Wide scope for Clean Production initiatives within Indian SMEs but policies required to catalyze critical mass of SMEs to adopt and sustain the implementation of CP technologies and practices

Ms. Ayumi Fujino, UNIDO Representative in India, provides insight into UNIDO’s work in Energy and Environment fields in India and also shares thoughts on policies proposed under the UNIDO Green Industry initiative. 

What are the key issues/domains that UNIDO is working on in the context of environmental sustainability in India?

UNIDO’s work in India on the thematic priority of Energy and Environment make up a significant portion of our portfolio at present and this trend is expected to continue in the coming years. We assist the country in fulfilling its commitments to international environmental agreements and achieving national targets on the reduction of substances that harm human health and the environment.

We have been instrumental in the formulation of National Implementation Plan for the reduction/elimination of POPs (Persistent Organic Pollutants), which is covered under the Stockholm Convention, as well as in the actual implementation of projects that help meet its objective, such as the environmentally-sound management and final disposal of PCBs (Polychlorinated Biphenyls) and environmentally-sound management of medical waste (wherein dioxins/furans are emitted from incineration processes).

We have also worked on the phase-out of ODS (Ozone-depleting substances) such as CTC (Carbon Tetrachloride) and HCFCs (hydrochlorofluorocarbons), to meet targets under the Montreal Protocol.

On Energy and Climate Change, UNIDO has been supporting India’s voluntary commitment to reduce the emission intensity of its GDP and subsequent implementation of the National Action Plan on Climate Change, by accessing Global Environmental Facility funds and implementing projects that promote energy efficiency and renewable energy particularly in SMEs (small and medium enterprises). We have thus far targeted industrial clusters in the steel, glass, ceramics, dairy, brass, foundry and hand tools sectors.

UNIDO plays an active part in: (a) introduction, demonstration and customization of Best Available Techniques and Best Environmental Practices that are suitable to local conditions, (b) sector-wise or cluster-level capacity building, (c) development of tools and guidance for future replication and (d) providing the platform (at national and international levels) for information exchange.

Some of UNIDO’s other projects in context of environmental sustainability in India are as follows:

Voluntary initiative to promote greenhouse gas accounting and low carbon production: The specific objective of the project is to improve resource efficiency and environmental performance of business with focus on verifiable accounting of GHG emission reductions in selected industrial sectors in India.
Cleaner Technology Promotion in India: UNIDO has implemented the Cleaner Technology (CT) Promotion Project in India in order to build and strengthen capacities to initiate the process of aggressively promoting the adoption of CT investment projects. The services offered to Indian enterprises under the project are: cleaner technology assessments, cleaner technology implementation, and financial engineering.

Earlier this year, UNIDO released a set of formal policies for supporting green industry - UNIDO Green Industry. Can you highlight some of the key policies and initiative ideas relevant to India?

That document was produced as part of UNIDO’s Green Industry Strategy which aims to provide guidance to developing country governments on ways to catalyze their industries towards a more sustainable path to development. Several policy instruments and options have been presented in the document, mostly from a review of existing frameworks across the globe. However one should see these as suggestive rather than prescriptive, since some policies and initiatives may not be applicable depending on culture or value systems and level of political or economic development in a country. Also, there is no one-size-fits-all approach and the right combination of policy instruments must be determined at country level to effectively support the greening of industries.

The Report groups the identified policies and strategies into five themes: (1) Integrated framework to support the greening of industries – fundamentally the need for coherence in government policies relating to social, economic and environmental goals and coordinated action within the government functionaries across tiers and sectors; (2) Creating an enabling environment – primarily influencing financing mechanisms to support resource efficiency measures, removal of harmful subsidies and building necessary infrastructure; (3) Supporting industry-led initiatives – or incentivizing capacity development on cleaner production, eco-efficiency, pollution control and lifecycle management, and supporting private sector initiatives on adhering to international standards on environmental management systems, corporate social responsibility and others; (4) Harnessing environmental technologies – or providing assistance programmes to facilitate the absorption and diffusion of new technologies that facilitate sustainable production; (5) Instrument mixes to promote the greening of industries – or employing a combination of market-based instruments such as pollution charges and tradable permits, regulatory policies that set standards for pollution abatement and coupled with a strong monitoring and reporting mechanism, voluntary agreements to raise industry awareness, and information-based instruments to promote demand for environmentally-friendly products.

In India some of the key issues which may be addressed through the policies and strategies cited above are: (1) Fragmentation of policies across several government agencies particularly between environmental authorities and industry sector agencies; (2) Lack of capacity of industrial sector, particularly SMEs in adopting clean technologies; (3) Inadequate infrastructure particularly for proper waste treatment and disposal; (4) Under-pricing and detrimental subsidies on energy and water favor unsustainable patterns of consumption and greater emissions; (5) Weak institutional capacity for enforcement of rules and compliance monitoring by administrative authorities.

UNIDO and UNEP launched a programme to set up the National Cleaner Production Centres (NCPCs) in order to promote clean technologies in industries. What specific inputs does UNIDO provide to assist Indian enterprises in implementing cleaner production (CP) practices?

The NCPCs were established to provide services to governments, private sector and other stakeholders involved in the implementation of cleaner production policies, practices and technologies. In the beginning NCPCs are hosted by industry associations or technical institutes until they become administratively and financially independent from UNIDO and UNEP through capacity building interventions and creating the market for their services. Worldwide, some 47 countries have already benefited from the program.

NCPCs are expected to provide the following services:
1. Technical Assistance and In-plant Assessments - to identify, evaluate and help implement lean Production (CP) options that are appropriate to the enterprise’s processes, products or services, technologies and management systems and skills.
2. Training of trainers - to build a cadre of national experts that can assist enterprises and other organizations with the implementation of CP and other tools on policy, Life Cycle Assessment, energy efficiency or sound management of chemicals.
3. Information Dissemination and Awareness Creation – through the establishment of knowledge tools and platforms to encourage commitment towards CP implementation.
4. Policy Advice - that may include developing new strategies aimed to promote CP or providing input for other relevant policy developments and strategies, to create a conducive policy environment for CP.
5. CP Technology and Investment Promotion – to support the transfer of Environmentally Sound Technologies (ESTs) and other activities such as benchmarking and technology gap assessments; technology identification, screening and assessment; and preparation of investment proposals and business plans.

India’s NCPC, hosted by the National Productivity Council, was one of the first to be established under the UNIDO-UNEP program and has already given rise to 4 Regional Cleaner Production Centres (Karnataka, Gujarat, Punjab and West Bengal). The India NCPC has thus far carried out more than 350 CP/energy efficiency assessments in key sectors (e.g. leather, automotive, textile) and assisted SME units in the implementation of technically and economically viable CP options which have resulted in significant reduction in pollution load. Training of some 30 CP service providers has also been undertaken and training manuals developed.

What have been some of the key learning for UNIDO while working with MSMEs for promoting cleaner production (CP) and operations?

There is a wide scope for CP initiatives in SMEs but substantial impact on environmental quality will only be achieved if a critical mass of SMEs adopt and sustain the implementation of CP technologies and practices. Awareness levels need to be constantly enhanced and while there are enough success stories to build on, communicating these to reach a vast number of geographically spread players in the SME sector remains a huge challenge. UNIDO and UNEP’s Resource Efficiency and Cleaner Production (RECP) program provides a platform for exchanging information on proven methodologies and relevant experiences around the world through a network of NCPCs.

Customer demand is a key driver in making the shift to more resource-efficient and cleaner practices so those enterprises supplying goods or services to OECD countries or are owned by international entrepreneurs will not be difficult to convince. Another form of commercial pressure is hinged on the pursuit of maintaining competitiveness which could mean survival for particular SME sectors. UNIDO has thus continued to work at aggregate levels, in clusters or along supply chains. At this level of intervention, it was made evident that the concept of self-help and voluntary initiatives could work as effectively as imposing regulatory pressures. SMEs are particularly responsive to initiatives from industry associations and turn to them for advisory and technical services, with confidence that most solutions lie with industry personnel and few from external sources. Working with groups of SMEs also offer economies of scale for establishing common facilities (e.g. effluent treatment) and other CP solutions, and facilitates faster diffusion of information and replication.

In order to enable financing of cleaner technologies, some flexible financing mechanisms have been established but only a few enterprises have availed of the opportunities. The basic reasons include the SMEs’ lack of awareness on such offers, inability to produce bankable project proposals and inadequate financial management/accounting systems. Some SMEs are even surprised to find out that they have the financial capacity to afford the shift to RECP measures through their own resources but due to lack of management/accounting capabilities are unable to make the business case out of it.

UNIDO therefore extends the assistance to fill such information gap and build the capacity of SMEs in reaching out to the available support mechanisms and services. UNIDO adopts the cluster development approach for MSMEs

South-South Cooperation is another key programme by UNIDO that is operational in India. Can you tell us about any recent initiatives under this programme?

The essence of South-South cooperation is that the wealth of knowledge and capacity in the South, when systematically mobilized and shared, can facilitate the effective participation of developing countries in the global economy. The UNIDO South-South Cooperation Programme aims to create and strengthen technical and business capacities of developing countries in order to increase their competitive edge and to base their cooperation on shared interests and on their economic and social needs.

The South-South cooperation programme focuses on:
• Technology transfer, management and up-gradation of skills
• Investment promotion in industries
• Information technology applications for industrial development and knowledge networking
• Business linkages for Small and Medium Size Enterprises (SME) and cluster development
• Micro enterprise and rural industry development
• Building trade capacities and market linkages
• Grassroots innovations and renewable energy sources
• Commercialization of research findings and skill development
• Value-chain participation

UNIDO has currently two Centres for South-South Industrial Cooperation: one in Delhi, India, and another in Beijing, China. The Centres have the mandate to promote this South-South Cooperation and identify ways to transfer the knowledge and technologies to foster the collaboration between and amongst developing countries in Asia and the Pacific, Africa and other regions.

Some of the recent initiatives, which have been promoted mainly by using the Indian expertise into other developing countries, include:

• Solar Micro-Utility (SMU) Enterprises for Promoting Rural Energy and Productive Uses in Bangladesh -- Overall strategic goal of the project is to develop rural SMU Enterprises to provide clean, reliable and affordable energy services to local communities for promoting productive uses and social & health benefits anchored in existing development infrastructure under a sustainable business model. The technical partner is The Energy and Resources Institute (TERI), New Delhi, for which the pilot phase is scheduled for two years with an estimated budget of US $0.3 million.
• Renewable Energy for Productive Uses and Rural Transformation in Africa (Benin and Nigeria) – The project will design and install biomass gasification renewable energy plants (25 KW each) for Ebonyi SME Association (Nigeria) and Songhai Centre (Benin) and provide capacity building that includes technical and managerial trainings. The Indian Institute of Science (IISc), Bangalore serves as technical resource institution.
• Preparatory Phase for the Development of Production Capacity and Promotion of Neem derived Bio Pesticides as a low cost and eco-friendly alternative to Chemical Pesticides in West Africa – The project assessed the country-specific needs of Ghana, Nigeria and Sierra Leone on neem-derived bio-pesticides to finalize components and strategy for project implementation. The Regional Network for Pesticides in Asia and the Pacific (RENPAP), New Delhi, serves as technical resource institution.

Can you discuss something about the project that UNIDO has undertaken in association with GEF and GOI to promote energy efficiency and renewable energy in 12 MSME clusters? Is this initiative a part of the South-South Cooperation programme in any way?

The Project entitled “Promoting Energy Efficiency and Renewable energy in Selected MSME clusters in India” is a joint effort with the Bureau of Energy Efficiency (BEE), Ministry of New and Renewable Energy (MNRE) and Ministry of Micro, Small and Medium Enterprises (MSME), with funding from the Global Environment Facility (GEF). The total financing for this project is valued at approximately US $ 33 million for implementation within five years.

As part of UNIDO’s overall strategy to promote Green Industry, the project aims to develop and encourage a market environment for enhanced adoption of energy-efficienct technologies and measures, as well as increased use of renewable sources of energy in process applications in 12 selected energy-intensive MSME clusters in India to reduce overall carbon emissions and improve the local environment. The sectors and areas covered are: Brass in Jagadhri and Jamnagar; Ceramics in Khurja, Morbi and Thangarh; Dairy in Gujarat and Punjab; Foundry in Belgaum, Coimbatore and Indore; and, Hand Tools in Jalandhar and Nagaur.

Once completed, the project would have considerable global environmental benefits in terms of reduction of greenhouse gas emissions through reduced energy consumption; switch over to renewable, and putting in place suitable policy incentives focusing on energy-intensive MSMEs. In the process, the project would also help in improving the productivity and competitiveness of the participating enterprises.

This Project does not directly address the dimension of the South-South Cooperation per se. However, according to the needs of clusters, the best practices and technologies might be referred to from within and outside of India.

What other projects is UNIDO engaging in for encouraging environmental sustainability process in India ? What are your future expectations and growth ideas for this country?

UNIDO’s portfolio will continue to grow in the priority area of Energy and Environment, particularly on projects relating to chemicals management and climate change. As we have committed in the UN Development Action Framework for 2013-2017, UNIDO will work closely with the government and other stakeholders to develop and implement policies and programs that promote ‘green industry’, which addresses both the transition towards resource-efficient and cleaner production processes, as well as the continued development of the environmental services sector. UNIDO will carry on with pipeline projects on environmentally sound management of hazardous substances, such as Persistent Organic Pollutants and Ozone Depleting Substances. For climate change mitigation, UNIDO will continue to demonstrate the viability of energy-efficient technologies and endeavour to assist in the adoption of energy management standards, development of direct industrial applications of solar energy and utilization of industrial waste to energy. Our groundwork on local-level environmental management, fostering the development of eco-cities and providing modern energy services to isolated areas, will be taken for replication in comparable areas in India and in other countries. Through UNIDO’s continued support to industry associations, cleaner production centres, technology centres, and the Centre for South-South Industrial Cooperation, the knowledge base towards a low-carbon economy will be harnessed and best available technologies and practices will be made widely accessible for adoption and deployment by the productive sector, particularly MSMEs.

This interview was conducted by Pramita Sen, a member of the Sustainability Outlook editorial team.

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