Environment and Development

Ramaswamy R Iyer
There are some worrying signals from the new government in New Delhi that it could compromise on environmental concerns in the pursuit of more rapid growth: clearances could be given quickly (i e, environment protection requirements will be loosened), the Land Acquisition Act could be diluted and more.
It may be more useful if we shake ourselves free of the obsession with GDP growth rates and try instead to make India a caring, humane, compassionate, equitable, just and harmonious society.

With the advent of the Narendra Modi government, there is much talk of a quick approval of projects held up for environmental clearances. The big corporates, their champions among the economists, and those who believe that gross domestic product (GDP) growth and “development” ought to be our over-riding goals, are convinced that among the impediments to growth and development “green clearances” are the worst.

One View of ‘Clearances’

Let me present a caricature of a particular view: project clearances should be had for the asking; similarly land for industry should be had for the asking and should be taken by the government from farmers and other people and handed over to corporate houses (whether for high or low priority industries or for speculative investments in real estate). “Free, informed prior consent” for land acquisition, fair compensation for land acquired, and generous rehabilitation packages are luxuries that we cannot afford. “Social Impact Assessment” or SIA is a newfangled and dangerous idea. The society that we should aim at building is one in which the stock market soars to ever new heights and foreign investors want to invest: that is the ultimate test of success. This is in fact not too much of a caricature of the industry view and of neo-liberal alliance economic thinking. It carried much weight with the United Progressive Alliance (UPA) government – but not, one hopes, with the new government.

Unfortunately, there seems to be a strong continuity between the erstwhile UPA government and the new Bharatiya Janata Party government on an impatience with environmental concerns. The redoubtable Sunita Narain is reported to have said that what we need is not rhetoric but tough action on the environment. Tough action is very likely, but alas, not necessarily in the direction that we would approve of.

Returning to project clearances, please note that the focus is on “projects”. However, projects are only the embodiments of approaches and policies. When a new government comes into power, one would expect it to examine the approaches and policies – the kind of thinking – underlying the pending projects, and consider whether it wishes to persist with that thinking or would like to bring new thinking to bear on the matter. In the latter case, it may wish to abandon some projects, redesign some and push ahead with some. Instead, the call is to “clear pending projects quickly”. This unthinking preoccupation with projects prevents serious thinking about policies.

Further, any requirement of a clearance implies the possibility of a denial of clearance, but no one is talking about rejections. Let us suppose that the examination of projects and the processes of decision-making are speeded up, and that out of 10 projects six are promptly rejected and four are promptly cleared. Would the corporate world and the protagonists of development be happy? Hardly. When they talk about “quick clearances” they mean positive clearances, not negative ones. What they want is that the whole business of a clearance under the Environment (Protection) Act (EPA) and related Acts should be reduced to a formality to be got through very quickly, and that all projects should come through unscathed.

At the Cost of the Environment?

There used to be complaints about delays in clearance even earlier, when the examination was confined to techno-economic and financial aspects, but with the onset of what are called “green clearances”, i e, clearances under the EPA, the Forest Conservation Act, and other related enactments, the complaints have become shriller. The reason is that project proponents were willing to accept the need for a techno-economic-financial examination, but resent an environmental clearance as a needless imposition. Concern about the environment and ecology is limited to a small number of people. Most people are willing to pay lip service to the environment because that has become the prevailing practice, but have no real belief in it, and would be seriously upset if it interferes with what they consider to be development. That is also the attitude of big business, and this point of view is quite strong in the so-called “developmental” ministries in the government. The Ministry of Environment and Forests (MoEF) is unpopular with these ministries; it is regarded as a “negative” force impeding development. A development-environment dichotomy is posited, with the former being accorded primacy and the latter relegated to a secondary position. The holders of the “primacy of development” argument would say “yes, the protection of the environment is important, but not at the cost of development”. Let us reverse that proposition: can we really have development at the cost of the environment?

It is interesting that the ardent advocates of what they call “reform” (which means a full changeover to free-market capitalism) sometimes describe “green clearances” as a return to the discredited “licence-permit raj”. As no one is currently in favour of licence-permit raj, the use of that term functions as an argument-stopper. However, can any government function without permits and licences? A passport is a permit. A driving licence is a licence. Boilers have to be periodically certified for safety. Building plans cannot be passed without a clearance from the fire department. Vehicle exhaust has to conform to certain specifications. In that haven of free enterprise, the United States, there is strong anti-trust legislation and there are powerful regulatory agencies such as the Securities and Exchange Commission and the Federal Drugs Administration. In that country, dams can be built by private agencies but they need a licence; and if the conditions prescribed are not adhered to, the licence can be cancelled. It follows that if we wish to protect and conserve mountains, forests, rivers, wildlife, the air that we breathe and the water that we drink, and indeed our habitat, the Planet Earth, we must have laws and rules and these must be enforced. Large interventions in nature will necessarily have to be carefully examined for their impacts on these things. Describing this kind of examination dismissively as licence-permit raj indicates a mind disabled by ideological prejudice.

Disturbing Signals

Dare one hope that the negative attitude to environmental concerns will not continue in the new government? Unfortunately there are disturbing indications. The new environment minister is reported to have said that the environment ministry will not be obstructionist. That is a revealing statement. It implies that any minister who implements the EPA faithfully and effectively is being obstructionist and that he or she should moderate the implementation to avoid being so. It is also a defensive statement seeking to reassure everyone that he will try not to give trouble to anyone.

Why does such a reassurance become necessary? The reason is that the EPA seriously tries to protect the environment and contains provisions for the purpose, which means that if rigorously implemented, the Act is bound to bite in some cases. If it did not, the Act would be worthless. It follows that the bland statement often heard that there need be no conflict between the environment and development is not true. An effort needs to be made to reconcile the requirements of the Act and the demands of development, and it will not be an easy effort.

Compromise on the Environment

It is in that context that the advocates of development glibly talk about a “balancing” of environment and development. What they mean by balancing is of course a compromise on environmental concerns, never a moderation of developmental activities. The development chariot must roll on, and environmental concerns must be sacrificed.

There are reports that time limits will be set for environmental clearances, and that there might be a provision for an automatic clearance if the clearance is not forthcoming within a certain period. These are of course media reports and one does not know what the exact instructions will be. However, these indications show which way the wind is blowing and that is indeed worrisome. Please note that the onus is entirely on the MoEF. They are responsible for delays; they must abide by the time limits; if they do not, there may be clearances by default. What responsibilities are cast on those who submit for clearance projects which are simply not fit for clearance? Is there any recognition that the projects must be well-prepared, fully documented and supported, and ripe for a clearance in every possible way; that the vast majority of Environmental Impact Assessments (EIAs) are extremely poor and shoddy and many downright dishonest; and that EIAs need to be fully professionalised, distanced from project formulators, approvers and implementers, and placed under the supervision of the National Environmental Regulator (if one is established)? That is a rhetorical question that needs no answer. Under the circumstances, the only way in which the MoEF can abide by the time limits would be to reject promptly the vast majority of projects. Would that be acceptable?

Dilution of Land Acquisition Act

Another source of worry is in relation to land acquisition, displacement and rehabilitation. There is a tendency on the part of many commentators, particularly the champions of free-market capitalism (who hold a view similar to the old American slogan that “what is good for General Motors is good for America”), to regard the Land Acquisition and Rehabilitation Act of 2013 as extremely bad and a serious impediment to development. The thought that a national policy was needed on development-induced displacement and the rehabilitation of project-affected people, as also a drastic overhaul of the colonial Land Acquisition Act, emerged in the 1980s. After protracted debates and a series of drafts (repeatedly diluted), a weak Act was finally passed in 2013. Many feel that it is defective and deficient in several respects, but such as it is, it exists and offers some limited protection against unfair alienation of agricultural land, and a modest rehabilitation provision. In the drive for the quick implementation of “developmental” projects, one hopes that the government will not be unduly influenced by the neo-liberal economic view of this Act.

Going beyond project clearances, it has also been argued by some commentators that institutions of accountability such as the Comptroller and Auditor General (CAG) and institutions against corruption such as the Central Vigilance Commission (CVC) are responsible for the economic slowdown. The inference is clear. It would be wonderful if there were no CAG, no CVC, and no EPA, but if that ideal situation is not possible, we should at least render these agencies, laws and procedures as weak and innocuous as possible. Corruption, fraud and financial irregularities are no doubt regrettable, but reporting on them in detail in public documents such as the CVC’s or CAG’s reports makes them visible internationally and affects “investor confidence”. A bit of corruption, fraud or irregularity is a price we may have to pay for a better inflow of foreign direct investment (FDI). These things will exist, but must be hidden from public view. That represents the thinking of several commentators, though they may not say so explicitly. That view found much resonance in the UPA government. One must hope that it does not find an echo in the new government through some of its advisers. Prime Minister Modi is probably too shrewd a person to be unduly influenced by that kind of thinking.

Reports to the effect that the new government proposes to restore the Ganga to a pristine condition are encouraging, but one must hope that it will not be a cosmetic exercise like the “revival” of the Sabarmati in Gujarat. The Sabarmati has not been revived; it is as dead as ever. All that has happened is that in a 10 km stretch of the 370 km-long river, Narmada waters have been put in, treating the Sabarmati bed as a conduit or a pipeline for those waters. An artificial “river” of 10 km has thus been created for the city of Ahmedabad. The only lesson to be learnt from that experience is that it should be avoided.

River Interlinking Project

More disturbing is the fact during his election campaign, the present prime minister talked about the interlinking of rivers (ILR) project. That is a very controversial project which has many supporters but also many critics. The fact that the prime minister is predisposed in favour of the project is hardly reassuring, but one fervently hopes that he will study the weighty objections that many critics have raised before taking a decision on the project. The ILR project is an ill-conceived project and will be an unmitigated disaster. However, that subject cannot be discussed in this article. The reader’s attention is drawn to two articles by this writer on the subject in EPW (“River Linking Project: A Disquieting Judgment”, 7 April 2012; and “Linking of Rivers: Judicial Activism or Error?”, 16 November 2002).

Perhaps one is being unduly alarmist. One hopes that the Modi government will be as earnest about environmental and ecological concerns as about what goes by the name of development. One hopes further that there will be an agonising reappraisal of what constitutes true development. A word needs to be said about this.

As already mentioned, the prevailing idea of development is a booming stock market, an inward rush of foreign investment, and a GDP growth of 8% to 10%. However, 8% or 10% growth would imply a huge draft on natural resources, a high potential for pollution requiring remedial measures, and an immense generation of waste needing disposal. Is it possible to pursue 8% or 10% growth without damaging the environment and Planet Earth? However, let us leave such radical thinking aside for the time being, though we may be forced to face that logic in due course. In practical terms, what can be done?

Need for Focus on Specifics

May one suggest that we refrain from adopting targets for growth, and focus instead on specifics such as food inflation, farmers’ suicides, poverty, jobs, illiteracy, disease, infant mortality, safe and reliable water supply, appropriate sanitation arrangements, safety of women in the streets and workplaces, and so on, and above all corruption, leaving growth to look after itself. This is a subject that will need to be discussed at length. One can only offer without proof the statement that such a piecemeal approach is possible without adopting ideologies of the right or the left. In particular, it is necessary to shake ourselves free of the obsession with GDP growth rates. It is also necessary to stop being bemused by visions of India as a super-power, and try to make India a caring, humane, compassionate, equitable, just and harmonious society.

One shares the widespread hope that a single-party majority and a decisive prime minister will mark a new beginning. The prime minister’s statement from his new website says: “Let us together dream of a strong, developed and inclusive India”. That phrase needs to be expanded to include ecological sustainability and harmony – not only between groups/states/countries, but also between generations, and between humanity and Nature. In the hope that the new government is engaged in serious thinking about these matters, these reflections are offered to it for whatever they are worth.

(Ramaswamy R Iyer (ramaswamy.iyer@gmail.com) is with the Centre for Policy Research and is better known for his extensive writings on issues related to water.)

For an eco-friendly industry

Chandrajit Banerjee

The state of the planet is grim. Carbon emissions are at their highest levels in human history – the last time the concentration of this greenhouse gas was so high, the Arctic was ice-free. This is the direct outcome of unregulated human action. In that context, World Environment Day is a great opportunity for all stakeholders to take stock of where we stand and where we must go from here.

The three key stakeholders to saving the environment are civil society, government and industry – each with its own unique role to play. But the ultimate responsibility of devising these solutions rests with industry.

TECHNOLOGICAL POSSIBILITIES

Studies show that Asia has nearly 100 million two and three wheelers vehicles which still use 2-cycle gasoline engines. Clearly, this is a challenge. Conversely, it is also a great opportunity for industry to introduce conversion kits to LPG or CNG, perhaps even low-cost quadricycles. Similarly, leading companies with innovative water management programmes are showcasing how by introducing new irrigation techniques they not only helped reduce the strain on the environment but also incrementally increased their profits.

The three stakeholders need to consider the growth requirements of our country vis-à-vis the challenge of sustainability. 

LEGAL ISSUES

The Indian economy has benefited from substantial deregulation in the last 22 years – considerably reducing poverty and improving lifestyles. However, environmental challenges, too, have increased manifold. Many antiquated laws have only been incrementally improved to suit the new governance order.

We must find innovative approaches to environmental governance in India. This would require moving beyond the conventional ‘do no harm’ approach to a more proactive ‘do good’ approach. Unfortunately, the country’s current environmental regulations come under criminal laws that imply a ‘prohibit and punish’ regime instead. Under criminal law, companies are either subject to compliance or non-compliance but extent of compliance is not considered; consequently, there is lack of any incentive for businesses to go beyond compliance.

Industry, civil society and government should work together to evolve solutions to environmental challenges in a concerted and coordinated manner. A joint task force should examine current laws and identify outdated regulations with a view to bringing them in line with current industry models. Industry can extend this initiative to State governments as well. For example, India does not have a single location for waste segregation and urban waste is fast becoming a problem as the number of million-plus cities grows rapidly.

Performance assessment or evaluation for determining environmental impact and identifying solutions is a must for enterprises. Not only does this help align the firm to environmental regulations, it also offers a chance for reducing costs by minimising waste and introducing more efficiency into processes.

RENEWABLE ENERGY

A CII-Boston Consulting Group study on Indian manufacturing identified green products as the next big area of potential opportunity for the sector. It estimated that a quarter of cars sold in 2020 could be electric vehicles. The solar energy market is expected to grow 9 per cent annually till 2017, while other renewable energy markets are also growing. There are huge opportunities in green buildings, water related products and biofuels, composites and advanced materials, nanotechnology, artificial intelligence, or fuel cells.

Indian companies can establish the current ‘green baseline’, identify and assess risks to business. The government is already working on developing Green Public Procurement Guidelines which can offer new opportunities, once in place.

Scale up oil exploration in India

P. Elango

Thanks to an elephant and a British geologist, India discovered its first oil in the jungles of Assam in 1889, much before any member of OPEC could do it. But that’s history.

The reality today is over 75 per cent of our sedimentary basins are yet to be categorised as “moderate-to-well explored” even as we import over 75 per cent of our oil demand by spending a whopping $134 billion during FY 2011-12. Such high import dependence has led to high trade deficit and widening of current account deficit (CAD). It’s a vicious cycle that can only be broken through a bold vision and a swift set of actions.

Every challenge represents an opportunity. India presents significant unexplored opportunities for the exploration and production (E&P) industry. So far only 73 billion barrels of oil and oil equivalent gas could be established through exploration, out of 205 billion barrels of prognosticated hydrocarbon resources. Thus, about 133 billion barrels of prognosticated resources remain to be unlocked through exploration. The size of the prize when we move the 65 per cent of prognosticated hydrocarbon resources to “in-place volumes” from “yet-to-find” category could be significant.

On an average, India drills about 200 exploratory wells every year while the US drills about 2,000. Factoring in the geological risks, this pace needs to be accelerated to identify and drill out each prospect in the 26 sedimentary basins that provide the hydrocarbon base for India spread over 3 million sq.km.

The Ministry of Petroleum & Natural Gas recently set the ball rolling with a vision to reduce oil imports by 50 per cent (2020), 75 per cent (2025), and 100 per cent (2030) and a roadmap is being evolved. The first significant step in this direction is the policy decision to allow exploration in all producing blocks, even as the industry awaits further procedural clarity.

The Hydrocarbon Vision 2025 aims at 100 per cent exploration coverage of sedimentary basins by 2025. To achieve this, we should scale up our exploration efforts to move 50 per cent of the sedimentary basin to the ‘moderate-to-well explored’ category in the next five years by:

Providing an enabling policy framework and fiscal terms that are clear, certain and internationally competitive to attract the risk capital and technology.

Establishing Open Area Licensing Policy (OALP) regime swiftly to enable industry to move rapidly to explore attractive blocks rather than waiting for bid rounds.

Revamping regulatory framework to global standards built on principles of self governance, trust and partnership.

National and international experience suggests that higher domestic production has a transformational impact on the host governments. In our own country, Rajasthan is the most recent example.

As per the Rajasthan Budget Study 2013-14, revenue from the petroleum sector now constitutes more than 40 per cent of the total non-tax revenue of the State government from just 0.2 per cent in 2008-09.

The petroleum sector is estimated to contribute Rs 5,500 crore to the State government’s non-tax revenue, primarily because of oil production from the Barmer Basin. Oil discovery and the resultant higher revenues from the sector have helped the State to present a more balanced budget, enabling large fund allocation to social and economic development projects.

From Discovery to Delivery

Over 50 per cent of the time from discovery-to-delivery is wasted in the lengthy “I don’t trust you” approval process — a non-value adding component in any project development.

As a result, out of 117 NELP discoveries as of April 2012, development plan has been approved only for 11 per cent of the discoveries, and very few discoveries are under production, even as we spend Rs 1,800 crore in importing oil every day.

As we seek to scale up exploration programme, there is a need to simultaneously fast-track the project development. We need to set a goal to reduce the cycle time from discovery-to-delivery. In oil and gas sector there is no equipment or facility that requires more than 18 months lead time to commission and no discovered barrel of oil in India is going to cost more to develop than its imported price.

The solution lies in adopting an integrated field development plan that is dynamic and looks at the life cycle of the development of a block vis-à-vis the current process of individual field development plan for a discovery. Controls can be exercised through annual work programme and budget and its amendments on merits. This can significantly shorten the discovery-to-delivery cycle, contributing to domestic production barrel by barrel, as every barrel counts when it saves $100/barrel of precious foreign exchange to a nation whose current account deficit is $78 billion.

Strengthening Governance

Scaling up exploration efforts and fast-tracking discovery-to-delivery demands strengthened governance framework for the E&P sector. This calls for a fully equipped regulator with a permanent, internationally experienced cadre to manage our nation’s oil and gas resource base. At the estimated recoverable reserve base of 2,041 MMT of O+OEG its value is more than $1 trillion, which is almost equivalent to the market capitalisation of all listed companies in India. If a regulator of SEBI stature is required to professionally manage the market, we need to look at how we strengthen and elevate the upstream oil and gas regulator DGH as an institution that promotes risk investment in exploration, facilitates fast-track development, promotes energy security and protects the national interest.

Norway, on which India’s E&P regulatory framework was originally modelled, is an appropriate example to follow. That country has provided statutory powers to a technically strong regulator — the Norwegian Petroleum Directorate (NPD). Well-codified practices, swift and transparent decision making, system of deemed approvals after a set timeline, are hall marks that make NPD an industry benchmark for the governance of E&P activities. And this is what has enabled Norway to increase production over the years and run a sovereign fund of $700 billion that is primarily contributed by a vibrant oil and gas sector providing a high quality of life to its citizens.

The price we will pay, if we do not act now, is clear; we will end up transferring over $1.5 trillion of national wealth to oil exporting countries.

To transform we need to, as a mission, step up and scale up exploration, fast-track discovery-to-delivery cycle time and strengthen governance to facilitate economic development. As the prize could be large, this journey to realise the Hydrocarbon Vision will surely be exciting, if we get set and move!

(The author is CEO of Cairn India.)