DECARBONIZING MSME: ECONOMY

DECARBONIZING MSME: ECONOMY

News: Recently, a study on decarbonisation of 7 MSME clusters (Alathur, Asansol-Chirkunda, Bengaluru, Delhi-NCR, Coimbatore, Ludhiana and Tiruppur) has revealed that adopting renewable energy solutions and energy efficient measures could lead to significant annual savings and reduction in emissions of CO2.

It covered sectors such as pharmaceuticals, refractories, aluminium die-casting, bakeries and textiles units across these clusters.

Whats in the news?

'Decarbonisation' refers to the process of reducing 'carbon intensity', lowering the amount of greenhouse gas emissions produced by the burning of fossil fuels.

 

Key Findings

MSME Energy Consumption: Approximately 31% of MSMEs operate in the manufacturing sector, contributing 20%-25% of the country's industrial energy consumption. Over 80% of this energy is utilized for thermal processes, such as heating in boilers and furnaces.

Initial Investment & Cost Saving: Implementing energy-efficient measures and renewable energy solutions in seven key MSME clusters would require an investment of Rs 90 crore, leading to annual cost savings of Rs 37 crore.

Emission Reduction: Decarbonizing these sectors could result in a reduction of 136,581 tonnes of CO2 emissions annually.

Recommendations

  1. Improve Access to Finance:
    • Offer affordable, collateral-free financing for MSMEs by reviewing loan eligibility.
    • Build capacity for financial institutions.
    • Explore carbon financing options.
  2. Tailor MSME Policies:
    • Set emission reduction targets.
    • Support energy audits, research and development, pilot projects, and financing for energy efficiency and renewable energy.
  3. Develop Biofuel Ecosystem:
    • Expand biomass policies.
    • Include biodiesel in government schemes.
    • Facilitate the sale of bio-CNG.
  4. Increase Renewable Energy Use:
    • Promote rooftop solar and open-access systems.
    • Rationalize charges and aggregate demand.
    • Utilize cluster development schemes.
  5. Regulatory Incentives:
    • Provide incentives for MSMEs to switch to cleaner fuels.
    • Simplify the adoption of clean fuels.
    • Monitor Scope 3 emissions (indirect emissions that are a consequence of the company’s activities, upstream and downstream of the manufacturing site).

Source: https://indianexpress.com/article/india/decarbonising-seven-key-msme-clusters-could-annually-save-rs-37-cr-study-9441279/