an average, German manufacturing companies that introduce incremental material-efficiency measures can achieve material cost savings of around €196,000 (per company and year) with a one-off investment of €129,000 (per company) [EIO, 2012]. 17 This assumption should be supported by more in-depth analysis at the sectoral level comparing the amount of material input that is needed to produce a certain output, measured by both the total material requirements (or comparable indicators) and the share of material costs of the total sector output. Current and future dimensions of India’s resource requirements
31
Box 1: Remanufacturing in India Remanufacturing is “the process of rebuilding a product, during which the product is cleaned, inspected and disassembled; defective components are replaced; and the product is reassembled, tested and inspected again to ensure [that] it meets or exceeds newly manufactured product standards” [Sundin / Bras, 2005, p. 917]. Thus, remanufacturing is part of the traditional manufacturing business as the Original Equipment Manufacturer (OEM) in particular is able to provide the necessary technology and competence in order to sell (fully and partly) remanufactured versions of its own products. India is one of the largest emerging medical equipment markets in the world, with a CAGR of 14%, and is expected to exceed a market value of US$ 4 billion by 2015. The demand for refurbished medical equipment is increasing in India, particularly in rural areas where there is a considerable deficit of affordable healthcare facilities. As healthcare providers seek ways of offering better services at lower cost, refurbished equipment offers an alternative because it comes with a warranty and clinical applications support system, but costs 30–40% less. In order to tap the opportunity, GE Healthcare has come up with a unit in Bangalore that refurbishes used medical equipment. Other companies like Siemens also refurbish entry-level medical equipment in India. The Ministry of Heavy Industry, Government of India, under the auspices of the National Automotive Testing and R&D Infrastructure Project (NATRiP) at the Global Automotive Research Centre (GARC) at Oragdum, Chennai, has recently established a scientific dismantling demonstration centre for automobiles. The centre has been set up with the active cooperation of the Society of Indian Automobile Manufacturers (SIAM), which helped to draw up the specifications for the layout and the equipment for such activities. The Indian automobile industry has shown significant interest in this venture, and has come forward and donated many used vehicles, including 100 two-wheelers and 25 used cars and old cars, to help kick start the setup. The centre also aims, in the future, to develop recycling processes that would employ manual labour to the maximum extent possible (against the conventional automated and/or mechanized processes used in the West), especially in dealing with India’s large numbers of two-wheelers. The centre, in the long run, will also train personnel and help upgrade current units in the unorganized sector dealing with such old cars and used cars. Certain auto components can also be tested and certified and sold through appropriate channels for future reuse.
32
India’s Future Needs for Resources
E. Key raw materials within the sectors
Minerals and metals are considered important if their unavailability, either in terms of physical exhaustion or higher prices (the latter being more probable),18 affects the economic stability and technological competitiveness of a country. Thus, security of metals has two dimensions: economic importance and supply risks (see Figure 22). Figure 22: Scheme for evaluation of critical metals
Source: TERI 2013.
The economic importance of a metal or material is determined on the basis of its application in key industrial and strategic sectors, and the extent of its substitutability by other metals or materials. Since the study focuses on three strategic sectors – automotive, construction, and renewable energy – the choice of materials selected for supply risk analysis is limited to the ones used in these sectors. For understanding the material supply security of these sectors, case studies of five raw materials have been included here. These are chromite and molybdenum ore used in the 18 There will never be any physical exhaustion of minerals. As Tilton and Lagos (2007) note, “Long before the last barrel of oil or the last tonne of copper are extracted from the earth’s crust, the cost of production would become prohibitive, causing demand to decline to zero.” Also, many mineral commodities are not destroyed even though they are extracted and used. Activities like recycling limit the ultimate scarcity of mineral resources. Key raw materials within the sectors
33
automotive sector, limestone used in the construction sector, and copper and cobalt ores used in the renewable energy sector. These short-listed materials do not constitute an exhaustive list of materials that are important for these sectors. Other materials could equally be evaluated and determined to be important. The idea here is to study materials that could be illustrative of the different issues and challenges that may hamper availability of these materials to the sectors. While studying the potential restrictions on the sustainable and affordable supply of these materials to the sectors, five broad factors or constraints have been considered – geological, techno-economic, socio-environmental, geopolitical, and geo-economic. Policy constraints and governance deficits inhibit sustainable development and pose security threats for almost all minerals. However, these factors or constraints are not discussed separately for each of the five minerals. Only material-specific policy constraints are examined in detail. The key dynamics, issues, and challenges associated with the five short-listed materials are discussed in the following sections.
E.1 Chromite Chromite is used in different industries, i.e. metallurgical, refractory, and chemical. Almost all chromite is used in metallurgical applications, i.e. in production of ferro-chrome, which is used in the production of stainless steel. Steel, in turn, finds wide application in the automotive sector.
E.1.1 Trends in production, consumption, and trade Details about the domestic production and consumption, and the imports and exports, of chromite for the period 1998–2009 are given in Figure 23 and Figure 24 respectively. Until now, India has been self-sufficient in meeting domestic demand, with the balance of production being exported. Exports have increased over the years owing to the doubling of international prices. Most of India’s exports are to China. In 2010, for instance, China accounted for an 87% share in the total exports from India, followed by Japan, with a share of 13% [Indian Bureau of Mines, 2012]. Figure 23: Production and consumption of chromite (1998–2009)
Domestic consumption = Production + imports - exports Data source: Ministry of Mines, Government of India.
34
India’s Future Needs for Resources
Figure 24: Imports and exports of chromite (1998–2009)
Data source: Ministry of Mines, Government of India.
E.1.2 Supply security concerns for chromite 1. Rising depletion of chromite reserves The rising production and increasing exports of chromite have led to concerns over the rapid depletion of existing resources. India’s currently identified resources account for 1% of the total global resources. Nevertheless, India is the third largest producer of chromite in the world [KPMG, 2012]. Its exports constitute 30–35% of the world’s share of chrome ore.19 According to government estimates, reserves are expected to last for only 20 years [Planning Commission, 2011a]. The government, in the past, had imposed export tax and export limits on chromite.
2. Technical constraints India’s chromite resources are estimated at 203 million tonnes. However, appropriate technology for increasing the feasibility of converting resources into reserves is not available. As a result, there is a large gap between resources and economically mineable chromite reserves, as seen in Figure 25. Also, 90% of reserves are located at depths between 100 and 300 metres. However, the currently prevalent open-cast technology is not feasible beyond a depth of 100 metres [Planning Commission, 2011a]. Appropriate technology for the exploration of deep-seated chromite resources is also not available. Figure 25: Resources, reserves, and production of chromite
Production figures relate to 2010. Resources and reserves figures are as of April 2010. Data source: Minerals Yearbook 2011; Indian Bureau of Mines, Ministry of Mines, Government of India.
19 http://www.iim-delhi.com/upload_events/MnOreCrOreFerroAllys.pdf (last accessed 11/21/2012). Key raw materials within the sectors
35
3. Problems in beneficiation owing to the export policy of the government Beneficiation is a variety of processes whereby the grade of the ore is improved by removing impurities, stones, and other extraneous matter. Through beneficiation, a non-marketable grade of ore can be converted into a grade that is directly useable. In the case of chromite, a considerable amount of low-grade ores are generated during mining, which, through appropriate processing, can be converted into directly useable grades of ores. However, the beneficiation activities for chromite have not witnessed the warranted increase in the quality of the ores. The reason for this is attributed to the export policy of the government. The policy, which is otherwise restricted, gives a free hand to beneficiated concentrates with a feed grade of a maximum 42% of Cr2O3. However, this has precluded genuine beneficiation, which requires chromite with Cr2O3 less than 38% to be processed into a marketable grade. The expert group constituted by the Ministry of Steel has also recommended that exports of beneficiated ore be confined exclusively to concentrates produced by genuine beneficiation. However, no policy steps have been taken so far.
4. Socio-environmental constraints Orissa has 98% of India’s chromite reserves, most of which are located in the Sukinda valley in Jajpur district and a few of them in Keonjhar and Dhenkanal districts. These districts have extensive forest cover, and are also home to various indigenous communities. Figure 26 shows the areas of chromite mining in different districts of Orissa and their overlap with forest areas. Large-scale open-cast mining of chromite has led to extensive destruction of forests, particularly in Sukinda valley [Bhushan, 2008]. The valley has been included amongst the top 10 polluted sources in the world primarily due to the widespread use of open-cast chromite mining [Blacksmith Institute, 2007]. Approximately 70% of surface water and 60% of drinking water in Sukinda is contaminated by the presence of hexavalent chromium. Around 24% of the inhabitants in villages located less than one kilometre from the mine sites are found to be suffering from pollution-induced diseases (ibid.). A survey carried out by the Orissa Voluntary Health Association in 1995 found that 84.75% of deaths in the mining areas and 86.42% of deaths in the nearby industrial villages occurred due to chromite mine-related diseases. In addition, around 7,000 people employed by chromite mines are constantly exposed to contaminated dust and water [Centre for Environmental Studies, 2006]. Figure 26: Mining of chromite versus forests
Source: ENVIS Newsletter, Centre for Environmental Studies, 2006.
36
India’s Future Needs for Resources
E.2 Molybdenum ores Molybdenum does not occur in its free or native state, and is found only in chemical combination with other elements. The only molybdenum-bearing mineral that is of commercial significance is molybdenite (MoS2). Molybdenum is also obtained as a by-product of copper mining. The metal is principally used in the form of ferro-molybdenum, which is used for the manufacture of steel. The steel, in turn, is largely used in the automotive sector.
E.2.1 Trends in production, consumption, and trade Currently, there is no production of molybdenum ores in India, which makes the country 100% import dependent. Most of the imports are from the USA, Chile, and Mexico, which together account for a 70% share in India’s total imports of ores.
E.2.2 Supply security concerns 1. Inadequate exploration Despite the limited availability of identified resources, no major attempts have been made to augment resources through exploration. The resources are estimated at 19.29 million tonnes, and the estimation has not changed since 2005.
2. Lack of economically mineable resources The resources are estimated at 19.29 million tonnes and as containing about 12,640 tonnes of molybdenite. None of the resources are economically mineable. Economic non-viability has been the main reason deterring the mining of molybdenum ores in India.
3. Lack of production as a by-product Molybdenum can be obtaining as a by-product of copper and uranium mining. However, currently, there is no supply of the material from this source. In the past, attempts were made to obtain the ore from copper and uranium mines, but no relevant results were reported due to the economic non-viability of extraction.
4. Reliance on imports and geopolitical and economic risks The lack of indigenous production makes India 100% dependent on imports, which, in turn, makes it vulnerable to geopolitical and economic risks. The risks result from the following dynamics in the international market: a. Concentration of world production and reserves
China, the USA, and Chile account for around 80% of world production. More than 80% of world resources are also concentrated in these three countries, implying that future production will be similarly geographically concentrated.
b. Limited reserves in major producing nations
Due to increased demand and the consequent increase in production, reserves in major producing countries are being depleted at a fast rate. At the current rate of production, reserves in China will last for 43 years, those in the USA for 27 years, and those in Chile for only 12 years.
c. Production of by-products
Primary mining of molybdenum constitutes about 33% of world output. The remaining 67% is obtained as a by-product of copper mining [Ministry of Mines, 2007]. Thus, the availability of molybdenum is largely dependent on the dynamics of the copper mining industry. There have been many instances where the supply of molybdenum was disrupted due to low copper prices.
d. Application of export restrictions by China
Key raw materials within the sectors
37
Owing to an unprecedented increase in domestic demand, China, which had previously been the major exporter, is now applying export restrictions to save the material for domestic consumption. Exports from China declined from 52 thousand tonnes in 2006 to 10 thousand tonnes in 2009 [TEX Report, 2008, 2010]. China’s share in India’s import basket declined from 46% in 2004 to only 6% in 2010.
E.3 Limestone Limestone is a sedimentary rock composed largely of calcium carbonate in the form of calcites. Rocks containing more than 50% calcites are termed as limestone.
E.3.1 Trends in production, consumption, and trade India is self-sufficient in the production of limestone (see Figure 27). But despite its self-sufficiency in production, India has been the net importer of limestone (see Figure 28). Net imports increased from 1 million tonnes in 2000 to 4 million tonnes in 2010, although this is still a small proportion of total domestic consumption. Net import reliance, measured as a ratio of net imports to apparent consumption, was estimated at only 3% in 2010. The reason for the increasing imports, despite India’s self-sufficiency in production, is the increase in domestic production of cement grade. Iron and steel grade, and chemical and other grades form only 3% and 2% of India’s total limestone production, respectively. Hence, the requirement for steel and chemical grade limestone is met mainly through imports. Figure 27: Production and consumption of limestone (1998–2009)
Data source: Ministry of Mines, Government of India. Consumption = production + imports - exports
Figure 28: Trade in limestone (1998–2010)
Data source: Ministry of Mines, Government of India.
38
India’s Future Needs for Resources
E.3.2 Supply security concerns Limestone is available abundantly in the country, with total resources estimated at 184,935 million tonnes (as of April 01, 2010). Out of these resources, reserves constitute only 8%, but in absolute terms, the amount is significant (i.e. 14,926 million tonnes). About 75% of these reserves are of cement grade and only 14% are of iron and steel grade, as mentioned previously. The 14% reserves (i.e. 2,090 million tonnes) are sufficient to meet the demand for 261 years at the current level of production. Thus, there are no constraints due to lack of geological potential. However, there are other factors that may lead to supply risks. These are discussed below.
1. Lack of access due to environmental constraints Despite the abundant geological availability even of limestone of iron and steel grade, India is import dependent. This is because large quantities of limestone are located under forests and in environmentally sensitive areas. The strong overlap between limestone reserves and forest areas can be seen in Figure 29. In addition to environmental constraints, logistical challenges in Rajasthan and in the Himalayas, where considerable amounts of reserves are located, makes it more feasible to import the material than to mine it domestically [Baijal, 2006]. The government estimates that out of the total cement-grade limestone reserves, about 30% is under forest and located in other inaccessible areas. Assuming that the cement sector grows at 12% per annum, limestone reserves, excluding those under forest and located in other reserved areas, are expected to last for only about 52 years [Planning Commission, 2011a]. Figure 29: Limestone reserves (in thousand tonnes) and forest areas
Source: TERI 2013, based on Forest Survey of India, Indian Bureau of Mines, 2011.
Key raw materials within the sectors
39
2. High environmental footprint of current extraction activities Limestone mining has significant environmental impacts, especially because the reserves in India are located in hilly areas. Open-cast limestone mining in Uttarakhand has affected the local water resources significantly. About 40% of the major limestone-mining activities have breached the groundwater table [Bhushan, 2008]. Further, uncontrollable environmental impacts have also led to the closure of mines in some areas. In 1990, for instance, a large number of limestone mines operating in the Doon–Mussoorie region were closed on account of environmental impacts. The impacts of uncontrolled mining, polluted air, reduced forest cover (12%), silted streams, etc. can still be seen in the region [Srivastava, 2005]. More recently, people and farmers in villages around the Lanjiberna limestone mines have opposed mining activities due to significant pollution levels and contamination of water.20
3. Technical constraints At present, limestone is mined to a depth of only 70 metres. Appropriate technology for extracting resources located at greater depths is not available. This is not a major constraint at present, as the supply is sufficient, but with growing demand, supply could potentially be restricted if the issue of technical constraint is not addressed soon.
E.4 Copper ores E.4.1 Trends in production, consumption, and trade India produces copper ores and concentrates. However, this production is sufficient for meeting only 5% of the total demand. For the rest, India is import dependent. Imports have increased significantly at a CAGR of 20% during the last 11 years. Figure 30 and Figure 31 give the trends in production, consumption, and trade for the period 1998-2009. More than 65% of India’s imports are from Chile, Australia, and Indonesia. Figure 30: Production and consumption of copper ore (1998–2009)
Consumption = production + imports - exports. Data source: Ministry of Mines, Government of India.
20 http://newindianexpress.com/states/odisha/article1356548.ece (last accessed: 09/23/2013) and http://newindianexpress.com/states/ odisha/article1355117.ece (last accessed: 09/23/2013).
40
India’s Future Needs for Resources
Figure 31: Trade in copper ore and concentrates (1998–2009)
Data source: Ministry of Mines, Government of India.
E.4.2 Supply security concerns 1. Inadequate exploration The availability of copper in India is limited as is the number of identified sources. Hence, copper has been put under the ‘deficit minerals’ category by the government [Planning Commission, 2007a]. Hindustan Copper Limited is the key company responsible for copper exploration in the country. Currently, it has an exploration licence for an area of 60,000 sq km, out of which it has explored only 20,000 sq km. 21
2. Lack of economically mineable resources Copper resources in India are estimated at 1.56 billion tonnes (estimated as of April 2010). Out of this, only 25% (394 million tonnes) is estimated as reserves. Copper content in these reserves is estimated at only 5 million tonnes (Figure 32). Given the low copper content in India’s reserves, the country is likely to continue to depend on imports to meet the projected growth in demand.
3. Monopoly in copper ore production Copper mines are subject to sub-optimal production primarily due to the monopoly status of Hindustan Copper Limited in copper ore production. Out of the nine available mines in the country, only four are in operation because of temporary problems like inadequate availability of equipment, breakdown of equipment during specific periods, and water shortage. No steps are being taken to solve these problems and to increase production in the country. Figure 32: Resources, reserves, and estimated copper content
Data source: Ministry of Mines, Government of India.
21 As indicated during a stakeholder consultation with officials from Hindustan Copper Limited in 2011. Key raw materials within the sectors
41
4. Environmental footprint The overburden ratio in copper mining is estimated at 1:9 [Sinha et al., 1998], which leads to the generation of large quantities of waste. This waste is generally dumped on land, leading to problems like land degradation and air and water pollution. Also, due to sub-optimal extraction, huge quantities of copper are found in the soil. A study done at the Khetri mines of Hindustan Copper Limited in Rajasthan estimates copper concentration in the soil at 885mg/kg as against the normal concentration at 5–100mg/kg [Sheoran et al., 2011]. The copper industry is also a contributor to greenhouse gas emissions. In 2007, CO2 emission from copper production was estimated at 64.7 thousand tonnes [MOEF / Government of India, 2010].
5. High import dependence and geopolitical and economic risks India is import dependent for meeting 95% of its indigenous demand for ores. Sterlite and Hindalco (the two largest producers of refined copper in India) own copper mines in Australia. However, the production from these mines meets only 8% and 26% of India’s concentrate requirements, respectively. The rest of the demand is met through contracts and the spot market [IMACS, 2010]. This high import dependence exposes India to geopolitical and economic risks stemming from the factors described below: a. Concentration in reserves and production
World copper mine production is mostly concentrated in Chile, Peru, China, and Indonesia, accounting for 56% of the total production. Chile’s share alone accounts for 34% of the production. The world reserves are equally concentrated in Chile, Australia, and Peru, accounting for more than a 50% share.
b. Risk of cartel actions
In the past, attempts have been made by major copper-producing nations to form cartels and to regulate the copper market globally, e.g. International Copper Cartel (1935) and the Intergovernmental Council of Copper Exporting Countries (CIPEC) (1970s). In the long run, cartels cannot succeed, as consuming countries tend to find alternatives or substitutes and to increase exploration activities. But in the short run, due to inelasticity of demand, the actions of cartels can affect the functioning of global markets by impacting the price levels.
c. Instability and declining production in major producing nations
Factors such as lower grades of ore, labour unrest, technical problems, temporary shutdowns, and production cuts in the major producing countries are adding to the risks for world copper supply [ICSG, 2012]. In Chile, for instance, acute shortages of power and opposition from environmental groups have led to the closure of some mines. Declining grades of copper ores, in particular in Chile, has also resulted in a fall in production. The copper grade has declined from 1.72% in 2007 to 0.97% in 2011.22
d. Increased merger and acquisition activities
Ten companies account for more than half of the copper production in the world. Codelco in Chile alone accounts for 20% and 12% of the world’s copper reserves and production, respectively [National Mining Association, 2012]. In addition, merger and acquisition (M&A) activities have been increasing in the industry. In 2010, out of the total M&A activities in the mining sector, copper accounted for a share of 19%.23 In the first quarter of 2012, there were about 10 instances of mergers in the copper mining industry with a combined deal value of $13 billion (ibid.). The trend towards consolidation is expected to strengthen further given the consolidation plans of Canadian, Australian, and Chinese companies. China, in particular, is expected to play a dominant role in acquiring copper companies in order to meet its growing demand.24
22 http://www.oracleminingcorp.com/copper/ (last accessed: 09/21/2012) 23 http://www.investmentu.com/2011/May/copper-sector-merger-activity.html (last accessed 09/21/2012). 24 http://copperinvestingnews.com/10984-time-may-ripe-copper-ma-flourish-anglo-american-bhp-billiton-glencore-xstrata-ivanhoe-riotinto.html and http://www.investmentu.com/2011/May/copper-sector-merger-activity.html (last accessed 09/21/2012)
42
India’s Future Needs for Resources
e. TC/RC margins (treatment charge/refining charge)
Indian copper smelters are import dependent, and hence their profitability is dependent on the TC/ RC margins. These margins are charged by custom smelters to process copper concentrate into copper cathodes. These charges are not determined by the cost of processing but by the deficit or surplus in the concentrate market. The TC/RC is negotiated between buyers and sellers, and is often influenced by the price set by the larger players like China and Japan. Hence, domestic smelters whose profitability is determined by these margins are exposed to the fluctuations in the global concentrate supply and to the activities of the major players globally [CRISIL, 2007; IMACS, 2010].
E.5 Cobalt ores Cobalt is rarely concentrated into economically viable deposits, and is produced as a primary mined commodity only in Morocco. Elsewhere, it is obtained as a by-product of other metals such as copper and nickel. Cobalt ore is refined to produce various cobalt products such as cobalt metal, oxides, and other chemical compounds.
E.5.1 Trends in production, consumption, and trade There is no production of cobalt ores in the country. India is 100% import dependent in meeting domestic consumption. Net imports increased at a CAGR of 17% during 2001–09 (Figure 33). More than 70% of India’s imports are from the Democratic Republic of Congo (DRC). DRC and the People’s Republic of Congo account for more than a 95% share in India’s total imports. Figure 33: Trade in cobalt ores and concentrates (2000–2010)
Data source: Ministry of Mines, Government of India.
E.5.2 Supply security concerns 6. Inadequate exploration Cobalt, with total estimated resources of 44.91 million tonnes (as of April 2010), has been put in the ‘scarce mineral’ category by the government [Planning Commission, 2007a]. No attempts have been made to augment domestic resources. The resource estimation of 44.91 million tonnes has not changed since 2001.
7. Lack of economically mineable resources There are no reserves of cobalt in the country. All the resources have been put in the ‘remaining resource’ category. Economic non-viability has been the main factor deterring the primary production of ores in the country.
8. Lack of production as a by-product Cobalt can be produced as a by-product of copper and nickel mining. Two possible secondary sources are nickel-bearing laterite deposits in Orissa and copper slag produced by Hindustan Copper Limited, which Key raw materials within the sectors
43
is now declining. The potential of cobalt recovery from these deposits has not yet been exploited despite ongoing R&D activities.
9. Import reliance and geopolitical and economic risks India is a net importer of cobalt ores and concentrates. The risks associated with import dependence for ores and concentrates are described below: a. Concentration in production and reserves
Production and reserves of cobalt ores are highly concentrated in one country. The copper belt of Congo accounts for 53% of total world production and for 45% of reserves.
b. Dependence on by-products1
The production of cobalt as a primary mined commodity accounts for only 15% of total world production. The rest comes from the nickel (50%) and copper industries (35%) [Wilburn, 2011]. Thus, the production of cobalt may be insensitive to changes in demand, at least in the short term.
c. Political instability in producing nations
The Democratic Republic of Congo has been witnessing widespread conflicts and political volatility. The political instability in DRC has led cobalt (along with tungsten and tantalum) to be termed a “blood mineral”. The instability in the region has had serious consequences for mining activities. For instance, from 1995 to 2002, civil unrest limited mining in Congo, and even after a peace accord and a revised mining code were signed in 2002, sporadic fighting continued, making cobalt mining difficult. These conflicts recently resulted in a complete ban on mining in the eastern part of Congo. The situation has led to a reduced global supply, and also has consequences for India, which depends mostly on these African countries for ores. Supply from politically unstable parts of the world also leads to significant price volatility. 25
d. Imposition of export restrictions by the major supplier
In recent years, China has emerged as a major producer and consumer of refined cobalt. China’s refined cobalt production capacity has increased from 1% in 1995 to 31% in 2008. However, its share in mined cobalt production has remained at less than 9% in the same period [Wilburn, 2011]. China is largely dependent on Congo to meet its requirements for ores. China’s increasing import demand led Congo to impose a ban on the export of cobalt ores in 2007. Although the ban has now been lifted, there is still a risk of the imposition of such restrictions in the future given the growing Chinese demand and the fact of Congo being the major supplier.
25 Reports of predicted supply shortages (whether real or perceived) usually result in industry purchasers stocking their inventories. This makes reports of supply tightness self-fulfilling and results in increased price. Once inventories are filled, there is normally a long period of declining prices as buyers leave the market and run down their inventories.
44
India’s Future Needs for Resources
E.6 Conclusion The various factors that could potentially constrain the availability of the five materials discussed above are summarized in the following table. Key factors
Chromium
Molybdenum
Copper
Limited geological availability due to inadequate exploration
x
X
Production in the nature of by-products
x
Limestone
Cobalt
Geological Limited geological potential
Techno-economic constraints
x
Socio-environmental constraints
x
x
x x
X
x
X
x
x
High import dependency
x
X
x
Geopolitical and geo-economic constraints
x
X
x
The analysis of key trends and supply-security challenges for the selected five materials indicates that while India is blessed with immense geological potential, the potential has not been realized due to inadequate exploration activities. The flow into exploration efforts is meagre in India, and requires urgent attention. The lack of appropriate technologies for improving the feasibility of converting resources into economically mineable reserves has hindered the production of almost all the materials under consideration. The indigenous reserves of various materials are low in grade and not directly useable. These could, however, be utilized through beneficiation, dressing, and other activities. No major attempts have been undertaken to develop appropriate technologies in this regard. In some cases like chromium, policy constraints hinder appropriate beneficiation, which need to be corrected. Technical constraint with regard to the production of by-products is also a major deterrent. Sub-optimal extraction of resources due to the absence of appropriate mining technologies is also a challenge. Thus, rather than the absence of geological potential, it is the techno-economic constraints and lack of exploration activities that hinder the availability from domestic resources, and lead to high import dependence. The technoeconomic constraints not only hinder supply, but also lead to various environmental problems, as seen in the case of chromium and copper. It is important to address these techno-economic constraints as well as the negative environmental and social consequences that result from mining. The socio-environmental constraints are becoming increasingly prominent and engendering a great deal of opposition from various quarters. These constraints have the potential to hinder access to these resources if they are not addressed holistically.
Key raw materials within the sectors
45
F. Concept of life-cycle thinking to analyse resource efficiency Comprehensive environmental assessments must consider all stages of the life cycle of a product. In this study, our products are a vehicle, a building, and a power plant. The concept includes all stages of a product’s life cycle, such as the production phase (material extraction, processing, transport, and manufacturing), the use/operation phase, and finally the disposal or recycling (end-of-life) phase. Usually, if material demand is considered, attention is paid only to the direct material input for the production of a product. The concept of life cycle assessment (LCA) goes further because it also analyses the raw materials consumed during other stages like the extraction phase, the use/operation phase, and the end-of-life phase. Some examples of resource consumption during other life-cycle stages are given below: ‒‒ Extraction of metal: High input of energy and water to extract metal from its ore ‒‒ Operation of a thermal power plant: High input of fossil fuels to produce electricity ‒‒ End-of-life of cars: Potential of using secondary metals from the car body ‒‒ End-of-life of buildings: Potential of using secondary concrete from demolished buildings The analysed raw materials consumed during the life cycle are not only metals and minerals, but also other natural resources like land, water, and energy. Another focus of this concept is analysing the emissions released into the environment. Only such a life-cycle assessment approach (LCA) allows for a comprehensive comparison of different product concepts, which is important for understanding the whole story of resource efficiency. The aspects of resource efficiency discussed in the case study are modelled with LCA software (method described in Annex III). Figure 34: Life cycle of a car
Source: IFEU 2013.
46
India’s Future Needs for Resources
G. Challenges and solutions in the hot-spot sectors – automobile construction, and renewable energy G.1 Automobile Sector G.1.1 Introductory description of the sector in general and in India Mobility is an essential factor in determining our quality of life. Increased mobility and enhanced infrastructure are associated with economic growth and development. Mobility is essential because it connects people to jobs, markets, and services, and gives people a chance to gain equity in the political, economic, and social spheres. In addition, it enables the business sector to contribute to development and reduces the trade-barrier effect of costly and unreliable transport, enabling poor regions and nations to become more competitive. Still, transportation has many negative impacts, such as pollution, accidents, and congestion, which can affect the entire economy, but which are often felt most by the poorest sections of the population. Regarding dwindling resource availability, environmental destruction, and the challenges of climate change, developing a sustainable model of transportation for the future is a matter of great significance and urgency. Strategies for achieving sustainable mobility involve promoting public transport, increasing the share of transport modes that do not consume fossil fuels, reducing trip length or duration, and promoting clean fuel technology for motorized modes [UBA, 2011].
G.1.2 Development of automobile sector worldwide and in India Since the invention of the car or automobile in the late nineteenth century, the sector has experienced rapid development. The automotive industry was one of the most important sectors in Western countries like the USA and Germany. The introduction of mass production and the assembly line made the car affordable for many people in Western countries. Rising incomes, cheap energy prices, and economies of scale prepared the ground for the introduction of bigger, faster, and more resource-intensive models. In India, as in most other countries, mobility relies heavily on rail and road infrastructure. The major modes of transport are two-wheelers, cars, auto-rickshaws, buses, and railways. Nowadays, the majority of trips in large Indian cities are made by non-motorized or public transport. In 2003, 32% of all commuter trips in Delhi were made on foot, while motorized trips amounted to 42%, with a large share of bus trips. In the 1990s, the share of personal transport modes (cars, two-wheelers, auto-rickshaws) increased from 16.2% to 21.2% [Tiwari, 2003]. Conventional public transportation witnessed an increase in absolute numbers, but could not keep up with the dynamic development of individual personal mobility. The highest increases in vehicle population took place among two-wheelers and autorickshaws. But ownership of cars is expected to increase rapidly in the future due to rising incomes and an expanding middle class. Figure 35 demonstrates the strong relationship between rising GDP and increasing car ownership. India still has a very low car ownership rate at the national level, but, as Figure 35 indicates, this situation may change. Nevertheless, India could follow any one of several different paths: 1. “Low car density path” (e.g. NLD, SWE, CHE, NOR, DK): Countries with a broad use of bicycles and public transport 2. “High car density path” (e.g. USA, DEU, AUS, NZL, ITA): Countries with a strong car-dependent mobility. Challenges and solutions in the hot-spot sectors—automobile construction, and renewable energy
47
Figure 35: Car ownership: Growth potential and saturation level (2010)
Data Source: World Bank 2013.
G.1.3 Economic relevance of the sector The automobile sector is globally one of the largest industries, and thus a key driver of the economy. The Indian auto market is currently small, but has the potential for dramatic growth. Less than 1% of Indians own a car [International Trade Administration, 2007]. Given the growing size of the middle class with its increasing purchasing power and India’s young population (over half the population is less than 25 years of age), considerable potential exists to penetrate a largely untapped market. Also, given the availability of cheap and skilled labour, India has the potential to serve as a regional export hub for manufacturers in the Asia Pacific region. After India began economic liberalization in July 1991, the automobile industry has grown at a rate of 17% on an average for the first few years, continuing the growth at approximately 12-15% per annum (see Table 4). Currently, it employs 12.5 million people (about 1% of India’s population), directly and indirectly, and contributes nearly 5% to India’s GDP. However, in 2008-09, the automobile sector was hit due to the global economic slowdown, whereupon the government immediately took remedial action and announced stimulus measures, which have resulted in a return to high growth rates as targeted by the Automotive Mission Plan for 2006-16. Currently, India’s auto production amounts to 4.9% of world production, placing it fifth behind China, Japan, Germany, and South Korea [Department of Heavy Industry India, 2012]. Table 4: Indian automobile production in 1,000s
48
Segment
2007–08
2008–09
2009–10
2010–11
Passenger vehicle
1,778
1,839
2,357
2,987
Total commercial vehicles
549
417
568
753
Three-wheeler
501
497
619
800
Two-wheeler
8,027
8,420
10,513
13,376
Total
10,854
11,172
14,057
17,916
Percentage growth
-2.1
2.9
25.8
27.5 Source: SIAM, 2012.
India’s Future Needs for Resources
G.1.4 Requirements of natural resources India, as the world’s second most populous country, has a significant impact on global emissions. Finding ways of meeting the mobility demands of the population – while seeking sustainable levels of resource use – is a challenge. The harmful environmental effects of current transport patterns occur at every stage of the life cycle of vehicles. The main impacts are at the operational stage. The transport sector is a major source of greenhouse gas emissions, generating 10% of CO2 emissions of total fuel combustion [World Bank, 2013]. In the last few decades, efforts have been made to reduce the environmental impacts of the transport sector through technological innovations. In many countries, these efforts have included more efficient use of raw materials, changes in production methods, adoption of cleaner fuels, introduction of more fuel-efficient and alternative-fuel engines, and changes in the design of vehicles. The concept of recycling materials has also been developed. Such changes have been promoted through laws and regulations, and through better and stricter enforcement. When assessing the material requirements of India in general, and of the automobile sector in particular, it is important to look not only at the direct raw materials in use – whether they are extracted within India or are imported – but also at the quantities of raw materials that are “embedded” in the products and services that are imported and consumed in India. This means that somewhere along the production chain, certain materials have been used to produce them. Incorporating this indirect material use into the analysis means taking a consumption-based point of view and as such analysing the real material requirement of an economy or an economic sector. Figure 36 shows the growth in the raw material requirement of the Indian automotive sector in 1997 and 2007, disaggregated into the four main material groups. Biomass, which has a large share, consists of grazing, forestry, and sugar crops, due to the considerable input of leather fabrics and chemical products based on animal fats. It can be seen that the material requirement of the sector has doubled in only 10 years; thereby, an increase has taken place in all the different material groups. While material use might become more efficient in the future, the estimated numbers pertaining to future vehicle production suggest that these efficiency gains will be more than balanced out by increased demand. Figure 36: Raw material requirement of the Indian automotive sector (1997 and 2007)
Note: All upstream flows are included. Source: SERI 2013.
G.1.5 Drivers of demand in the sector These increases in the rate of urbanization and the size of the middle class will lead to higher levels of aspiration and demand for automobiles. Given the changes in the consumption patterns of Indian consumers, it is expected that automobile consumption would rise from 37 billion to 354 billion Indian rupees in the period from 2005 to 2025, at a CAGR of 12%. At the same time, the two-wheeler consumption is expected to increase from 99 billion to 496 billion Indian rupees, at a CAGR of 8.4% [McKinsey Global Institute, 2007].
Challenges and solutions in the hot-spot sectors—automobile construction, and renewable energy
49
The rising demand for vehicles needs to be satisfied by higher imports of foreign vehicles as well as by increased production of vehicles within India. Table 5 shows the expected development of vehicle production in India. Table 5: Expected Vehicle Production in India (1,000 units) Passenger vehicles
SCVs
LCVs
M& HCVs
2 & 3 wheelers
Tractors
Construction Total equipment*
2009
2, 220
150
120
200
10, 230
420
40
13, 380
2015 (E)
5, 100
670
360
390
22, 100
710
100
29, 430
2020 (E)
8, 700– 9, 700
1, 100 –1, 220
470–530
540–600
30, 000–33, 500
940–1,050
170–190
41, 920– -46,790
Source: Automotive Component Manufacturers Association of India, n.d. *includes backhoes, track excavators, wheeled loading shovels, vibratory rollers, and liftalls SCV: Small Charter Vehicle LCV: Light Commercial Vehicle M & HCV: Medium and Heavy Commercial Vehicle
Given the tremendous increases in the number of automobiles in the country, the road infrastructure needs to be improved and expanded. Various fast-growing megacities in India have already exceeded their road infrastructure capacity, especially on the major arterials connecting the central business district (CBD) [itrans, 2009]. If the need for implementing a comprehensive infrastructure policy is neglected, the pressure on road capacity will increase further and cause harm to the population, damage the environment, and disrupt the economic sector.
G.1.6 Specific description of selected technical aspects As discussed above, different factors contribute to the rising demand for mobility in India. This case study focuses primarily on cars and two-wheelers, since these mobility options will have the greatest impact on the demand for natural resources in the future. Hence, they also have the highest potential for improvements in resource efficiency. Cars and two-wheelers allow private mobility and maximum flexibility. But cars in particular offer more than just mobility, since they also provide convenience and affordability. Besides these rather practical aspects, cars worldwide are seen as status symbols. These aspects contribute to an extensive use of advanced technology and to high material intensities in private mobility. In Western countries as well as in developing countries, the use of more resource-efficient cars is an important issue in terms of costs and energy savings. The Asian car industry has introduced smaller and lighter cars, which are more affordable for mid-income groups. Similarly, the Indian car industry has recognized the demand for cost- and resourceoptimized vehicles, as innovations by leading Indian car manufacturers demonstrate. Figure 37: Average distribution of certain metals in a compact car except steel
Source: Ecoinvent 2011.
50
India’s Future Needs for Resources
An analysis of the material composition of a conventional compact car reveals that steel is the main contributor (76%) to the total weight. Minor contributors are other metals and plastic components. These other metals may contribute less to the overall weight of the car, but their environmental impact could be higher, or the availability of these raw materials could be limited. Consequently, given the huge growth rates in car consumption, a deeper investigation of these materials is necessary. The material composition of two-wheelers is similar to that of cars, but on a much smaller scale. The share of aluminium and plastic components is higher in two-wheelers than in cars, which decreases the overall share of steel to approximately 52%. If the total weight of both vehicles is divided by the number of passenger seats, the car outnumbers the two-wheeler more than fivefold. Since two-wheelers are experiencing even higher growth rates, their resource demand should be considered as well. The material composition is based on the compact car, which is the most common car category in Germany (27%). Together with minis and small cars, it has an overall share of 53.5% [KBA, 2013]. Nevertheless, other categories like the middle-class car and the upper-class car account for about 25% of the car market in Germany. Growing numbers of SUV sales in Europe and in other developing countries is a cause for concern from an environmental point of view. Small and compact cars account for the largest share of the car market in India today. Since car purchases in India are predicted to be dynamic in the coming years, the future distribution of car categories could change in a non-predictable way. Besides the material composition of cars and the various categories of cars, there are additional factors that contribute to resource intensity and environmental burdens. In India, the following aspects will probably undergo dynamic changes in the future:
- Average age of cars It is obvious that a longer usage phase of a car limits resource consumption compared to a short usage phase. Closed recycling loops for old vehicles may reduce the environmental impact of new cars, but there is always a certain demand for primary materials in cars due to the need to maintain quality standards. In 2006, the average age of a German car was 15 years; 20 years before, it was 13 years because of shorter longevity [Höpfner et al., 2009].
- Auxiliary equipment There is an increasing tendency to incorporate additional equipment within the car. This equipment serves different purposes like security, convenience, and entertainment. Certain components like air conditioning have a considerable impact on energy consumption.
- Type of energy source Vehicles come with different fuel options, such as petroleum, diesel, biofuel, gas, and electricity. The fossil fuels petroleum and diesel have the highest share within the car category. Biomass is considered to be a renewable source, but it has high resource intensities in land and water use. Electricity is generated by power plants, and its environmental burdens are therefore dependent on the national electricity mix.
G.1.7 Meeting resource efficiency Private transportation contributes to a flexible mobility pattern, which is increasingly required by modern society. Thanks to the growing middle class in India and affordable private mobility options, it is expected that car and twowheeler ownership will increase in the future (see Figure 35). Vehicles are probably one of the most resource-intense assets owned by people. Therefore, resource efficiency in this sector generally has a high impact. The potential for resource efficiency can be identified at different levels such as production, design, energy consumption, and end-of-life treatment.
G.1.7.1 Cars as the focus of resource efficiency Between 2000 and 2010, the CAGR of the total number of registered cars was 10.8%. If this growth rate is further projected until 2030, the total number of registered cars would be well over a hundred million (see Figure 38). Challenges and solutions in the hot-spot sectors—automobile construction, and renewable energy
51
Figure 38: Growth in total number of registered cars in India*
Data source: Ministry of Road Transport and Highways, 2012.
Consequently, the total amount of metals used for the manufacture of cars will rise accordingly. In order to get a better idea of this additional amount of material, it is assumed that all newly registered cars are average cars weighting 1.2 t and reflect the material composition discussed in chapter G.1.6. Following this logic, the annual steel demand for cars in 2025 would account for 10% of the total Indian steel production and for 1% of the total Indian chromium production of today (base year 2010). Indeed, the demand for not only steel and chromium but also for other metals such as copper and aluminium will rise accordingly. This calculation demonstrates the development of material demand and the high saving potential in the area of car production. Figure 39: Projected annual demand for steel and chromium
Data source: Ministry of Road Transport and Highways, 2012; World Steel Association, 2011.
52
India’s Future Needs for Resources
G.1.7.2 Resource efficiency influenced by car design One of the most influential factors in terms of resource efficiency is the type of car, as this has a significant impact on resource consumption during the production and use phases. The car industry produces many different types of cars. This analysis focuses on the following car concepts: Table 6: Different car types Name
Car type
Length
Weight
Compact car
Average car
4,200 mm
1.2 t
City car
Light mini
3,400 mm
850 kg
SUV
Sports utility vehicle (SUV), Jeep
4,700 mm
1.8 t Source: IFEU 2013.
Figure 40 shows the amount of extracted primary raw materials (e.g. iron ore, bauxite, and crude oil) that are required during the course of the life-cycle. The example shows a considerable reduction in primary raw material usage of the city car in comparison to the compact car (-25%). Accordingly, a much heavier vehicle like an SUV could increase the consumption of primary raw materials by as much as 40%. The saving potentials are distributed over the production and the use phases of a vehicle. Another option in this context is related to exploring alternative materials for the same car. The lightweight option assumes the substitution of certain steel components with aluminium. Focusing on the primary raw material demand, this would lead to a reduction of 10%, but the fact must be taken into account that aluminium is much more expensive and has to be imported. Furthermore, it does not show high saving potentials if other resource categories are considered. Annual land use even shows a negative effect if steel is substituted (see Figure 41). Figure 40: Primary raw material demand for different car options
Source: IFEU 2013.
To highlight future demand for primary raw materials, the expected newly registered cars in the future are assumed to be one of the different car types shown in Table 6, plus the lightweight option (see Figure 42). Figure 41: Saving potential of a lightweight compact car in different resource categories*
*Infrastructure is not included. Source: IFEU 2013. Challenges and solutions in the hot-spot sectors—automobile construction, and renewable energy
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Figure 42: Future raw material demand for different car options
Source: IFEU 2013; TERI 2013.
G.1.7.3 Closed Recycling Loops Recycling systems contribute to resource efficiency since materials are kept within the production system and are not lost through unregulated disposal. Recycling needs a well-organised collection system and energy-efficient recovery mechanisms to supply the market with competitively priced secondary materials. If these mechanisms are established, recycling could reduce dependencies and stress on primary materials. Since steel constitutes the largest amount of materials used in vehicles, its recycling potential is high. Additionally, the steel components of a car are easy to remove and could be collected in homogeneous fractions. Steel recycling of an Indian compact car would decrease raw material consumption theoretically by 23%. The potential is determined by the assumption of recycling rate 0% compared to 100%. Taking the increasing demand for cars into account, it is seen that this could save up to 60 million tonnes of primary raw material in 2030. Since recycling is already taking place in India, the unexploited potential is less than 23%. Figure 43: Material-reduction potential in primary raw material demand by steel recycling
Source: IFEU 2013; TERI 2013.
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India’s Future Needs for Resources
G.1.7.4 Occupation rates The occupation rate of a vehicle has a significant influence on the resource demand if the consumption per passenger is considered. An adequate occupation of vehicles saves space in the city in addition to conserving resources and reducing emissions. Therefore, it is desirable to have high occupation rates within the guidelines of security standards. Figure 44 demonstrates the per passenger raw material consumption based on the assumption of different occupation rates. If a city car is compared with a two-wheeler, given an average occupation rate, the two-wheeler consumes 15% fewer primary raw materials. If full occupation of the vehicle is assumed, raw material consumption per passenger could drop even slightly below the consumption of a two-wheeler. It should be noted that the city car is the smallest car option and that the lifetime of a car is usually longer than that of a two-wheeler. This example demonstrates the impact of occupation rates and does not rank cars and two-wheelers. Figure 44: Primary raw material consumption by different occupation rates
Source: IFEU 2013.
G.1.7.5 Discussing electric mobility in the context of resource efficiency Vehicles are usually equipped with internal combustion engines that run on fossil fuels such as gasoline, diesel, and gas. The concept of electric engines, however, is not new, since the first electric vehicles were developed in the nineteenth century. After the success of the internal combustion engine in the automotive sector in the twentieth century, electric engines became merely an option for niche vehicles. Four main arguments have been made in support of the renaissance of electric passenger vehicles: 1. Technical developments: More efficient engines and battery systems are making electric vehicles more competitive. 2. Urban air quality: Electric vehicles can reduce emissions harmful to human beings in areas with high traffic concentration. 3. Global climate change: Electric cars have the potential to reduce greenhouse gases resulting from combustion processes. 4. Energy security: Different energy sources can reduce the demand for gasoline, diesel, and gas. Concerning argument three, it must be recognized that emissions are not directly released by the vehicle, but are released earlier at the power plant. Calling electric vehicles “zero-emission” disguises the fact of electricity generation. If the electricity mix of a country is based mostly on fossil fuels, the energy supply for electric vehicles is still CO2 intensive, and energy dependencies could also persist further. Any real benefits for the environment and for energy security are possible only if renewable energy plays a dominant role in the energy supply for electric vehicles. Talking about resource efficiency, it is seen that electric mobility is not an easy issue to understand. Generally, electric vehicles are more material intensive since they require large amounts of high-tech materials, instruments, and other Challenges and solutions in the hot-spot sectors—automobile construction, and renewable energy
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parts, such as the battery. The large battery in an electric vehicle makes it heavier compared to a conventional car. The maintenance of electric vehicles is usually more complex, and if a new battery is needed, the overall balance, as far as resource use in manufacturing in concerned, tilts against electric vehicles. Thus, resource efficiency is restricted primarily to the use phase of electric vehicles. This is closely linked to the discussion on the electricity mix. If a high share of renewable energy is supplying electric vehicles, the CO2 balance and the saving of energy resources are clearly better for these vehicles. If we focus only on metal consumption, we find that electric vehicles do not offer many advantages. Hence, besides a renewables-based energy mix, an efficient recycling system is also needed to support electric vehicles from a resource-efficiency point of view.
G.1.7.6 Further potential of enhancing resource efficiency by broadening the sector If the automotive sector is considered in a broader context, a comparison could be made between different mobility options. The most environmental-friendly and resource-efficient mobility options are walking and cycling. Therefore, traffic infrastructure should be developed to support this form of mobility rather than threaten or undermine it. Infrastructure for pedestrians and cyclists needs a comprehensive concept and a safe environment. In India’s fast growing megacities, these groups are often threatened and marginalized by motorized vehicles and their attendant infrastructure. Figure 45: Development of absolute and per capita mobility* in India
Data source: TERI 2013.
Nevertheless, modern society expects high and flexible mobility behaviour from every individual. Hence, daily travelling distances are growing, which cannot be satisfied by non-motorized mobility alone. Figure 45 shows the rapid development of passenger kilometres in India by road, rail, and air. According to this future projection, which is based on historical trends, absolute passenger kilometres per capita will reach European standards shortly after 2020.26 There is no sign of saturation until 2030; all modes of transport will continue witnessing high growth rates due to long travel distances between and within the relevant urban centres. Different options of motorized mobility are available in India for managing daily trips. Table 7: Different options of motorized mobility Motorized mobility Personal
Public
‒‒ Two-wheeler
‒‒ Bus
‒‒ Auto-rickshaw
‒‒ Tram
‒‒ Taxi
‒‒ Suburban train
‒‒ Car
‒‒ Train
26 This means that the total number of passenger kilometers per capita will be higher in India than in Europe by 2030. But if this number is examined more closely, it is clear that the passenger kilometres served by cars per capita is still higher in Europe than in India.
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India’s Future Needs for Resources
From discussions on climate change and urban air quality, it is well known that public transportation is better for the environment and for urban air quality since it emits less CO2 and other harmful substances per passenger. The same can be stated from the resource-efficiency perspective. Figure 46 presents the different rates of primary raw material consumption by different modes of transport. The underlying model considers Indian conditions as far as possible. This accounts for the electricity mix, the car’s lifetime, and vehicle occupation rates. Private mobility options have higher consumption rates per passenger kilometre than public modes of transport. The bus shows the highest advantages in comparison to all the other modes of transport. The energy supply and the use phase are considerably high for railbased transport modes due to their energy supply, which is electricity. Electricity generation in India is highly fossil fuel based, which is highly resource and CO2 emission intensive. If renewable energy gains a larger share in the Indian electricity mix, the resource consumption of these modes of transport will drop further. Figure 46: Consumption of primary raw materials by different modes of transport
Source: IFEU 2013.
If the essential natural resource of fresh water is considered, a similar picture emerges. Not surprisingly, private mobility is even more water intensive than public mobility. In this comparison, the rail-based mode of transport has more advantages compared to the bus. Since the availability of fresh water is an important issue in India, the saving potentials of public transport besides the saving potentials in materials is a relevant point of discussion. Figure 47: Consumption of fresh water by different modes of transport
Source: IFEU 2013.
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The future distribution of different modes of transport – the modal split – has a significant influence on future demand in the mobility sector. As discussed previously, private mobility has the highest levels in terms of primary raw material consumption. To further emphasize the effect of a future modal split, two scenarios are elaborated in Figure 48. The future volume of personal mobility is projected in passenger kilometres (see Figure 45). If this amount of passenger kilometres is served by India’s modal split (base year 2010), the results are far more advantageous compared to an expected car-intense modal split (e.g. the German modal split). This example points to the significance of future public transport for achieving resource efficiency. It is a challenge to meet the rapidly rising demand for mobility with an efficient and cost-effective public transportation infrastructure and system. Figure 48: Future demand for primary raw materials divided by modal split
Scenario: High share public transport
Scenario: High share car
Source: TERI 2013; IFEU 2013.
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India’s Future Needs for Resources
G.2 Housing Sector G.2.1 Introductory description of the housing sector in general and in India Housing, which forms a major part of the construction industry, is a basic human need, ranking next only to food and clothing as essential for survival. It has always had important socio-economic implications. Housing as well as the entire infrastructural sector holds the key to the acceleration of the pace of economic development, in being a basic requirement for urban and rural settlers, in being a central plank of poverty-reduction programmes with regard to slum prevalence and slum clearance, and furthermore in being a major generator of employment in the national economy. Thus, especially in countries like India, which are in the throes of rapid development, housing and infrastructure development have come to play a crucial role. Housing investments are made for several decades, or even for centuries. Given the volume of these investments, it is essential to consider the monetary aspects seriously before taking further steps. In addition, it is advisable to consider also the material aspect of the investments: location, design of houses, choice of building materials, and several other factors that determine the consumption of natural resources such as land, water, and air, as well as of scarce materials, not only during the construction phase of a building but also during the operational and demolition phases. To a large extent, decisions about the material aspects determine future investments in materials that are essential for running and maintaining the building. For example, the amount of energy required for heating and cooling the building is determined in particular by the building’s insulation. Thus, a country like India facing rapid development in the housing and infrastructural sector has an opportunity to choose and move on a material- and natural resource-efficient path of housing for decades ahead, and possibly even for the next century.
G.2.2 Development of the housing sector worldwide and in India, and implications for mineral consumption Ever since humans settled down in permanent locations, the construction, maintenance, and demolition of buildings has been a central task and a major economic activity. With improvements in construction skills and techniques, even common residential buildings have become stronger, larger, and longer lasting than before. One example of this trend is the increasing use of durable instead of non-durable building materials in the housing sector. Furthermore, residential buildings have become increasingly comfortable as a result of sophisticated technical equipment and appliances, including basic equipment like sanitation facilities and also complex technical equipment like ventilation systems. In spite of the socio-economic importance of housing, a census on the global housing stock and the global housing sector is not available. Housing stocks and housing sectors are very different all over the world due to different cultural traditions of housing, locally available materials for construction, and different national frameworks. Nevertheless, some general trends with regard to material consumption are observable. The processes of industrialization, urbanization, and rising income usually result in a rapid increase in investments in the housing and infrastructure sector. In particular, during periods when the building and infrastructure sector is witnessing a boom, the demand for construction minerals increases significantly, while the demand increases slightly or stagnates during periods when infrastructure needs to be mostly maintained rather than be built or created anew (Figure 49). It is noteworthy that densely populated countries usually show lower per capita values of construction minerals than less populous and particularly large countries where more infrastructure has to be built to connect widely spread and scattered settlements (e.g. [UNEP, 2011b]).
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Figure 49: Mineral consumption per capita during the build-up and maintenance of infrastructure in selected countries, 2008
Sources: income: World Bank, 2011; material consumption: SERI, 2012 and Dittrich, 2012.
India still has a very low average of mineral consumption per capita compared with other nations. Currently, the consumption of minerals is around 1.5 tonnes per capita, which is a remarkable fivefold increase since 1980. Nevertheless, comparison with China or South Korea, two countries that have invested large amounts in housing and infrastructure in the past few decades, indicates how the consumption of construction minerals might change in the following decades given the forecasted demand for housing, as shown in Figure 50. Figure 50: Consumption of minerals in India, China, and South Korea between 1980 and 2009
Sources: Dittrich, 2012; SERI, 2012; World Bank, 2011.
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India’s Future Needs for Resources
In the last few decades, India has increased its housing stock and housing equipment to a remarkable degree. According to the 2011 census, India’s housing stock amounted to more than 330 million housing units [Government of India, 2012b], of which around 221 million houses were located in rural areas and 110 million houses were located in urban areas. This is a remarkable increase compared to 2001 when the rural and urban housing stock amounted to 178 and 72 million houses, respectively. In addition to the increasing demand for residential construction, particularly by the growing middle class, slum prevalence in India fell from 41.5% in 1990 to 28.1% in 2010 [empulseglobal, 2008]. However, according to a UN estimate about the percentage of slum dwellers in 2009, the number still amounted to about 29.4%, which means that 105 million Indians were still living in slums in 2009 [UN, 2012].
G.2.3 Economic relevance of the sector The housing sector plays a major role in India’s national economy in terms of employment generation and contribution to national income. In economic analysis, the housing sector is usually subsumed in the construction sector. The information in the following paragraphs mostly pertains to the construction sector. The share of the real estate segment in the construction sector accounts for about 50% of construction activities, according to the Planning Commission [2011b], and the remaining 50% is contributed by infrastructure. The construction sector forms the second largest segment in India’s economy in terms of employment, after agriculture. It provides employment to about 35 million Indians and accounts for about 52.4% of the gross fixed capital formation of the country [Planning Commission, 2011c]. Furthermore, investments in the construction sector have a multiplier effect on income and employment. It is estimated that the overall employment generation due to additional investment in the housing/construction sector amounts to eight times the direct employment [Planning Commission, 2008]. Moreover, housing has a direct impact on the industries related to steel, cement, marble/ceramic tiles, electrical wiring, PVC pipes, and various types of fittings, all of which contribute significantly to the national economy. The Indian construction sector has been growing at an average annual growth rate of 10% over the past 12 years, with its contribution to GDP increasing from Rs. 1,554 billion in 2001–02 to Rs. 4,046 billion in 2011–12. Thus, the construction sector currently contributes around 8% to India’s GDP [UN, 2012] and the real estate segment contributes about 5–6% to India’s GDP, with residential housing accounting for about 90–95%, commercial buildings contributing about 4–5%, and the organised retail forming 1% of the total share [Planning Commission, 2011c].
G.2.4 Requirements of natural resources in the housing sector Buildings are one of the biggest consumers of all natural resources and also one of the biggest creators of waste in India’s economy. Although the assessment of natural resource consumption by the building sector is a relatively new field of research, there are some studies that provide information on resource consumption by the building sector. A study by CSE [2011] shows that the overall constructed area in 2005 was estimated to be close to 21 billion square feet. The construction industries are major contributors of CO2 emissions in India. CSE estimates that the construction industries contribute almost a quarter of the total CO2 emissions in India, which mostly come from the energy-intensive production of cement and steel, and from the extraction of bricks and limestone (Figure 51). It is not only the construction phase of a building that has a substantial resource footprint, but also its operational phase. Figure 51 gives the current resource consumption of buildings throughout their life-cycle in India based on the limited data available [CSE / Roychowdhury, 2011]. Buildings are said to impose a burden on the environment because they not only consume a substantial amount of resources such as energy, raw materials, water, and land, but also because they produce emissions and waste.
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Figure 51: Share of buildings in resource use and pollution
Source: CSE / Roychowdhury, 2011.
The operational phase of buildings accounts for about 80–90% of the total energy that is consumed by buildings as a whole [Ramesh et al., 2012, 2013]. GEF–UNDP [2012] assessed the average energy consumption by commercial buildings in India. On average, a commercial building in India consumes about 210 kWh/m2 per year of energy vis-à-vis less than 150 kWh/m2 per year in developed countries in North America and Europe. The UNDP study estimates that a commercial building in India, if it adheres to the energy-efficiency codes established by the Energy Conservation Building Code, would consume about 180 kWh/m2 of energy per year [GEF–UNDP, 2012]. As analysed by Ramesh et al. [2012], the operating energy consumption by a conventional residential building using fire-clay is around 174 kWh/m2. Maintenance consumes about 10% of the building material used during the construction phase. The waste generated by construction and demolition is also substantial in India. On an average, about 12–14 million tonnes of construction and demolition waste is generated annually in India. This waste accounts for a substantial share (about one-third) of the total solid waste generated in the country. The waste from soil, bricks, and concrete accounts for a substantial amount of the total construction and demolition waste generated (Figure 52). Figure 52: Composition of construction and demolition waste
Source: IL&FS Ecosmart Limited, n.d.
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India’s Future Needs for Resources
Focusing on all the materials used in the construction sector (building and infrastructure), it is seen that the construction sector is one of the most material-intensive sectors. In India, the construction sector was the second largest sector with regard to material consumption in 2007, accounting for around 20% of all material demand [SERI, 2012]. Further, the construction sector was the fastest growing sector with regard to increases in absolute material consumption: between 1997 and 2007, material consumption grew by more than one billion tonnes. Thus, if this trend continues, in the years 2013/2014 material consumption in the construction sector will outweigh material consumption in the agricultural sector, the sector with the highest level of material consumption so far. The predominant materials used in the construction sector are minerals, in particular bulky ones such as sand and gravel (Figure 53). However, between 1997 and 2007, the share of metals used in the construction sector increased more rapidly (around +400%) than the share of fossil fuels (around +70%), reflecting, amongst other things, increasing energy efficiency within the sector and the more intensive use of structural metal elements in constructions. The biomass used in the sector includes wood, grass, bamboo, and thatch. Figure 53: Raw materials in the construction sector by main aggregates
Source: SERI, 2012.
Furthermore, materials constitute the dominant part of the costs of construction activities. They account for about half of all costs in the construction part and for nearly two-thirds of the total construction costs of buildings (Figure 54). Of the raw materials, cement and steel are the most important inputs, and constitute the largest amounts of components being consumed in the industry [Planning Commission, 2007]. Figure 54: Building cost components (in %):
Data source:[Planning Commission, 2007b. Challenges and solutions in the hot-spot sectors—automobile construction, and renewable energy
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India’s construction sector relies increasingly on imports. In 2007, 90% of all materials required in the construction sector originated in India, while 10% were imported, compared to 97% and 3%, respectively in 1997. In recent years, net imports of limestone and gypsum have increased in particular, while net exports of building stones and mineral products such as cement have decreased (see also chapter E). Figure 55: Increasing import dependencies in the construction sector, 1997 and 2007
Sources: left: SERI, 2012. Please note: upstream flows are included.
G.2.5 Drivers of demand in the sector The main drivers of future housing demand in India have been described in chapter C: increase in population; rapid rate of urbanization; and increase in income, in particular increase in income of a rising middle class demanding better housing conditions, particularly in large cities. In the past few years, the rising demand for housing in India has led to shortages. In rural areas, the housing shortage decreased from 34 million units in 2001 to 26 million units in 2010 thanks to the initiatives taken by the government to provide housing facilities and, more importantly, because of migration to urban areas. At the same time, the housing shortage increased from 15.1 million to 20.5 million units in urban areas [IBEF, 2011]. Cushman and Wakefield [CSE / Roychowdhury, 2011] further point out that real estate development during 2008–2012 was concentrated in just a few megacities of India. Almost 80% of the projected demand was in seven major cities in India, that is, National Capital Region (NCR) of Delhi, Bangalore, Mumbai, Pune, Hyderabad, Chennai, and Kolkata. The above-mentioned trends of growing urbanization, rising income, and increasing population make it necessary to develop housing facilities and to create infrastructural facilities more rapidly and extensively. Real estate and infrastructure development is therefore a key priority for India. This is seen clearly in the increased investments made in the sector in the past few years. As a result, the construction sector in India is expected to grow rapidly in the coming years. It is expected to grow by more than 70% from the 2011–12 value to reach a level of Rs. 13,590 billion by 2016–17. Consequently, the real estate segment is expected to grow at an average annual rate of about 20% in the next five years [ASA & Associates, 2012]. Given the strong growth drivers, the built-up area in India is expected to increase exponentially. According to ASCI–NRDC [2012], at the current level, about 70% of the buildings that will exist in 2030 have yet to be built. Considering the current housing stock of 330 million housing units, the estimation by ASCI-NRDC is that around 770 housing units will be built until 2030 (Figure 56). CSE predicts that the overall constructed area will swell to around five times the current size, reaching approximately 104 billion square feet by 2030. CSE further expects that
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India’s Future Needs for Resources
the demand for low-cost housing will rise to 38 million affordable housing units by 2030 (from 25 million housing units in 2007; [CSE / Roychowdhury, 2011]). Figure 56: Existing housing stock and housing units to be built according to NRDC-ASCI until 2030
Source: Own figures based on Government of India, 2012b and NRDC-ASCI, 2012.
G.2.6 Specific description of selected technical aspects As described above, the choice of materials used in the construction of buildings depends on various factors such as regional availability, affordability of prices, technical and legislative standards, municipal regulations, skill and knowledge of builders or labourers, as well as the further requirements of a building in order to meet, for example, housing demands in different climate zones. The Indian census divides housing units according to the materials used for the construction of roofs, walls, and floors. The predominant material for roofs is concrete in about 30% of houses, while brick is the key ingredient for walls in about 50% of houses. Floors in about 32% of houses are made of cement, which is next only to mud, which accounts for 45% of houses (Figure 57). Figure 57: Predominant materials used for construction of roofs (above) and walls (below)
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Source: Government of India, 2012b.
In India, data on the quantity of each material that goes into the creation of a building are limited. However, some studies, in particular those undertaken by Ramesh et al. [2012, 2013], have analysed the material composition of a conventional residential building. Ramesh et al. [2012] focused on a building in the state of Hyderabad (Andhra Pradesh), and Ramesh et al. [2013] on a building in Allahabad (Uttar Pradesh), to assess the material and energy requirements of the same. Table 8 provides an overview of the material composition of both buildings. Table 8: Material composition of buildings analysed by Ramesh et al. 2012 and 2013 Hyderabad
Allahadad
One-storey, two bedrooms, living room, and kitchen building, with an area of about 85.5 m²
Four-storey multifamily residential house comprising 44 apartments with useable floor area of 2960m² (average per apartment: 67.3 m²)
Key Materials (kg/m²) Cement Steel
268.77
186.93
51.13
86.59
Aluminium Brick
0.05 1,583.56
1,426.38
567.02
697.51
Glass
2.12
0.54
Copper
3.13
0.10
19.20
80.07
0.92
0.71
71.39
46.35
Aggregates
Ceramic tile PVC Marble Sand
649.12
Paint
0.19
Flush door
4.76
Grey cast iron pipe
3.72 Sources: Ramesh et al., 2012, 2013.
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India’s Future Needs for Resources
Thus, the census and the above-mentioned studies point to the importance, and partly even the dominance, of cement and concrete (a compound of cement, sand, and aggregates) as well as brick as material inputs of a residential building or house. The specific materials used in construction have an important impact on the raw material demand during the construction, operational, and demolition phases. This issue is discussed in detail in the following chapter. In addition to the material inputs, other factors also influence the resource intensity of a residential building or house, in particular:
- Average life span of a building: Constructing residential buildings or houses requires large investments, and they are often built to last for generations. Naturally, a building that lasts several decades, or even centuries, is less resource intensive than a building that has to be demolished some years after its construction. Although the life spans of buildings vary widely (some buildings last for several centuries), Ramesh et al. [2013] noted a service life of 75 years in his study on the building in Allahabad. These data will be used for calculating the average life span of a building in the following paragraphs.
- Type of energy source: As in the automotive sector, in the building sector also, the type of energy source employed influences the resource intensity of a building. Particularly during the operational phase of a building, energy is used for cooling, heating, lighting, and for running electrical appliances. Fossil fuels (e.g. petroleum, coal) and renewable energy (e.g. wind, water) are used as energy sources in India (see also the following case study on renewable energy, chapter G.3). Buildings mostly do not produce energy themselves, but purchase energy from public energy producers, and thus use the typical Indian energy mix in which coal is the dominant energy source.
- Technical equipment and appliances Buildings increasingly contain more technical and electrical appliances. Sanitation appliances inside buildings, part of the basic equipment, require water pipelines and canalization. Currently, 53.1% of buildings in India do not have a latrine within the premises [Government of India, 2012c]. The penetration and technical configuration of other appliances such as televisions and refrigerators, and also of ventilation systems, mainly determine the electricity demand of a building during the operational phase.
- Location of building India has five climate zones: hot-dry, warm-humid, composite, moderate, and cold. Each climate zone entails specific demands on the functionality of buildings, in particular for cooling and heating.
- Average living space per person The average living space per person changes significantly the material input required for meeting the given housing demand. Currently, the average living space per person is around 20 m². In the international context, it was observed that average living space increases with rising income. For example, in Germany, the average living space per person increased from 18 to 42 m² between 1960 and 2009. In urban China, it increased from 17 to 30 m² between 1998 and 2005.
G.2.7 Meeting resource efficiency Given that buildings are among the largest resource consumers in the economy, several initiatives worldwide are aimed at improving resource inputs and at reducing the environmental impacts of buildings. In the past, particular emphasis was laid on improving the energy efficiency of buildings. In recent years, the embedded energy of buildings, such as the energy used to produce building materials, has gained increasing attention. Several initiatives, in particular rating programmes, also address additional environmental aspects such as water and (toxic) materials. Examples in the international context are BREEAM (Building Research Establishment’s Environmental Assessment Method), one of the first building environmental assessment methods developed in the UK; CASBEE (Comprehensive Assessment System for Building Environmental Efficiency) in Japan; and LEED (Leadership in Energy and Environmental Design) in the United States; for an overview, see [MNRE / TERI, 2010] and [MNRE / TERI, 2010]). Challenges and solutions in the hot-spot sectors—automobile construction, and renewable energy
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In India, TERI has developed an India-specific rating system named GRIHA (Green Rating for Integrated Habitat Assessment), which was adopted as the national rating system for green buildings by the Government of India in 2007. GRIHA is a tool that facilitates the design, construction, and operation of green buildings in India, that is, it measures the “greenness” of a building. GRIHA compliance for a typical office building used for 8 hours results in 30%–50% reduction in energy consumption compared to the GRIHA base case and to the implementation of good practices on-site at no or at negligible incremental cost. Further, the experience of GRIHA implementation on site helps in influencing and implementing policy at various levels at the centre and at the state. GRIHA was developed to meet the specific requirements of the Indian housing and environmental context. The rating system is highly comprehensive, including several stages from site planning to construction, to operation and maintenance of buildings, and providing several options for improving resource conservation and enhancing resource use and efficiency of buildings (Figure 58). Figure 58: Overview of GRIHA criteria
Source: TERI, 2013.
GRIHA is already part of the national policy pertaining to the building sector. MNRE launched GRIHA as a national rating system in 2008, and CPWD adopted GRIHA as a Green Building Standard in 2009. The Government of India made GRIHA 3 stars (that is, scoring at least 71 out of 100 points) mandatory in all new central government buildings in 2010. As GRIHA already offers various possibilities for resource savings and for improvements in resource efficiency, the present case study analyses selected aspects of material efficiency in the building sector in order to provide additional supporting evidence and to point to further potentials for improving material efficiency in the sector. Hence, two aspects will be analysed: first, cement as an example of why and how material savings during the construction phase of a building could be improved; and second, the choice of materials used for the walls of buildings to show the impacts of the selected materials over the life span of the building.
G.2.7.1 Construction material: Choosing a particular cement Concrete, a compound of cement, sand, and gravel, is one of the most common materials found in buildings in India. Thus, cement production offers large resource-efficiency potentials in the housing sector. Cement and also mortar are very old building materials. Some of the world’s most remarkable constructions, such as the Pantheon in Rome and the Great Wall of China, were built with cement and mortar. Cement and mortar are not
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only very old and long-lasting construction materials but are also widespread. There is hardly any region in the world where cement and mortar are not used for construction. The basic component of cement is limestone (largely CaCo3). When limestone is heated to more than 1,000°C in a kiln, carbon dioxide and lime (CaO) are released. Lime is mixed with water and sand in a specific proportion to make mortar. Mortar prepared in this way hardens when it is exposed to air, as carbon dioxide is reabsorbed into the atmosphere. When lime is mixed with silica, alumina, and sand, and water is added, it leads to a chemical reaction called curing. The result is a very hard, long-lasting, and water-resistant material. Further additives enhance specific product characteristics. Portland cement, the cement used most commonly around the world to produce concrete, is a mixture of lime, clay (which contains silica and alumina), sand, and iron. The cement industry is one of the main emitters of CO2. According to the International Energy Agency [2009], it is responsible for 5% of CO2 emissions globally. In India, the cement industry is currently responsible for approximately 7% of the country’s total anthropogenic CO2 emissions [Wbcsd / IEA, 2013]. Two sources are mainly responsible: first, the chemical reaction of the decomposition of limestone into lime, as mentioned above; and second, the heating process in the kiln up to 1,450°C to produce the pellets of clinker. While the first emissions are inherent in the production of cement, the second emissions depend strongly on the energy sources used to heat the kiln. However, in the following paragraphs, the case study does not focus on the output side of the cement industry, but analyses aspects of resource input in cement production against the predicted cement demand.
Future demand for cement and limestone Global cement production increased from around 1 billion tonnes in 1980 to around 3.5 billion tonnes in 2010 mainly due to growth in production in China, the largest producer of cement currently. In India, the second largest producer, around 210 million tonnes of cement were produced in 2010, which was 6.3% of global production. India nearly quadrupled cement production between 1996 and 2010 [USGS, various years]. At present, India still has a low per capita consumption of cement, that is, of less than 200 kg per person [Wbcsd / IEA, 2013]. In the international context, as income increases, so does the consumption of cement [Allwood et al., 2012]. Based on with this observation, the road map for the Indian cement industry predicts that per capita consumption of cement will increase to between 400 tonnes (low-demand case) and 565 tonnes (high-demand case) in 203027 [Wbcsd / IEA, 2013]. In absolute numbers, this means a projected cement production of between 600 and 850 million tonnes in 2030, and of between 780 and 1,360 million tonnes in 2050 (Figure 59). Figure 59: Projected growth of cement production in India
Source: Own figures based on Wbcsd / IEA, 2013.
27 Wbcsd and IEA (2013, p. 47) project the cement demand intensity (expressed in kilogramme of cement per capita) using the expected growth in GDP per capita and the expected elasticity of cement demand and per capita income. Challenges and solutions in the hot-spot sectors—automobile construction, and renewable energy
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The main raw material used for the production of cement is limestone. Limestone, in particular for cement production, is usually seen as an abundantly available resource in India. Reserves amount to 14,926 million tonnes (see chapter E). The specific amount of limestone required to produce a unit of clinker and following that a unit of cement varies according to the specific limestone source. The British Geological Survey [BGS, 2005] estimates that the raw material requirement for each tonne of cement is typically 1.65 tonnes of limestone (with a variation of 1.5 to 1.8 tonnes per unit of average cement, which is predominantly OPC). Following BGS, the average input of limestone combined with the predicted demand for cement, as mentioned in the road map for the Indian cement industry, it is estimated that the yearly demand for limestone will increase to a figure between 1,000 million tonnes (low-demand case) and 1,400 million tonnes (high-demand case) in 2030 (Figure 60, left). By cumulating the yearly required amounts of limestone for cement production in both scenarios, and by comparing this figure with the size of the known Indian reserves of limestone, we can estimate that the known reserves may last until 2028 in the high-demand case, and until 2031 in the low-demand case (Figure 60, right). Figure 60: Projected demand for limestone in India, yearly (left) and cumulated (right)
Sources: Own calculation based on BGS, 2005; Wbcsd / IEA, 2013.
Improvements in Material Efficiency However, the particular demand for limestone depends on the type of cement required, and thus leaves room for resource-efficiency improvements. In OPC, the share of limestone input as clinker is higher than 95%, and in blended cements, the share of limestone input is less. In blended cements, the input of clinker is partly substituted by other materials such as puzzolan, fly ash, slag, and red mud. Thus, the substitution of clinker input not only reduces energy input in the production process significantly, but also reduces limestone input because less clinker is required. However, it should be noted that the substitution of clinker leads to a decrease in the density of the cement and concrete. Thus, OPC, the densest and strongest cement, may not be substituted in all cases [BETON, 2012]. The current share of cements in India is 25% OPC, 67% PPC, and 8% PSC [Planning Commission, 2007b]. The Government of India is already promoting the blending of cement, which improves resource efficiency considerably. In the GRIHA rating (criterion 15), the use of cement and of further structural elements containing flyash is also scored. Figure 61 shows the demand for limestone depending on the type of cement employed, using the low-demand scenario of the cement industry roadmap and comparing the limestone demand for OPC and for blended cements, presenting the spread between the lowest and the highest shares of limestone substitution. Given the estimates of future demand for cement in India, it is clear that substitution contributes significantly to the reduction of pressure on limestone reserves (as described in chapter E). New types of cement, which are even less resource intensive in terms of limestone and energy input, have been developed. One example is the award-winning Celitement cement, in which lime and sand are bound at a low temperature of around 300°C while water is added (and not reduced) during heating. This leads to significantly lower inputs of energy while producing the clinker. Furthermore, compared with OPC, only one-
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third of limestone input is required to produce one unit of calcium-silicate-hydrate [Celitement, 2013]. This cement is not yet marketable. Nevertheless, this example demonstrates how new innovations can further enhance resource efficiency in the sector. The Building Materials and Technology Promotion Council under the Ministry of Housing and Urban Poverty Alleviation, Government of India, is working towards the introduction of a number of building materials and technologies based on agro-industrial wastes such as flyash-based bricks/blocks, cellular lightweight concrete, bamboo-based materials, and bagasse boards. The council has taken initiatives such as the construction of bamboo-based demonstration structures in the states of north-eastern India. It has formulated a number of Indian standards in close association with the Bureau of Indian Standards (BIS) on cost-effective technologies such as flyash bricks, RCC planks and joist, and bamboo mat-corrugated roofing sheets. However, there is considerable scope for the wide-scale applications of such initiatives and for conducting research in new material-efficient technologies. Figure 61: Demand for limestone depending on type of cement
Sources: BGS, 2005; Celitement, 2013; Planning Commission, 2007b; Wbcsd / IEA, 2013.
Thus, the case of cement as one of the most important inputs in the building sector has demonstrated that a basic input material in the building sector, limestone, which is currently not scarce, will become scarcer given the future demand in this sector. The choice of cement type (where feasible) as well as the use of innovative technologies (where feasible) could reduce significantly the required amount of material input, that is, limestone (as well as energy input, not analysed in this study), and improve material efficiency in the building sector. Consequently, current and future pressures on limestone reserves, particularly in environmentally and socially sensitive zones, could be mitigated.
G.2.7.2 Importance of selected building materials, for example, in building walls Buildings can be constructed of a variety of materials. The material composition of Indian buildings, that is, in floors, walls, and roofs, as presented in the official census, involves a variety of materials. In the following paragraphs, a case study of the wall of a building will be used to show how the choice of the material used to construct the wall can influence the material efficiency of the building not only during the construction phase but also during the operational phase. The walls of Indian buildings are constructed of several different materials such as brick, concrete, wood, metal, mud, plastic, and grass. Burnt brick is the dominant material, with 48% of Indian buildings having burnt-brick walls ([Government of India, 2012c;], see also above). Further, brick is the dominant key material in terms of quantity per square metre of area constructed, as shown by Ramesh et al. [2012, 2013], with 1,583.56 and 1,426.38 kg per m² in the analysed buildings in Hyderabad and Allahabad, respectively.
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Aerated concrete: Compared to burnt brick, aerated concrete is a less dense material, although it fulfils the carrying specification for building walls. It is not flammable and is open for the diffusion of steam. Compared to burnt brick, the insulation characteristic of aerated concrete is significantly higher. Ramesh et al. [2013] suggest the further use of aerated concrete to improve the energy and material efficiency of a building throughout its life cycle.
[Dittrich, 2013]
Strawtec: Strawtec is made out of straw, a waste product of agriculture. It was developed in Uganda, and its use was approved in two level buildings, in the inside and outside walls of the buildings.28 Strawtec has won several awards. It is now also produced in Europe and is used as an alternative to dry walling inside buildings. In the following section, Strawtec is modelled as an alternative for interior walls.
[IFEU 2013]
In the following paragraphs, the analysed building in Allahabad will be used to assess how global warming potential, raw material input, energy demand, and freshwater consumption change throughout the entire life-cycle of a building if the walls were not constructed with burnt brick but with alternative materials, namely:
Additional insulation material: As encouraged by the Indian government and included in the GRIHA system, the insulation of exterior walls may increase the energy efficiency of a building significantly during the operational phase. Various insulation materials are already available in India. In the following model, a PUF PIR panel of Lloyd insulation was chosen simply due to the fact that it is the first product described in the product catalogue of GRIHA. These materials can be used and combined in several different ways in a building, compared to the basic house described by Ramesh et al. [2013]: 1. Aerated concrete. All walls are constructed using aerated concrete instead of burnt bricks. 2. Strawtec. All inside walls are constructed using strawtec; the outside walls are made of burnt bricks. 3. Aerated concrete–strawtec. The outside walls are made of aerated concrete, and the inside walls are made out of strawtec. 4. Burnt-brick insulation. The building (wall, roof, and floor) as described by Ramesh et al. (2013) was insulated with the above-mentioned panels until the point the building reached the passive-house standard as described in Feist et al. [2011] for Dubai. This standard was chosen because there is no particular standard for India available, and Dubai is the region with a climate most similar to that of India among the regions analysed by Feist et al. In this and in the two following options, windows were also adopted in the standard. 5. Aerated-concrete insulation. As in combination 4, only based on a building with aerated concrete instead of burnt brick. As aerated concrete already has insulation characteristics, fewer insulation panels are required. 6. Aerated concrete–strawtec insulation. As in combination 4, only based on the building described in combination 3 with aerated concrete-based outside walls and strawtec-based inside walls. As in combination 28 www.strawtec.com (last accessed 20/09/2013).
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5, the choice of aerated concrete for the exterior walls reduces the required thickness of further insulation material. The passive house standard for the thickness of insulation was chosen because the concept of a passive house is an innovative way of reducing the energy consumption of a building. A passive house is defined on the basis of the level of energy consumption. For certification in Germany, for example, heating demand cannot exceed 15 kWh/(m²a) for an indoor temperature of 20°C. The low consumption standard is reached by making use of different strategies to prevent energy flows at and within the building, such as insulation, high-quality windows, air-tightness, and the avoidance of thermal bridges [Feist, 2011]. Figure 62 compares the primary raw material demand for the different usages and combinations of external walls as described above. The chosen basic unit is material input for housing space per person and year. The raw material demand in the basic standard house in Allahabad as analysed by Ramesh et al. [2013] is 1,108 kg of material input per person and year. The results show that the substitution of the burnt-brick wall by aerated concrete reduces the amount of raw material demand of building materials by 39%. If the inside walls are substituted by strawtec, the raw material demand for building materials would be reduced by 43%. Insulation naturally increases the raw material demand; if the basic house in Allahabad could be insulated, as explained above, the raw material demand for building materials would increase by 3%. Figure 62: Primary raw material demand for a unit housing space per person and year by the different options of building materials and potential savings
Source: IFEU 2013.
The inclusion of the raw material demand (for electricity consumption, water consumption, and the disposal of the building) shows the overall raw material demand of a building. In passive houses, as per the definition, the energy demand, and thus the electricity demand, is low because insulation reduces in particular the electricity (energy) demand for heating and cooling the building. Figure 63 shows that the substitution of burnt brick by aerated concrete has an even greater overall effect on the raw material demand throughout the lifespan of the building than the insulation of the basic building. The greatest effect is produced by the combination of aerated concrete and strawtec along with further insulation. In this option, the overall raw material demand could be reduced by nearly half compared to the basic building in Allahabad.
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Figure 63: Overall primary raw material demand of the building options per person and year
Source: IFEU 2013
Saving options can be realized not only in terms of raw material inputs but also in terms of primary energy demand. In the model, both the operational energy and the embodied energy in the building materials are included. Embodied energy is the energy required to produce the building material. Primary energy demand is significantly lower in the options that comply with the passive house standard (Figure 64). Figure 64: Primary energy demand of the different options
Source: IFEU 2013.
Savings in material and energy input are usually also linked to savings in final disposal. Not only is the amount that has to be deposited reduced, but the raw material and energy demand used in the phase of disposal is also reduced. Compared to the basic building in Allahabad, both raw material demand and energy demand could be reduced by around one-third if aerated concrete is used (Figures 33 and 34; due to the small scale, visibility is not good). The
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recycling of building materials cannot be addressed in more detail in this case study due to limited space. However, it should be stressed that recycling and reusing building materials could further reduce the primary raw material demand and the energy demand, and thus contribute to resource efficiency in the housing sector. Given the housing demand in India, as explained above, the potential future savings in terms of resource efficiency are immense in absolute values. Even if average living space were to remain constant, the possible savings in primary raw material demand would exceed one billion tonnes – based only on the choice of the material(s) used for the walls. Figure 67 shows the raw material demand in 2030 by the different options. Even if average living space were to remain constant, the amount of raw material required for housing for all Indians would be 3 billion tonnes if all buildings were built like the building analysed by Ramesh et al. [2013]. In contrast, the raw material demand for building materials, electricity consumption, water consumption, and disposal would be only 1.56 billion tonnes if the buildings were built in the most resource-efficient way among the analysed options, resulting in a saving of 1.4 billion tonnes in required raw materials, including a saving of 697 million tonnes in building materials and a saving of 700 million tonnes in material input for electricity consumption. Figure 65: Raw material demand and potential savings for buildings in 2030 by the different options
Note: Projection is based on medium population growth as provided by UN. Source: IFEU 2013.
It should be noted that the savings refer only to the year 2030. Given a life span of a building of around 75 years, the difference between a building in Allahabad requiring 146 tonnes per inhabitant to serve the function of housing versus a building with aerated concrete in exterior walls, strawtec in inside walls, insulation, and high-quality windows would require only 77 tonnes per inhabitant to serve the same function of housing. Thus, hypothetically and regardless of all differentiations, if all of the 770 million houses estimated to be built until 2030 were to be constructed with the most resource-efficient option instead of the basic building option, more than 50 billion tonnes of different materials could be saved throughout the life span of these buildings – based only on the choice of wall materials.
G.3 Renewable Energy Sector G.3.1 Introductory description of the sector in general and in India India is one of the fastest growing countries in terms of energy consumption. Currently, it is the third largest consumer of energy in the world [Enerdata, 2013]. At the same time, the country is heavily dependent on fossil fuels for meeting most of its energy needs. To ensure economic growth in the coming years, it is important to address the issue of energy
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security. At the moment, the required fossil fuels are largely imported. According to the World Energy Outlook Report, India will become the third largest net importer of oil before 2025, after the USA and China [DIREC, 2010]. India has taken significant steps to ensure its energy security while also taking action to achieve global climate-change objectives. The use of renewables is a potential option for achieving these twin goals. Renewable energy-based decentralized and distributed applications have already benefitted millions of people in rural areas by meeting their cooking, lighting, and other energy requirements in an environmentally friendly manner [MNRE, 2012a]. With a projected high-growth trajectory, and also keeping in mind the principles of sustainable development, India is now focusing on maximizing its utilization of renewable energy potential.
G.3.2 Development of the Renewable Energy Sector Worldwide and in India There are high expectations from renewable energy globally. In June 2011, the Intergovernmental Panel on Climate Change (IPCC) released a Special Report on Renewable Energy Sources and Climate Change Mitigation (SRREN). The report suggests that in some scenarios, the renewable energy share in the global energy mix could reach 77% by 2050 [IPCC, 2011]. Further, in some cases, renewable energy technologies are already economically competitive, and if environmental impacts such as emissions of pollutants and greenhouse gases were monetized and included in energy prices, more renewable energy technologies may become economically attractive. India is the fourth largest country in terms of installed power generation capacity in the field of renewable energy [Ernst & Young, 2012]. The demand for power is growing exponentially, and the scope of growth in this sector is immense. India’s power supply–demand gap has averaged between 8% and 10% over the last decade where electricity access exists. Average per capita consumption of electricity in India is 879 kWh per year [Central Statistical Organisation, 2013], which is much lower than that in developed countries (Figure 66). Thus, this figure is expected to rise sharply due to high economic growth and rapid industrialization. Undoubtedly, renewable energy is the most feasible option for the country. The Government of India estimated the renewable energy potential from different renewable energy sources in the country as 245,880 MW [Government of India, 2013]. The market for renewable energy in India is growing at an average annual rate of 15% [DIREC, 2010]. This growth is expected to continue in the near future as stricter environmental norms and regulatory pressures are applied and imposed on Indian industries. Figure 66: Electricity consumption per capita in selected countries (2010)
Source: World Bank 2012.
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G.3.3 Economic relevance of the sector In 2011, the share of renewable power installed capacity was 10.62% of the total installed capacity in power generation, whereas wind accounted for more than 70% of installed capacity among the renewables. In the same year, the share of renewable energy in total electricity generation was 5.5% [CEA, 2012a]. The sector currently employs 0.2 million people [WIPRO, 2012]. This figure could be multiplied up to 14 times by 2030 with the right policies and investments in place, according to the India Energy [R]evolution Report [Greenpeace International, 2012]. According to this scenario, by 2050, about 92% of India’s installed energy infrastructure could be based on renewable energy sources and comprise 74% of electricity generation, thereby helping the country reduce its carbon emissions in the face of climate change. Figure 67 compares the different shares of energy sources in India’s electricity mix. The installed power capacity is the overall installed potential of power, and is measured in watts. The numbers for energy generation – which is measured in watt-hours – give better information on how much energy is actually produced. To clearly see the contribution of renewable energy to India’s energy mix, installed capacity along with capacity utilization needs to be considered (it is misleading to consider installed capacity alone, since capacity utilization factors for renewables are much lower than those of conventional sources). In this context, it is the final energy output that offers a proper explanation for the requirement or demand, and for how much of this requirement or demand is met. Figure 67: Indian electricity mix by installed capacity and energy generation
Data source: Central Statistical Organisation, 2013; CEA, 2012b; CEA, 2012a.
G.3.4 Requirements of natural resources in the renewable energy sector Nevertheless, the generation of renewable energy also faces relevant resource constraints. Wind energy, which forms the biggest part of India’s renewable energy supply, often requires certain key metals. In state-of-the-art wind turbines with direct-drive permanent-magnet generators, about 550 kg of permanent magnets or 150 kg of neodymium (a rare earth material) is used per MW [Kleijn / van der Voet, 2010]. At the moment, very few wind turbines actually use directdrive systems with permanent magnets. Most turbines use electromagnets in geared generators, which are primarily made of copper and iron. Therefore, neodymium constraints will not inhibit the large-scale application of wind turbines in general, but it will limit the market share of certain types of wind turbine systems. Other renewable energy technologies also consume highly specialized materials, such as photovoltaic cells. A study conducted by the Fraunhofer Institute suggests that some raw materials used in solar power technologies could become scarce compared to their demand in future scenarios, due to their limited recycling possibilities among other reasons [Angerer et al., 2009]. In addition, India’s rivers have enormous hydro potential, which remains unexploited to a great extent. This is due to financial and technical constraints, but is also due to inter-state disputes fuelled by anxieties about increasing water scarcity. As pressure increases on scarce water sources, conflicts around energy production and water availability are
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expected to continue. The water–energy conflict is an increasingly important dilemma in India because both resources are needed in an emerging industrial country. This is also the reason why India differentiates between small hydro projects (< 25 MW), which are categorized under conventional energy sources due to their critical environmental and social implications, and large hydro projects.
G.3.5 Drivers of demand and future prospects To understand the composition and direction of future demand in the renewable energy sector, it is crucial to identify the factors that drive the dynamics of this sector. These drivers can be quantitative and/or qualitative (see Table 9). Table 9: Quantitative and qualitative drivers of demand Quantitative
• • • • • •
Energy deficit as population increases Increasing fossil fuel prices Large untapped potential R&D expenditure on renewable energy technology Environmental concerns (e.g. CO2 emissions) Government policy (e.g. public expenditure on renewable energy sector)
Qualitative
• •
Need for strengthening India’s energy security
•
Complementing energy supply from nonrenewable sources (e.g. viable solution for rural electrification)
•
Government policy (e.g. qualitative indicators, tax subsidies)
Pressure on high-emission industries from their shareholders and government
Source: Based on Meisen, 2006.
Figure 4: Primary energy: Production, consumption, and deficit (TWh)
Figure: TERI 2013. Data source: Central Statistical Organisation, 2013.
Mismatches between the economy’s total energy requirements and its capability to produce primary energy generate an energy deficit. This deficit is an important indicator for measuring the magnitude of pressure on renewable energy. In the 1970s, India’s production of primary energy from conventional sources exceeded consumption, but later in 2005–06 consumption overtook production. As of 2010–11, India’s energy deficit was high, being of the magnitude
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of 805.6 TWh [Central Statistical Organisation, 2013]. If production at the 2010–11 level is frozen, and if the consumption requirement is projected until 2022 (13th Five Year Plan), the projected energy consumption would outnumber the 2011 energy production by more than twofold. Hence, energy deficit is acting as a driver of growth in this sector. In the electricity sector, generation more than tripled between 1985 and 2005. The Central Electricity Authority of India estimates an electrical energy requirement of roughly 1,400 TWh in 2016, and of 1,920 TWh in 2021 (see Figure 64). This means nearly a doubling of electricity demand between 2010 and 2022. India faces a major challenge in meeting this additional demand in a short period of time since it already suffers shortages in electricity supply. Figure 68: Development of electricity generation in India (TWh)
Source: British Petroleum, 2012 (1985–2011); CEA, 2012c.
The energy deficit is also going to drive up fuel prices if adequate supply cannot be ensured. The withdrawal of subsidies has already driven up petroleum and diesel prices in 2012. However, as kerosene, diesel, and petroleum prices rise, alternative energy sources become increasingly viable. Even if subsidies have to be provided initially to ensure affordable alternative energy sources, they will help in making the industry mature and subsequently reap increasing returns-to-scale benefits and enjoy lower prices. In this context, public expenditure on the renewable energy sector will not only serve to create capacity but also will act as a good indicator of the capability of this sector in meeting India’s future energy needs. Figure 69: Renewable energy investment in billion USD
Figure: TERI, 2013. Data source: UNEP / Frankfurt School, 2012.
Another driver promoting renewable energy is growing concern over environmental issues, resulting from the burning of fossil fuels for energy generation. In this context, rising CO2 emissions can be taken as a rough indicator for this driver. In India, CO2 emissions per capita are very low in comparison to those in industrialized countries. But taking into account the experience of other emerging countries like China and Korea, it is expected that CO2 emissions
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will rise significantly in India.29 Given the negative effects of climate change, every country is responsible for taking measures to mitigate emissions that trigger climate change. India has the opportunity to follow a different path in energy generation since the relevant technology and the required funding are available.
G.3.6 Description of selected technical aspects Renewable energy potential in India is not uniform across all regions. The availability of renewable energy depends largely on the climate, location, and geography of the place. For example, coastal regions have access to tidal energy, but not the interior of the subcontinent. Despite this, India has high potential in different renewable energy technologies, especially wind energy, which already has a prominent share of around 70% within the renewables for electricity generation. Wind power generation in India is mainly onshore, and there is no offshore installation till now. This case study will focus on wind energy in the following discussion on resource efficiency. The most prominent feature of wind climatology in India is monsoon circulation. Winds in India are influenced by the southwest summer monsoon, which starts between May and June, when cool, humid air moves towards the land; and the northeast winter monsoon, which starts in October, when cool, dry air moves towards the ocean. Thus, the states that lie directly in the path of these winds naturally are the prime locations for wind energy generation. These states are Gujarat, Andhra Pradesh, Karnataka, Madhya Pradesh, Kerala, Maharashtra, Rajasthan, Tamil Nadu, Orissa, and West Bengal. Wind turbines can be set up in very different geographical settings, such as valleys, mountains, seas, and coastal areas. Small turbines even have the potential to be set up in urban locations. The construction and operation of wind turbines have an impact on the natural environment, ranging from their striking appearance across the landscape to birds flying into turning rotors. It is believed that the benefit of wind energy far outweighs the damage caused by the use of fossil fuel energy sources. Precautionary measures should help in mitigating potential negative impacts. There are different types of wind turbines, which convert wind energy into electricity. The main difference is the type of drive system used. As discussed earlier, electromagnets in geared generators are the most common drive systems, but the use of direct-drive systems with permanent magnets may increase in the future, as they demonstrate a high level of efficiency. Generally speaking, a conventional wind turbine consists of a foundation, a tower, a nacelle module, rotor blades, a turbine transformer, and electronics/cables. Figure 70: Composition of a conventional onshore 3 MW wind turbine
Image: Modified BMU / Bernd Müller 2013. Source: PE NWE, 2011.
29 This is due to the fact that China nearly tripled its per capita CO2 emissions between 1990 and 2010, Indian emission rates are expected to show a similar trend. In 2010, China emitted 6.18 tonnes, South Korea 11.78 tonnes and India 1.64 tonnes CO2 per capita, UN, 2013.
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Figure 70 demonstrates the material composition of a conventional onshore wind turbine without the foundation, which consists mainly of concrete. The main components next to concrete are steel, plastics, ceramic/glass, and copper. Large amounts of copper are used in the generator of the wind turbine and in all the internal and external cables. Also, cobalt is widely used in alloys and magnets, to increase the heat resistance of the materials. Hence, it is commonly used in the electricity generating sector [Reller, 2012]. The economic significance of these raw materials has been described in chapter E. They also contribute to high emissions during the production phase and to general high-resource consumption. There is a need for an in-depth analysis on whether the use of large volumes of such resource-intensive raw materials is justified from the point of view of resource efficiency.
G.3.7 Meeting resource efficiency Using renewable resources for energy generation generally contributes to resource efficiency since they are abundant and their availability is not restricted as in the case of fossil fuels. Hence, a diversification of energy-generation sources is highly recommended, and is already the focus of many energy policies around the world. Besides the use of renewable energy itself, several measures can be taken to further enhance resource efficiency. The renewable energy sector is closely related to the development and use of high-end technology, which holds a huge potential for developing efficiency options. Usually, sophisticated materials are used in the manufacturing process of RE technology. These materials are often expensive and cause extensive environmental damage, since they require a differentiated production process. Savings of certain materials via smart design or substitution can save costs and reduce environmental burdens. Focusing on Green Technology in the energy sector is an ambiguous but promising option for an emerging economy like India. Both experience and advanced technology are available, hence developing countries do not have to follow the emission-intense path taken by the industrialized countries in the twentieth century. Taking advantage of Green Technology during the period of economic growth seems to be the best option considering resource availability and environmental concerns. As discussed previously, certain materials used in this sector are critical to meeting India’s resource demand. An efficient use of these materials should be supported because high-tech sectors such as renewable energy are particularly vulnerable to shortcomings in supply, and this factor is clearly a disadvantage when dealing with international competition.
G.3.7.1 Wind energy as the focus of resource efficiency As already discussed in chapter G.3.1, Indian electricity demand is going to rise sharply in the next decade. Wind energy could contribute a certain share to meeting this additional demand since it is already well established in India. Onshore wind potential is largely untapped, and offshore wind potential has yet to be explored. C-WET, the official research institution run by the Ministry of New and Renewable Energy (MNRE), estimated an onshore potential of about 103 GW at a hub-height of 80 metres. However, other studies30 have concluded that the potential is far higher. For instance, the Berkeley Lab estimates a potential of 2006 GW at a hub-height of 80 metres (no farmland included) [Phadke et al., 2012]. Figure 71 shows the development of installed capacity and electricity generation of wind turbines in India until 2011. Due to the fluctuating development of the Indian wind energy market (which is based largely on a policy scenario), it is not easy to project the future amount of windbased electrical energy. Two different scenarios are outlined. The RPO31 target scenario assumes that non-solar RPO targets are mostly met by wind energy. Furthermore, the moderate and advanced wind energy scenarios published by GWEC are plotted to gain a better understanding of the data. Since the study focuses on resource efficiency in the wind energy sector, a detailed projection of future wind energy is not the aim. Rather, this approach is intended to point out the saving potentials in the sector for India.
30 [Phadke et al., 2012]; [Lu et al., 2009]; [Hossain et al., 2011] 31 Renewable Purchase Obligation (RPO): It refers to the obligation imposed by the law on the obligating entities (distribution licensees, captive users, and open access consumers) to purchase electricity from renewable energy sources. The RPO policy, devised under the National Action Plan on Climate Change (NAPCC), targeted to produce 5% green electricity in 2009, 7% in 2012 and 15% by 2020 [Government of India, 2008]. Challenges and solutions in the hot-spot sectors—automobile construction, and renewable energy
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Figure 71: Development of wind-based electricity generation in India under different assumptions
Source: MNRE, 2012b (1997–2011); TERI, 2013; GWEC, 2009.
According to the future energy demand predicted by the Central Electricity Authority of India, there will be an additional demand of about 2,500 TWh by 2030.32 Since the main source of electricity generation is coal, it can be assumed that the future demand will be met mainly by coal. If the RPO target scenario is assumed, about 500 TWh could be provided by wind energy (see Figure 72). The saving potential of CO2 equivalents emissions between the two assumptions is about 630 million tonnes. If the total additional demand is generated by wind energy, the emissions would drop by 99% in comparison to coal.
32 The electricity demand in 2012 was about a thousand TWh. In 2030 the electricity demand is expected to be over 3500 TWh.
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Figure 72: India’s future additional electricity demand until 2030
Source: CEA, 2012c; TERI 2013.
Besides the savings of CO2 emissions, which reduces the potential for global warming, wind energy also contributes to the saving of other resources such as water, land, and raw materials. Nevertheless, it should be recognized that a broad implementation of wind-energy technology is accompanied by an increase in the demand for high-tech materials such as copper, cobalt, and rare earths. Figure 73 depicts the sharp increase in the demand for steel and copper for the production of wind turbines if the RPO targets are met. Therefore, the saving potentials of these technologies need to be considered to evaluate if the overall balance is still resource efficient. Figure 73: Annual demand for steel and copper for wind turbines*
* Every installed MW corresponds to the material composition of a Vestas V112. Database: TERI 2013; PE NWE, 2011; UN Comtrade, 2012.
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Given the fact that an increase in electricity demand is inevitable, it is clear that the choice of the power source contributes to resource efficiency. In the case of wind turbines, besides the high demand for input materials, an even higher potential of resource savings could be reached compared to coal-based power plants. Table 10 summarizes the saving potential of different resources between coal-fired and wind-based power, with the reference value of one GWh. Table 10: Estimated consumption of resources by coal-fired and wind power-based plant Generation of 1 GWh
Coal fired power plant
1 256 000 l
65 m²
700 t
Wind turbine
500 l
0.005 m²
0.003 t
* Water: Cooling water is excluded. ** Raw materials: Included are all direct and indirect raw materials used during the life cycle. Source: IFEU 2013.
Figure 74 demonstrates the cumulative savings of primary raw materials if wind energy were to contribute as well to additional energy generation. The two graphs represent two scenarios. In the coal-based scenario, the total additional demand will be met by coal-based power plants. In the RPO target scenario, a certain share of the additional energy demand will be met by wind energy, and the rest by coal-based power plants. The RPO target scenario could save up to 350 million tonnes of primary raw materials by 2030. Figure 74: Cumulative savings of primary raw materials through wind energy
Source: TERI 2013; IFEU 2013.
G.3.7.2 Further potential of enhancing resource efficiency Besides the fact that wind energy in general contributes to resource efficiency compared to fossil fuel-based energy generation, further enhancements could be achieved by adopting ecological design options. The wind turbine itself deploys high-tech mechanisms, and companies are already trying to reduce material input in order to decrease costs. Hence, research and development in this sector is highly dynamic. One example of resource-efficient design is the choice of tower material for a wind turbine. Figure 75 presents some tower options for wind turbines. Today, the most commonly used tower material is steel. The wooden tower is an interesting concept proposed by a small start-up enterprise in Germany, which is not in series production yet [TimberTower GmbH, 2012].
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Figure 75: Different tower options for a wind turbine
Source: juwi AG, BMU / Bernd Müller, BMU / Christoph Edelhoff, TimberTower GmbH, Hannover.
Figure 76 compares steel and wooden towers for the environmental indicators, GWP and primary raw material demand. The wooden tower mainly substitutes steel components. This concept saves steel as a direct material as well as indirect materials as Figure 76 indicates (34% in total). The overall GWP balance is also better for the wooden concept (22%). This example demonstrates the further possibilities of enhancements in resource efficiency. Inarguably, the choice of material depends on many factors, and manufacturers are not always free to choose. Furthermore, the use of wood is a disputed issue in India, and enhanced frame conditions are needed to make sustainable use of this natural resource. Taking this into account, substitution of the tower material with wood is not the best choice for India at present. Nevertheless, it should be stated that innovative ideas may further enhance resource efficiency in this field. Figure 76: Environmental comparison of two tower concepts
Source: IFEU 2013.
Another important issue in this field is the choice of the magnet and the drive system. A commonly cited example is the controversy over direct-drive magnets, which need a large amount of the rare earth neodymium. On the one hand, these magnets are more efficient than conventional electromagnets and save a large amount of other materials since a gearbox is not needed. The higher level of efficiency results in a higher rate of electricity production. On the other hand, a critical raw material with high environmental burdens, namely neodymium, is required in the manufacturing process of these magnets. At this point, more in-depth analysis is needed to evaluate the trade-offs between the advantages and disadvantages from a resource-efficiency perspective. Challenges and solutions in the hot-spot sectors—automobile construction, and renewable energy
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G.4 Conclusions from the case studies The aim of the case studies was to draw attention to the potential for resource efficiency in different sectors of the economy. Of course, the case studies are not comprehensive analyses of all the resource-efficiency options available in the different sectors. Rather, they highlight certain areas with considerable potential and sensitize the public and policy makers to the issue of resource efficiency. The conclusions emerging from the case studies are summarized in the following paragraphs. The automotive sector is already undergoing highly dynamic development in India. Vehicles provide access to mobility and therefore satisfy a basic social need. The automotive industry is witnessing high growth rates in all segments of vehicles, particularly cars and two-wheelers. Since vehicles are highly material-intensive products, it makes perfect sense to consider efficiency potential in this sector because the impact will be significant. Usually, when the automotive sector is analysed in terms of environmental impact and efficiency, the focus of the discussion is on CO2 and other vehicular emissions. In terms of global warming, this is a very important discussion. The focus on resource efficiency calls for a different emphasis, but nevertheless leads in the same direction. This study focused on different vehicle options and on their raw material-saving potentials. A car was assumed in different sizes and compared to other mobility options such as two-wheelers and modes of public transport. From an efficiency perspective, a small car saves over its entire life cycle up to 25% of primary raw materials compared to a compact car. Considering the recent trend of SUV sales worldwide, it is estimated that a city car can save up to 40%. The study also analysed a lightweight and recycling option. In this case, lightweight means the substitution of certain steel components with aluminium. This substitution could save primary raw materials in the long term, but other evaluation categories, such as energy demand and annual land use, show minimal or no advantages. The reuse of vehicle materials has a very high savings potential if recycling loops could be further closed in future. A comparison between private mobility options and public transport indicates that public mobility is less resource consuming, which supports the messages or findings emerging from other discussions (e.g. global warming, urban air quality) about the need for promoting public transportation instead of private mobility. The housing sector plays a crucial role in the economic development of any country and in its material consumption. In India, the future demand for additional housing for the rapidly growing middle class, and also for a vast population of the poor, is immense. The building sector is usually analysed with regard to energy consumption and saving. In contrast, this case study focused on material-saving potentials and chose two examples for analysis, first, the potential savings of a selected raw material, that is, limestone, based on the choice of the cement used; and the potential overall raw material savings based on the choice of material for the walls of the building. Both examples demonstrated huge amounts of potential material saving without limiting functionality or compromising on the building standards. Both examples demonstrate the potential of primary raw material savings in India, thus emphasizing the relevance of material efficiency in the housing sector in the country. The case of cement has shown that the choice of the type of cement could mitigate significantly the pressure on the crucial raw material, limestone, which is still available abundantly in India, but where scarcity and thus additional pressure on sensible environmental zones is foreseeable. The case of different wall material options has shown how the chosen materials determine resource requirements throughout the life span of the building. Emerging countries like India are facing a sharply rising energy demand. It is crucial for any country to meet its energy needs in order to achieve economic development and to ensure social well-being. For this reason, it is one of the main tasks of the government to ensure reliable and safe energy supply for the future. Electricity generation requires many raw materials to meet the demand. Efficiency options in this sector could contribute to high savings in terms of primary raw materials. The most promising path is the expansion of renewable energy. The case study focuses on wind energy since its importance has already been acknowledged in India.
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Wind turbines only need the materials necessary for setting up the plant and the related infrastructure during the construction phase. During the operational phase, turbines use only wind resources to generate electricity. In comparison to fossil fuel-based power plants, turbines do not require fossil fuels such as coal, oil, and gas. This makes wind energy highly resource efficient during the operational phase. The material consumption per installed unit of power during the construction phase is considerably high, since materials such as copper, cobalt, and other critical metals are needed. Nevertheless, the net savings are far higher because the electricity generated by wind turbines consumes less than 1% of primary raw materials compared to electricity generated by coal-fired power plants. This fact turns the overall balance in favour of wind energy, which supports the conclusions and findings emerging from other discussions about the importance of reducing CO2 emissions and of mitigating energy dependencies. The technology of wind turbines could be further optimized to save building materials or to substitute economically and environmentally critical materials. Since steel is the main component of the tower in a wind turbine, the design and substitution aspects could open up further saving potentials. Another technological enhancement is the use of permanent-drive magnet-based generators in the wind turbine. This would, on the one hand, save materials and enhance the efficiency of electricity generation. On the other hand, it would increase the demand for critical materials like neodymium. The case studies in this scoping study do not claim to be comprehensive. Hence, it is advisable to go into further detail and analyse additional options for raw material savings in different sectors in India. In the housing sector, this will include further crucial input materials such as sand, gravel, clay, and metals. It will also involve the analysis of further material options not only for the walls of buildings but also for other parts like roofs and floors. In the automotive sector, other car and mobility concepts could be analysed in more detail. In the case of renewable energy, the focus could be broadened to include other renewable sources such as small hydro plants, biomass, and solar energy. At this point, social, environmental, and other issues have to be considered as well, and they should broadly support each other rather than compete.
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H. Resource efficiency in the context of Asia
The Asia Pacific region will continue with its current pace of economic growth. It will expand its manufacturing capacity; will build more infrastructure, buildings, and transport systems; and will enable increased household consumption through higher incomes. Such developments often have social impacts that can undermine development gains, if any, if they are not undertaken in a way that respects people’s social, environmental, and economic needs. This could eventually lead to social and political instability and to conflicts over resources. The Indian economy grew rapidly between 1995 and 2005, and there is huge potential for further growth in material use, as the country continues to urbanize and industrialize, and as its vast population earns higher incomes and increasingly adopts higher-consumption lifestyles. Hence, any policy that seeks to improve resource efficiency needs to focus on a number of urgent issues that are relevant for the future sustainability of Asia, and of India, respectively. UNEP [2011a] listed the following benefits of enhanced resource efficiency: ‒‒ Help avoid social conflicts over resources ‒‒ Tackle climate change, air pollution, and waste disposal problems ‒‒ Preserve natural capital and local environmental quality ‒‒ Improve economic competitiveness and profitability ‒‒ Create new business and innovation opportunities ‒‒ Offer social benefits and improve living standards ‒‒ Ensure energy security and supply security of strategic materials National and international organizations, and the policies and measures they adopt, will be helpful in overcoming barriers and in stimulating market development in favour of developing less resource-intense products and systems [Bleischwitz, 2012; EIO, 2011]. Hybrid forms of governance such as agencies with partners from the private sector and public–private alliances can certainly help in promoting best practices, disseminating knowledge, and improving qualification and training. Without an explicit international dimension, resource-efficiency strategies will face an uphill struggle against existing distortions and unfair competition. As for market-based environmentally oriented responses, the strategy of resource efficiency is high on the European policy agenda.33 It is well rooted in Japan, China, and elsewhere, although it is almost invisible in the USA. This is evident from the fact that the EU has a roughly 30% better performance in terms of resource productivity than the USA. It is certainly too early to assess the strengths and weaknesses of this approach or to estimate how stringent efforts could lower the demand for natural resources on a global scale. With regard to governance, however, one can conclude that business and related stakeholders can play a major role. But information deficits and internalization strategies should also be addressed. Thus, it is up to each country to figure out how a successful resource strategy can be pursued, one that seizes the opportunities for achieving resource efficiency while also investing in future needs and infrastructures. Several national and international approaches and initiatives, starting with those adopted in India, are discussed in the following paragraphs.
33 www.eco-innovation.eu; http://ec.europa.eu/environment/enveco/resource_efficiency/ (last accessed 09/20/2013).
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H.1 India Although the Indian government does not have a consolidated approach at the apex level to promote resource efficiency, it has adopted various policy initiatives to promote the sustainable use of resources. Some of the policy initiatives in key sectors are described below: ‒‒ Waste management o Hazardous Wastes (Management & Handling) Rules (introduced in 1989 and revised in 2003: promotes the proper collection, reception, treatment, storage, and disposal of waste o Solid Waste (Management & Handling) Rules 2000: promotes the collection, segregation, storage, transportation, processing, and disposal of municipal solid waste o Batteries (Management & Handling) Rules 2001: lays down the responsibilities of manufacturers, importers, assemblers, re-conditioners, dealers, and recyclers of batteries o E-waste (Management & Handling) Rules 2011: lays down the responsibilities of producers, collection centres, consumers, dismantlers, and recyclers ‒‒ Transport industry o In regard to fuel efficiency standards for the automotive sector, the Bureau of Energy Efficiency (BEE) has introduced new fuel efficiency standards designed to force auto companies to decrease fuel consumption (distance covered for every litre of fuel). The standard called the Corporate Average Fuel Economy (CAFÉ) has given auto manufacturers until 2015 to improve the fuel efficiency of cars by about 18%, up from the average of 14.1 km/litre of petrol to 17.3. Under this standard, cars will be assigned labels ranging from one-star labels to five-star labels depending on their fuel efficiency. o The Directorate General of Civil Aviation (DGCA) has established an aviation climate change task force to assess carbon emissions, to monitor data collection from airports, and to chart out measures to deal with climate change. o Indian Railways is developing fuel-efficient diesel locomotives that could lower fuel consumption by up to 20%. It is the single largest consumer of diesel in the country, and has to pay market-linked prices for diesel. Hence, this state-owned transport system is also moving towards a massive programme for the electrification of its network. ‒‒ Infrastructure sector o The brick industry in India has taken several initiatives to reduce its energy consumption. o The Government of India has adopted the GRIHA ratings (developed by TERI) to assess energy consumption and to determine how green buildings are. o The Energy Conservation Building Code (ECBC) was launched by the Ministry of Power, Government of India, in May 2007, as a first step towards promoting energy efficiency in the building sector.
H.2 Resource-effeciency policies around the world There are multiple arguments the importance of increased resource efficiency and its benefits in the future. Consequently, governments around the globe have set their focus on increasing resource efficiency. Such approaches may be used as (best practice) examples for identifying and implementing similar strategies in India. Table 11 presents a selection of such strategies. In this chapter, we provide a brief overview of different strategies in Europe and Asia (appearing in bold in Table 11).
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Table 11: Selected resource-efficiency strategies around the globe European level
International level
National level
Europe 2020 / Flagship InitiativeResource Efficient Europe
OECD Green Growth Strategy
Resource Efficiency Programme (ProgRess), DE
Thematic Strategy on the Sustainable Use of Natural Resources
UNEP Green Economy Initiative
Natural Resource Strategy, FI
Raw Materials Initiative
UNIDO Green Industry Initiative
Waste & Resources Action Programme (WRAP), UK
Flagship-Innovation Union
National Programme on Natural Resources, NL
Beyond GDP Initiative
Resource Efficiency Action Plan (REAP), AT
EU Sustainable Dev. Strategy
Commission on the Measurement of Economic Performance and Social Progress, FR Japan’s resource agenda Korea Taiwan
H.3 Europe 2020 strategy Europe 2020 is the EU’s growth strategy for the current decade. The European Commission describes the aim of its 2020 Strategy as follows:
“In a changing world, we want the EU to become a smart, sustainable and inclusive economy. These three mutually reinforcing priorities should help the EU and the Member States deliver high levels of employment, productivity and social cohesion. Concretely, the Union has set five ambitious objectives – on employment, innovation, education, social inclusion and climate/energy – to be reached by 2020. Each Member State has adopted its own national targets in each of these areas. Concrete actions at EU and national levels underpin the strategy.” More specifically, the three dimensions of growth encompass the following aspects: ‒‒ Smart growth • Knowledge- and innovation-based economy achieved through more effective investments in education, research, and innovation ‒‒ Sustainable growth • Resource-efficient, green, and competitive growth due to a decisive move towards a low-carbon economy ‒‒ Inclusive growth • High-employment economy delivering social and territorial cohesion, with a strong emphasis on job creation and poverty reduction
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In order to reach these goals, seven “Flagship Initiatives” have been formulated. The fourth Flagship Initiative addressed resource efficiency (Resource-efficient Europe) and was adopted in 2011. For its implementation, the Directorate General for Environment (DG ENV) published in 2011 a detailed “Roadmap for a Resource-efficient Europe”, which is supposed to guide the continent “[…] towards sustainable growth and a shift towards a resource-efficient, low-carbon economy” [European Commission, 2011]. Under the slogan “Doing more with less”, the milestones of the Roadmap are: ‒‒ Adoption of a vision for 2050 and setting of milestones by 2020. ‒‒ Identification of actions by the European Commission as well as by the EU-27 member states. ‒‒ Implementation of four lines of action: • Transforming the economy • Addressing the need for natural capital • Tackling the key sectors • Dealing with governance and monitoring For evaluating the progress in the implementation of the Roadmap, a set of indicators has been suggested. Resource productivity34 is supposed to be the headline indicator. Additionally, a dashboard of indicators should cover the four main categories of resource use to avoid trade-offs when focusing only on one of the categories: non-/renewable materials, land, water, and carbon. Currently, extensive measures are being taken to develop and apply the best-suited indicators for the measurement of the use of the different resource categories. The aim is to take a “consumption-based” approach, and to cover also the resources that are necessary outside the borders of the EU to produce the goods and services required within European borders.
H.4 UNIDO: Green Industry Initiative The aim of UNIDO’s Green Industry Initiative is to achieve “sustainable industrial development in the context of new global sustainable development challenges”. The initiative builds on two main principles: ‒‒ “Green Industry”: is aimed at protecting communities, vital ecosystems, and the global climate from escalating environmental risks and from the emerging threat of scarce natural resources. Hence, economies should focus on making green public investments and on implementing public policy initiatives that encourage environmentally responsible private investments. ‒‒ “Green Industry Initiative”: seeks to place sustainable industrial development in the context of global sustainable development challenges and to contribute to the transition towards a Green Economy. It creates awareness, increases knowledge, and enhances capacities. UNIDO aims at working with governments to support industrial institutions and to provide assistance to enterprises in the greening of industry. UNIDO identifies the following areas of work (as examples): ‒‒ Resource-efficient and cleaner production (RECP): ‒‒ Application of preventive management strategies that increase productive use of natural resources using cleaner production methods. ‒‒ Energy efficiency in industry: Continually improving energy performance and productivity, and reducing environmental and climate change impact.
34 GDP is divided by the domestic material consumption (DMC). Further explanation in chapter D and Annex I. Resource efficiency in the context of Asia
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‒‒ Cleaner production (CP): Production efficiency, environmental management, human development ‒‒ Corporate social responsibility and responsible production Environmentally sound management of chemicals and (hazardous) waste, and the substitution and/or minimization of the use of hazardous substances. UNIDO recognizes that “intensified national and international efforts are needed to effectively respond to the scale and scope of the interrelated and increasingly urgent global challenges. [...] Green Industry plays a key role in the progress towards a Green Economy in which industries are not only part of [the] solution to the global economic, environmental and social challenges, but [also] a driving force.” The aim is to follow these principles throughout the collaborations of UNIDO in order to achieve green economies in Asia.
H.5 Germany’s Raw Materials Strategy The aim of Germany’s Raw Materials Strategy launched by the Federal Ministry of Economics and Technology, which was published in 2010 [German Federal Ministry of Economics and Technology, 2010], is “safeguarding a sustainable supply of non-energy mineral resources for Germany”. To reach this goal, the following main actions are foreseen: ‒‒ Integrating Germany’s national policy on raw materials with the Raw Material Initiative adopted by the European Commission ‒‒ Reducing trade barriers and distortions of competition ‒‒ Helping German commerce to diversify its sources of raw materials ‒‒ Helping commerce to develop synergies between sustainable economic activity and enhanced materials efficiency ‒‒ Developing technologies and instruments to improve the conditions for recycling ‒‒ Establishing bilateral partnerships with selected countries pertaining to raw materials ‒‒ Conducting research on substitution and materials in order to open up new options ‒‒ Focusing on research programmes relating to raw materials ‒‒ Creating transparency and good governance in raw materials extraction ‒‒ Supporting the private sector through the instruments of raw materials policy, support for research, and joint international raw material initiatives, while taking into account the objectives of foreign, economic, and development policy.
H.6 Germany’s Resource Efficiency Programme (ProgRess) In 2012, Germany’s government announced the programme for the sustainable use and protection of the country’s natural resources [Bundesregierung, 2012], which takes a further step towards the goal of resource efficiency in Germany. The German Resource Efficiency Programme is aimed at structuring the extraction and use of natural resources in a sustainable way, as well as reducing associated environmental pollution as far as possible. By these means, the responsibility to future generations shall be assumed, and a prerequisite for securing a high quality of life for the long term shall be set down. The following four guiding principles have been formulated to achieve this aim; they are elaborated on in the first part of the document: ‒‒ GP 1: Joining ecological necessities with economic opportunities, innovation support, and social responsibility ‒‒ GP 2: Viewing global responsibility as a key focus of our national resource policy ‒‒ GP 3: Gradually making economic and production practices in Germany less dependent on primary resources, and developing and expanding closed-cycle management ‒‒ GP 4: Securing long-term sustainable resource use for society’s quality growth
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The second part of the programme contains specific measures based on an analysis of the entire value chain. Five strategic approaches are considered: ‒‒ Securing a sustainable raw material supply ‒‒ Increasing resource efficiency in production ‒‒ Making consumption more resource-efficient ‒‒ Enhancing resource-efficient closed-cycle management ‒‒ Using overarching instruments Overall, 20 strategic approaches are identified and underpinned by appropriate supporting measures. Particular importance is given to market incentives, information, expert advice, education, research, and innovation, and to strengthening voluntary measures and initiatives by industry and society. Every four years, a report on the development of resource efficiency in Germany will be published by the German government. Further progress will be assessed, and the Resource Efficiency Programme updated if needed. Figure 77 illustrates the different categories of natural resources and the stages at which ProgRess is meant to get into action. Figure 77: Natural resources defined by ProgRess
Source: Bundesregierung, 2012, modified.
H.7 Japan’s resource agenda Japan’s resource agenda is largely influenced by the aim of reaching a “3R society” – referring to reduce, reuse, and recycle, particularly in the context of production and consumption. The main political milestones [Bahn-Walkowiak, B., Bleischwitz, 2008] on the path to reaching this goal have been the following: ‒‒ Vision of a Recycling-Oriented Society (1999) ‒‒ Fundamental Law for Establishing a Sound Material-Cycle Society (2000)
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‒‒ Fundamental Plan for Establishing a Sound Material-Cycle Society (2003) ‒‒ Declaration of Commitment to [the] Development of an Eco-Oriented Nation (2003) ‒‒ Vision for a Virtuous Circle of Environment and Economy in Japan 2025 (2004) ‒‒ Cabinet Decision: Becoming a Leading Environmental Nation in the 21st century: Japan’s Strategy for a Sustainable Society (2007) Figure 78: Japan’s political strategies for achieving a sound material cycle society
Source: Hotta, 2012.
The above-mentioned policies imply implementation through concrete measures. Hotta [2013] identifies the following approaches as essential for achieving the 3R society: ‒‒ “Sound Material Cycle Society” (waste and resource efficiency), “Low Carbon Society” (climate and energy efficiency) and “Society in Harmony with Nature” (biodiversity and country landscape) ‒‒ “Regional” resource circulation: Environmentally sound resource circulation at appropriate geographic and economic scales ‒‒ Expansion of “Indicators”: Quantitative targets and additional indicators ‒‒ International Sound Material Cycle Society: International collaboration with East and Southeast Asia (Regional 3R Forum in Asia), Contribution to international research on resource efficiency / productivity (in collaboration with OECD, UNEP) As a consequence, the second plan (2008–2013) for establishing a sound material cycle society sets targets and indicators to monitor the progress of Japan’s Policy for Sound Material Cycle Society, including those related to resource efficiency. Further, the relevant stakeholders and their roles are identified. While reviews and evaluations are carried out on an annual basis, the plan is to be revised every five years.
H.8 Korea’s resource approach Korea is a resource-constrained country with close trade relations with Japan and China from which it imports refined materials and alloys as well as recycled materials, and to which it exports waste for recycling. Korea, being aware of this situation (high levels of dependency on material imports from neighbouring countries), has adopted a material strategy
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that focuses on promoting recycling, and through this means, achieving self-sufficiency in critical metals [source here and in the following: DEFRA, 2012]. The following goals have been set by the government for the year 2018: ‒‒ to increase self-sufficiency in materials from 12% to 80% ‒‒ to increase their technical performance level from 60% to 95% ‒‒ to increase the number of specialized companies founded from 25 to 100 Eleven elements (In, Li, Ga, REEs, PGMs, Si, Mg, Ti, W, Ni, Zr) were identified as being strategically important for the Korean economy. Four main strategies have been designed to secure the supplies of these elements: ‒‒ Securing foreign/overseas natural resources • Gather information and dispatch teams for exploration • Form strategic alliances with other countries (such as the Korea–China Material Industry Committee) • Invest in overseas mines and modify regulations to encourage investments in foreign developments ‒‒ Securing domestic natural resources (stockpiles) • Stockpile 21 elements to cover 60 days of domestic demand [APS/MRS, 2011] ‒‒ Focusing on R&D for materialization (reduction/substitution) • Focus on 40 technologies that use the 11 elements identified as being strategically important for the country’s economy • Resource extraction (refining and smelting) • Materialization (processing and treatment) • Alternative resources (recycling) and substitution • Reduction • Invest $300 million over 10 years in these technologies • Build and enhance collaboration between producers and consumers; establish new capital-intensive R&D projects and industries ‒‒ Building circulation technology and infrastructure (recycle/reuse) • Focus on scrap and on recycling at end-of-life of products • Enhance collection and increase awareness of the recycling potential of consumer products through an ‘urban mining’ strategy • Provide funds and tax incentives to selected industries until they are well established • Invest in workforce education by establishing international collaborations and by providing funding for graduate studies in critical-metal technologies
H.9 Taiwan The Zero Waste Programme was launched by TEPA (Taiwanese Environmental Protection Administration) in 2002, and is aimed at responding to the issues of global resource and energy depletion and at promoting more sustainable material use through the implementation of a more cyclic approach to waste management. [source: here and in the following paragraphs: DEFRA, 2012] Taiwan’s Industrial Waste Control Centre is quantifying and tracking industrial waste flows. One of these waste groups consists of technological metals and materials that are included among the resources of concern. Further, Taiwan
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implements and promotes so-called Environmental Science and Technology Parks, which are aimed at raising awareness of resource use, recycling, and recovery. In the field of electronic waste, Taiwan is engaged in the UK–Asia Pacific Electronic Waste Management GPF Project for 2011/2012, which aims to bring together experts on, and key stakeholders in, electronic waste, as well as those engaged in furthering the wider sustainable material management agenda. Just recently, in 2012, the new Ministry of Environment and Resources (MOER) was established. Its responsibilities include environmental protection and mineral management. Resource efficiency and security issues are expected to be the key concerns of the new ministry.
H.10 9. Further initiatives In addition to national initiatives, a variety of other initiatives aim to increase resource efficiency during the life-cycle of a product. As explained in chapter F on the life-cycle approach, at the beginning of any supply chain, the ensuring of increased transparency in payments in the extractive industries is an important step towards ensuring properly functioning markets and good governance. Combating corruption in mining countries through the transparent disclosure of payments strengthens democratic institutions and increases participation by stakeholders. Additionally, fair contracts can stabilize the income of producer countries. With rising revenues from resource extraction thanks to increasing prices, it is by no means unrealistic to assume that a robust extractive industry and sufficient investment in sustainable development can offer promising economic prospects for the 100 or so resource-rich developing countries and their 3.5 billion people.35 The Extractive Industries Transparency Initiative (EITI) is a coalition of governments, companies, civil society groups, investors, and international organizations. Its global standard requires the disclosure of corporate payments to governments and the related government revenues. A country report is then produced, which undergoes independent verification. As of June 2013, 23 countries are EITI-compliant, including Azerbaijan, Ghana, Iraq, Nigeria, and Norway. The reported payments total around $1 trillion. The implementation of related initiatives and rules is underway in the USA, the EU, the OECD, and is being promoted by the IMF, the World Bank, and a number of NGOs.
35 E.g. in the case of Ghana, an increased transparency for mining revenues has lead to an increase by factor four for the state from 2010 to 2011 which clearly demonstrates potential achievements if all partners agree.
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I. Findings and Conclusion
The aim of this study is to understand the scope of current and future raw material consumption in India. Further, it illustrates the impacts of such consumption on sustainable development and inclusive growth in India. The study concludes that resource efficiency can be an effective means of reducing environmental burdens and simultaneously of strengthening India’s economy by contributing to the decoupling of resource consumption and economic growth. It illustratively highlights resource-efficient measures in three strategic sectors: automotive, construction, and renewable energy. 1. Over the last two decades, India has witnessed strong economic growth, mirrored in a gradual shift from agricultural to industrial and service sector production, a rising middle class, increasing urbanization, and large-scale infrastructure development, which have contributed to eradicating poverty. This rapid economic growth has been achieved through the extensive consumption of resources, particularly biotic and abiotic raw materials like minerals, metals, fossil fuels, and biomass. The trends will continue in the future, and thus decoupling of resource consumption and economic growth is required. 2. On a global scale, India’s material consumption per capita is relatively low, with 4.2 tonnes in 2009, compared to the average material consumption per capita of 15.7 tonnes in OECD countries. The projections of material consumption in absolute numbers, however, present a different picture, that of India currently being the third largest consumer of materials worldwide, with 4.83 billion tonnes in 2009. 3. Given a medium-growth scenario, it is estimated that India’s material consumption will triple through 2030. In light of greater global competition for resources, supply vulnerabilities, and rising commodity prices, India will have to find ways to meet this significant growth in demand. 4. The analysis of key trends and supply security challenges for selected materials (chromite, molybdenum ore, limestone, copper, cobalt ores) used as inputs in the three sectors assessed indicates that techno-economic constraints, lack of exploration even on a limited basis, and severe environmental impacts mostly constrain availability from domestic raw materials, and lead to greater import dependence. 5. In order to reduce India’s exposure to import dependencies, to strengthen India’s economy, and to reduce India’s environmental and climate burden, the study builds the case for resource efficiency. Resource efficiency comprises all kinds of activities that are aimed at improving the input–output relation of material and energy-consuming or energy-transforming processes, while contributing to the mitigation of impacts on the environment caused by these processes. 6. Raw material productivity in India has improved significantly over the last three decades. On a global scale, however, Indian material productivity in the manufacturing sub-sectors (NIC/NACE) (such as food products, coke and refined petroleum products, and chemical products) [see Figure 24] and the currently deployed technologies leave room for improvements in resource efficiency and overall decoupling. Taking into account the fact that the share of material and energy cost of these sub-sectors is 71%, the implementation of resource-efficient measures will be accompanied by immediate cost reductions and will thus improve the competitiveness of Indian industry.
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7. The study examines selective resource-efficient measures along the life-cycles in the sectors assessed and illustrates their resource-saving potentials. Automotive / mobility sector: Currently, India is the fifth largest auto producer worldwide. Continuing the strong growth of the industry in the past, automotive demand is expected to grow at an average annual rate of 12% until 2025. The number of registered cars in India is estimated to reach 100,000,000 by 2029, along with a corresponding growing material demand for car production, such as steel, aluminium, copper, lead, zinc, chromium, and nickel. Consequently, the annual steel demand for cars will account for 10% of total steel production in India by 2025. Energy use and supply during the usage phase of a compact car constitute the largest amount of extracted primary materials during the entire life cycle of the car. Thus, fuel efficiency, which is closely linked to the weight and design of a car, is the predominant factor in efforts aimed at saving raw materials. The study identifies resource-efficient measures that hold significant material-saving potentials: – lightweight compact cars save up to 10% of accumulated raw material demand – full steel recycling reduces primary material demand by 23%, especially chromite and molybdenum ores – public transport has a material efficiency that is five times higher than that of a conventional car, as it has higher occupation rates. Thus, a country’s transport modal split determines the material demand. Housing/construction sector: India’s construction sector has been growing at an average annual growth rate of 10% over the past 12 years, and is predicted to continue growing rapidly over the next several years. Based on the prospects of housing demand, India’s housing stock is estimated to increase from 330 million housing units in 2011 to 770 million housing units in 2030. The construction and the operational phases of a building have significant raw material footprints, including the consumption of minerals (sand, gravel), cement, steel, bricks, aggregates, and energy use – depending on the size and design of a housing unit. For instance, the study highlights that India’s proven limestone reserves will only last until 2028 taking into account future prospects for cement demand. The study identifies resource-efficient measures that hold significant materialsaving potentials: – the type of cement used, resource-efficient methods of cement production, and efficient usage of cement reduces limestone demand – the choice of building materials determines the material demand during the life cycle of a building. For instance, primary raw material savings of more than 40%, especially in the construction and operational phases, can be achieved by deploying alternative wall materials (such as a combination of aerated concrete and strawtec walls and burnt brick-insulation) per unit housing space per person per year – to meet India’s housing demand by 2030, the resource-efficient option assessed can save up to 50 billion tonnes of required raw materials compared to the material demand for constructing existing basic buildings, under the assumption that living space remains the same, otherwise the savings would be even higher Wind energy/renewable energy sector: India is the third largest energy consumer worldwide. The renewable energy potential (from different renewable energy sources) in India is estimated to be 2,45,880 MW. The market for renewable energy is growing at an average annual rate of 15%. Wind energy, which forms the majority of India’s renewable energy supply, requires certain key metals such as copper, cobalt, and rare earths. The study concludes that despite the high demand for the input materials needed, the potential resource savings using wind energy over coal-based power plants are still much higher. Further, if the Renewable Purchase Obligation (RPO) targets are met by the Indian energy market, up to 350 million tonnes of primary raw materials could be saved by 2030. The design of a wind turbine with respect to the tower, magnet, and drive system holds potential for raw material savings if smart and efficient design options are adapted.
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J. Outlook and Recommendations
The preparation of the study also involved widespread stakeholder consultations and presentations of the initial findings at a high-level event in May 2013. These consultations revealed an overwhelming consensus on the need for launching a resource initiative for India focusing on further action research, demonstration activities, and appropriate institutional mechanisms aimed at enhancing resource efficiency. The consultations also revealed the widespread interest in the subject and emphasized the need for proper communication and facilitation efforts to foster resource efficiency in India. Based on the above findings, the following recommendations are made: 1. Resource efficiency should be adopted as an organizing principle of the Indian economy to support sustainable and inclusive growth in the country. Thus, a coherent and integrated policy framework that rewards and incentivizes resource-efficient efforts and closed-looped management principles must be adopted. The cross-cutting nature of resource efficiency calls for multi-stakeholder involvement to harmonize the interests and constraints of the different groups involved. 2. In order to deal with resource-efficiency challenges and explore related options that India will face in the years ahead, more comprehensive qualitative and quantitative data are needed on the basis of which future scenarios and trends can be predicted. It is recommended that a national data hub on mineral resources be set up to complement the database on mineral resources proposed by the Planning Commission and that the existing Mineral Year Book, published annually by the Indian Bureau of Mines, should be expanded and improved. 3. India’s manufacturing and construction sectors must continuously innovate technologically to remain competitive in a global economy. This drive to remain competitive must go hand in hand with efforts aimed at achieving resource efficiency. This will not only help to reduce physical material consumption and therefore costs, but will also act as a trigger for stimulating innovation as well as R&D efforts. Collaboration efforts by the Government of India (the Ministry of Environment, the Ministry of Industry, and the Ministry of Science and Technology, among others), research institutes, and the private sector should be promoted. 4. The pricing of resources must reflect the “true and fair” marginal social cost, keeping in mind that on occasions environmental and social imperatives might work against each other. The ongoing efforts to promote environmental and fiscal reforms, aimed at aligning the economic and environmental drivers for arriving at the “fair and true” marginal social cost, must be strengthened. 5. The formation of an institutionalized national resource panel and of multi-stakeholder forums on sustainable resource management could act as nuclei or hubs for promoting resource efficiency in India beyond individual sectors or regional interests. Thus, India’s role on the international stage would be strengthened and India could become one of the leading players (e.g. the EU, Germany, and Korea) to embrace and incorporate resource efficiency as a means of achieving sustainable development.
Outlook and Recommendations
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UNEP (2011b): Decoupling Natural Resource Use and Environmental Impacts from Economic Growth. A Report of the Working Group on Decoupling to the International Resource Panel. Fischer-Kowalski, M., Swilling, M., von Weizsäcker, E.U., Ren, Y., Moriguchi, Y., Crane, W., Krausmann, F., Eisenmenger, N., Giljum, S., Hennicke, P., Romero Lankao, P., Siriban Manaiang, A., Le Mont-sur-Lausanne. UNEP / Frankfurt School (2012): Global Trends in renewable energy Investment 2012. Frankfurt a.M. UNIDO (2010): Resource use and resource productivity in Asia: Trends over the past 25 years. Giljum, S., Dittrich, M., Bringezu, S., Polzin, C., Lutter, S. Sustainable Europe Reseach Institute Vienna. UNIDO (2011): Resource use and resource productivity in emerging economies: Trends over the past 20 years. Dittrich, M., Giljum, S., Bringezu, S., Polzin, C., Lutter, S. Sustainable Europe Research Institute, Vienna. UNStat (2013): UNSD Statistical Databases. http://unstats.un.org/unsd/databases.htm (last accessed: 09/20/2013). Van de Voet, E. / van Oers, L. / Moll, S. / Schütz, H. / Bringezu, S. / de Bruyn, S. / Sevenster, M. / Waringa, G. (2005): Policy Review on Decoupling: Development of indicators to assess Decouping of Economic Development and Environmental Pressure in the EU-25 and AC-3 Countries. Leiden. Walz, R. (2010): Competences for Green Development and Leapfrogging in Newly Industrializing Countries. In: International Economics and Economic Policy. Vol. 7, Nos. 2–3, pp. 245–265. Wbcsd / IEA (2013): Technology Roadmap. Low-Carbon Technology for the Indian Cement Industry. Paris, New Delhi. Wiedmann, T. (2009): A review of recent multi-region input–output models used for consumption-based emission and resource accounting. In: Ecological Economics. Vol. 69, No. 2, pp. 211–222. Wiedmann, T. / Wilting, H. C. / Lenzen, M. / Lutter, S. / Palm, V. (2011): Quo Vadis MRIO? Methodological, data and institutional requirements for multi-region input–output analysis. In: Ecological Economics. Vol. 70, No. 11, pp. 1937–1945. Wilburn, D. (2011): Cobalt Mineral Exploration and Supply from 1995 through 2013. Specific Investigations Report 2011. U.S. Geological Survey. WIPRO (2012): Green: Enabling India’s Agenda für Inclusive Growth. WIPRO Council for Industry Research. http://www.wipro.com/DOCUMENTS/INSIGHTS/GREEN_FOR_INCLUSIVE_GROWTH.PDF (last accessed: 08/02/2013). World Economic Forum (2012): More with Less: Scaling Sustainable Consumption and Resource Efficiency. Geneva. Worldbank (2006): Where is the Wealth of Nations? New York. Worldbank (2012): Worldbank Database. www.worldbank.org (last accessed: 08/02/2013).
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Sources [IFEU 2013]: Data from IFEU LCA Models for cars, wind turbines and construction. [TERI 2013]: Data based on research by TERI. [Ecoinvent 2011]: Ecoinvent Database Version 2.2 Ecoinvent Centre. Zürich.
Image Sources Figure 70:
BMU / Bernd Müller
Figure 75:
juwi AG
BMU / Bernd Müller
BMU / Christoph Edelhoff
TimberTower GmbH, Hannover
Box selected building materials (p. 72): Monika Dittrich 2013, IFEU 2013;
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109
Annex I
In the past 20 years, several methods have been developed for quantifying the use of materials by modern societies. Material Flow Accounting and Analysis (MFA) is one of the key methods, and internationally recognized as an important tool, for evaluating resource-use policies. The principal concept underlying MFA is a simple model of the interrelation between the economy and the environment, in which the economy is seen as an embedded subsystem of the environment. Like living beings, this subsystem is dependent on a constant throughput of materials and energy. Raw materials, water, and air are extracted from the natural system as inputs, transformed into products, and finally re-transferred to the natural system as outputs (waste and emissions). To highlight the similarity to natural metabolic processes, the terms “industrial metabolism” and “societal metabolism” have been introduced. According to the laws of thermodynamics, total inputs must by definition equal total outputs plus net accumulation of materials in the system. This principle of material balance holds true for the economy as a whole as well as for any subsystem (an economic sector, a company, a household). It thus follows that the increasing problems associated with waste generation and emissions are directly related to the scale of material input. In the past 15 years, a number of academic and statistical institutions have been working towards the standardization of an accounting method for material flows. These efforts resulted in the publication of the first methodological guidebook for economy-wide MFA by the European Statistical Office (Eurostat) in 2001, and the publication of updated versions in 2007 and 2011, in which Eurostat closely collaborated with the OECD. Depending on the question asked, one can assess material inputs in order to illustrate or determine what amounts of natural resources a city or a country consumes and where these resources originate. The focus can also be placed on waste and emissions which are returned to the natural system. A complete MFA comprises both material inputs extracted from nature and disposed materials returned to nature. In its methodological guidelines, Eurostat advises distinguishing between various types of material flows according to the following scheme:
Direct versus indirect: Direct flows refer to the actual weight of the products and thus do not take into account the life-cycle dimension of production chains. Indirect flows, however, indicate all the materials that are required for manufacturing (upstream material requirements), and comprise both used and unused materials. Used upstream material requirements of traded products should be expressed in so-called Raw Material Equivalents (RMEs), which express the amounts of used primary extracted materials required along the entire production chain of an imported or exported product.
Used versus unused: The category of used materials is defined as the amount of extracted resources that enters the economic system for further processing or for direct consumption. All used materials are transformed within the economic system. Unused extraction refers to materials that never enter the economic system and comprise overburden and parting materials from mining, by-catch from fishing, wood and agricultural harvesting losses, as well as excavated soil and dredged materials from construction activities.
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Domestic versus Rest of the World: This category refers to the origin and/or destination of material flows. For the categories of unused and indirect material flows, the terms “ecological rucksacks” and “hidden flows” are also used.
Key Indicators: A large number of resource-use indicators can be derived from economy-wide material flow accounts. These indicators can be grouped into (a) input; (b) output; (c) consumption; and (d) trade indicators. The main input and consumption indicators, which are most frequently applied in MFA studies at the national level, are illustrated in the following figure.
Source: SERI, 2013.
Main input indicators: • Direct Material Input (DMI) comprises all materials with economic value that are used directly in production and consumption activities. DMI equals the sum of domestic extraction and imports. • Raw Material Input (RMI) adds the used part of the Raw Material Equivalents (RMEs) of imports to DMI. • Total Material Requirement (TMR) includes, in addition to RMI, unused domestic extraction and the unused RMEs of imports. TMR is thus the most comprehensive material input indicator, comprising all input flows.
Main consumption indicators: • Domestic Material Consumption (DMC) measures the total quantity of materials used within an economic system, excluding indirect flows. Thus, DMC is the closest equivalent to aggregate income in the conventional System of National Accounts. DMC is calculated by subtracting exports from DMI. • Raw Material Consumption (RMC) deducts the exports plus the used RMEs of exports from RMI. • Total Material Consumption (TMC) includes, in addition to RMC, the unused parts of RMEs associated with imports and exports. TMC equals TMR minus exports and their RMEs.
Other MFA indicators include the following: • Domestic Processed Output (DPO) equals the flow “outputs to nature”, and comprises all outflows of used materials from both domestic and foreign origins. DPO includes emissions into air and water, wastes deposited in landfills, and dissipative flows. • Total Domestic Output (TDO) represents the environmental burden of material use, that is, the total quantity of material outputs into the environment caused by economic activity. TDO equals DPO plus unused domestic extraction. Annex I
111
• Net Additions to Stock (NAS) reflect the physical growth of the economy, that is, the net expansion of the stock of materials in buildings, infrastructures, and durable goods. NAS may be calculated indirectly as the balancing item between the flow of materials entering the economy minus the materials leaving it, taking into account the appropriate items for balancing. NAS may also be calculated directly as gross additions to material stocks, minus removals (such as construction and demolition wastes and disposed durable goods, excluding recycled materials). • Physical Trade Balance (PTB) expresses whether the resource imports exceed the resource exports of a country or a world region, and thus illustrates the extent to which DMC is based on domestic resource extraction or on imports. A PTB can either be compiled for direct material flows (physical imports minus physical exports) or additionally can include indirect flows associated with imports and exports.
For further reading European Environment Information and Observation Network: http://scp.eionet.europa.eu/themes/mfa M. Fischer-Kowalski, F. Krausmann, S. Giljum, S. Lutter, A. Mayer, S. Bringezu, Y. Moriguchi, H. Schütz, H. Schandl, and H. Weisz, 2011. Methodology and Indicators of Economy-wide Material Flow Accounting State of the Art and Reliability across Sources. Journal of Industrial Ecology, 15 (6), 855-876. http://onlinelibrary.wiley.com/doi/10.1111/j.1530-9290.2011.00366.x/pdf OECD: http://www.oecd.org/env/indicators-modelling-outlooks/ oecdworkonmaterialflowsandresourceproductivity.htm SERI: www.materialflows.net
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Annex II
Methodology of GTAP–MRIO Multi-regional input-output (MRIO) analysis is carried out to calculate the direct and indirect materials embodied in the final demand of products. MRIO analysis is a methodology that assesses the national and international environmental consequences of a country’s consumption of goods and services. It combines economic data (i.e. data on the sectoral structure of economies linked via international trade data) with physical data (e.g. data on the materials used for the production of different commodities in different parts of the world). The model captures the upstream impacts on global material use induced by a country’s consumption. This means that the amount of materials used for the production of different goods is allocated to the country where the products are finally consumed. In this way, the extent to which a country’s standard of living is dependent on foreign resources can be assessed. It can also be analysed whether a reduction in domestic material use is merely a consequence of outsourcing production processes to other countries.
Data sources SERI’s global MRIO includes all trade relations between the countries and regions in the model, and is extended on the basis of resource extraction data in tonnes. For constructing MRIO-based environmental accounting models, global harmonized sets of input–output (IO) tables and bilateral trade data are required. These data were taken from the Global Trade Analysis Project (GTAP v5 and v8, see Narayanan et al. 2012), a data set covering 57 economic sectors for 2007 and covering 129 countries and world regions, including all European Union (EU-27) Member States, the OECD countries, the major emerging economies, and a significant number of developing countries in Asia, Africa, and Latin America. In GTAP, all countries not represented by a country model are grouped in regions (e.g. Rest of East Asia, Rest of South-East Asia). This monetary model is then extended on the basis of material extraction data that are obtained from the SERI Global Material Flow Database (SERI 2011). The extraction data are differentiated into 18 material categories: (1) paddy rice; (2) wheat; (3) other cereal grains; (4) vegetables, fruit, nuts; (5) oil seeds; (6) sugar cane, sugar beet; (7) plant-based fibres; (8) other crops; (9) grazing; (10) forestry; (11) fishing; (12) coal; (13) oil; (14) gas; (15) industrial minerals; (16) iron ores; (17) non-ferrous ores; and (18) construction minerals.
Allocation Extracted material needs to be allocated to the economic sectors that make direct use of it. Most material extraction categories are assigned to the corresponding economic sectors (see Table x). Category (9), grazing, is split up and allocated to sectors 9, “Cattle”, and 11, “Raw Milk”, in relation to their economic output. The material categories (15) to (17) – all metals and industrial minerals – are allocated to the non-energy mining sector. Extraction of construction minerals (18) is split up between sector 18, “Other Mining”, and sector 46, “Construction”, which also extracts on its own, at equal shares (50%).
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113
Table x. Allocation of material categories to the sectors of the GTAP–MRIO model Material category
Sector
Share
(1) Paddy rice
(1) Paddy Rice
100%
(2) Wheat
(2) Wheat
100%
(3) Other cereal grains
(3) Other Grains
100%
(4) Vegetables, fruit, nuts
(4) Veg. & Fruit
100%
(5) Oil seeds
(5) Oil Seeds
100%
(6) Sugar cane, sugar beet
(6) Cane & Beet
100%
(7) Plant-based fibres
(7) Plant Fibres
100%
(8) Other crops
(8) Other Crops
100%
(9) Cattle (11) Raw Milk
corresponding to the economic output of the two sectors
(10) Forestry
(13) Forestry
100%
(11) Fishing
(14) Fishing
100%
(15) Coal
(15) Coal
100%
(16) Oil
(16) Oil
100%
(17) Gas
(17) Gas
100%
(18) Other Mining
100%
(18) Other Mining
50%
(46) Construction
50%
(9) Grazing
(15) Industrial minerals (16) Iron ores (17) Non-ferrous ores (18) Construction minerals
Model uncertainties While being able to fully cover the direct and indirect production requirements for an infinite number of upstream production stages, environmentally extended IO analysis suffers from uncertainties arising from the following sources: (1) reporting and sampling errors of basic data; both the main data sources, GTAP and SERI Global Material Flow Database [SERI 2011], are subject to uncertainties; (2) the proportionality assumption – the assumption that monetary and physical flows originating from a sector are always in exactly the same proportion; and (3) the aggregation of IO data over different products (homogeneity assumption) – price–material use ratios across different materials supplied by one sector are assumed to be equal, while they may vary substantially. However, it was shown that the overall uncertainties of IO-based assessments are usually lower than the truncation errors in extensive process analyses up to the third order [Lenzen 2001].
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Annex III
A life cycle assessment (LCA) is a methodology that seeks to identify the environmental impacts related to a product, service, or system from a holistic standpoint that includes all known potential environmental impacts, and that follows the product, service or system from “cradle to grave”. The life cycle includes all known processes in the stages of the extraction of raw materials and their production, use, and disposal. An LCA study consists of four phases, as shown in Figure 79. The main purposes of the goal and scope definition are to clarify the purpose of the study, to show what it can and cannot be used for, to present the product system studied, and to indicate its boundaries or limits. In the inventory analysis, data on the inputs and outputs of the processes included in the system are collected or calculated. On the basis of this inventory, the potential environmental impacts are assessed, and finally the results are interpreted. Carrying out an LCA is by definition an iterative process, as illustrated by the arrows in Figure 79.
Figure 79: Phases of an LCA (ISO, 2006)
In 1997, an international standard on LCA was introduced. ISO 14040 presented the general framework of LCA, and was followed by ISO 14041 to ISO 14043, describing the requirements for goal and scope, inventory, and impact assessment. In 2006, a thorough revision of the standards resulted in a revised 14040 standard and in a new 14044 standard replacing 14041–14043.
The LCA methodology allows for the evaluation of different environmental impact categories. This study focuses in particular on the impact categories summarized in Table 12. Table 12: Selection of impact categories used in the study Impact category
Unit
Global warming potential
CO2 equivalents
Cumulative raw material demand
unit of weight
Cumulative energy demand
in joules
Fresh water
in litres
Land use
m² per year
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115
To generate the results for the impact categories, the LCA software Umberto® 5.6 was used. The programme allows the modelling of material and energy flows of certain products, services, and complex systems. At every stage along the modelled life-cycle, the user can integrate data on certain inputs and outputs of the system. Figure 80 demonstrates the logic of the programme. Every square reflects a certain process within the life-cycle where the associated input and output data can be integrated. The input data for the different processes were either researched, calculated, or taken from the Ecoinvent database v 2.2. Figure 80: Example of a modelled life cycle in Umberto (Indian apartment)
For further reading LCA methodology: Wenzel, H. / Hauschild, M. / Alting, L. (1997): Environmental assessment of products. Volume 1: Methodology, tools, and case studies in product development. Chapmann & Hall. Guinée, J.B (Ed.) (2002): Handbook on Life Cycle Assessment. Operational Guide to the ISO Standards. Kluwer, Dordrecht. Umberto: http://www.umberto.de/en/ ecoinvent: http://www.ecoinvent.org/
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Figures Figure 1:
Concept of resource efficiency as adopted and used in this study
5
Figure 2:
Growth of India’s population (actual and projected) compared to China and Europe
6
Figure 3: Growth of GDP in India
7
Figure 4:
Global share of middle class consumption
8
Figure 5:
Selected Indian cities by population
9
Figure 6:
Ecological footprint and biological capacities of China, India, and Germany from 1961 to 2009
11
Figure 7: Resource-saving opportunities by 2030
13
Figure 8: Per capita consumption of materials in India, 1980–2009
16
Figure 9: Absolute consumption of materials in India, 1980–2009
17
Figure 10: Typical material consumption pattern during a development process and country-specific examples
18
Figure 11: Consumption of various resources (million tonnes) between 2006 and 2011
19
Figure 12: India’s past material demand and future projections until 2050
21
Figure 13: Future material consumption by material categories in scenario continuing current dynamic
21
Figure 14: Global resource use by world regions in the past three decades and future prospects
22
Figure 15: Resources, reserves, and production of selected industrial minerals
23
Figure 16: Forest areas versus mineral resources
24
Figure 17: Import dependencies in the case of selected raw materials
26
Figure 18: Improvements in resource productivity* in India, China, and Germany, as well as the global average between 1980 and 2008
28
Figure 19: Material input in India by sectors, 2007
29
Figure 20: Material productivity in India by sectors, 1997 and 2007
29
Figure 21: Resource-efficiency potentials in India’s manufacturing sub-sectors
30
Figure 22: Scheme for evaluation of critical metals
33
Figure 23: Production and consumption of chromite (1998–2009)
34
Figure 24: Imports and exports of chromite (1998–2009)
35
Figure 25: Resources, reserves, and production of chromite
35
Figure 26: Mining of chromite versus forests
36
References
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118
Figure 27: Production and consumption of limestone (1998–2009)
38
Figure 28: Trade in limestone (1998–2010)
38
Figure 29: Limestone reserves (in thousand tonnes) and forest areas
39
Figure 30: Production and consumption of copper ore (1998–2009)
40
Figure 31: Trade in copper ore and concentrates (1998–2009)
41
Figure 32: Resources, reserves, and estimated copper content
41
Figure 33: Trade in cobalt ores and concentrates (2000–2010)
43
Figure 34: Life cycle of a car
46
Figure 35: Car ownership: Growth potential and saturation level (2010)
48
Figure 36: Raw material requirement of the Indian automotive sector (1997 and 2007)
49
Figure 37: Average distribution of certain metals in a compact car except steel
50
Figure 38: Growth in total number of registered cars in India*
52
Figure 39: Projected annual demand for steel and chromium
52
Figure 40: Primary raw material demand for different car options
53
Figure 41: Saving potential of a lightweight compact car in different resource categories*
53
Figure 42: Future raw material demand for different car options
54
Figure 43: Material-reduction potential in primary raw material demand by steel recycling
54
Figure 44: Primary raw material consumption by different occupation rates
55
Figure 45: Development of absolute and per capita mobility* in India
56
Figure 46: Consumption of primary raw materials by different modes of transport
57
Figure 47: Consumption of fresh water by different modes of transport
57
Figure 48: Future demand for primary raw materials divided by modal split
58
Figure 49: Mineral consumption per capita during the build-up and maintenance of infrastructure in selected countries, 2008
60
Figure 50: Consumption of minerals in India, China, and South Korea between 1980 and 2009
60
Figure 51: Share of buildings in resource use and pollution
62
Figure 52: Composition of construction and demolition waste
62
Figure 53: Raw materials in the construction sector by main aggregates
63
Figure 54: Building cost components (in %):
63
Figure 55: Increasing import dependencies in the construction sector, 1997 and 2007
64
Figure 56: Existing housing stock and housing units to be built according to NRDC-ASCI until 2030
65
Figure 57: Predominant materials used for construction of roofs (above) and walls (below)
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India’s Future Needs for Resources
Figure 58: Overview of GRIHA criteria
68
Figure 59: Projected growth of cement production in India
69
Figure 60: Projected demand for limestone in India, yearly (left) and cumulated (right)
70
Figure 61: Demand for limestone depending on type of cement
71
Figure 62: Primary raw material demand for a unit housing space per person and year by the different options of building materials and potential savings
73
Figure 63: Overall primary raw material demand of the building options per person and year
74
Figure 64: Primary energy demand of the different options
74
Figure 65: Raw material demand and potential savings for buildings in 2030 by the different options
75
Figure 66: Electricity consumption per capita in selected countries (2010)
76
Figure 67: Indian electricity mix by installed capacity and energy generation
77
Figure 68: Development of electricity generation in India (TWh)
79
Figure 69: Renewable energy investment in billion USD
79
Figure 70: Composition of a conventional onshore 3 MW wind turbine
80
Figure 71: Development of wind-based electricity generation in India under different assumptions
82
Figure 72: India’s future additional electricity demand until 2030
83
Figure 73: Annual demand for steel and copper for wind turbines*
83
Figure 74: Cumulative savings of primary raw materials through wind energy
84
Figure 75: Different tower options for a wind turbine
85
Figure 76: Environmental comparison of two tower concepts
85
Figure 77: Natural resources defined by ProgRess
93
Figure 78: Japan’s political strategies for achieving a sound material cycle society
94
Figure 79: Phases of an LCA (ISO, 2006)
115
Figure 80: Example of a modelled life cycle in Umberto (Indian apartment)
116
References
119
Tables Table 1:
Main assumptions of the three scenarios
20
Table 2:
Mineral production, waste generation, and land affected in 2005–06
25
Table 3:
Extrapolation of additional incremental resource savings for selected sub-sectors in India
31
Table 4:
Indian automobile production in 1,000s
48
Table 5:
Expected Vehicle Production in India (1,000 units)
50
Table 6:
Different car types
53
Table 7:
Different options of motorized mobility
56
Table 8:
Material composition of buildings analysed by Ramesh et al. 2012 and 2013
66
Table 9:
Quantitative and qualitative drivers of demand
78
Table 10: Estimated consumption of resources by coal-fired and wind power-based plant
84
Table 11: Selected resource-efficiency strategies around the globe
90
Table 12: Selection of impact categories used in the study
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India’s Future Needs for Resources
115
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH The Indo-German Environment Partnership programme B-5/2, Safdarjung Enclave New Delhi - 110 029 T + 91 11 4949 5353 F + 91 11 4949 5391 E
[email protected] I www.igep.in, www.giz.de
