Recommendations for an Indian Resource Efficiency ......2 Recommendations for an Indian Resource...

Recommendations for an Indian Resource Efficiency Programme (IREP)A Guiding Document for Policy Makers by the Indian Resource Panel

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Recommendations for an Indian Resource Efficiency Programme (IREP): A Guiding Document for Policy Makers by the Indian Resource Panel April 2017

Recommendations for an Indian Resource Efficiency Programme (IREP) 2

Imprint Published by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

Registered Offices: Bonn and Eschborn, Germany

Fostering Resource Efficiency and Sustainable Management of Secondary Raw Materials B-5/1, Safdarjung Enclave, New Delhi 110029 India T: +91 11 49495353 E: [email protected] I: http://www.giz.de Responsible Mr. Uwe Becker E: [email protected] Contributing Authors

The Energy and Resources Institute (TERI) Dr. Shilpi Kapur, Nitish Arora, Bhawna Tyagi, Souvik Bhattacharjya, Dr. Suneel Pandey

GIZ Dr. Abhijit Banerjee, Reva Prakash, Katharina Paterok, Uwe Becker, Dr. Rachna Arora, Dr. Poonam Pandey, Lalit Sharma

adelphi consult GmbH Jai Kumar Gaurav, Frederik Eisinger

Development Alternatives (DA) Achu R. Sekhar, Krishna Chandran, Pratibha Ruth Caleb, Vaibhav Rathi Advisors Dr. Soumen Maity, Dr. K. Vijayalakshmi

Institut für Energie- und Umweltforschung Heidelberg GmbH (IFEU) Dr. Monika Dittrich, Claudia Kaemper

VDI Zentrum Ressourceneffizienz GmbH (VDI ZRE) Sebastian Schmidt, Manuel Weber Knowledge Partners

Consultant

New Delhi, India, April 2017 The IREP has been developed by the Indian Resource Panel (InRP). In its development, it was supported by the Indo-German bilateral project “Fostering Resource Efficiency and Sustainable Management of Secondary Raw Materials”, which is being implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, jointly with the Indian Ministry of Environment, Forest and Climate Change (MoEFCC) as part of the International Climate Initiative (IKI) of the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB). InRP consists of Mr. Vishwanath Anand, Dr. Prodipto Ghosh, Dr. Tishyarakshit Chatterjee, Mr. Rajen Habib Khwaja, Dr. Ajay Mathur, Dr. Ashok Khosla, Ms. Seema Arora, Mr. Ravi Agarwal and Dr. Prasad Modak.


Table of Contents List of Figures .......................................................................................................................5 List of Tables .........................................................................................................................6 List of Abbreviations ............................................................................................................7 Foreword ......................................................................................................................... 11 Preface ............................................................................................................................. 12 Executive Summary ......................................................................................................... 14 Chapter 1: Introduction .................................................................................................. 34 1.1 What is Resource Efficiency? ........................................................................................34 1.2 Focus of Indian Resource Efficiency Programme ..........................................................35 1.3 Aim of the Document ..................................................................................................36 1.4 Structure of the Document ..........................................................................................37 Chapter 2: Resource Efficiency as a Strategy for Development and Resource Conservation in India ...................................................................................................... 38 2.1 Resource Efficiency as a Strategy for Sustainable Development ....................................38 2.2 The Multi-Dimensional Benefits of a Resource Efficiency Strategy ..............................40 2.3 Resource Efficiency in the Context of Equity and Access to Resources ........................41 2.4 Congruence of Resource Efficiency Strategy with Government Obligations and Priorities ................................................................................................................42 Chapter 3: Resource Use in India: A Trend Analysis ....................................................... 43 3.1 Past and Current Trends of Material Use in India ........................................................43 3.2 India’s Future Trends and Trajectories on Material Demand ......................................49 3.3 Consequences of Current and Future Material Demand .............................................50 3.4 Global Resource Use ...................................................................................................50 3.5 Existing International Approaches for Measuring and Fostering Resource Efficiency ...52 Chapter 4: Status of India’s Policies of Resource-Use: Following a Life-cycle Approach .. 58 4.1 Background ..................................................................................................................58 4.2 Resource Efficiency in Mining .....................................................................................59 4.3 Resource Efficiency in Design Phase ............................................................................61 4.4 Resource Efficiency in Production/Manufacturing .......................................................62 4.5 Resource Efficiency in Consumption ...........................................................................64 4.6 Resource Efficiency in End-of-Life Stage ......................................................................65


Chapter 5: Approaches for Selected Materials .................................................................. 67 5.1 Background ..................................................................................................................67 5.2 Iron and Steel ...............................................................................................................68 5.3 Copper .........................................................................................................................74 5.4 Nickel .........................................................................................................................77 5.5 Plastics and Composites ...............................................................................................79 5.6 Sand .............................................................................................................................82 5.7 Soil ...............................................................................................................................86 5.8 Stone (Aggregates) ........................................................................................................89 5.9 Limestone ....................................................................................................................91 Chapter 6: Approaches for Selected Sectors ..................................................................... 94 6.1 Introduction .................................................................................................................94 6.2 Automotive Sector .......................................................................................................94 6.3 IT Equipment Sector .................................................................................................100 6.4 Construction Sector ...................................................................................................104 Chapter 7: Approaches for Cross-Cutting Issues ........................................................... 109 7.1 Introduction ...............................................................................................................109 7.2 Green Public Procurement .........................................................................................109 7.3 Standards and Benchmarks ........................................................................................112 7.4 Eco-labelling and Certification Schemes .....................................................................114 7.5 Consumer Sensitisation ..............................................................................................118 7.6 Fiscal Instruments .....................................................................................................120 7.7 Upgrading Informal Sector .........................................................................................121 Chapter 8: Approach of India’s First Resource Efficiency Programme ........................... 123 8.1 General Principles and Perspectives ............................................................................123 8.2 Integrating Perspectives for Policy Design .................................................................124 8.3 Stakeholder Engagement ............................................................................................127 8.4 Business Models .........................................................................................................129 8.5 Monitoring of the Programme and Further Development ..........................................131 8.6 Conclusion .................................................................................................................134 Major Action Points for a Resource Efficiency Strategy for India ................................. 135 References ........................................................................................................................137


List of Figures Figure 1: Material consumption in India, 1970-2010 (with extrapolation for 2011-2015) .......................................................................................................44 Figure 2: Material consumption of India compared to other countries and regions .........45 Figure 3: Per capita material consumption in India, 1970-2010 (with extrapolation for 2011-2015) .......................................................................................................46 Figure 4: Trends in Resource Consumption, GDP and Resource Productivity in India, 1970-2010 ........................................................................................................47 Figure 5: Resource Productivity in India, 1970-2010 .......................................................47 Figure 6: Import dependencies of India ............................................................................48 Figure 7: India’s past material demand and future projections until 2050 .......................49 Figure 8: Resource extraction by material category world-wide, 1970-2010 ....................51 Figure 9: Life-cycle Approach ...........................................................................................58 Figure 10: Sector-wise consumption of steel in India ..........................................................68 Figure 11: Iron ore production and consumption trends ....................................................69 Figure 12: Month-wise steel price in Delhi Retail Market in India .....................................70 Figure 13: Life-cycle of steel ...............................................................................................72 Figure 14: Benefits of using scrap steel v/s iron ore .............................................................73 Figure 15: Estimated sector-wise copper consumption in India ..........................................74 Figure 16: Monthly price of copper, 2005-2016 (INR/metric tonne) .................................75 Figure 17: Average monthly Wholesale Price Index (WPI) of nickel alloys in India (1995-2010) ......................................................................................................78 Figure 18: Percentage weights of different plastic components to total plastic use in a 1,200 kg car ....................................................................................................80 Figure 19: Indian production of key plastics (in thousand metric tonnes) ..........................81 Figure 20: Illegal sand mining hotspots in India .................................................................83 Figure 21: Projected sand demand in India .......................................................................83 Figure 22: Overlap of major agricultural soil types with large-scale brick production in India ............................................................................................................87 Figure 23: Granite producing states and basalt deposits in India .......................................90 Figure 24: Evolution of the number of eco-labelling schemes by modes of governance and ownership (1970-2012) ............................................................................115 Figure 25: The EcoMark label ..........................................................................................115 Figure 26: Indira Paryavaran Bhawan, New Delhi awarded GRIHA 5 Star rating ............116 Figure 27: BEE Energy Label ..........................................................................................117 Figure 28: Product – Service system .................................................................................130


List of Tables Table 1: Volume of extraction, imports and exports of India 1970-2010 (with extrapolation for 2015) .........................................................................................44 Table 2: Indicators and objectives regarding Resource Productivity according to ProgRess II ............................................................................................................54 Table 3: Selected materials .................................................................................................67 Table 4: Raw materials requirement for projected Iron and Steel production (base case) ....70 Table 5: Post-consumer steel product recovery rates by sector .............................................73 Table 6: Royalty rates on sand in different Indian states ......................................................84


List of Abbreviations ABS Acrylonitrile Butadiene Styrene AIS Auto Industry Standards AMD Acid Mine Drainage AMRUT Atal Mission for Rejuvenation and Urban Transformation ASTM (formerly) American Society for Testing and Materials ATDF Auto-component Technology Development Fund BATNEEC Best Available Technologies Not Entailing Excessive Costs BEE Bureau of Energy Efficiency BHEL Bharat Heavy Electricals Limited BIS Bureau of Indian Standards BMTPC Building Materials and Technology Promotion Council BMUB German Federal Ministry for the Environment, Nature Conservation,

Building and Nuclear Safety BMZ German Federal Ministry for Economic Cooperation and Development BPM Business Process Management BRICS Brazil, Russia, India, China and South Africa BSI British Standards Institution C&D Construction and Demolition CAGR Compound Annual Growth Rate CAFE Corporate Average Fuel Economy CEA Central Electricity Authority CECI Clean Energy Cooperation with India CEEP European Centre of Employers and Enterprises providing Public Services CEN Comité Européen de Normalisation or European Committee for

Standardisation CEQ Council on Environmental Quality CFL Compact Fluorescent Lamp CII Confederation of Indian Industry CNG Compressed Natural Gas COP21 Conference of the Parties to the UN Framework Convention on Climate

Change CPCB Central Pollution Control Board CPSE Central Public Sector Enterprises CREDAI Confederation of Real Estate Developers’ Association of India CREP Corporate Responsibility for Environmental Protection CRZ Coastal Regulation Zone CSE Centre for Science and Environment CSIR Council of Scientific and Industrial Research CSTEP Centre for Study of Science, Technology & Policy DERec Direct Effects of Recovery DFPR Delegation of Financial Powers Rules DGS&D Directorate General of Supplies and Disposal DIERec Direct and Indirect Effects of Recovery DIPP Department of Industrial Policy and Promotion DIN Deutsches Institut für Normung


DMC Domestic Material Consumption DMI Direct Material Input DMIC Delhi Mumbai Industrial Corridor DRS Deposit Refund Scheme DST Department of Science and Technology EC European Commission ECE Energy Critical Elements ECN European Composting Network ECR Energy Consumption Rating EEA European Environment Agency EESL Energy Efficiency Services Limited EITI Extractive Industries Transparency Initiative ELV End-of-Life Vehicle EPFL École Polytechnique Fédérale de Lausanne EPIA European Photovoltaic Industry Association EPR Extended Producer Responsibility ESM Environmentally Sound Management EU European Union EUD European Union Delegation EWEA European Wind Energy Association FAO Food and Agriculture Organisation of the United Nations FAR Federal Acquistion Regulation FDI Foreign Direct Investment FEAD European Federation of Waste Management and Environmental Services FICCI Federation of Indian Chambers of Commerce and Industry FIMI Federation of Indian Mineral Industries FYP Five Years Plans GARC Global Auto Research Centre GDP Gross Domestic Product GHG Greenhouse Gas GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH GoI Government of India GP Green Passport GPP Green Public Procurement GPNI Green Purchasing Network of India GRIHA Green Rating for Integrated Habitat Assessment GSI Geological Survey of India GWP Global Warming Potential HCL Hindustan Copper Limited HDI Human Development Index IBM Indian Bureau of Mines ICT Information and Communication Technology IEA International Energy Agency IGBC Indian Green Building Council IGEP Indo-German Environment Programme IIF Institute of International Finance IMF International Monetary Fund INR Indian Rupee


InRP Indian Resource Panel IOT Input Output Table IREP Indian Resource Efficiency Programme IRP International Resource Panel ISO International Organization for Standardization ISRI Institute of Scrap Recycling Industries ITES Information Technology and Information Technology Enabled Services LC3 Limestone Calcined Clay Cement LCA Life Cycle Assesment LED Light Emitting Diode LEED Leadership in Energy and Environmental Design LNG Liquefied Natural Gas MEMC Mines Environment and Mineral Conservation MNRE Ministry of New and Renewable Energy MoCF Ministry of Chemicals and Fertilizers MoEFCC Ministry of Environment, Forest and Climate Change MoHI Ministry of Heavy Industries and Public Enterprises MoHUPA Ministry of Housing and Urban Poverty Alleviation MRAI Metal Recycling Association of India M-Sand Manufactured Sand MSME Micro, Small and Medium-Sized Enterprises MSW Municipal Solid Waste NASSCOM National Assoication of Software and Services Companies NATRiP National Automotive Testing and R&D Infrastructure Project NCCBM National Council for Cement and Building Materials NDC Nationally Determined Contribution NEP National Environment Policy NGO Non-Governmental Organisation NMCP National Manufacturing Competitiveness Programme NMDC National Mineral Development Corporation NTPC National Thermal Power Corporation OECD Organisation for Economic Cooperation and Development OEM Original Equipment Manufacturer OES Original Equipment Supplier OMB Office of Management and Budget PAYT Pay-As-You-Throw PCI Pulverised Coal Injection PE Poly Ethylene PMAY Pradhan Mantri Awas Yojna (Prime Minister’s Housing Scheme) PP Poly Propylene PPP Purchasing Power Parity ProgGress German Resource Efficiency Programme PVC Poly Vinyl Chloride QMS Quality Management Standard QTT Quality Technology Tool R&D Research and Development RE Resource Efficiency RECI Renewable Energy Corporation of India


REE Rare Earth Element REI Resource Efficiency Initiative RET Renewable Energy Technologies RMC Raw Material Consumption RME Raw Material Equivalent RMI Raw Material Input SAIL Steel Authority of India Limited SCP Sustainable Consumption and Production SDF Sustainable Development Framework SDG Sustainable Development Goal SEA System of Economic Accounting SEEA System of Environmental and Economic Accounting SEZ Special Economic Zone SIAM Society of Indian Automobile Manufacturers SIDBI Small Industries Development Bank of India SIIL Sterlite Industries (India) Limited SME Small and Medium Enterprises SOP Standard Operating Procedures SPM Suspended Particulate Matter SPP Sustainable Public Procurement SRM Secondary Raw Material SVCL SIDBI Venture Capital Limited TADF Technology Acquisition and Development Fund TARA Technology and Action for Rural Advancement TDT Technology Development and Transfer TEQUP Technology and Quality Upgradation TERI The Energy and Resources Institute TIFAC Technology Information Forecasting and Assessment Council TMR Total Material Requirement TUDS Technology Upgradation and Development Scheme UAE United Arab Emirates UBA Umweltbundesamt (Federal German Environment Agency) UJALA Unnat Jyoti by Affordable LEDs for All (scheme) UN United Nations UNCRD United Nations Centre for Regional Development UNECE United Nations Economic Commission for Europe UNEP United Nations Environment Programme UNFC United Nations Framework Classification UNIDO United Nations Industrial Development Organisation USD US Dollar USEPA United States Environmental Protection Agency VDI ZRE Verein Deutscher Ingenieure – Zentrum Ressourceneffizienz V-VMP Voluntary Vehical Fleet Modernisation Programme WBCSD World Business Council for Sustainable Development WPI Wholesale Price Index


Foreword Resource efficiency is built around needs, ecological limits, and social acceptability, and is a key element of sustainable development. The 2030 Agenda for sustainable development defined by the Sustainable Development Goals (SDGs) have also assigned an important position to resource efficiency. This is directly reflected in Goal 12 on ensuring sustainable consumption and production patterns, specifically in terms of substantially reducing waste generation through prevention, reduction, recycling and reuse. Eight other goals (Goals 2, 6, 7, 8, 9, 11, 14 and 15) also directly refer to resource efficiency or sustainable use of resources. Resource efficiency also directly contributes to mitigation of climate change targets, in most cases without necessarily having adverse economic effects. The International Resource Panel, hosted by the United Nations Environment Programme (UNEP) in a recent (May 2016) report notes that more efficient resource use coupled with ambitious action on climate change, could achieve up to a 74% reduction in greenhouse gas emissions by 2050, whilst also stimulating economic growth. Besides the positive economic, social and environmental advantages, the benefits from resource efficiency could be technical, monetary, aesthetic and cultural. Resource efficiency thus, because of its strong influence on the attainment of the SDGs and of the nationally determined contributions to the Paris Agreement, is a top priority for enabling sustainable development now and in the future. The flow of materials and resources along globalised supply chains and product life cycles strengthens the need for a global perspective of resources as well as a need for integrating various policy areas for promoting resource efficiency. Over the years, the Government of India has taken many initiatives in terms of policies and programmes to implement its commitment to the principles and goals of resource efficiency. However, most of this commitment has resulted in bringing about improvements in energy and waste use efficiency. With the passage of time, new challenges and constraints to meeting the objectives of resource efficiency for metals and minerals have emerged, which also need to be addressed. This guiding document outlines the broad contours of India’s first resource efficiency program (IREP) and ways to mainstream resource efficiency and secondary raw materials in policies with focus on metals and mineral resources in India. The program focuses on our social and economic conditions, but at the same time draws upon the learning from global initiatives and best practices. The work on the document was commissioned and coordinated by the Indian Resource Panel (InRP) and was based on a consultative process involving all the relevant Ministries of the Government of India and various other stakeholders including those representing important hotspot sectors. I hope the document will serve as a useful reflection on the pursuit of resource efficiency in the country and help position India on a more sustainable path of development. Dr. Ajay Mathur Member, InRP New Delhi, April 2017


Preface The past four decades have witnessed deep, structural changes in the range of issues that policy makers are used to dealing with. Until the 1980s, the primary topics of concern related to politics were: economics, international relations -- and war and peace. While these worries have not gone away, in recent decades the corridors of power and the headlines of newspapers are increasingly being overtaken by problems that have virtually no precedents in history: local and global processes that threaten the very life support systems of our fragile planet. Much of the attention of world leaders, the media and the public is now increasingly being captured by such complex and possibly irreversible anthropogenic processes as climate change, biodiversity loss and species extinction, large-scale destruction of lands, forests and oceans.

Successive summits of national leaders and other high-level conferences have taken place, currently at a rate of several per year, and numerous conventions, treaties, accords and institutions are now in place, constituting an elaborate web of “multilateral environmental agreements”. Largely because of the complexity and economic costs involved, the process of identifying and defining the respective problems, and negotiating agreements and setting in place the institutional machinery needed, is usually quite long, in the order of two or three decades. Today, the machineries to deal with several global issues such as climate change, biodiversity, ozone depleting substances, hazardous wastes and other environmental issues are attracting significant attention from decision-makers.

However, international or national efforts to address the issues related to sustainable management of the Earth’s biophysical resources, though of importance comparable to those of the other environmental issues, are in their infancy. The United Nations Environment Programme took the first step in this direction in 2007 by setting up the International Resource Panel (IRP). Over the past decade, the IRP has produced detailed reports on resources such as Metals, Water, Land, Biomass and other materials; and on sectors that affect or are heavily affected by resource availability or resource use such as Cities, International Trade and Energy Production. The main emphasis of the work of the IRP has been on identifying and documenting practical and economically viable ways to decouple economic development from material consumption. The easiest, primarily technological, means for doing this is through improvements in resource efficiency. Other means include changes in lifestyles, consumption patterns and production systems. Policy instruments to facilitate these changes include innovation, fiscal incentives and regulations.

India is the first country to have set up a national-level counterpart to the IRP, the Indian Resource Panel (InRP), a body of eminent resource experts drawn from government, industry and civil society. The Ministry of Environment, Forests and Climate Change, with considerable support from the German Government’s development agency, GIZ, has played a most valuable part in initiating, nurturing and building up the InRP’s capability to address resource issues from a national perspective.

Broadly speaking, societal concerns regarding natural resources fall into two broad categories: (i) How can the economy get greatest benefit for all citizens from the Earth’s resource endowments? And (ii) How can our technologies, economic policies and lifestyles be moulded to ensure that


our consumption of resources does not transgress the upper limits of the biosphere or the lower limits of human wellbeing?

This document sets out an agenda for India to initiate policy formulation in the sphere of natural resources, starting as a first step, with active promotion of resource efficiency in all sectors of the national economy.

Dr. Ashok Khosla Member, InRP Co-Chair, IRP (2007 to 2016) New Delhi, April 2017


Natural resources are vital for our life, health and economy. We depend on resources like: minerals, energy, water, biodiversity and ecosystem services, land and clean air. Driven by rapid economic growth, a burgeoning middle class, urbanisation and increasing population, the demand for natural resources, especially materials, has grown manifold over the last few decades. Consequently, concerns over resource depletion and constraints have also gained greater prominence. Resource supply constraints and price shocks can not only produce potentially severe economic and social consequences, but can also engender political and social conflicts when vital resources are unequally distributed. In addition, resource extraction, utilisation and disposal also typically impose significant environmental burderns, many of which, particularly climate change, are becoming acute in the 21st Century and are borne disproportionately by the poor and vulnerable. Therefore, judicious use of resources through a combination of conservation and efficiency measures for economic, social and environmental sustainability is in every society’s interest.

In a resource constrained world, the challenge for a developing country like India is to find a balance between the developmental needs and minimising the negative impacts associated with resource use. Therefore, it is imperative that India identifies key areas for developing an action plan that is well-suited to its needs. The challenge, thus, is to find a balance between the needs for enabling a worthy life for all with equitable access to resources and minimising the negative impacts of resource use. The enormous social benefits that can accrue from reduced environmental burdens needs to be emphasised.

In order to face these challenges in future, a comprehensive and holistic national resource efficiency programme can chart out a vision with policy strategies and action plans that supports India’s development and social justice goals. These strategies and plans can also contribute towards meeting the Sustainable Development Goals (SDGs), and Nationally Determined Contributions (NDCs) under the 2015 Paris Climate Agreement. India is the first country to have instituted a national Resource Panel – the Indian Resource Panel (InRP) – under the aegis of Ministry of Environment, Forest and Climate Change (MoEFCC) with the objective to advice the government on developing an Indian Resource Efficiency Programme with focus on resource efficiency and secondary raw materials management in the initial phase. Thus, India has the opportunity to become a role model for other countries. This report provides recommenadations for such a programme and has the aim to be a guiding document for policy makers.

Resource Efficiency Can Support National Development Goals Resource efficiency (RE) is a strategy to achieve the maximum possible benefit with least possible resource input. Fostering resource efficiency aims at governing and intensifying resource utilisation in a purposeful and effective way. Such judicious resource use brings about multiple benefits along the three dimesions of sustainable development – economic, social, and

Executive Summary


environmental. Sustainable Development, by its very definition, must also take into consideration three critical aspects related to resource equity and access. Firstly, that all human beings, regardless of their location in the global socio-economic-environmental matrix, must have access to a minimum level of income and environmental quality for a dignified sustenance. Secondly, it also must ensure that the benefits, burdens and risks of resource use and conservation be equitably distributed. Thirdly, resource efficient production and consumption practices must take into account the needs of future generations by conserving access to resources. Thus, as a strategy it can support India in the achievement of its National Development Goals. This overarching framework suggests fostering resource efficiency particularly to support four specific goals:

Goal A: India combats poverty and facilitates greater resource access and equity More raw materials are required for fulfilment of the new societal material demand; since, a lot of resources are already scarce, more efficient use is needed to ensure greater equity in access of resources. Reduced environmental impacts can help ease to some extent the environmental burdens borne by the poor and also future generations.

Goal B: India supports economic innovation in the country as this is the key for development Efficiency is an important driver for innovation – more efficient use of resources enables enterprises to save input materials and related costs which can be invested in new and better products or which can be used to cut prices and strengthen competitiveness. Likewise, utilisation of secondary resources could improve competitiveness by reducing costs as well as dependence on virgin resources and production of more environment-friendly products.

Goal C: India preserves its natural environment Economic growth driven by production and consumption of resource and conservation of natural resources are conflicting goals in most cases. If primary resources are used more efficiently, less pressure will be put on extraction of virgin materials leading to a decrease in pollution and environmental degradation. Associated social conflicts and equity issues can be addressed to an extent.

Goal D: India reduces its GHG emissions During past decades, GHG emissions in India have increased remarkably. Fostering Resource Efficiency has several linkages to climate policy and thus, a remarkable potential to reduce CO2 emissions along the entire lifecycle of a product. The present programme puts priority on measures which contribute to a reduction of both primary resource consumption and greenhouse gas emissions. Thus, India needs to foster resource efficiency to manage and limit the increasing material demand

it is facing on its way of development and wellbeing for all Indians. India also needs to aim to limit, to the extent possible, the environmental impacts of resource use and associated conflicts linked to extraction, use and disposal of the required primary raw materials.


Definition of Resource Efficiency and Indicators In the context of this overarching framework it is necessary to define the term resource efficiency more precisely:

Resource efficiency and resource productivity, respectively, is the ratio between a given benefit or result and the natural resource use required for it.1

While the term “resource efficiency” is predominantly used in business, product or material context, “resource productivity” as a term is used in an economy-wide, national context.

While indicators for measuring resource productivity exists, those for measuring resource efficiency need to be developed at national level. As different countries follow diverse approaches based on their national goals and strategies for RE, a single universally applicable indicator does not exist. For India, based on the recommendations developed by Indian Resource Panel (InRP), the definition of goal and an ascribed value can be devised towards development of indicators by following the two steps mentioned below:

1. Monitor resource use and resource efficiency regularly on national level 2. Decide on the most appropriate indicators and set an ambitious but realistic goal

for India As a first step, India can follow the international accounting methods, particularly the conventions of SEEA2 (UN et al., 2014), in order to measure Domestic Extraction, Imports and Exports as well as derived indicators such as Direct Material Input (DMI) and Domestic Material Consumption (DMC). In the initial phase, like UNEP and other countries, it can use GDP per DMC for measuring RE. India has the potential to improve the measurements of wastes in different material streams along with recycling rates as these form central components of resource efficiency programmes on an international level. As the second step, the Indian Resource Panel may decide and suggest a specific goal for the development of Indian Resource Efficiency Programme (IREP) specific to India’s needs. In the industrialised countries the focus is on achieving of economy-wide resource efficiency linked to a decrease of absolute material consumption. For India, in contrast, the focus of resource efficiency needs to take into account its development needs characterised by progressively increasing resource demand especially for infrastructure and other related activities. In short to mid-term, this may even be linked to a temporary decrease of resource efficiency in spite of a medium or high GDP growth. Therefore, it is advisable to analyse examples of resource demand and efficiency of emerging economies. Based on the results and considering the results of resource consumption and efficiency in India, an ambitious but realistic aim for economy-wide resource efficiency in India can be suggested by the Indian Resource Panel to the Government of India. 1 Adapted from: German Federal Environment Agency (UBA, 2012): Glossar zum Ressourcenschutz. 2 System of Environmental Economic Accounting


Past and Current Trends of Material Use in India In India, extraction of primary raw materials increased by around 420% between 1970 and 2010 which is lower than the Asian average but higher than the world average. While extraction of biotic materials only increased by a factor of 2.4, extraction of abiotic materials, particularly of non-metallic minerals, show remarkable augmentation. Notably, extraction of non-metallic minerals, predominantly used for construction has grown, reflecting the demand of the construction sector during recent decades. Compared to extraction, India’s exports and imports are still small in terms of quantity. However, both have grown significantly. Exports continue to be dominated by metal ores, particularly iron and steel; while imports are dominated by energy-carriers, particularly petroleum and coal. Increased extraction, imports and exports have resulted in an increase in material consumption in India. According to UNEP (2016), India consumed about 5 billion tonnes of materials in 2010, out of which about 42% are renewable biomass and 38% are non-metal minerals (figure S-1). Thus, from a material perspective focusing on current situation, biomass and non-metal minerals are the most important material groups in India and domestic extraction is more important than trade.

Figure S-1: Material consumption in India, 1970-2010

(Source: UNEP, 2016)

In 2010, India’s material demand3 was the third largest in the world, after China and the United States. India consumed about 7.2% of globally extracted raw materials in that year. In recent years, given its material consumption, the gap between India and United States has been shrinking progressively. Also, given the higher growth of economic activities, India could even 3 Measured in Domestic Material Consumption (DMC)


overtake US. Notably, despite high aggregate consumption levels, per capita consumption in India remains lower than the world average. The UNEP assessment (2016) demonstrates that it has increased from 2.1 tonnes per capita in 1970 to 4.2 tonnes per capita in 2010 – less than half of the world average. Until 2000, consumption was primarily biomass based; in 2010, the share of abiotic materials in consumption increased by nearly 58%. Biomass still has a high share in the material consumption with a steady increase in the abiotic consumption. Significantly, the assessment also notes that world-wide consumption is the strongest driver for growth in material use even when compared to population growth. Consumption patterns also remain highly differentiated in India with an urgent need to reconcile the oversupply of resources and materials to the upper and middle classes and an undersupply along with severe lack of access of basic minimum resources for the poor. In the following figure S-2, resource consumption and resource productivity measured as GDP / DMC, is used to provide an overview of current trends in India. India has experienced a remarkable growth of GDP, resource consumption and resource productivity. Resource productivity increased slightly until around 1990 and faster during the last decade. However, resource productivity increases in India has lagged behind many other comparable countries which indicates much room for improvement.

Figure S-2: Trends in Resource Consumption, GDP and Resource Productivity in India, 1970-2010

(Sources: DMC based on UNEP, 2016; GDP based on Government of India, 2016)

India is still predominantly fulfilling its resource demands domestically, and thus, is less affected by international price trends and scarcities than other import dependent countries. However, it does remain highly import dependent for critical materials such as molybdenum, copper, nickel (see figure S-3). This may in future make it vulnerable to supply shocks.


Figure S-3: Import dependencies of India

(Source: IGEP, 2013)

India’s Future Trends and Trajectories of Material Demand Given a growing world population and assuming that present resource production and consumption patterns continue to spread globally, UNEP (2011) estimates that more than 140 billion tonnes of primary materials will be used globally in 2050. This will be twice as much material as used today. This would lead to an increasing pressure of extraction in remote and ecologically sensitive areas, extraction from complex geological sites or areas with low concentration of minerals that require energy and material intensive technologies and worsened negative impacts on land, water, air and ecosystems. For India, the few projections available show that material demand will increase as its economy transitions towards greater shares of industrial and service sectors supported by a growing middle class. Thus, the question is not if material demand will grow, but the question is how fast and to what extent it will grow. IGEP (2013) study compared three different scenarios reflecting the impact of different development paces until 2050:

- Slowdown of development process: With, among other things, high population growth, stagnation/depletion of sources, no new technologies and low growth of production, decline in food consumption per capita (5% growth in GDP p.a.);

- Continuing current dynamic: With, among other things, medium population growth, new sources and technologies and a medium economic growth, stagnation in food and biomass consumption (8% growth in GDP p.a. until 2030, thereafter 5%);

- Fast catching up: With, among other things, low population growth, new sources and technologies and high GDP growth, medium increase in food and biomass consumption (12% p.a. as observed in China) until 2020.


Figure S-4: India’s past material demand and future projections until 2050


The medium scenario results in a per-capita consumption of about 9.6 tonnes in 2030 which is near the current global average. The total consumption for the medium scenario in 2030 is projected to be 14.2 billion tonnes consisting of about 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 (IGEP, 2013). This means that India would nearly triple its demand for primary materials compared to 2010, particularly the demand for energy carriers, metals and non-metal minerals. India is meeting its material demand for resources predominantly domestically; thus, most of the impacts of material extraction, use and disposal occur domestically impacting a sizeable population negatively. If India triples its material demand within about 20 years, the question arises where do the required raw materials come from and what are the associated social, economic and environmental implications? Tripling domestic resource extraction of biomass, minerals and fossil fuels will be linked to increasing pressure on natural resources such as land, forest, air and water. Mining activity, for example, has already led to large-scale destruction of forests, displacement of millions accompanied by loss of land and livelihood for many. Owing to deteriorating socio-environmental conditions, the opposition of tribals and other local communities against mining has increased during recent years. Thus, further significant increase of mining activity will lead to even more social and environmental conflicts than today. Imports of materials also face severe constraints: import dependencies and costs for imports would increase. Moreover, 3.8 billion tonnes of fossil fuels or 4.6 billion tonnes of construction minerals annually would be further required. It would mean that India would have to import about 2/3rd of internationally traded fossil fuels or about 4.5 times more the amount of non-metal minerals in 2010.


Identifying a Suitable Approach for India’s Resource Efficiency Programme After analysing the resource challenges for India in future, a Resource Efficiency Programme not only analyses the future volumes of resource demand but can also be a guide for strategies and measures to increase RE and achieve the identified goals. Resource efficiency measures can be implemented at various points within a country’s economy. In order to structure and identify the fields of action, different approaches can be followed which incorporate diverse perspectives and emphases. Four main perspectives appear to be suitable for structuring elements for the planned measures:

Approach A) Stages of the lifecycle Approach B) Selected materials Approach C) Selected sectors Approach D) Measures related to cross-cutting issues

Each perspective reveals its own logic of interdependencies and relations and thus sheds light on different aspects that are worth considering for the formulation, implementation and evaluation of policies. However, the kind and mix of instruments to be adopted in a policy can be decided on the basis of analyses of the concrete underlying situations in a specific context that could be based on materials, sectors, lifecycle stages or a combination of these. Approach A) Stages of the Lifecycle

The lifecycle approach provides for a comprehensive way of analysing and identifying the entry points for policies of resource use and efficiency in India. The use of resources is characterised by their use and flow from one lifecycle stage to another, beginning from mining to designing, followed by production/manufacturing of a product, consumption phase and ultimately end of life management (disposal or recycling) as shown in figure S-5 below:

Figure S-5: Typical life-cycle approach

(Source: spcadvance.com, 2015)


The transitions between the stages are marked by energy input to process and transport the product with resources entering along the lifecycle of a product. The lifecycle can be interpreted as a nexus of economic and social activities that also have an impact on natural resources. Lifecycle analysis provides a comprehensive point of view since the stages are interconnected. For example, the technologies used for mining raw materials can have an impact on the quality of basic materials used for further processing and avoid or make necessary resource consuming processing steps in the ensuing stages of the lifecycle. If only one part of the life cycle is considered, there is a great danger of burden shifting from one stage of the lifecycle to another. Therefore, all stages of the lifecycle are potential points for concrete resource related measures. The lifecycle approach is also in line with the idea of closing the loops and reducing dependency on virgin raw material by creating an alternate source of resources through reuse and recycling. At every stage along the lifecycle, policies of resource use and resource efficiency can be implemented. Some programmes and policies already focus on energy efficiency or environmental issues but do not directly address RE or secondary raw materials. Approach B) Selected Materials

The approach of selected materials focuses on all relevant RE aspects concerning identified abiotic materials (e.g. metals, minerals, plastics, etc.). The significance of material specific approaches can be observed at all stages of the lifecycle and value chain and is based on different physical and chemical properties of the materials in both virgin and processed forms. The scope of the present programme is limited to the potential resource efficient approach for abiotic raw materials used in significant quantifies by sectors of economic importance to the country. RE approaches presented for selected materials will serve as guiding examples for strengthening this framework. In order to include different lifecycle stages, virgin as well as processed materials were selected. Four processed materials were chosen due to their higher recovery percentage, reuse and recycling potential. Four virgin materials were selected based on potential alternative materials available in the country to substitute their use and potential alternative technologies available in the country for reduction in the overall virgin materials use. Table S-1 summarises the selected materials.

Table S-1: Selected materials

Processed Materials Iron and Steel

Copper

Nickel

Plastics and Composites

Virgin Materials Sand

Soil

Stone

Limestone

The main entry points for resource efficiency focusing on the “Approach: Selected Materials” are at mining, manufacturing, and end-of-life stages. Efficient and sustainable mining strategies combined with best available technology for processing raw materials are of great importance for


a resource efficient use at the beginning of the lifecycle. As the IREP document highlights in chapter 5, some steps have been taken by the national government but a lot of potential is still unexploited. The recycling of resources is highly dependent on the characteristics of the different raw materials. Generally speaking, the main differences can be assigned to the categories – metals, biotic raw materials, plastics and mineral raw materials. Metals differ from other material groups as they have comparatively beneficial properties that support the realisation of a circular economy: theoretically, they can be recycled over and over again without nearly any losses. And the ways in which they are integrated in products usually allow achieving a comparatively satisfactory grade of purity of metal wastes entering the recycling stream. Some biotic resources cannot be recycled at all, especially if they are used energetically (e.g. firewood). In the case of wood fibres, the raw material only can be recycled to a certain extent due to losses with every recycling cycle, leading to the necessity of inserting new primary biotic resources in the recycling process to obtain high quality. While plastics can also be recycled, owing to contamination and high material diversity of the different waste streams, losses occur in the original volume. Thus, due to the different physical and chemical properties, the separation of products and waste streams for plastics proves more challenging as compared to metals. This in turn influences their integration into products or waste streams. Mineral resources such as sand, stones, etc. have physical and chemical properties that make them suitable especially for products used in the construction sector. It also determines the nature of manufacturing and recycling processes as well as the functional properties of the products made from these raw materials. In contrast to metals, materials such as stone, soil and sand based building materials are usually more bulky, heavy and at the same time cheaper. It follows that transportation distances have to be shorter for metals or plastics to be still economically viable. Processing technologies for such mineral resources are different to those applied in metallic raw materials. The same holds true for recycling processes since a lot of mineral raw materials are chemically modified during sintering processes (e.g. cement). These differences between the materials constitute the rationale according to which the material specific formulation of measures may seem promising in increasing resource efficiency to the highest extent possible. Priority materials for India can be targeted with specific measures to increase their resource efficient use in a circular economy along all stages of their life cycles. Such measures may include the promotion of recycling and markets for secondary products of individual materials, the targeted substitution of critical materials by less critical materials, or R&D for the development of materials fulfilling certain conditions to allow for a specific product function or property. Approach C) Selected Sectors

Raw material productivity at a macroeconomic level depends on various factors. An economy with large resource-intensive sectors has usually lower resource productivity values in terms of Direct Material Input (DMI) or Raw Material Input (RMI) than an economy with large service and research sectors, which are less resource-intensive. Furthermore, the mix of raw material sources largely influences resource productivity in the sector, making it important to focus on improvements and productivities of sectors and their products. The economic importance of a resource is determined by its application in key industrial and strategic sectors and the extent of


its substitutability by other resources. Chapter 6 of the IREP document focuses on three hotspot sectors – automotive, IT equipment manufacturing and construction. These sectors have high economic importance and are facing high consumption of materials as inputs. Automotive Sector

The automotive industry occupies a prominent place in the Indian industrial scenario with extensive forward and backward linkages, having grown at the rate of 14.4% over the past decade, making India the world’s sixth largest producer of automotives in terms of volume and value (IGEP, 2013). The industry consists of both automotive manufacturers and auto component manufacturers. The country has been experiencing one of the highest motorisation growth rates in the world over the last decade. There were over 200 million motorised vehicles registered by 2015 (SIAM, 2015). Considering the increasing demand for mobility, the sector is expected to grow at an average of 7% for the next 20 years, and it will require significant amounts of natural resources and can face resource restraints in an economy that already has supply side constraints. Estimates of the material requirements in the automotive sector in India, considering current use levels, reveal that if the current production trend continues over the next 15 years with no substantial resource use reduction and/or substitution, the total demand for six major raw materials, i.e. iron and steel, aluminium, copper, plastics/composites, zinc and nickel would increase from almost 14 million tonnes in 2015 to more than 102 million tonnes by 2030 (GIZ, 2016a).

Figure S-6: Projected raw material consumption in the auto sector, 2015-2030 (in million tonnes)

(Source: GIZ, 2016a)

This translates into an urgent call to decouple the potential high growth rate of the automotive sector from increasing primary raw material use by promoting resource efficiency and use of secondary raw materials, thereby, enhancing sustainability and resource security. Mining policies and framework need to put adequate emphasis on specific minerals to enhance efficiency in extraction including those that are important for the automotive sector. Increased use of secondary raw materials can also enhance the supply of raw materials. In order to increase


the share of secondary raw materials in high-value products such as vehicles, the use of secondary raw material should be encouraged and mainstreamed by the OEMs4, which will also enable the various auto component manufacturers to use the same in the manufacturing of the components. As per an estimate from the Society of Indian Automobile Manufacturers (SIAM, 2015), with efficient recycling, India can hope to recover by the year 2020 over 1.5 million tonnes of steel scrap, 0.18 million tonnes of aluminium scrap and 0.075 million tonnes each of recoverable plastic and rubber from scrapped vehicles. There is also a need to encourage efficiency programmes and technologies during the manufacturing process. Some policies are already aiming at this purpose but there is still a need to establish synergy between OES5 and OEM, and some regulation ensuring fair amount of incentives to enhance the use of secondary raw materials and bring about process and resource use efficiency (GIZ, 2015a). During the consumption phase, predominantly fossil fuels are used by the vehicles for energy. The Indian government is already promoting concepts for reducing fuel usage to address urban air quality issues and climate change aspects. This policy path should be strengthened and expanded in future. The last stage of a vehicle’s lifetime requires End-of-Life-Vehicle (ELV) management. Currently, the retired vehicles in India usually end up in the unorganised sector where after dismantling, auto components are either refurbished or sent for recycling. Material recovery remains low as workers lack both training and appropriate equipment needed to dismantle and recycle auto components. While some professional dismantling facilities exist, these remain sporadically distributed throughout the country. This does not meet the requirements of auto component manufacturers (GIZ, 2015a). Efforts are also needed to establish a national ELV management system and a viable financial model for ELV disposal and recycling which needs to integrate consumers, collectors, recyclers and producers. Besides the focus on raw materials required by vehicle manufacturing, the choice of modes of transportation has a very significant impact on resource use. Heavy reliance on private vehicles means much higher levels of resource requirements compared to reliance on public transportation. Thus, due to the dwindling resource availability, environmental destruction, and the challenges of climate change, developing a sustainable model of public transportation for the future is a matter of great significance and urgency.

IT Equipment Sector

With a turnover of around USD 150 billion in 2015 and exports accounting for 67% of the revenue, the IT and Business Process Management (BPM) sector in India contributes around 9.5% to the country’s GDP (NASSCOM, 2015). It is projected that the Indian IT and Information Technology Enabled Services (ITES) industry is likely to grow to about USD 300 billion by 2020. Indian IT sector’s core competencies and strengths have attracted significant investments from major countries. Recognising the importance of the sector and its significance, it is important to promote resource efficiency in the Indian IT sector. This would include minimising energy consumption by the sector through development of innovative energy-saving technologies, and promote use of more energy efficient products. This would also mean addressing energy and materials used for manufacturing critical IT components such as chips, etc.

4 Original Equipment Manufacturer 5 Original Equipment Supplier


In case of the IT sector, since the rare earths and other strategic metals offer great potential for technological, product and process innovations, their use and efficiency needs to be encouraged. In the absence of systematic exploration, there has been no major mineral discovery in India in the last 40 years particularly in the context of technology metals, energy critical metals and rare earths, which are essential for manufacturing of almost all modern devices and machinery, and those facilitating more efficient energy use. Besides the consideration of exploration activities, there is also a need to promote R&D to minimise material losses and environmental pressures in the extraction, processing, use and recovery of technology metals. Further, there is a need to intensify research into the possibility of replacement by less critical/environmentally harmful resources. Besides some activities in the manufacturing stage of the telecom sector, policies to promote resource efficient manufacturing in other IT fields is lacking. There is a need to promote importance of expandability and modular construction of devices to enhance repairing, dismantling, and recyclability and reuse (BMUB, 2016). At the consumption stage, measures like reduced stand-by times could enhance energy efficiency. Developing high quality products with longer lifetime than comparable products can reduce the material input. IT equipment has very short innovation cycles and is frequently replaced after a useful life of only a few years. Therefore, effective end-of-life management is needed to regain this rich scrap of precious and special materials. India has recently revised the E-waste Management and Handling Rules (MoEFCC, 2016a) to include all stakeholders and to add more clarity for implementation of the mechanism for safe handling of e-waste. This is a good starting point for further actions to optimise collection and treatment technology of scrap. In future, recycling technologies for recovery of rare earth elements (REEs) from e-waste can be developed. Construction Sector

The construction industry is a major contributor towards India’s GDP. It employs large number of people, and any improvements in the construction sector affect a number of associated industries such as cement, iron and steel, etc. The construction sector is recently facing a slowdown but there have been several positive impetuses to the growth of the construction industry through national programmes. It is expected that construction activity will soon increase again due to the creation of the Affordable Housing Mission, along with quicker approvals and other supportive policy changes. Also, township housing and infrastructure will become major drivers for the construction sector in the immediate future (Jain, 2016).The two most crucial raw materials required in the construction sector are iron/steel and cement. The construction industry is the biggest consumer of finished steel in India, accounting for 35% of total consumption in the financial year 2014-15 (IBEF, 2015).

The Indian cement industry is the second largest cement producer in the world, which has been due to the exponential growth both in the infrastructure and the building construction sectors. Rising demand calls for enhancing resource efficiency in the production processes. Steel and cement production need to improve their resource efficiency since they use large quantities of energy. Cement is estimated to be the third largest coal consumer in the country after the power and the steel industry; coal is required for both electrical and thermal energy in cement plants. Thus, given the high manufacturing costs for energy use alone, the industry has over the past decades made considerable efforts to improve efficiency in technology and continuous up-


gradation of technology and innovation in design and material use. But there is still high potential for further improvement.

The main raw materials that are used in the production of cement are limestone, gypsum and sand. Cement companies are already facing dwindling reserves for limestone and import dependencies for gypsum. It has become increasingly important to identify non-limestone bearing raw materials and binders as substitutes. The government has already encouraged the utilisation of fly ash, slag and red mud in concrete as substitute for other binders.

There is still a lot of potential for RE during the manufacturing phase of construction. Some by-products from iron and crude steel production are marketable products such as slags, process gases, dusts and sludge. Recovery rates of these by-products can still be further increased. Financial incentives can help the industry to invest in R&D to improve process efficiency and to introduce new processes that generate less waste. A lot of research is taking place in India and worldwide concentrating on substitutes in the cement industry and energy efficient production. This research needs further support in the future and identified RE innovations need a favoured access into the market.

During the stage of end-of-life management, a lot of RE potential can be gained from recycling and reuse. Steel has good recyclability due to it physical characteristics as a metal. In theory, it can be recycled 100% if the scrap is homogeneous and does not consist of many alloys. Annual metal scrap consumption in India has been estimated to be about 20 million tonnes by the Metal Recycling Association of India (MRAI) (Sally, 2016). However, the recycling industry is dominated by the informal sector which limits its effectiveness. As a result, scrap imports are increasingly important to the industry, which currently imports about 1/3 of its scrap demand (Sally, 2016), with steel scrap imports alone amounting to 5 million tonnes in 2013-14 (Tewari, 2014). The government could support increased recycling of steel by providing clear guidelines on certification and support homogenous collection. Additionally, regulations for different sources of recycling is needed, as for instance in the ship-breaking industry which is characterised by insufficient technological and environmental standards.

Besides steel recycling, the recovery of construction and demolition (C&D) waste is a promising approach for RE in the construction sector. Compared to metals, recycled C&D waste cannot always be used for the same products due to quality losses but its accumulated amount bears a lot of potential for other construction applications. At the end of the product lifecycle, concrete can be recycled back into concrete production as a recycled aggregate or into the application of other non-load bearing construction material. The same holds for e.g. brick walls which can be recycled to aggregates and sand which is already scarce in many regions in India. In recent developments, the Construction and Demolition Waste Management Rules (MoEFCC, 2016b) apply to every waste generating construction, remodelling, repair and demolition of any civil structure of individual or organisation or authority. This is already a step in the right direction but further efforts need to be undertaken to close recycling loops in the construction industry.

Approach D) Measures Related to Cross Cutting Issues

Policy approaches regarding cross cutting issues attempt to aid in market transformation by promoting sustainable production and consumption practices, including fiscal instruments, development of standards, eco-labelling and certification, preferential public procurement and consumer sensitisation.


Green Public Procurement

Preferential procurement by large organisations, public or private, can be used to bolster the market demand of goods and services deemed serving a desirable social goal. Since governments are typically among the largest consumers in an economy, preferential public procurement can have a significant impact on market transformation towards desirable products and services. Sustainable Public Procurement (SPP), more commonly referred to as Green Public Procurement (GPP), is "a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life-cycle when compared to goods, services and works with the same primary function that would otherwise be procured” (European Commission, 2008). SPP/GPP has been extensively used, especially in OECD countries, to support green production and to bring about market transformation towards environmentally preferable products through large scale purchases.

Public procurement accounts for almost 20% of GDP in India, wielding substantial purchasing power to the government (TERI, 2013). The draft for the Indian Public Procurement Bill introduced in Parliament in 2012, which did not become a law, is comprehensive in many respects, but did not specifically include GPP. Therefore, a single law governing public procurement at the central government level still does not exist. Few successful examples such as LED lights and the Fly Ash Notification (S.O. 763 (E)) show how preferential procurement policies could reduce prices and increase utilisation of the respective products within a couple of years. A comprehensive and well-designed GPP policy can be a key instrument to promote resource efficiency in the economy in addition to many other environmental goals. It is important, however, to start with a small range of products for which the market is already reasonably well established first, and then gradually expand as the programme matures. Experience from other countries shows that an independent entity should develop criteria and standards and oversee certification and eco-labelling of products. In addition, a list of products and manufacturers of approved green products must be maintained by such an entity. This makes it simpler for each government agency to engage in green procurement without the need to undertake complex assessments with inadequate expertise. Finally, mandatory targets for green procurement help to achieve the desired level of performance; these targets can be gradually increased over time depending on the maturity of the programme and the market for green products. Standards and Benchmarks

In modern economies, standards have historically been widely used to promote quality in manufacture and performance of manufactured products. However, the use of standards to promote resource efficiency is still evolving. The principal advantage of standards as a policy instrument is the high degree of certainty they provide about the environmental outcome. In addition, standards, especially those set by independent professional bodies, are often more politically acceptable than other policy instruments such as eco-taxes. However, there are a number of potential disadvantages associated with standards. Setting standards can be a resource intensive and time consuming task requiring a high degree of technical expertise. Technologically prescriptive standards can be seen as reducing flexibility for compliance and increasing compliance costs. Compliance and enforcement are also a major challenge, especially when the number of standards increases. Finally, unless standards are updated at reasonable intervals, they may hinder innovation to go beyond compliance (OECD, 2016).


The most prominent example of an international standard promoting RE is the “EU EcoDesign Directive” of 2009. As a framework directive, it allows for setting compulsory eco-design requirements for various product groups, and would therefore enable a gradual expansion of standards over time. In India, the Bureau of Indian Standards (BIS) has been the universally recognised professional standard setting organisation created by the Government of India with a wide range of standards for quality and performance of manufactured products. In recent years, BIS standards have been developed for recycled products that can be used to promote resource efficiency in the economy, such as the use of fly ash in concrete (IS 3812) and bricks (IS 12894). In 2016, BIS also amended the IS 383 standard to allow for the use of recycled aggregates from construction and demolition waste in concrete production (BIS, 2016). Well recognised standards such as those from BIS can have an immediate impact on market acceptance of new products. Therefore, BIS can play a key role in promoting the production and consumption of resource efficient products throughout the economy. As standard setting is a time and resource intensive process requiring high levels of expertise, BIS can consider ways to speed up the process. One option would be to look for standards developed internationally and adapt them to the Indian context that address local challenges. Another option, as seen in the recycled aggregates example, would be to amend existing standards rather than creating new ones, say for permitting use of secondary materials, since this can be a much shorter and simpler process. Initially, simpler standards for the use of secondary materials may be prioritised, while more complex standards targeting resource efficiency in the design phase may be taken up gradually over time. Where formal standards do not exist or maybe developed in the future, industry-wide benchmarks can play a similar role and industry associations, together with other stakeholders, can play a key role in developing and propagating their adoption. Eco-labelling and Certification Schemes

Eco-labelling, i.e. certification of the desirable environmental attribute or performance of a product or service, is a useful information based policy instrument that harnesses the buying power of conscious consumers, including public and institutional purchasers, to promote the acceptance and consumption, and hence the production, of greener products. Eco-labelling been a widely used policy instrument in numerous countries for several decades, and its success has largely depended on the degree of consumer consciousness and motivation.

The pioneering German Blue Angel eco-label was introduced in 1977. In the following decades, several countries have introduced eco-labelling schemes. Up to 544 eco-labelling schemes covering 197 countries were operating in 2012 (Gruere, 2013). In 1991, India launched its own eco-labelling scheme called “EcoMark” which is unique because it considers both environmental and quality criteria; product quality has to be certified by the Bureau of Indian Standards (BIS) in addition to an environmental attribute certification. Criteria have been developed for 16 product categories, with the approved products being awarded the “earthen pot” EcoMark label (CPCB, 2016a). However, the EcoMark scheme has not become very popular even after two decades with only a few dozen products being certified so far. Experts have cited several reasons for this lack of success including low public awareness and complicated certification process (Mehta, 2007). Another example is the GRIHA (Green Rating for Integrated Habitat Assessment) rating system for green buildings modelled after the internationally famous LEED (Leadership in Energy and Environmental Design) rating system. Since 2007, the GRIHA rating system has been adopted as the national rating system for green buildings by the Government of India. While GRIHA is a comprehensive and well reputed rating system that is being updated


continually, its actual impact on the building market is limited only to a handful of eco-conscious developers. In recent years, its impact has improved somewhat with both central and state governments making GRIHA rating mandatory for all new government construction projects. The energy efficiency labelling for appliances by the Bureau of Energy Efficiency (BEE) has also been relatively successful. Launched in 2006, the scheme identifies appliance categories contributing to the highest energy consumption and sets minimum standards for their energy efficiency. The BEE energy label has seen widespread use and its impact has been further enhanced by public procurement programmes that mandate the purchase of efficient appliances. While BEE has continued to refine the programme over time, experts have called for a more participatory approach involving non-governmental experts to improve transparency, accountability, promotion and adoption, monitoring and evaluation, and capacity building (Jairaj et al., 2016). Instructively, eco-labelling schemes that have been successful to varying degrees in India have been supported by some sort of government mandate. In the Indian market, where public consciousness is relatively low, completely voluntary eco-labels like EcoMark are unlikely to be successful on their own without supportive policies such as public procurement mandates, at least in the initial stages. Lessons can be taken from the relatively successful public awareness campaigns associated with the BIS quality logo and the BEE energy label. The EcoMark scheme should be rejuvenated with a reorganised structure comprising multiple stakeholders. The scheme should expand into new product categories, especially focusing on products that use secondary resources. The standard setting and criteria development should take into account international best practices, using life cycle assessment tools wherever applicable and using guidance from ISO standards. The certification process should be simplified and streamlined, possibly with the involvement of third-party accreditation agencies, to make it more appealing to manufacturers. Testing and certification capacities are often lacking for many environmental attributes, and these capabilities need to be built up all over the country before an eco-labelling scheme can be successful. A rejuvenated EcoMark scheme can focus on a few chosen categories initially for which the criteria, market, and testing facilities already exist and gradually expand into other categories. Consumer Sensitisation

Consumers are key actors who also have a shared responsibility in charting a path towards more efficient and sustainable resource use. Their awareness towards availability of more resource efficient alternatives of goods, readiness to buy them, and proper segregated disposal of generated waste into separate waste streams to aid recovery of the materials are important steps towards environmental sustainability.

Several studies demonstrate that Indian consumers show an increasing preference towards the use of ‘green products’ and to buy ‘used’ things (GPNI, 2014). However, a discernible paradoxical behaviour change is also observable with increase in preference towards disposable household goods as opposed to reusable goods. Overall, the understanding of what qualifies as an environmentally-friendly, and by extension, a resource efficient product, especially from a life-cycle perspective, is low. In order to increase demand and consumption of green products, four factors need to be addressed:


o Strengthen awareness regarding green products o Improve availability of green products in the market o Clear certification for green claims made by producers o Lowering costs of green products

A stronger regime of standards, certifications and labels is imperative as a first step towards engendering greater trust in the claims of the green products. It will aid consumers to assess the authenticity of claims by manufacturers. At the same time, a robust awareness generation campaign and marketing strategy must be developed by involving consumer bodies, government and manufacturers. Such campaigns should be carried across different media like television, radio, newspaper, internet and social networking websites. For example, awareness regarding consumer rights through consumer courts is regularly promoted through advertisements in television, radios and newspapers. The success of BEE in promoting ‘star’ rating for household appliances can be attributed to its marketing strategy along with the simplicity and comprehensibility of the label itself, although notably the attractiveness of energy efficient appliances is partly due to their near-immediate cost savings to the consumer. On the other hand, the Indian EcoMark scheme had not had much success due to lack of awareness among consumers which acted as a dis-incentive for producers. This clearly shows that creation of standards and labels alone is not sufficient to impact purchasing decisions. Information dissemination and awareness generation play a significant part in driving consumer behaviour. However, if the price differential between “green” and conventional products is too great, consumer motivation alone may not be enough and other policies that improve the competitiveness of green products may be needed. Further, consumers must also be sensitised and made aware of their responsibility towards waste disposal. More aware and proactive consumers will aid in greater recovery of secondary raw materials. Fiscal Instruments

It is widely recognised across the world that fiscal instruments play a significant role in helping transform economies to become greener. Fiscal instruments in the form of taxes, charges, subsidies, incentives and budget allocations can also help generate revenue for environmental and social purposes besides shifting behaviour towards resource efficient activities and stimulating investment in cleaner and resource efficient technologies by pricing environmental externalities.

In India, the government had initiated a tax - Clean Energy Cess (@ INR 50 per metric tonne in 2010 for both domestic and imported coal, which has been increased in the 2016 budget to INR 400 per metric tonne). The tax, now known as the Clean Environment Cess, was levied to promote and finance clean energy by setting up National Clean Energy Fund.

For the waste sector, the commonly prevalent incentives to address the critical problem of waste management in India includes: 1) taxes and fees; 2) recycling credit and other forms of subsidies; 3) deposit-refund; and 4) standards and performance bond or environmental guarantee fund. Volumetric landfill taxes can encourage the reduction of waste and are easy to implement. Their effectiveness, however, depends on the tax rate per tonne of waste and on the existence of adequate monitoring and enforcement measures providing control on types and volumes of waste streams. It is also important to ensure that the tax does not result in increased illegal dumping rather than encouraging 3Rs (reduce, reuse, recycle). Pay-as-you-throw (PAYT) is another way of discouraging waste generation. Precaution against illegal waste dumping or misuse of recycling


facilities is therefore needed. Full financing of the waste-management infrastructure has to be assured and sufficient awareness-raising is necessary. PAYT has been shown to have a positive impact on recycling.

If we see the case of lead acid batteries (which generate hazardous lead waste with environmental and health implications) in India, there is a deposit-refund system for recycling in Delhi which provides a discount to consumers on purchasing new batteries and returning used batteries to retailers for recycling. For promoting use of cleaner technologies, the Technology Acquisition and Development Fund (TADF) under the National Manufacturing Policy being implemented by the Department of Industrial Policy & Promotion (DIPP) is helping Micro, Small & Medium Enterprises (MSMEs) to acquire clean and green technology at affordable cost across sectors. The fund will support manufacturing of pollution control equipment and reducing energy and water consumption through subsidies.

Upgrading Informal Sector

Informal sector makes a significant contribution to the overall economy and society by reducing the cost of waste management and recycling. They constitute nearly 1% of urban population and belong to the lowest social strata. With substantial increase in volume of waste across dispersed streams, a RE strategy should recognise their role and build upon the comparative advantages of the informal sector (in collection, segregation and dismantling) with an aim to mainstreaming and formalising it.

Towards this end, the informal sector could be organised into cooperatives, jointly owned private enterprises to aid their access to technology and funding for improving their operations, ensuring safe working environment and health for the workers employed in the sector. This will enable them to participate formally in waste management related tenders while ensuring that benefits from SRM accrue to the workers resulting in increased earning potential. From a material recovery perspective, the loss of value and quality of metals and critical mineral resources due to inefficient and unskilled handling could be minimised. Quality metal scrap would be more in demand, especially as resources become more scarce, and this will enable them to fetch better prices and augment livelihood options. Other kinds of business models could also be developed that build on the positive aspects and overcome inefficiencies. For instance, the informal sector’s expertise and ability in terms of collecting e-waste or other wastes directly from households and segregation can be supported through a web-platform which could be operated by a formal sector enterprise. Therefore, integration of informal sector towards efficient and quality raw material recovery should be made an important element for an Indian RE and SRM strategy.

Further Development of the Programme After addressing, measuring, analysing and shaping measures for RE in India, a translation into practice is needed. Policy can provide sectoral, even process-specific information and support to convince businesses that conscious resource management does not only reduce the burden on the environment, but that it can reduce cost of production by reducing material and energy cost and thus create competitive advantages for the company. Companies or organisations can use business models which can either focus on helping others to reduce their resource consumption


(e.g. machinery, service, etc.) or increasing internal efficiency to reduce resource consumption of a company or sector. Another option for companies to acquire economic benefits while reducing the pressure on the environment stemming from a specific product is to develop, produce and sell products that use less resource for their production as well as in their use phase, and also allow for optimised recycling after end-of-life.

The Indian Resource Efficiency Programme is a policy framework which needs constant stakeholder guidance and support to ensure its political relevance. Stakeholders have tremendous knowledge about the specific situation, the context and inter-relationships in their field of activity. Targeted access to practical expert knowledge can help to overcome such barriers to optimal governance by providing decision-makers with information that allows them to formulate and implement policies in the best possible way. This ensures a broader acceptance and legitimacy of political activity. Policy coordination among various branches of government to reinforce resource efficiency throughout the economy can only be strengthened over the medium-to-long term through constant effort. The program may be reviewed after a period of 3-5 years for refinement and readjustment based on implementation experience.

Future Outlook In conclusion, it can be said that there is a wide array of opportunities for businesses, governmental institutions and society to benefit from resource efficiency. The message that needs to be conveyed as an incentive to change enterprises for introducing sound resource management and to those who innovate in green product segments and sell them on the market is that they can obtain significant economic gains. While this first Indian Resource Efficiency Programme limits itself to improving resource efficiency and management of secondary raw materials in a sectorial approach for abiotic resources, future versions may consider other types of abiotic as well as biotic resources. The implications of trends and patterns of resource use on social welfare (e.g. on food production, drinking water, access to energy, housing and healthcare) also need to be studied in order to devise a holistic and equitable resource efficiency strategy. The resource problematique of India, given its development trajectory, needs to at all points be geared towards goals of resource equity, access and productivity.


Natural resources are essential for our quality of life and health. We depend on resources like energy, water, biodiversity and ecosystem services, land and clean air. Furthermore, raw materials classified as biogenous (e.g. wood), mineral (e.g. metals) or energetic (e.g. fuels) are crucial for our survival. All these resources constitute vital inputs that keep our life and our economy functioning. However, an increasing demand for resources in the past few years, driven by the rapid economic development, population growth and urbanisation in India has raised concerns over resource depletion. Material resources in particular have witnessed significant increases in demand.

Resource supply constraints and price shocks can not only produce potentially severe economic and social consequences, but can also engender political and social conflicts when vital resources are unequally distributed. In addition, resource extraction, utilisation and disposal also typically impose significant environmental burdens, many of which, particularly climate change, are becoming acute in the 21st Century and are borne disproportionately by the poor and vulnerable. Therefore, judicious use of resources through a combination of conservation and efficiency measures for economic, social and environmental sustainability is in every society’s interest.

India is currently experiencing not only resource supply constraints, but also several negative impacts on natural resources such as a deterioration of air and water quality and soil fertility, as well as the loss of forest and biodiversity.

Consequently, the importance of raising attention to resource use, with growing demands but finite resources, is becoming more important in India and the country needs to find its own areas of action. India cannot afford to ignore this issue since it can potentially jeopardise its development plans, not to mention the enormous social benefits that can accrue from reduced environmental burdens. The challenge, thus, is to find a balance between the needs for enabling a worthy life for all and minimising the negative impacts of resource use.

1.1 What is Resource Efficiency? The term “resource efficiency” is a common term and generally understandable. However, in the context of this overarching framework it is necessary to define it more precisely. While the term “resource efficiency” is predominantly used in business or product context, “resource productivity” as a term is used in an economy-wide, national context.

Chapter 1: Introduction


Resource efficiency and resource productivity, respectively, is the ratio between a given benefit or result and the natural resource use required for it.6

The benefit is usually measured in monetary terms. At lower levels, e.g. enterprises, other organisations, services or products, besides the monetary ones, established indicators for calculating the benefit include suitable functional units (e.g. transportation of 1 person over a distance of 1 kilometre) or production outputs. The use of natural resources in this context is measured as the use of raw materials expressed in physical terms (mass). Typically, raw materials include all abiotic and/or biotic materials. However, the RE-programme focuses currently on abiotic resources, specifically on certain materials/material groups. Chapter 5 will provide rationale and arguments for the selection of these materials/material groups that should be addressed with high priority. In the long run, InRP should also target biotic resources.

At the national level, Gross Domestic Product (GDP) is the monetary expression of the economic benefit and it is measured as per the SEA (System of Economic Accounting). Focusing on changes over time, usually GDP in constant prices is used.

According to the System of Environmental-Economic Accounting (SEEA)7, resource use can be measured as material input into the economy (domestic material input as extraction plus imports) or as resource consumption (domestic material consumption as extraction plus imports minus exports).

Depending on the specific focus of the overarching framework, resource efficiency and resource productivity should be defined more specifically. The following aspects could be considered:

- Focus on single materials (e.g. copper) or material groups (e.g. metals) which are important or critical for India, possibly linked to recycling and substitution of these materials.

- Focus on the reduction of all primary material extraction, possibly linked to increase of circular economy in general.

- Focus on specific materials (e.g. uranium) which are linked to defined impacts in terms of environmental degradation and/or in terms of social conflicts and/or in terms of economic relevance; in these cases, “benefit” could be defined as the avoidance of conflicts.

1.2 Focus of Indian Resource Efficiency Programme In November 2015, India instituted a national body – the Indian Resource Panel (InRP) – under the aegis of the Ministry of Environment, Forest and Climate Change (MoEFCC). This panel, comprising of ten eminent experts from a variety of backgrounds – government, academia, industry, and civil society – has the objective of providing advice to the government for framing 6 Adapted from: German Federal Environment Agency (UBA, 2012): Glossar zum Ressourcenschutz. 7 United Nations Statistical Commission (UNSTATS) devised SEEA is an agreed set of standard concepts, definitions, classifications, accounting rules and tables for producing statistics on the environment-economy relationship that are internationally comparable. See: http://unstats.un.org/unsd/envaccounting/seea.asp


and adopting a comprehensive resource efficiency strategy. It is among the first of its kind national level body in the world.

A comprehensive approach to resource efficiency has the potential to bring benefits along all three dimensions of sustainable development, viz., social, economic and environmental. These are elaborated in Chapter 2. While resources can be broadly defined to include both biotic and abiotic resources as well as ecosystem services that include air, water, forests, land, minerals, fossil fuels, etc., the InRP has initially decided to deliberately focus its attention to abiotic resources, specifically non-energy minerals. The rationale for this choice is that policies on most of these other resources already exist to some extent, and improving resource efficiency for minerals is an extremely urgent task given the current and projected explosive growth rates in material demand arising out of India’s booming economy (see Chapter 3). In future, the InRP hopes to expand its scope of interest to a broader set of resources.

Further, the panel recognises that the efficient use of resources and reuse of secondary raw materials, while an immediate priority, is only one dimension of the broader goal of sustainable and equitable resource management. Resource efficiency has the potential to reduce costs and therefore stimulate further consumption (so-called “rebound effect”), which may be detrimental to long-term sustainability. Therefore, resource efficiency alone may have limited benefits without an equal emphasis on the overall scale of resource use, especially consumption that is related to luxury. Moreover, in a country like India, with high levels of poverty among the massive rural population, resource access for survival and livelihood is a predominant concern that cannot be neglected in any discussion of resource sustainability. While acknowledging these caveats, the panel feels that the initial focus on resource efficiency is justified because it is a topic where consensus is easy to build in a policy setting where there is little emphasis on resource issues so far. As resource policy matures in India, the panel hopes to expand its remit to these other dimensions discussed above.

1.3 Aim of the Document While targeted policies such as those that promote recycling have been around for decades all over the world, many governments are now moving towards more comprehensive strategies to promote resource efficiency (RE) at the national or supra-national scale. The German Resource Efficiency Programme (ProgRess) (BMUB, 2016), and the European Commission’s Roadmap to a Resource Efficient Europe (European Commission, 2016a) can be regarded as most prominent examples. The International Resource Panel (IRP)8, launched in 2007 under the United Nations Environment Programme (UNEP), examines most critical resource issues with an aim of providing government, industry and society guidance towards an equitable and efficient path of resource use.

In a resource constrained world, the challenge for a developing country like India is to find a balance between the developmental needs and minimising the negative impacts associated with 8 International Resource Panel website: http://www.resourcepanel.org/


resource use. In order to face these challenges in future, a comprehensive and holistic national resource efficiency programme can chart out a vision with policy strategies and action plans that supports India’s development goals. This document is intended as a guide for policy makers towards formulating the first Indian Resource Efficiency Programme (IREP) and mainstreaming RE and SRM in development policies. Such a visionary strategy has the potential to make India a role model among developing countries.

1.4 Structure of the Document Chapter 1 is the introductory chapter that that provides a brief background for the Indian Resource Efficiency Programme.

Chapter 2 creates the rationale for adopting resource efficiency as a key part of India’s development strategy because it provides multiple social, economic and environmental benefits as well as helps to meet the nation’s vital development goals and international obligations.

Chapter 3 highlights India’s current material use trends and future projections and the consequences associated with such trends in the context of global resource use.

Chapter 4 provides a brief summary of the existing policy framework in India that directly or indirectly affects resource use at different stages of the material life-cycle. Gaps and opportunities in terms of promoting resource efficiency are highlighted.

Chapter 5 takes a material-based approach and discusses resource use, impacts and possible ways of mitigation for selected materials.

Chapter 6 takes a sectoral approach and analyses resource use, impacts and possible ways of mitigation for selected sectors such as automotive, construction and IT equipment.

Chapter 7 discusses a range of cross-cutting issues and approaches that can help to promote RE across materials and sectors, such as standards, eco-labelling, public procurement, and consumer sensitisation.

Chapter 8, the final chapter, attempts to provide a framework for policy design and implementation for the proposed Indian Resource Efficiency Program, including monitoring and future development.

Lastly, ten major action points for a resource efficiency strategy for India are listed.


2.1 Resource Efficiency as a Strategy for Sustainable Development Resource efficiency (RE) is the strategy to achieve the most possible benefit with least possible resource input. Fostering resource efficiency aims at governing and intensifying resource use in a purposeful and effective way. Fostering resource efficiency as a strategy can support India in the achievement of its development goals.

Goal A: India combats poverty and facilitates greater resource access and equity More raw materials are required for fulfilment of the new societal material demand; since, a lot of resources are already scarce, more efficient use is needed to ensure greater equity in access of resources. Reduced environmental impacts can help ease to some extent the environmental burdens borne by the poor and the future generations.

Using scarce resources more efficiently is a key building block in meeting the needs of a growing population. India will need significant amounts of raw materials and other natural resources as it moves on its development path to provide a decent life to all. However, recent economic growth which enabled a remarkable number of people to increase their quality of life was linked to a high increase in the use of natural resources coupled with the degradation of existing resources and environment. Thus, the main challenge India faces is to reconcile increasing resource use with its reduced degradation and to ensure its availability for future generations.

Goal B: India supports economic innovation in the country as this is key for development Intelligent solutions on how to process raw materials efficiently are required to produce products which are internationally competitive. Utilisation of secondary resources could improve competitiveness since secondary materials may reduce cost due to less dependence on virgin resources and production of more environment-friendly products.

Striving for efficiency is one of the most important drivers for innovation – this can be observed all the way from households to enterprises. The United Nations Environment Programme, through its International Resource Panel (UNEP-IRP) calls this “spontaneous decoupling”. More efficient use of resources enables enterprises to save input materials and related costs which may be invested in new and better products or to cut prices. This can happen at both ends of the technological spectrum in terms of sophistication. In India, both extremes are existing, high-end technology branches and low-technology branches.

At the “high-end” of the technological spectrum, a more efficient use of raw materials supports the international competitiveness of the respective sector; however, India’s international strength is predominantly in the relatively less resource-intensive service sector. For medium- and lower-

Chapter 2: Resource Efficiency as a Strategy for Development and Resource Conservation in India


end technologies, more resource efficient use of raw materials enables enterprises to improve and invent more affordable products. Also, many of the improved or new products may not only satisfy needs within India but enhance export opportunities for Indian enterprises as well. The creation of new products and linked innovations also need to focus on reducing the dependence on virgin resources by enhancing utilisation of secondary resources and production of more environment friendly products. This could lead to an exemplary model for addressing resource scarcity and achieving resource security.

Goal C: India preserves its natural environment Economic growth driven by production and consumption of resources and conservation of natural resources are conflicting goals in most cases. However, if primary resources are used more efficiently, less pressure will be put on extraction of virgin materials and associated social conflicts can also be limited to an extent. Reduced pressures from mining will provide further opportunities for undertaking landscape restoration and regeneration of degraded mined areas. Extraction, use and disposal of materials are often linked to detrimental impacts on the surrounding environment. India, like most countries, meets its material demand for resources predominantly domestically. Thus, most of the impacts of material extraction, use and disposal also occur domestically. For example, the use of fertile soil to produce bricks results in the degradation of soil fertility and reduces agricultural production; mining activities lead to significant loss of natural forests and biodiversity and even to the loss of livelihood for tribal and other local communities; mining of sand and gravel from rivers destroys the riverbed including the habitat for aquatic life. Further processing of materials is also linked to serious environmental impacts, particularly due to improper use of toxic substances or energy carriers in processes. This can result in the deterioration of air and water quality which affects local communities and wildlife. Furthermore, if toxic substances and emissions are spread in the atmosphere with effects on climate and/or air quality and/or water systems, the whole ecosystem and thus the quality of life of Indians living in this ecosystem are affected.

Disposal of products post-use also has several environmental impacts such as diversion of land resources for disposal sites, associated greenhouse-gas emissions, air pollution, soil and ground water pollution resulting from leachates. Reduced waste generation resulting from RE will not only reduce pollution associated with disposal but also save related costs.

Goal D: India reduces its GHG emissions During past decades, GHG emissions in India have increased remarkably. Fostering material efficiency has several linkages to climate policy and thus, a remarkable potential to reduce CO2 emissions along the entire life-cycle of a product. The present programme puts priority on measures which contribute to a reduction of both, primary resource consumption and greenhouse gas emissions.


2.2 The Multi-Dimensional Benefits of a Resource Efficiency Strategy In fulfilment of its development goals, efficient and judicious use of resources can help decoupling of resource consumption from economic growth by addressing objectives related to three aspects of sustainable development – economic, social and environmental.

Economic benefits:

As materials and other natural resources are essential for economic and social development, resource efficiency can enhance living conditions for more Indians.

Facing the situation that resource demand is increasing world-wide, resource efficient innovative technologies are needed to ensure competitiveness in the international market.

On national level, import dependencies and thus supply risks can be reduced; decreasing imports can furthermore improve the financial situation of a country.

In case primary materials are economised domestically and exported (as raw material or as product), India can increase its income and thus financial situation.

From a business perspective, benefit can be augmented with the same amount of input improving the economic situation of the enterprise and thus the competitiveness of the enterprise and/or industrial sectors.

Resource efficiency facilitates product innovation and opens new markets for products with reduced resource inputs.

Increasing green investment flows towards development of RE and SRM products and lead towards a green economy.

Systematically integrating resource efficiency in product design and product development strategies can lead to the development of new innovative product and market segments, in which the respective pioneers can particularly benefit.

Social benefits:

Improved resource efficiency alleviates social problems associated with materials extraction and processing. Reducing these activities could contribute to reduction of air and water pollution which exacts a heavy toll on human health and strains national health care system.

Improved resource efficiency can act as a means to ensure both resource equity and access to these resources for provision of a better quality of life.

Promoting resource efficiency in the form of recycling and reuse will reduce the need for mining, and hence the displacement and loss of livelihood for people residing in mining areas.

Potential for new jobs in the R&D sector and increase of prestigious (or innovation driven) jobs in logistics, waste management, processing, design, etc.


Environmental benefits:

Efficient use of primary materials can decrease the additional demand for further primary materials given the necessity for economic development in India.

Efficient use of raw materials which include the use of secondary materials can contribute to decrease the amount of waste and contamination of the environment.

Efficient use of raw materials could contribute to reduced transportation of raw materials, products as well as waste.

Efficient use of materials can also contribute to reduction of greenhouse gas emissions and further environmental impacts such as the loss of soil degradation or biodiversity loss and thus contributing to national as well as international climate change mitigation goals or other environmental goals.

Efficient use of primary materials can contribute to reduced conflicts on land, forest, water and clean air as well as other natural resources.

Tapping the potential of resource efficiency in supporting these outcomes will help India in fostering many of its developmental goals.

Thus, India needs to foster resource efficiency to manage and limit the increasing material demand it is facing on its way of development and well-being for all Indians. India also needs to aim to limit, to the extent possible, the environmental impacts of resource use and associated conflicts linked to extraction, use and disposal of the required primary raw materials.

2.3 Resource Efficiency in the Context of Equity and Access to Resources A combination of drivers including economic growth, urbanisation and industrialisation, growing middle class and population growth have contributed to rapid increase in resource use in India over the past few decades. Notably, UNEP 2016 points to consumption as the main driver for resource use, more significant than population growth. Resource Efficiency as a strategy for Indian economy and as an SDG needs to address the issue of access and equity in the Indian and world economy. Large gaps exist in the material standard of living between the upper class, middle class and lower class in India with an urgent need to reconcile the over-supply of materials and resources to the rich and under-supply with severe lack of access of basic minimum resources to the poor.

Sustainability Development, by its very definition, must also take into consideration three critical aspects. Firstly, that all human beings, despite their location in the global socio-economic-environmental matrix, must have access to a minimum level of income and environmental quality for a dignified sustenance. Secondly, it also must ensure that the benefits, burdens and risks of resource use and conservation must be equitably distributed as a result of government actions, industrial interests, etc. (Beder, 2000). Thirdly, resource efficient production and


consumption practices take into account the needs of future generations by conserving access to resources (Weiss, 1992).

Resource efficient production and consumption can tackle the tendency of over-use and wastage as well as reduce the environmental burdens across the life-cycle. As extraction pressures get minimised over time, loss of livelihood and displacement related migration can also correspondingly be addressed. At the end-of-life stage, the skills and advantages of informal sector could be built upon to enhance greater resource recovery potential and increase in livelihood opportunities, as well as dignified and safe working conditions for the workers.

2.4 Congruence of Resource Efficiency Strategy with Government Obligations and Priorities Not only does a RE strategy provide multi-dimensional benefits for sustainable development as outlined in Section 2.2, judicious use of resources is an important part of several Sustainable Development Goals (SDGs), most obviously Goal 12 (responsible consumption and production), and Goal 8 (decent work and economic growth) but also those related to sustainable cities and communities (Goal 11), industry, innovation and infrastructure (Goal 9), climate action (Goal 13) and affordable & clean energy (Goal 7). Further, an ambitious RE strategy has the potential to make a substantial contribution to India’s Nationally Determined Contributions (NDC) commitments under the 2015 Paris Climate Change Agreement.

Moreover, it is important to recognise the implications of and potential for overlap of a RE strategy with several key policy priorities of the Government of India. With the government’s goal of promoting India as a global manufacturing hub through its Make in India campaign and Zero Defect–Zero Effect scheme, the issue of using resources more efficiently and strategic planning for critical resources becomes extremely pertinent. The Smart Cities program envisages efficient urban infrastructure and the Housing for All mission has ambitious goals for affordable housing; both need judicious planning for resources to fulfil their aims. Waste and pollution reduction through adoption of RE approach can also contribute positively to the Swachh Bharat (Clean India) and Ganga Rejuvenation missions. Therefore, the rationale is overwhelming for India to adopt a comprehensive RE strategy as central to its developmental goals.


3.1 Past and Current Trends of Material Use in India In India, extraction of primary raw materials increased by around 420% between 1970 and 2010, which is lower than the Asian average but higher than the world average. While extraction of biotic materials only increased by a factor of 2.4, extraction of abiotic materials, particularly of non-metallic minerals, show remarkable increase (Table 1 on the following page). Notably, extraction of non-metallic minerals, predominantly those used for construction has grown, reflecting the demand of the construction sector during recent decades. Thereby, it is important to note that the assessment from UNEP (2016) underestimates the quantities of minerals used for construction because they do not consider adequately the use of clay from fertile soil for clay bricks. According to a recent assessment by GIZ (2015b) based on bottom up methods, minerals used for construction add up to an amount of about 2.8 billion tonnes per year. Extrapolations of UNEP (2016) assume that domestic extraction increased up to 6.5 billion tonnes in 2015. Compared to extraction, India’s exports and imports are still small in terms of quantity. However, both have grown significantly. Exports are still dominated by metal ores, particularly iron and steel, while imports are dominated by energy-carriers, particularly petroleum and coal. Increased extraction, imports and exports have resulted in an increase in material consumption in India. According to UNEP (2016), India consumed about 5 billion tonnes of materials, out of which about 42% are renewable biomass and 38% are non-metal minerals (Figure 1 on the following page). Thus, from a material perspective focusing on current situation, biomass and non-metal minerals are the most important material groups in India and domestic extraction is more important than trade.

Chapter 3: Resource Use in India: A Trend Analysis


Table 1: Volume of extraction, imports and exports of India 1970-2010 (with extrapolation for 2015) (million tonnes)

1970 1980 1990 2000 2010 2015 Change

2010 vs. 1970

Domestic Extraction

Biomass 873.0 1,024.4 1,432.7 1,743.9 2,092.2 2,818.8 140%

Fossil fuels 76.2 121.8 262.9 384.9 639.7 861.9 740%

Metal ores 35.9 51.8 74.1 112.5 263.4 354.9 635% Non-metallic minerals

179.3 188.2 434.5 808.5 1,878.1 2,530.4 947%

Total 1,164.3 1,386.3 2,204.2 3,049.8 4,873.5 6,566.0 +319%

Exports

Biomass 2.2 3.3 8.2 12.4 25.9 34.9 1,060%

Fossil fuels 0.4 0.8 3.3 12.0 69.6 93.7 17,207%

Metal ores 26.5 35.9 27.2 153.8 207.3 481%* Non-metallic minerals

0.7 2.4 8.7 14.6 19.7 1,968%*

Total 2 .6 31.3 49.8 60.3 263.9 355.6 9,999%

Imports

Biomass 5.2 2.9 4.7 10.6 29.4 39.7 464%

Fossil fuels 14.9 24.0 37.8 109.7 318.8 429.4 2,042%

Metal ores 2.1 6.2 9.0 26.0 35.0 1,152%* Non-metallic minerals

5.9 10.3 14.2 38.5 51.9 548%*

Total 20.1 34.9 59.0 143.5 412.7 556.1 1,953%

(Source: UNEP, 2016) * change 2010 vs. 1980

Figure 1: Material consumption in India, 1970-2010 (with extrapolation for 2011-2015)



In 2010, India’s material demand (as measured in domestic material consumption) was the third largest in the world, after China and the United States. India consumed about 7.2% of globally extracted raw materials in that year. As material consumption is closely linked to economic growth, it can be assumed that currently India has overtaken the United States as the gap between both countries had been rather small and India has shown an ongoing higher growth of economic activities than the United States in recent years (see Figure 2).

Figure 2: Material consumption of India compared to other countries and regions


Despite high aggregate consumption compared to other countries, the per-capita consumption in India is still lower than the world average. According to the UNEP assessment, it increased from 2.1 tonnes per capita in 1970 to 4.2 tonnes per capita in 2010 – less than half of world average (including the underestimated clay extraction, material consumption increases up to 4.8 tonnes per capita). Until the turn of the millennium, consumption was dominated by biomass (see Figure 1); in 2010, the share of abiotic materials in consumption is 58% at a minimum. This is a typical pattern in the development process of an industrialising country when it is moving from a dominant agricultural sector towards increasing percentage of industrialised sectors, with increasing demand of energy, massive construction and the increasing demand for consumer goods. Nevertheless, biomass (predominantly used for food and animal feed) still has a very high share in India’s material consumption reflecting the importance of the primary sector.


Figure 3: Per capita material consumption in India, 1970-2010 (with extrapolation for 2011-2015)


The measurement of Domestic Material Consumption (DMC) has a bias as it measures extraction differently than trade: trade is measured only as the weight of traded goods while extraction is measured as the total extracted mass of the raw material, e.g. including the gross ore. To overcome this bias, the traded goods can be expressed in Raw Material Equivalents (RME). There is an ongoing debate on how to measure RME exactly. In case of India, all preliminary assessments show that consumption measured in RMC (Raw Material Consumption) is lower than domestic material consumption as the raw material equivalent of the exported goods are higher than those of the imported goods. Nevertheless, India’s resource consumption is clearly dominated by domestic extraction and the difference between domestic extraction and consumption is small - the described trend is still the same: a steadily increasing consumption of primary materials. In Figure 4 (on the following page), resource consumption and resource productivity measured as GDP /DMC, as the more widely used indicator, is used to provide an overview on current trends in India.


Figure 4: Trends in Resource Consumption, GDP and Resource Productivity in India, 1970-2010

(Sources: DMC based on UNEP, 2016; GDP based on Government of India, 2016)

India has experienced a remarkable growth of GDP, resource consumption and resource productivity (as shown in Figure 4); growth in GDP is highest, followed by the increase of resource consumption. Resource productivity increased slightly until around 1990 and faster during the last decade. Figure 5 shows the trend of resource productivity in absolute terms which nearly doubled between 1970 and 2010 in India. Currently, about Indian Rupee (INR) 1 crore or 10 million is gained per kilogram of consumed raw materials.

Figure 5: Resource Productivity in India, 1970-2010

(Source: DMC based on UNEP, 2016; GDP based on Government of India, 2016)


Although comparisons of resource productivity between countries are limited due to the respective compositions of different material intensive sectors in the countries, it can be noted that Indian’s resource productivity is still low compared to other countries. In 2010, India gained comparatively similar economic benefit per unit of consumed raw material like Pakistan (both about 1,100 USDppp const. 2011 per tonne DMC), but less than for example Bangladesh or the Philippines (with about 1,450 USDppp const. 2011 per tonne DMC) or e.g. Germany with about 2,700 USDppp const. 2011 per tonne RMC)9. This comparison shows that India has quite high potential for increasing resource productivity, and thus gaining more economic income per unit of consumed materials. India is still predominantly fulfilling its resource demands domestically, and is thus comparatively less affected by international price fluctuations and scarcities than other import dependent countries. However, there are already some raw materials where share of imports are very high as compared to domestic extraction or availability. Examples are molybdenum, copper, nickel, etc. (see Figure 6).

Figure 6: Import dependencies of India


Owing to the growing demand for resources, India may face a situation in future where the demand of raw materials cannot be met domestically any more. India may have to compete with other countries for them and may possibly face a situation of higher raw material prices or even shortages in supply. In the following chapters, current use and future projections as well as most important strategies and actions for India will be analysed and discussed. The materials, products and sectors which are the most important for our future scenarios of material consumption will be highlighted. These results can be used to elaborate India’s position and role in the ever-changing context of international resource consumption. 9 GDP is taken from http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locations=IN; DMC data is taken from UNEP, 2016; RMC data for Germany is taken from DESTATIS, 2016; note that RMC includes the counting of import and exports as raw material equivalents as Germany is highly dependent on raw material imports.


3.2 India’s Future Trends and Trajectories on Material Demand Given a growing world population and assuming that present global resource production and consumption patterns continue, UNEP (2011) estimates that more than 140 billion tonnes of primary materials will be used globally in 2050 – twice as much material as used today. This could lead to an increased pressure of extraction in remote and sensitive areas, extraction of low concentrated ores, extraction from complex geological sites requiring increasingly energy and material intensive technologies and thus may lead to more negative impacts on the environment. Regarding India, there are only a few projections available which show the future demand of materials. All projections show that material demand will increase as India’s economy is transitioning towards higher shares of industrial and service oriented activities and as the middle-class population continues to grow. Thus, the question is not if the material demand will grow, but how fast and to what extent it will grow. IGEP (2013) compared three different scenarios reflecting the impact of different development paces until 2050:

- Slowdown of development process: With, among other, high population growth, stagnation/depletion of sources, no new technologies and low growth of production (5% growth in GDP p.a.);

- Continuing current dynamic: With, among other, medium population growth, new sources and technologies and a medium economic growth (8% growth in GDP p.a. until 2030, thereafter 5 %);

- Fast catching up: With, among other, low population growth, new sources and technologies and high GDP growth (12% p.a. as observed in China) until 2020.

Figure 7: India’s past material demand and future projections until 2050



All scenarios indicate that a remarkable share of Indians living in poverty could improve their physical living conditions, with emphasis on equitable access. The medium scenario results in a per-capita consumption of about 9.6 tonnes in 2030 which is near the current global average, consisting of about 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 (IGEP, 2013). This means that India would nearly triple its demand on primary materials compared to 2010, particularly the demand of energy carriers, metals and non-metal minerals.

3.3 Consequences of Current and Future Material Demand Extraction, use and disposal of materials are linked to environmental, social and economic impacts. Tripling domestic resource extraction of biomass, minerals and also coal will be linked to increasing pressure on natural resources such as land, forest, air and water. Mining activity for example has already led to large-scale destruction of forests, displacement of millions, and loss of livelihood for many. Owing to deteriorating socio-environmental conditions, the opposition of tribal and of other local communities against mining has increased during the past years. Thus, further increase of mining activity will lead to even more social and environmental conflicts. Imports of materials also face severe constraints; import dependencies and costs for imports would increase. Moreover, the future demand for 3.8 billion tonnes per annum of fossil fuels and 4.6 billion tonnes per annum of construction minerals would mean that India would have to import about two-thirds of internationally traded fossil fuels or about 4.5 times more than the internationally traded amount of non-metal minerals in 2010.

3.4 Global Resource Use Globally, resource use has been gaining increasing political attention during the last decade with supra-national institutions and organisations. At a global level, UNEP established the International Resource Panel (IRP) in 2007 as a central institution which should help to transform the current pattern of use and re-use of resources. UNEP-IRP provides independent scientific assessments on sustainable use of natural resources and their environmental impacts and promotes decoupling economic growth from environmental degradation. World-wide, the use of natural resources has been growing remarkably. According to a recent assessment of the UNEP-International Resource Panel (2016), the extraction of primary materials increased by a factor of three during the past four decades from 24 billion tonnes in 1970 to 70 billion tonnes in 2010. The extraction of both biomass and fossil fuels has doubled, while extraction of metal ores has tripled and the extraction of non-metal minerals has nearly quadrupled during the period (Figure 8). Regionally, the highest increase can be found in Asia, where the extraction of primary materials more than quintupled in just 40 years, particularly after 1990.


Figure 8: Resource extraction by material category world-wide, 1970-2010


Growth in extraction was such that per capita global material use increased from 7 tonnes per capita in 1970 to 10 tonnes per capita in 2010 (UNEP, 2016). This indicates the improvements in the material standard of living in many parts of the world. Domestic extraction of materials has increased all over the world; however this increase happened in varying proportions in different regions. Furthermore, it can be observed that particularly densely populated regions in Europe and Asia have large and increasing net imports of materials, especially fossil fuels and metal ores, as compared to the other regions of the world. Increasing demand for raw materials is usually linked to price increases, if the production cannot increase simultaneously. In the years before the global financial crisis, prices of several raw materials such as copper or petroleum have shown remarkable increases and in recent years higher volatilities in prices have been observed. Although resource prices have decreased in recent years as growth decelerated in many countries, it can be assumed that fluctuating demands in future (e.g. due to new technologies, discovery of new reserves or changes in world economy) may raise the prices of raw materials. This is due to the trend of ongoing economic growth in the next decades pushed by the basic drivers of increasing consumption, growing middle class due to economic development and population growth (UNEP, 2016). Countries which are currently importing scarce raw materials will have to pay higher prices or accept constraints in supply of crucial raw materials. Several countries and supra-national institutions, particularly those who are net importers of raw materials, have reacted to this changing global situation by formulating policies in order to change their pattern of resource use. Examples are the European Union; Asian countries such as Japan, Korea, China; and Latin-American countries such as Mexico. The policies of the countries differ in their details; nevertheless, the below objectives are common to all of them:


• decrease environmental impacts of material extraction and material use; • increase material efficiency in production processes; • increase awareness of resource use in consumption; • increase reuse and recycling of (critical/selected/all) materials.

The countries aim at:

• an increase in international competitiveness (in general or regarding strategic national economic sectors);

• a decrease in (defined/all) material dependencies; • a decrease or limitation of further demand on primary materials and associated environmental

degradation, and • a reduction of waste and waste to be disposed-off at landfill sites.

3.5 Existing International Approaches for Measuring and Fostering Resource Efficiency This section will provide examples on measurement of resource productivity and resource efficiency at the national level.

Resource efficiency at the country level is usually measured with so-called material flow indicators. The methodological and conceptual framework is laid out in the SEEA (UN et al., 2014). Material flow indicators measure total material use or relevant components of material use of a country. Due to the large scale of its use, water is not included. Gaseous substances are taken into account only by a few countries.

The following raw material groups are distinguished: - Biotic raw materials: food and animal feed, fibres, timber, etc.; - Fossil resources: oil, gas, coal; - Metallic raw materials; - Non-metallic mineral raw materials: construction minerals, industry minerals.

Furthermore, the following material flow indicators are distinguished:

Extraction of raw materials + Imports = Domestic material input (DMI) - Exports = Domestic material consumption (DMC)

If imported goods are measured in so-called Raw Material Equivalents (RME), i.e. raw materials required to produce a good are included, material input is denoted as ‘Raw Material Input’ (RMI). If exports are also measured in RME, material consumption is denoted as ‘Raw Material Consumption’ (RMC). All indicators are measured in metric tonnes of raw materials.


Resource efficiency at a country level is measured by relating the material flow indicators mentioned above to the gross values added. In general, it is defined as: Resource efficiency = GDP / Material flow indicator.

A number of countries are currently supporting approaches to increase resource efficiency. Here, resource efficiency usually refers to material use efficiency. Resource categories such as water or land area are addressed by countries’ resource efficiency policies to differing extents. In general, the utilisation of other natural resources is a consequence of raw material use (and often times addressed by other policies), such that in the first step only raw material use is addressed.

In May 2016, the European Environment Agency (EEA) published updated country profiles of 32 European countries on their material efficiencies. The country profiles show that only three countries, Austria, Finland and Germany, and two regions, Flanders and Scotland, have adopted specific strategies to increase resource efficiency. The focus of most other countries is in the waste sector, where waste prevention and recycling of selected materials/waste fractions or the circular economy are promoted. Waste management is the current focus of most countries outside Europe as well. For example, Japan, a raw material import-dependent country, promotes the so-called ‘3Rs: Reduce, Re-use, Recycle’ not only within the country, but also in other Asian countries.

According to EEA (2016), nine European countries have currently quantified targets for economy-wide material efficiency. Most countries use the GDP / DMC indicator, which is regularly collected and published by Eurostat. One exception is Hungary which has set the goal of reducing material intensity. Material intensity measured as DMC / GDP is the inverse of material efficiency GDP / DMC.

A further exception is Germany which is the only country not using the consumption-based indicator DMC, but the production-based indicator DMI. Also, unlike other countries, Germany includes abiotic raw materials only in the DMI. The production-based raw material indicators are more ambitious in an export-oriented country such as Germany, since exports are fully included. At the same time, it is important, especially in countries that are heavily involved in international trade, to take account of the intermediate consumption of traded goods to avoid unwanted shifting effects. This aspect is considered in the recently updated version ProgRess II (March, 2016) where RMIabiotic and biotic is used in addition to DMIabiotic as an indicator for overall raw material productivity of Germany.

Other countries, including the UK, Switzerland and Japan, monitor economy-wide material efficiency without combining it with a political objective. The indicator GDP per DMC (DMI) is criticised, particularly by countries that produce independent statistics on resource efficiency and actively develop them, as the DMI measures imports and exports in actual weight, thereby making it incompatible with the measurement of raw material extraction. This implies that the relocation of resource intensive industries to other countries is erroneously reported as an increase in resource productivity. The weakness can be circumvented by measuring imports and exports in raw material equivalents (RMEs). In contrast to the calculation of the DMC and DMI, the calculation of the RME is not yet harmonised internationally and is still in the development stage.


At present, Germany and Austria are the only countries that have included raw material equivalents in their goal definitions. Switzerland, UK, as well as France, are calculating RMEs of their international trade, partly using calculation approaches made available by Eurostat and, in some cases, independent approaches. Examples of Germany, Japan and the EU are presented in more detail. Germany

With the launch of German Resource Efficiency Program (ProgRess) in 2012 and its update ProgRess II in 2016, Germany has adopted a comprehensive political approach. Both ProgRess and ProgRess II are intended to increase resource efficiency along the entire value chain. The goal is to be able to continue to reliably supply German industries especially with mineral raw materials as sustainably as possible. At the same time, options for livelihoods of future generations are to be preserved. ProgRess I addresses the fields of securing sustainable raw material supply, increasing resource efficiency in production, resource-conserving products and consumption, fostering a resource-efficient circular economy, sustainable construction and sustainable urban development, resource efficient information and communication technology as well as overarching instruments and the promotion of resource efficiency policies at different national and international levels. ProgRess II considers material and energy flows as well as the impact of raw material use on other resources (such as land or water), but the focus remains on promoting the efficiency of material use of abiotic and biotic materials (without food and animal feed and energetic use of fossil fuel resources). ProgRess II identifies four economy-wide indicators and objectives, two of which are underpinned by specific indicators and targets (Table 2).

Table 2: Indicators and objectives regarding Resource Productivity according to ProgRess II

(Source: BMUB, 2016)

Approach Indicator Objective

Continuously increase raw material efficiency of domestic production

Raw material productivity

GDP / DMIabiotic

Doubling of raw material productivity

1994 – 2020

Continuously increase raw material efficiency considering biotic resources and imported goods

Total raw material productivity (GDP + imports) / RMIabiotic+biotic

Until 2030 continuation of the trend of the years 2000 – 2010

Reduce primary raw material requirements (including imported products) by use of secondary raw materials (as far as depolluted)

Share of direct effects of recovery (DERec) of direct material use (DMI)

Reduce primary raw material requirement including raw materials used abroad for imports by use of secondary raw materials (as far as depolluted)

Share of direct and indirect effects of recovery (DIERec) of raw material input (RMI)


ProgRess II’s new indicator, total raw material productivity includes the primary raw material input of imports and ensures that no increases in raw material productivity are reported when raw material intensive processes are shifted abroad or when abiotic raw materials are replaced by biotic substances. Since the total raw material productivity indicator is more comprehensive than the indicator raw material productivity, it could in principle, completely replace the latter. At present, the raw material productivity indicator is associated with a more ambitious objective than the total raw material productivity indicator.

The DERec and DIERec indicators are currently being developed by BMUB and UBA (German Environmental Ministry and Germany Environment Agency, respectively). They indicate direct and indirect substitution effects of primary by secondary raw materials, namely the theoretical quantity of primary raw materials that would have been needed to produce the same products (with the same production patterns and technologies) exclusively based on primary raw materials. For example, secondary metals such as copper wires are recycled and replace primary copper. The indicators measure the theoretical amount of primary copper which would have been used if secondary copper wires had not been recycled.

Monitoring of resource productivity is carried out by the Federal Statistical Office of Germany (Destatis). The calculations for the material accounts (direct use indicators) are based on the SEEA which has been updated several times and which has been harmonised internationally (UN et al., 2014). The raw material equivalents are calculated based on an Input-Output-Table (IOT) for Germany (72 * 72 product groups). The most recent methodological description for calculating the raw material equivalents of imports is based on Buyny et al. (2009) and describes a combined approach based on both input-output calculations and raw material coefficients determined on the basis of process chain analysis. The coefficient approach is applied for imported goods in an early processing stage, the input output approach for highly processed goods. One reason for this is that goods in an early processing stage include those which are not extracted in Germany (such as metal ore imports) and for which no coefficients can be derived from the German IOT. A mixed approach is used for 56 raw materials to calculate the raw material equivalents of the imported semi-finished goods.

Japan

Japan has been pursuing the 3R Initiative (reduce, reuse, recycle) since the 1990s. A key objective of this policy is to reduce the amount of waste and to reduce the illegal dumping of waste. The increase in the recycling rate is intended to contribute to reducing the use of primary raw materials and energy (Ministry of Environment-Japan, 2013). The 3R Initiative is the focus of the Fundamental Plan for Establishing a Sound Material-Cycle Society which has been updated approximately every four years since 2001. The most recent update was in 2013 (Ministry of Environment-Japan, 2013).

Like Germany, Japan uses the resource productivity indicator (GDP per input of raw materials with and without unused extraction) and formulates a target for the recycling rate as well as a maximum limit for deposited waste (Ministry of the Environment-Japan, 2013). The target year was 2015. Resource productivity, including (excluding) unused extraction, is expected to increase by 51% (excluding unused extraction: 10%) and the recycling rate by 5.3% while total waste


disposal is intended to be reduced by 67% (compared to year 2000 levels). In addition, specific recycling ratios are mentioned for different waste fractions. For example, concrete blocks should be recycled to 98% in 2015 and 90% of the excavated soil of construction sites should be reused.

Japan promotes the 3R approach in Asian countries. The sixth Regional Forum took place in 2015 in Male, Maldives, with the participation of 39 Asian countries, cities and international organisations. The seventh forum took place in November 2016 in Adelaide, Australia. At the fourth meeting in Hanoi 2013, medium-term targets were adopted with a view to 2023 in Hanoi 3R Declaration (UNCRD, undated). In addition to waste-related objectives, the increase in resource productivity was also decided on as part of the overarching targets (Target 17). While the indicator to be used was not specified, TMR, DMI and DMC were mentioned as possible indicators.

European Union (EU)

Within the framework of its flagship initiative ‘A Resource-Efficient Europe - Flagship Initiative under the Europe 2020 Strategy’ in 2011, the European Union made a commitment to the promotion of resource efficiency. The EU is thus pursuing the following objectives:

- Strengthening economic performance while reducing resource use - Identifying and creating new opportunities for growth and innovation as well as

improving the competitiveness of the EU - Ensuring the supply of essential resources - Combating climate change and mitigating the environmental impacts of resource use.

However, a specific objective on resource efficiency, comparable to the reduction of greenhouse gas emissions, is not mentioned for the European Union. Still, raw material consumption for the EU as a whole and for the individual countries is published annually by Eurostat in a time series since 2000. The DMC is currently the lead indicator (European Commission, 2017). Among others, it is being used for the calculation of raw material productivity. Eurostat can be regarded as a pioneer with regard to the continuous development of the methodology for calculation of the raw material equivalents. According to the latest published handbook, calculation of raw material equivalents of the imported and exported goods is based on a mixed approach similar to the one in Germany. In contrast to the German approach, a further differentiated IOT (182 * 182 product groups) is used because the insufficient disaggregation of mining activities in standard IOT leads to significant errors. The RMEs of low-processed goods are determined by means of a coefficient approach and the RMEs of further processed goods by means of the input-output approach (Leontief method) (Schoer et al., 2012). Current developments include, among others, the integration of further multi- regional information. In 2015, Eurostat issued a manual for European countries describing three ways to calculate the RME on a country level with differing levels of effort (European Commission, 2016b). The most elaborate method is to use local IOT-based models, while the simplest approach is to apply the coefficients of the European mean, and the third approach is a mixture between the two.


Other international institutions, including UNEP, United Nations Industrial Development Organisation (UNIDO) and Organisation for Economic Co-operation and Development (OECD) are also supporting further developments in resource efficiency policy and measurement procedures. However, no specific global or regional objectives are mentioned by any of the above-mentioned institutions. The resource panel of the United Nations has relatively recently promoted the further development of a global data base on raw material utilisation and issued a report on global utilisation (UNEP, 2016). It provides information on the DMC, physical trade balance and material intensity as well as raw material equivalents for a selection of countries. While the DMC indicators are based on the SEEA's harmonised methodology, raw material equivalents are calculated based on a multi-regional input-output model that distinguishes between 60 production groups and 40 countries or world regions. The greatest problems regarding the accuracy of the results are limited data quality and low differentiation (Schoer et al., 2013); thus, the assessment of so-called material footprints presented in the UNEP-report should be taken with caution. Thus, in its national programme, India can assess and develop a set of indicators to measure resource efficiency of the economy, sectors and materials depending on its priorities.


4.1 Background The utilisation of resources involves their flow from one life-cycle stage to another, beginning from mining to designing, followed by manufacturing, consumption and ultimately end-of-life management (disposal or recycling). The impact of each life-cycle stage can highlight the stages where maximum resource inefficiency occurs and then measures can be developed to enhance resource efficiency. Devising a national level initiative for resource efficiency and secondary resource management in India must have scope for achieving the objectives across different stages of the life-cycle and ensure that all the stakeholders get involved at respective stages. In addition, a life-cycle approach is not sector-specific and it provides scope for initiatives across different sectors. It enables highlighting the relevant policies and facilitates stakeholders, particularly the government departments, to create an enabling policy environment for achieving resource efficiency. The life-cycle approach is also in line with the idea of closing the loops and reducing dependency on virgin raw material by creating alternate sources of resources through reuse and recycling. The approach also enables introducing consistency in policies, targeting different life-cycle stages so that resource efficiency gains at one stage are not lost due to inefficiencies at other stages. The life-cycle diagram below represents the different stages which could be considered for introducing RE interventions.

Figure 9: Life-cycle Approach

(Source: spcadvance.com, 2015)

Chapter 4: Status of India’s Policies of Resource-Use: Following a Life-cycle Approach


Furthermore, RE is important not just in product life-cycles, cutting across materials and sectors, but also in processes that enable excessive primary resource use. Process studies at the extraction, design, production, consumption and end-of-life stages of abiotic natural materials need also to be prioritised in order to reduce transaction costs which are related to the general inefficiency of resource use. Licensing, planning, monitoring, data gathering and processing, transporting, supply-chain management and other activities can affect the quality, quantity and price of the raw materials being used in production. This in turn can increase or decrease aggregate demand for the products. Therefore, while considering life-cycle stages of products, the processes related to resource consumption need to also be considered to introduce efficiency measures.

4.2 Resource Efficiency in Mining The mining sector provides around 97% (IGEP, 2013) of all abiotic and non-renewable materials consumed in India. Increasing resource efficiency at the mining stage could include: using less of material inputs (e.g. use required energy more efficiently, less water, less toxic materials, etc.) for mining to increase resource efficiency. Making use of the by-products from mining and use of mining waste as raw material for construction or in other industries like cement manufacturing, will lead to resource efficiency and enhanced use of secondary raw materials in mining as well as other sectors. Fostering certification and international standards helps in enhancing accountability in mining industry. For example, the Extractive Industries Transparency Initiative (EITI) has developed a standard for the mining industry that ensures transparency on how a country's natural resources are governed. This ranges from how the rights are issued, to the way resources are monetised plus its benefit for the citizens and the economy. The transparency issues have implications for resource efficiency in the sector as well (EITI, 2016a). Minimising mining waste or extracting as much material as possible from the ore will increase resource efficiency. For instance, only around 93.5% of the iron in the ore is extracted while rest is left as mining waste. The government aims to extract around 98% as per the Draft National Steel Policy (Ministry of Steel, 2012). Thus, resource efficiency in the mining sector would contribute to environmental protection and economic development significantly. Inefficient extraction is leading to wastage of resources deployed in mining activities as certain percentage of the extractable mineral in left in the mine and there is limited or no extraction of associated minerals. The National Mineral Policy (2008) already includes zero-waste mining as a national goal and emphasises the need to upgrade mining technology to ensure efficient extraction and utilisation of the entire run-of-mines (Ministry of Mines, 2008). Further, extraction of associated metals (Tin, Cobalt, Lithium, Germanium, Gallium, Indium, Niobium, Beryllium. Tantalum, Tungsten, Bismuth, and Selenium) along with major metals like Copper, Lead and Zinc needs to be emphasised as a resource efficiency measure. This becomes extremely important in the case of strategic minerals such as Molybdenum and Selenium from Copper ore, Cadmium and Germanium from Zinc ore, and Gallium and Vanadium from


Bauxite, where there are limited reserves (and may be classified as “Deficit Category”), making efficient extraction critical. The Sustainable Development Framework for Mining in India has been developed in 2011 and includes incorporating environmental and social sensitivities in decisions on mining leases, strategic assessment in key mining regions, managing impacts at the mine level through sound management systems and addressing land, resettlement and other social impacts. It also notes that the mine closure and post-closure mining operations must prepare, manage and progressively work on a process for eventual mine closure along with assurance and reporting (Ministry of Mines, 2011). It must also clearly lay down the process for fund disbursement by the District Mineral Foundation so that accrued funds contribute to the long term social and economic development of the communities affected by mining. The Indian Bureau of Mines (IBM) organises a Mines Environment and Mineral Conservation (MEMC) week in India each year to promote awareness amongst the mine owners for minimising environmental damage. Mining companies successful in environmental protection activities are given an award (Banerjee, 2005; IBM, 2010) and this award can include a category on RE. A Star Rating Scheme for responsible mining based on the social and environmental impact of mining activities has been developed by IBM. This scheme could also explore including RE related aspects in the Star Rating for promoting RE technology and practices in the country (Ministry of Mines, 2016). Guidelines for best available technology and processes for mining along with promoting research and development is needed to achieve the potential of RE in Mining Sector in India. The expertise available with IBM and the National Mineral Development Corporation (NMDC) would help the Bureau of Indian Standards (BIS) to develop standards for sustainable mining. These standards/benchmarks may separately be developed for existing mines, new mines and closed mines. A disclosure process should be created by the mining companies or the IBM that provides stakeholders with relevant and timely information, and allows issues to be raised in engagement forums. There should be an intensive use of geo-spatial and geo-scientific information at mine level for assessment, planning, management and monitoring of the mining sector. Developing information and tools for businesses to help them make resource efficiency savings could also be supported.

Example of RE and SRM Policy at Mining Stage

State government of Rajasthan has introduced mandatory requirement for preparation of mining plans in case of minor minerals as well. The eco-friendly mining plans have been prepared by miners and approved by the state mining authority before start of extraction. The surface management plans particularly contribute to RE by ensuring utilisation of ore to the best possible extent, and providing alternate use of waste and/or restoring mined areas for alternate use like agriculture or forestry (Government of Rajasthan, 2017).


4.3 Resource Efficiency in Design Phase The design phase is critical in influencing the production and consumption phase of a product and has considerable implications on the raw material input requirements and end-of-life material recovery. RE in the design phase could aim at improving lifespan of products, enabling easier repair and/or recycling of the product, focus on using less packaging material, easy disassembly, enhancing greater recovery for enabling use of secondary raw materials, etc. The National Design Policy provides overall guidelines for quality assurance of products and their economic and industrial competitiveness and can include issues related to RE and SRM, which would also reflect their potential environmental impact. The Science, Technology and Innovation Policy, 2013 seeks to highlight that science, technology and innovation should focus on faster, sustainable and inclusive growth. Therefore, Technology Development and Transfer Division (TDT) of the Department of Science and Technology, Ministry of Science and Technology supports research and development (R&D) and market development for 19 Waste Management Technologies. It is possible to extend similar programs for sectoral RE related R&D with additional funding to TDT division (Ministry of Science and Technology, 201610). The “I-Mark” scheme of the India Design Council and the EcoMark scheme of BIS are eco-labelling schemes for the identification of environment-friendly products. Further, ‘Sub-committee on Eco-Labelling Scheme’ constituted by MoEFCC is already working on reviving EcoMark specifically for the products made from waste, including construction & demolition waste, solid waste, waste paper & pulp, etc. Such schemes can include RE issues in addition to SRM. Programmes related to energy efficiency have had significant success in India. While energy efficiency is directly related to the expenditure to be incurred on energy by the user of the product, resource efficiency and use of secondary raw materials could go beyond the economic gains, and have a positive social and environmental impact. However, considering that energy efficiency has been accepted by the people primarily due to the accrued economic benefits, it is crucial that resource cost savings also be shared between the different stakeholders through design of appropriate tax and incentive structure. It is also possible to setup an Indian Bureau of Resource Management based on the experience of setting up BEE that works in close coordination with BIS and other related government bodies to mainstream RE and SRM issues. Under the Environment (Protection) Rules, 1986, the Central Pollution Control Board has developed national standards for effluents and emissions for industries under the statutory powers of the Water (Prevention and Control) Act, 1974 and Air (Prevention and Control of Pollution) Act, 1981. Additionally, it is required to develop standards for design of products which could target RE and promote SRM. Conceptualisation of the ‘design’ through the life-cycle of a product that ensures manufacturing utilising least resources, ease of refurbishing, dismantling, recycling etc. continues to be a recent development in the Indian manufacturing 10 Response to request for inputs from Ministry of Science and Technology as part of the Inter-Ministerial Consultation for IREP.


sector, as most products are designed considering the utilisation phase with limited consideration of resource use during manufacturing or post-consumption waste disposal issues. Priority is given to maintaining and increasing production levels, with the design being thought of as short-term investment (Zbicinski et al., 2006). Design policies will need to be incorporated in manufacturing policies itself to enable companies and firms to undertake life-cycle environmental impact assessments of production and product designs, with emphasis on resource efficiency and promotion of the use of secondary raw materials. Voluntary standards, like Green Reporting Initiative and ISO 14062: 200211 should be encouraged to develop and strengthen design initiatives for improving resource efficiency and promoting use of secondary raw materials.

4.4 Resource Efficiency in Production/Manufacturing India has set the target to increase the contribution of manufacturing to GDP from 15% to 25% in the National Manufacturing Policy (Ministry of Commerce & Industry, 2011a). Flagship programmes like “Make in India” provide special assistance to energy efficient, water efficient and pollution control technologies through Technology Acquisition and Development Fund (TADF). Such incentives can be extended to promote specific RE and SRM technologies. RE in production/manufacturing may include reduced waste in production process, substitution of more environmentally harmful materials by less harmful ones, reduced input materials in production via better organisation of processing in a more efficient way, etc. Within manufacturing, sectors like automobiles, cement, IT, electronics and electrical equipment, etc. have sector specific promotion policies, but they mostly lack any focus on RE and SRM goals. One example that may be replicated by other sectoral policies is that of the Draft National Steel Policy (2012) which has set material efficiency goal of 98% by 2025 from the present 93.5% in 2012. Industrial infrastructure promotion policies like the Delhi-Mumbai Industrial Corridor (DMIC) and “Smart Cities” are already considering the issue of solid waste management and recycling. Setting up of recycling units in the industrial corridors could be promoted through designing appropriate incentives. 11 ISO 14062 deals with integrating environmental aspects into product design and development.

Example of RE and SRM at Design Stage

National Housing and Habitat Policy, 2007 and the Pradhan Mantri Awas Yojana (PMAY), 2015 emphasize on developing appropriate ecological design standards for building components, materials and construction methods. PMAY has a technology sub-mission to promote the use of innovative housing designs and typologies that are modern, green and cost-effective for faster and quality construction of houses. Such policies should be replicated in other sectors as well (MoHUPA, 2016).


As a voluntary standard, the MoEFCC launched the Charter on "Corporate Responsibility for Environmental Protection (CREP)" in March 2003 that includes various measures such as waste minimisation, in-plant process control and adoption of clean technologies. Abiding by these standards could have significant positive impact on RE and SRM. However, it would additionally require appropriate accompanying measures like dissemination of information regarding RE and SRM approaches along with awareness generation in partnership with industry bodies and chambers of commerce. Industry standards for implementation of “Best Available Technologies Not Entailing Excessive Costs” (BATNEEC) should be developed by Central Pollution Control Board (CPCB) which include explicit RE and SRM criteria. Tax exemptions may be provided to companies that are able to meet the BATNEEC standards. The National Manufacturing Competitiveness Programme (NMCP) being implemented by Ministry of Micro, Small & Medium Enterprises highlights the need for enhancing the competitiveness of Indian manufacturing sector. This may be achieved by reducing the manufacturing costs through better space utilisation, scientific inventory management, improved process flows, reduced engineering time, etc. The target is to achieve "Zero Effect, Zero Defect Models" by aligning schemes like Lean Manufacturing Competitiveness Scheme, Quality Management Standards (QMS) and Quality Technology Tools (QTT), Technology and Quality Upgradation (TEQUP) schemes, etc. (PIB, 2015). The inclusion of raising awareness on e-waste under the Digital India mission is another example of promoting SRM in India. While the Digital India mission promotes the manufacturing and consumption of IT in India, the inclusion of e-waste awareness demonstrate that policies for promoting manufacturing can also promote recycling as an industrial activity. Also, the recently revised e-waste Rules mandate that space should be allocated for the recycling of e-waste in every industrial park or zone by the state government. This provision would promote the practices of industrial symbiosis in the industrial clusters by channelising the waste from one firm as a resource for another.

Example of RE and SRM at Production Stage

The Standards prepared by the Bureau of Indian Standards (BIS) have significant uptake amongst manufacturers. For example, IS 455:2015 Portland Slag Cement – Specification (Fifth Revision) allows for use of slag as raw material to compensate for lime. Similarly, IS 1489 (Part 1): 2015 Portland Pozzolona Cement —Specification Part 1 Fly Ash Based (Fourth Revision) allows for use of fly ash in place of lime in specified proportions. There is a need for more such standards for promoting RE and SRM across sectors.


4.5 Resource Efficiency in Consumption Despite global economic slowdown, India has positive long term growth potential (Patnaik and Pundit, 2014) fuelled by rising domestic consumption. Although the EcoMark scheme is a step in the right direction to create information on environment-friendly products, due to its limited outreach, its impact on the purchasing decisions of consumers has been insignificant. Therefore, there is a need to create more awareness and provide guidance to consumers so that they can make informed decisions at the time of purchase. RE in consumption stage may include purchase of goods and services that have consumed fewer resources or those which used recycled materials to produce same output. There is a need for a mechanism to create awareness among the public to showcase how to read and select products that are less resource intensive. Further, public procurement has the potential to create enabling market conditions for the consumption of environment-friendly products. Therefore, the Public Procurement Bill (2012) could be modified to promote the procurement of products manufactured using resource efficient practices and using secondary resources. Awareness creation regarding SRM and RE is crucial for creating demand for such products. Therefore, all forms of media, including the “Jago Grahak Jago” campaign of the Ministry of Consumer Affairs, may be engaged in awareness creation. The Bureau of Energy Efficiency (BEE) Star Label has been a significant success in promoting the use of energy efficient appliances. The uni-dimensional focus on energy and the economic benefits from using energy efficient appliances, made communication of the benefits of the Star Label to the consumer easier as compared to the multi-dimensional nature of RE and SRM. Although it is limited to energy efficiency, lessons learned from the implementation of the Star Label could be used to revive the EcoMark Scheme. Around 80 million LED bulbs have been procured by the Government of India and sold at a subsidised price in 2016 across 125 cities under its UJALA (Unnat Jyoti by Affordable LEDs for All) scheme. A similar innovative approach can be applied for promoting RE and SRM products (PIB, 2016).

Example of RE and SRM at Consumption Stage

The recent notification of the Construction & Demolition Waste Management Rules, 2016 have for the first time highlighted that local bodies will have to utilize 10-20% material from construction and demolition waste in municipal and government contracts. Such public procurement policy changes can have significant impact on promotion of RE and SRM.


4.6 Resource Efficiency in End-of-Life Stage Waste generation in India is expected to increase with population growth, higher income, growing middle class and urbanisation. The National Environment Policy 2006 (MoEF, 2006) of India emphasises the high potential of waste as a resource. Therefore, policy response including laws for the management of MSW, C&D waste, plastic waste, e-waste, batteries waste and hazardous waste have been formulated. Due to several reasons, the enforcement of waste management rules has been limited, particularly in case of Municipal Solid Waste (MSW), C&D waste, plastic waste and e-waste. Therefore, there is a need for a unifying framework that brings together these different sources of secondary raw materials for effective closed-loop recycling. RE in the end-of-life stage may include emphasis on reuse, repair and recycling in all sectors and for all materials if possible. To effectively manage the dispersed waste steams there is also a need to involve the informal sector by providing them with technical capacity building and financial support. Mandatory buy-back and Extended Producer Responsibility (EPR) policies can be implemented to promote recycling in most types of waste streams as already proposed under the E-waste Management Rules 2016 and Plastic Waste Management Rules, 2016 (MoEFCC, 2016c). Further, there is a need to clearly define the roles and responsibilities of various stakeholders, particularly the waste generators, along with enforcing the shared responsibility and EPR clauses more strictly. The introduction of standards for resource efficient recycling is a requirement that is essential to all existing relevant policies/programmes, particularly regarding recycling by the informal sector to whatever extent possible. However, RE should not be used as a barrier for mainstreaming of the informal sector leading to loss of livelihood of informal recyclers. To the contrary, focusing on the comparative advantages of the informal (in collection, segregation and dismantling) and formal sector (in advanced technological solutions for scientific disposal and recovery of materials (and energy)), models promoting cooperation between the two could be developed. There is also an urgent need to formalise the informal sector by organising them in cooperatives or jointly owned private enterprises, so that they can access technology and funding to improve their operations and ensure safe environment and health for the people employed in the informal sector. Therefore, the positive aspects of informal sectors could be built upon to develop business models that augment the livelihood generation potential. For instance, the informal sector’s expertise and ability in terms of collecting e-waste or other wastes directly from households and segregation can be supported through a web-platform which could be operated by a formal sector enterprise. Informal sector units can form cooperatives or private companies that enable them to participate formally in waste management related tenders while ensuring that safety procedures and employment benefits are provided to the workers engaged in the formal set-up.


For achieving economy wide benefits of RE & SRM it is crucial that policies across life-cycle stages consider RE & SRM issues. The existing policies and programs of Government of India have already included several aspects related to RE& SRM with ample opportunities and options to include additional RE & SRM measures. Introducing life-cycle approach in RE & SRM related policy making across ministries and exploring inter-linkages will help India utilise resources more efficiently and unlock the potential of secondary resources.

Example of RE and SRM at End-of-life Stage

The latest E-waste Rules of 2016 have adopted target-based approaches for implementation of EPR. This requires that in the first two years of implementation of the EPR plan, 30% of the quantity of waste generated must be collected. Further, financial instruments like the deposit refund scheme (DRS) have been introduced.


5.1 Background For easy understanding of the approaches to resource efficiency, this programme focuses specifically on non-fuel abiotic resources viz. ores, industrial minerals, construction minerals, etc. For future versions of the programme, material use of biotic resources will also be considered (GIZ, 2016b). While the significance of different sectors (agriculture, manufacturing, construction, automobile, textiles, etc.) in their contribution to the country’s GDP is mentioned here, business-as-usual trends in material consumption would lead to the physical exhaustion of the resources. This in turn would lead to de-stabilisation of material prices and hence affect the economic stability and the technological competitiveness of that particular sector. As mentioned in the previous chapter, RE can be achieved in all stages of the product life-cycle. The examples below give an insight into the potential resource-efficient approaches that exist for materials used in significant quantities by sectors of economic importance to the country. Since showcasing exhaustive resource efficiency approaches for all materials and all sectors is beyond the scope of this programme, examples for only selected materials are provided. In order to include all life-cycle stages, virgin as well as processed materials were selected. Four processed materials were chosen due to their a) higher recovery percentage and opportunity to reduce use of virgin resources by process modification, and b) higher reuse and recycling potential. Four virgin materials were selected based on: a) potential alternative materials available in the country to substitute their use, and b) potential alternative technologies available in the country for reduction in the overall virgin materials use (see Table 3).

Table 3: Selected materials

Processed Materials Iron and Steel

Copper

Nickel

Plastics and Composites

Virgin Materials Sand

Soil

Stone

Limestone

Chapter 5: Approaches for Selected Materials


Further, a Material Flow Analysis was used as a methodology to assess the intervention points in the material flows where resource efficiency approaches can be applied.

5.2 Iron and Steel

5.2.1 Trends in Production, Consumption and Trade Iron is the fourth most common material found in the earth’s crust (Woodford, 2015). India has abundant deposits of iron ore. As per IBM data, total iron ore resource in India as of 2010 was reported to be 28.5 billion tonnes, of which 8.1 billion tonnes were under ‘reserve’ (accessible for mining) category and 20.4 billion tonnes were under ‘remaining resources’. Iron is not used directly because of its softness, but is combined with carbon, which then results into a tougher and more usable material – steel. India is the third largest producer of steel in the world. About 99% of iron ore is utilised to make steel in India (IBM, 2015a). Figure 10 illustrates the proportion of steel consumed by the various sectors in India, with the largest being Construction (61%) (Dun & Bradstreet India, 2011).

Figure 10: Sector-wise consumption of steel in India

(Source: Dun & Bradstreet India, 2011)

With the growth of the Indian construction, infrastructure and automobile industries, the demand for iron and steel is estimated to grow. At present the per capita consumption of steel in India is 59.2 kg per year as compared to the world average of 225 kg per year (IBM, 2015b). The iron and steel industry in India comprises of pig iron, crude steel and finished steel. The construction industry is the biggest consumer of finished steel, accounting for 35% of total consumption in the financial year 2014-2015; this is followed by infrastructure at 20% and automobiles at 12%.

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Figure 11: Iron ore production and consumption trends

(Source: Calculated from statistics provided by Ministry of Mines, 2015)

Supply-side Concerns Availability and Prices

The production of steel requires an input-extensive extractive industry, the raw material availability of which determines the competitive growth of the industry. The requirement of raw materials in the steel industry is determined not only by the rate of growth in output but also by the technology adopted in making the required steel (Ministry of Steel, 2011). Further, the choice of the technology used is reflective of the relative costs of raw materials, energy, labour, capital and importantly, the transportation of the raw materials and finished products. India is the world’s third-largest producer of crude steel (up from eighth in 2003) and is expected to become the second-largest producer by the end of 2016. The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labour (IBEF, 2016a). The steel consumption in the country is expected to grow by 5.3% year-on-year at 8.1 million tonnes in August 2016. Over April-August 2016, steel imports fell 34.5% year-on-year to 3.01 million tonnes, while steel exports rose 23.6% year-on-year to 2.38 million tonnes (IBEF, 2016a). The raw materials required to produce iron and steel depends on the availability of finite natural resources like iron ore, manganese ore, coking coal, etc. A summary of the projected requirement of major raw materials during the Twelfth Five Year Plan period is shown in Table 4 (on the following page).

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Table 4: Raw materials requirement for projected Iron and Steel production (base case) Million tonnes

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Crude steel production 73.70 85.90 94.50 104.00 114.50 125.90

Pig iron for sale 6.13 6.88 7.66 8.54 9.38 10.00

Iron ore 115.03 135.70 149.43 166.66 185.24 206.18 Coking coal 43.25 52.29 57.91 67.49 77.23 90.16

Non-coking coal (for sponge iron sector)

35.31 37.86 36.50 34.71 33.92 28.41

PCI coal 1.95 2.40 2.66 3.20 3.83 4.54

Manganese ore 4.03 4.53 4.98 5.57 6.18 6.82 Chromite 2.64 2.90 3.19 3.52 3.93 4.31

Ferro-chrome 0.56 0.61 0.67 0.74 0.84 0.92

Ferro-manganese 0.46 0.51 0.57 0.64 0.70 0.74

Silico-manganese 1.26 1.42 1.56 1.74 1.94 2.16

Ferro-silicon 0.23 0.26 0.28 0.31 0.34 0.38

Refractories 1.29 1.42 1.56 1.72 1.89

(Source: Ministry of Steel, 2011)

As the demand for steel has risen over the years, there has also been a fluctuation in the steel price. The figure below depicts the fluctuations in prices for steel using the example of the Delhi Retail Market during the period from January 2008 to March 2013. The plunge in prices from September 2008 to January 2010 has been attributed to the decline in global stock markets. With the projected increase in demand and in absence of technological changes, these prices are expected to escalate in the future (Baksi and Biswas, 2009).

Figure 12: Month-wise steel price in Delhi Retail Market in India

(Source: indiastat.com)


Environmental and Social Impacts

The production of iron and steel requires five different steps namely: treatment of raw materials, iron making, steel making, casting and rolling, and finishing. It is a highly energy intensive process and involves melting of iron ore at high temperatures which leads to emission of greenhouse gases (primarily CO2 along with other gases like CH4 and N2O). Various factors are responsible for emissions such as combustion of fossil fuels, use of electricity, and use of coal and lime as feedstock. One tonne of steel produced in a Basic Oxygen Furnace requires 1.6 tonnes of iron ore, 0.6 tonnes of coking coal and 0.21 tonnes of steel scrap. Further, production of 1 tonne of iron itself requires 1.4 tonnes of ore, 0.5-0.65 tonnes of coke and 0.25 tonnes of limestone or dolomite (OECD, 2012). Both of which indicate approximately 40-46% level of efficiency, respectively. Iron mining is generally carried out by the open cast process which involves operations such as excavation, loading, sizing, crushing and screening, and transportation. These operations generate emissions from ore bodies, drilling, blasting and transportation, which deteriorate the ambient air quality within the range of the mining and surrounding areas (GIZ, 2016a). Several State Pollution Boards have banned opencast mining that results in environmental deterioration which includes altered land use pattern and degradation of the environment, mineral loss due to acidic rain, increased accumulation of waste, and deterioration of water quality due to run off from the dump and mining areas. Steel production from an integrated steel mill is much more energy intensive and emits higher GHG emissions as compared to steel production from mini-mills (OECD and IEA, 2001). The Steel Authority of India Limited (SAIL), one of the leading steel producers in India, has adopted some best practices such as maintenance and consistent operation of pollution control systems, effluent treatment plants, recycling of solid waste and adoption of cleaner and environment-friendly technologies. The steel sector contributes almost 2% of the country’s GDP and currently employs nearly 0.6 million people. Most steel plants are situated in economically and socially remote regions of the country and since labour recruitment is carried out locally, a large number of socially disadvantaged groups get employed in the steel industry (especially SAIL).

5.2.2 Approaches to Recycling Iron and Steel Recycling and process modified steel is a strategic core element for achieving resource efficiency in this industry. This approach is strongly supported by high recyclability potential of steel. Once steel is manufactured, it can be reused numerous times. Recycling iron and steel has many financial, economic and environmental benefits as it reduces landfill disposal of waste, reduces the need to extract and manufacture raw materials, as well as contributes to the reduction of pollution and GHG emissions. The case example of the life-cycle of steel in the automobile sector can be seen in the figure below.


Figure 13: Life-cycle of steel

(Source: World Steel Association, 2013)

According to the Institute of Scrap Recycling Industries (ISRI), recycling one car can save around 1,000 kg of iron ore, 560 kg of coal and 48 kg of limestone. In 2012, the USA recycled nearly 11.8 million cars, achieving a recycling rate of 93% (ISRI, 2014). Recycling steel scrap not only conserves resources but also saves carbon emissions from mining and processing of iron ore into steel. It also translates into reduction of water use, energy consumption and environmental pollution (CSTEP, 2013). Scrap steel is also a source of material for steel and foundry industries in India and contributes to about 1-2% of domestic steel consumption (IBM, 2015b). Shipbreaking yards and construction and demolition waste are major sources of steel in India as it has high recycling potential. Considering 80% of metal waste fraction of C&D to be iron and steel and 716 million tonnes12 of C&D waste generated in India, the iron and steel scrap generated from C&D waste is estimated to be 29 million tonnes. Salvaged steel is seen as a valuable resource and fetches a high price in the secondary market. Local foundries reuse recovered iron and steel rods in finished steel production. Scrap steel is also an important raw material source for electric and induction 12 See GIZ, 2015b


furnace mills as well as non-ferrous secondary sector producers. Also, due to its magnetic properties, steel is easy to separate from waste streams, enabling high recovery rates.

Table 5: Post-consumer steel product recovery rates by sector

Sector Recovery rate 2007 (%)

Recovery rate 2050 (%)

Life-cycle in years

Construction 85 90 40-70

Automotive 85 90 7-15

Machinery 90 95 10-20

Electrical and domestic appliances

50 65 4-10

Weighted global average 83 90 N/A

(Source: World Steel Association, 2017)

The use of scrap metal is an important part of the modern steelmaking industry, improving the industry’s economic viability and reducing environmental impact. Close to 40% of the world’s steel production is made from scrap. Compared to ore extraction, the use of secondary ferrous metals reduces significantly the CO2, energy, use of virgin material and water, thus, resulting in considerable reduction in water pollution, air pollution and generation of mining waste. For example, the embodied energy is drastically reduced in recycled steel. The embodied energy of virgin steel is between 32MJ/kg to 59MJ/kg whereas the recycled steel values range from 8.9MJ/kg to 12.5MJ/kg (Steel Recycling Institute, 2014). Hence, the energy consumed to produce recycled steel is 39-85% lower than making steel from virgin materials. Millions of tonnes of non-ferrous scrap (aluminium, titanium, cobalt, chromium) are also recovered annually and used in smelters, refiners, foundries and other manufacturing processes.

Figure 14: Benefits of using scrap steel v/s iron ore

(Source: ARA and ISRI, undated)

EnergyUse RawMaterials AirPollu@on WaterUse WaterPollu@on

MiningWastes

Reduc@onbyusingSteelScrap IronOre


5.3 Copper

5.3.1 Trends in Production, Consumption and Trade Copper is a tough, malleable and highly conductive metal, making it one of the world’s most important metals. Copper use in human history stretches back 7,000 years; today it is vital for many industrial sectors. Copper and copper alloys are used in building construction (roofing, wiring, and plumbing), power generation and transmission (cables, transformers), electronic appliance manufacturing (computers, cell phones, microwaves, etc.), the production of industrial machinery (gears, turbine blades, and heat exchange equipment) and transportation (vehicles, high speed trains). Use of copper in electric power and electronics are based on its excellent ability to conduct electricity. Copper is also used in other consumer products such as cookware, as well as in artistic applications such as musical instruments and sculptures. Brass is a very useful alloy of copper and zinc.

Figure 15: Estimated sector-wise copper consumption in India

(Source: Indian Copper Development Centre, 2012)

Mining for copper is costly and difficult, because copper ores typically contain only a small percentage of the metal13. Pure copper metal is generally produced in a multi-stage process, beginning with the mining and concentrating of low-grade ores containing copper sulphide minerals, followed by smelting and electrolytic refining to produce a pure copper cathode. Mined copper ores generally contain between 0.5-3% copper and need to undergo a concentration process to increase the copper content to 25-35% before it can be smelted (BGS, 2007). 13 Against the international average of metal content (in the ore) of 2.5%, Indian ore grade averages less than 1%.

56%

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Electronics Transport Processindustry

GeneralEngineering Consumabledurables Building&Construc@on

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India is not self-sufficient in supply of copper ore. Thus, in addition to domestic production of ore and concentrates, India also imports copper concentrates for its smelters for metal production. The domestic demand for copper and its alloys is met through domestic production, recycling of scrap and by imports. The low grade quality of Indian copper ores and nature of ore bodies (narrow width) restrict large scale production from underground mines (IBM, 2012). The total resource of copper ore in India was estimated at 1.56 billion tonnes in 2010. Of this, only 394 million tonnes (25%) fall under reserve category (proven and probable), while the balance 1.16 billion tonnes (75%) are under remaining resources. The grade of copper ore reserves varies highly between 1% Cu and 1.85% Cu whereas identified resources contain less than 1% Cu grade. The largest resources are found in the state of Rajasthan (50%), followed by Madhya Pradesh (24%) and Jharkhand (18%), along with small occurrences in other states (IBM, 2012).

Figure 16: Monthly price of copper, 2005-2016 (INR/metric tonne)

(Source: indexmundi, 2016)

Refined copper production in India is currently dominated by three major players: HCL, Hindalco and SIIL. While HCL produces copper metal from the ore produced at its captive mines, Hindalco and SIIL have shore-based smelters and are dependent entirely on imported metal-in-concentrates (IBM, 2012). India is a net exporter of refined copper, though exports have reduced over the last few years, with the expansion of domestic demand and range-bound production. Refined copper exports account for 36% of domestic production. Nearly 50% of India’s copper and alloy exports are to China, Saudi Arabia and the United Arab Emirates. Refined copper imports, on the other hand accounted for less than 4% of the domestic demand for refined copper. Copper sales in India have increased at a Compound Annual Growth Rate (CAGR) of 8% during the last five years,

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whereas refined copper consumption has witnessed a growth of 10% CAGR (IBM, 2013a). The per capita consumption of copper in India is around 0.5 kg as against 4.6 kg in China and 10 kg in developed nations. The consumption is expected to grow by 8-9% in the coming years driven by the government’s increased expenditure in the power and transport sectors. Environmental and Social Impacts of Copper

The process of mining copper starts with extraction of ore from the earth which is then smelted, processed and converted to copper plates. The traditional way of mining copper has resulted in production of many toxic waste products which negatively impact the environment at the mining site. In 2007, GHG emission (CO2 equivalent) from copper production was estimated at 64.7 thousand tonnes (MoEFCC, 2010). The negative environmental consequences of copper mining are substantial and have both acute and chronic impacts on the geography, water, air, vegetation, land and wildlife in and around the mines. Further, when the metal sulphides present in the underground ore are exposed to natural elements, the sulphides are oxidised to sulphuric acid and Acid Mine Drainage (AMD) is caused which leaches toxic metals and contaminates the surrounding areas, thus making the affected area unable to sustain and support life for long time periods. Areas near mines typically have high levels of copper and other heavy metals present in the ground water and surface water, thus affecting the health of mining workers and people nearby (Dudgeon, 2009). The effects of copper mining on the health of workers has been explored and studied extensively and two genetic disorders have been identified, namely Wilson’s Disease and Menkes Disease. Both these diseases arise from mutations in enzymes that are involved in the transport of copper into body cells. Further, constant exposure to chronic high levels of copper is a major cause for lung cancer and coronary heart disease in mine workers. Various studies involving pre and post mortem analysis of workers involved in copper mining have showed the risk of chronic copper exposure on health during various phases of the copper production process (e.g. smelting, converting and plating) (Thomassen et al., 2004; Adam et al., 2001; Rencher et al., 1977).

5.3.2 Approaches to Recycling Copper In light of adopting a greater resource efficiency approach, it is essential to point out that copper is highly recyclable with nearly 90% of the available scrap being recycled across the world. Copper by-products from manufacturing and obsolete copper products are readily recycled and contribute significantly to copper supply. Copper, by itself and in any of its alloys such as brass and bronze, can be used indefinitely as it is completely recyclable. Copper recycling value is so great that premium grade scrap generally has at least 95% of the value of the primary metal from newly mined ore (Copper Development Association, 1998). There are various economic and environmental benefits associated with recycling copper. Recycled copper uses much less energy, about 10GJ/tonne, which is only 10% of the energy used for extracting or mining copper (Copper Development Association, 1998). This energy conservation leads to saving valuable resources such as oil, gas or coal, as well as reduction in GHG emissions. Economically, it is often cheaper to recycle the old copper rather than to mine and extract new or primary copper. Recycling copper helps to keep the prices of copper and


copper products low. However, there is no formal organised metals recycling industry structure in India that can ensure efficient recycling and use of recycled copper. The extent of recycling of ‘old’ or obsolete scrap tends to fluctuate depending on copper prices and other commercial considerations. The recovery rates of old scrap decline when copper prices are low. However, the only drawback to using recycled copper is that it may contain trace impurities that negatively impact its properties. Due to this, appliances requiring high conductivity wire require newly mined, or primary copper or scrap copper that has been refined or re-smelted (Copper Development Association, 1998).

5.4 Nickel

5.4.1 Trends in Production, Consumption and Trade Another metal of importance is nickel as it is widely used in over 3,000 products for consumer, industrial, military, transport, aerospace, marine, and architecture applications. The use of nickel has been expanding rapidly in Asia as nickel containing materials are needed to modernise infrastructure, for industry and to satisfy the growing demand for consumer goods (Nickel Institute, undated). India currently does not produce nickel as there are no major identified nickel ore deposits in the country. A few potential sources for producing nickel in the country have been identified, but these sources are still being explored and no commercial production is currently taking place. One potential source of producing the metal is from lateritic oxides which is only available in Sukinda valley of Odisha state. Nickel also occurs in sulphide form along with copper mineralisation in East Singhbhum district, Jharkhand state. In addition, it is also found in Jaduguda and Jharkhand with uranium deposits and a process is being developed for its recovery. Other places where occurrences of nickel are found are in Karnataka, Kerala and Rajasthan. Poly-metallic sea nodules are another potential source of nickel. As per UNFC, as of April 2010, the total resources of nickel ore have been estimated at 189 million tonnes (IBM, 2013b). Nickel is widely used in the transport and automobile sectors with no single use dominating. It is estimated that the automotive sector accounts for 7-8% of new nickel use, i.e. approximately 90,000 tonnes of nickel each year (Nickel Institute, undated). The chemical composition of batteries is constantly evolving to enhance battery life and performance. In early hybrid cars, Nickel Metal Hydride was the standard battery, but in recent times new hybrids are using lithium ion batteries. These batteries use nickel as an important material in their formulation while some use cobalt. Supply-side Concerns Availability and Prices

The Indian market is mostly dependent upon imports to meet its nickel demand. India imports around 30,000 tonnes of nickel each year. About 85% of Indian imports are in the form of unwrought nickel. Russia is the main supplier of nickel to India and contributes nearly half of its imports, followed by Canada with 9% and Brazil with 7% (FIMI, undated a; b).


Figure 17: Average monthly Wholesale Price Index (WPI) of nickel alloys in India (1995-2010)

(Source: indiastat.com) The majority of India’s consumption is of low nickel content stainless steel which uses 1-4% of the base metal. With increasing use and manufacturing of stainless steel, the demand for primary nickel is going to rapidly increase in the coming years. Nickel import in India is regulated by the Government of India with an import duty of 15% (ICEX, undated). Environmental and Social Impacts of Nickel

Nickel is produced and released in the air by power plants and during mining and smelting processes which over time settles down on the ground through precipitation. As nickel enters the surface water it makes the water acidic and toxic in nature. High nickel concentrations in soils also damage plant life. Nickel in small quantities is essential for humans and animals but when it exceeds tolerable levels it can cause various kinds of diseases including cancer. Exposure to nickel through food, drinking water, and air can cause sickness and dizziness, asthma and chronic bronchitis, lung embolism, birth defects (physical and mental disorders in children), various allergies such as skin rashes and hair loss, as well as heart disorders. Exposure to nickel and its compounds can result in development of dermatitis known as “nickel itch” as well as pneumonitis in mine workers. Further, nickel tetracarbonyl, an intermediate in the Mond process for refining nickel, is extremely toxic in nature and can damage the lungs and heart over long periods of time (HE&W, undated). A US study has found that lung and nasal sinus cancer occur in workers who are exposed to more than 10 mg/kg/day doses of nickel, since nickel and its compounds are difficult to dissolve. Both the US Department of Health and Human Services and the USEPA have classified nickel as a human carcinogen, after studies on workers and laboratory animals (ATSDR, 2005). Nickel mining leads to deforestation, land degradation and dumping of overburden rock mass in the form of large heaps. In many places, mining also causes displacement and loss of livelihood for local communities (Priyadarshi, 2012).


5.4.2 Approaches to Recycling Nickel Globally, nickel is among the most recycled metals and about half of the nickel content of a stainless steel product comes from recycled sources. Nickel is rapidly recycled in many of its applications and large tonnage of secondary or ‘scrap’ nickel is used to supplement newly mined metals. The International Nickel Study group estimates that around 4.4-4.6 million tonnes of nickel bearing scrap are collected and recycled per year. This scrap is estimated to contain almost 350,000 tonnes of nickel (one quarter of the total demand) annually. Most of the collected scrap is stainless steel scrap from the demolition of obsolete factories, machinery and equipment, and consumer electronic goods (Nickel Institute, undated). Overall, approximately 40% of the nickel contained in automobiles and parts are re-used for its nickel content through part reuse and nickel containing stainless steel recycling. Another 40% is recycled into other metals and goes out of the nickel recycling loop. The remaining 20% is generally dispersed, including dumping in landfills (Nickel Institute, undated).

5.5 Plastics and Composites

5.5.1 Trends in Production, Consumption and Trade Plastics are lightweight, comparatively cheaper and durable materials used widely in manufacturing different types of products. They are derived mainly from by-products of fossil fuels. The two major processes used to produce plastics are called polymerisation and poly-condensation, and they both require specific catalysts. In a polymerisation reactor, monomers like ethylene and propylene are linked together to form long polymer chains, where each polymer has its own properties, structure and size depending on the various types of basic monomers used. Plastics are often manufactured as composites. This is achieved by adding reinforcements such as glass or carbon fibres to the plastics, increasing their strength and stability. Plastic foam is a different type of composite which combines plastic and gas. In the second half of the 20th century, plastics became one of the most universally used and multi-purpose materials in the global economy. Today, plastics are utilised in more and more applications/products and they have become essential to our modern economy. In the automobile sector, they are mostly used in manufacturing non-load bearing components and interiors. Their increased application has made vehicles lighter and hence energy efficient, and has added durability due to their corrosion resistant properties. On an average, it is estimated that a 10% reduction in vehicle weight will improve fuel efficiency in the range of 5-7%. Due to growing scarcity in metal resources, increased price competition and tightening fuel efficiency mandates, plastics will find larger applications in manufacturing of automobiles. Plastics and composites have second largest share by weight in automobiles after ferrous metals and alloys (like cast iron, steel, nickel).


Figure 18: Percentage weights of different plastic components to total plastic use in a 1,200 kg car

(Source: Szeteiová, 2012)


Over the years, the Indian plastics industry has emerged as a leading industry and also among the fastest growing in the country. Commodity plastics, comprising of Polyethylene, Polypropylene, Polyvinyl Chloride (PVC), and Polystyrene, find the largest application, followed by engineering and specialty plastics. Between 2008 and 2013, the demand for plastics has grown at an average annual rate of 8%, rising from 5.8 million tonnes to 8.5 million tonnes (MoCF, 2014). With a demand of more than 3.5 million tonnes, polyethylene is the most used plastic, followed by polypropylene at 2.1 million tonnes and PVC close to 2 million tonnes. Polystyrene demand in 2013 has been estimated at 0.25 million tonnes while for other polymers (like polycarbonate, ABS, etc.) demand stands at 0.1 million tonnes (MoCF, 2014).

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Figure 19: Indian production of key plastics (in thousand metric tonnes)

(Source: MoCF, 2014)

India’s production capacity of polypropylene is 2.7 million tonnes while that of PVC is 1.3 million tonnes. These two polymers account for almost 50% of the total plastic use in the auto industry. India has the highest production capacity in polyethylene (at 2.9 million tonnes) out of which 1.6 million tonnes is high density PE, 1 million tonne is linear low-density PE and the remaining is low density PE. Further, production capacity of polystyrene and extended polystyrene are 0.4 and 0.1 million tonnes respectively. India is import dependent for polycarbonates and polyamides and other major engineering plastics (MoCF, 2014). An overall assessment reveals that India is deficient with regard to plastics and quite a lot is imported to meet domestic demand. These are mostly imported from Saudi Arabia, Qatar, UAE, Korea, USA, Singapore, Thailand, Germany, Malaysia, etc. India recorded an increase in annual growth rate in import of plastics from 15% (2001-02 to 2005-06), to 36% (2006-07 to 2009-10). In 2013, India imported 1.2 million tonnes of PE, while the import of PP was 0.45 million tonnes. Further, 30% of India’s demand for PVC (approximately 1 million tonne) is met through imports (MoCF, 2014).

5.5.2 Approaches to Recycling Plastics and Composites Given this growing demand and use of plastics, increased and improved recycling is considered key to ensure sustainability in this industry. Use of recycled plastics results in lesser environmental impacts due to lower energy consumption, reduced GHG emissions and water use. However, formal recycling of plastics is low in India and there exists high potential, particularly when the sector is estimated to grow at 10% over the next 5-10 years. There are also some difficulties associated with recycling plastics as melting of plastics to form new components results in quality loss. Further, due to its high calorific value, plastic is used in the burning process of incineration plants. Thus it continues to be a contested resource for its value as a fuel for energy recovery and its value as a new product.


The materials discussed above refer to metals and minerals (mostly in the form of finished products) that have a high re-use potential (i.e. they can be used in the same form). However, some natural materials such as sand (used in finished product: concrete and mortar), soil (bricks), stone (aggregates), and limestone (cement), cannot be used in the same form once processed into concrete, cement, etc. Thus, a resource efficient approach for such materials consists of reduction in their overall use, finding and innovating suitable alternatives and recycling them to the extent possible.

5.6 Sand

5.6.1 Trends in Production, Consumption and Trade Sand is an essential resource for the construction industry as it is used for making concrete and brick, the key elements of a building. Sand is formed by weathering rocks, a very slow and gradual geological process. However, its journey from the riverbed to a landfill as part of building debris takes only about 50 to 100 years – the average life of a building. Mining of sand in India is largely informal and unorganised. The process of sand mining is easy and does not require any sophisticated infrastructure, making it attractive to small players. This makes it difficult for the State to police the activities of the sand mining industry, which proliferates due to low investments and high returns. Additionally, the unscientific and unregulated extraction of sand from riverbeds has significant environmental impacts. In terms of priority, river sand is the most preferred choice in the construction and brick sector due to the presence of silica, which is inert, hard and durable. This type of sand does not require much processing. Coastal and marine sand is least preferred, as it is fine, rounded and contains salt, which affects the durability of reinforced concrete. Due to the informal and unorganised nature of mining there are no official national figures available on the amount of sand that is being extracted. While some states, for e.g., Andhra Pradesh and Telangana, maintain information of leases granted for sand mining, this is likely to be a significant underestimate since illegal extraction is not fully accounted for. Supply-side Concerns Availability and Prices

Though sand miners are required to obtain a permit from the state government and pay a royalty on the sand sold to the market, this procedure is seldom followed as mining is carried out in a decentralised and unorganised manner, frequently skirting the law. Illegal sand mining is a practice followed in almost every state. While the number of illegal mines is still unaccounted for, there are 12 illegal hotspots of sand mining that have been identified in the country. In the Southern states where sand is scarce, there have been more instances of illegal mining.


Figure 20: Illegal sand mining hotspots in India

(Source: Shrivastava et al., 2012)

Figure 21: Projected sand demand in India

(Source: Aggregate Business International, 2013)

Sand demand for making concrete: It is estimated that per capita consumption of concrete in India is 1.5 tonnes/annum (CSE, 2011). Assuming an average of 28% sand in a concrete mix (considering coarse to fine mix), the sand consumption for concrete per annum is estimated to be 500 million tonnes. Considering 2% losses14 of sand in preparing concrete, gross demand of sand is estimated to be 510 million tonnes/annum. 14 Based on expert consultation with Department of Civil Engineering, Indian Institute of Technology-Madras.

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Sand demand for making mortar: There is no reported data on amount of sand that goes into mortar. However, it is estimated that the volume of mortar required for fixing a standard brick of size 230 mm x 110 mm x 70 mm15 (BIS, 2007) considering 10 mm space from all four sides is 673,200 mm3. With a standard density of dry sand as 1,640 kg/m3 and considering 260 billion brick production per annum in India (CPCB, 2015), sand required for mortar can be roughly estimated to be about 243 million tonnes/annum. Sand demand for making fly ash bricks: Total fly ash utilisation in fly ash bricks in 2014-2015 was estimated to be about 12 million tonnes (CEA, 2015). A standard fly ash brick of 2.7 kg utilises about 46% (1.2 kg) of sand. About 10 million fly ash bricks were produced in 2014-2015 (CEA, 2015). Therefore, sand required to produce all fly ash bricks in India annually can be roughly estimated to be about 0.01 million tonnes/annum. Sand as waste from construction and demolition activities: Total C&D waste generated in the country in 2015 is estimated to be 716 million tonnes16. Based on a study conducted by Technology Information Forecasting and Assessment Council (TIFAC, 2001), the estimated amount of sand as part of various components, i.e. concrete, bricks, mortar etc. is 153 million tonnes/annum. Governments have also imposed royalty on sand to regularise the sand market in India.

Table 6: Royalty rates on sand in different Indian states

S. No. State Royalty Rate (INR) Source

1 West Bengal 35 per mm3 West Bengal Minor Minerals Rules, 2002 (Amended 2011)

2 Karnataka 60 per metric tonne Karnataka Minor Minerals Concession (amendment Rules, 2014)

3 Madhya Pradesh 33 per mm3 Minerals and Resources Department, Government of Madhya Pradesh, 2015

4 Gujarat 30 per metric tonne Gujarat Minor Minerals Rules, 1966 (Amended, 2010)

(Source: GIZ, 2015b)

It is difficult to put one firm price on sand due to the existence of an underground market and price fluctuations caused by bans and restrictions. In the absence of any marketable alternative material, the price of sand is on an upward trajectory due to persistent and rising demand. Due to illegal extraction of sand, state governments lose out on substantial revenues that are generated from the sale of this material. Environmental and Social Impacts of Sand

Though sand miners are required to obtain a permit from the state government and pay a royalty on the sand sold to the market, this procedure is seldom followed. Some reports have indicated an amount of INR 10 billion (USD 150 million) being generated from illegal extraction of sand 15 Length x Width x Height. 16 Author’s calculations based on survey of 10 cities across India (see GIZ, 2015b).


in India in 2011 (CSE, 2012), but comprehensive data on sand reserves is unavailable. Hence the lack of inventory of sand and wide variation in rates across the country becomes a barrier in examining the demand and supply gap. The latest Sustainable Sand Mining Guidelines 2016 have suggested States to set up District-level Sand Monitoring Committees (Sand Mining Administration Regulation and Transport System) to monitor and regulate illegal and unscientific mining. Available estimates suggest that about 1.4 billion tonnes of sand will be required by the year 2020. Thus, future projections clearly indicate that there is need for alternatives of sand to satisfy its growing demand. The second concern with sand mining is its environmental impacts. The Geological Survey of India (GSI) lists the ecological impacts related to riverbed sand mining, including alteration of in-stream floral and faunal habitat caused by increase in river gradient, suspended load, sediment deposition, increase in turbidity, change in temperature, etc. The environmental impact of sand mining on the river is long term; studies have suggested that rivers remain in their early stage of recovery even after 20 years of sand mining cessation (Bhushan and Banerjee, 2015). Many instances of the detrimental impacts of sand mining have been recorded. A visible impact of sand mining was observed in the Yamuna River flowing through Gautam Budh Nagar, Uttar Pradesh. The river shifted by almost 500 metres towards manmade embankments made to protect surrounding areas from floods. The cause of the shift was illegal sand mining up to a depth of 15 to 20 feet (almost double the legal limit) within 30 metres of the embankment (Keelor, 2013). In another instance, the Neyyar River in Thiruvananthapuram district, Kerala, has changed its course due to continuous in-stream and flood plain sand mining. The riverbanks were widened by 69 metres in just 48 years causing a loss of almost 50 hectares of fertile land (Shaji and Anilkumar, 2014). Any damage to the river has a direct impact on the surrounding communities. A change in the course of the river can damage the surrounding agricultural land and expose adjacent populations to floods. Further, loss of agricultural land has a direct impact on the socio-economic conditions of farmers. These conditions often compel farmers to search for other income opportunities; sometimes they are even temporarily contracted in illegal sand mining. This opportunity lasts only till sand is available in the area after which they lose their livelihoods again.

5.6.2 Substitutes of Natural Sand Given the trends of illegal and unscientific mining, several states have either imposed a ban on sand mining on certain rivers or imposed a blanket ban on sand mining across the state. Thus, the market prices of sand vary widely from region to region due to existence of underground market and price fluctuations caused by bans and restrictions. This has pushed the government to attempt a market shift towards alternatives. The new draft guidelines released by MoEFCC (2015) suggest promoting Manufactured Sand (m-sand) as an alternative to natural sand. M-Sand is produced by crushing hard granite stone to a suitable particle size. It also suggests using quarry dust, as well as accumulated sand and gravel at the bottom of dams as alternatives to sand. The guidelines also highlight the steps taken by the Government of India for use of alternatives. These include permitting the use of slag (waste from the steel industry), fly-ash (waste from coal-based thermal power plants), and crushed over-burnt bricks and tiles (waste from clay brick and tile industry) in plain cement concrete as an alternative to sand/natural aggregate via concrete


code IS 456. In recent interventions, C&D waste has also been used as a possible alternative source of m-sand. Several studies (Pilegis et al., 2016; Joe et al., 2013) have indicated that the compressive and flexural strengths of manufactured sand concretes are higher than those made of natural sand. The results of the studies reveal that the angular shape of m-sand has a positive effect on aggregate interlock and hence leads to improved bond between the cement and aggregate particles. Thus the studies have proved that with the replacement of 50% of natural sand by M-Sand, the building material has a higher compressive strength, higher split tensile and flexural strength (Joe et al., 2013). With a plethora of issues plaguing it, the sand market has slowly started to respond to these alternatives. Many southern states of India, where impacts of sand mining are most evident, have started shifting towards m-sand. The Department of Mines and Geology, Karnataka has identified 52 granite blocks where granite can be quarried and crushed to produce m-sand (Ashwini, 2015). There are around 100 m-sand manufacturing units existing in Karnataka (Govind, 2015). Tamil Nadu and Kerala also have manufacturing units of m-sand. Though the market and the government are slowly moving towards alternatives, the shift needs to be expedited. Rampant sand mining continues to destroy rivers and river systems while the construction industry still faces shortages of sand. Use of alternative materials to sand will not only protect the rivers but also relieve builders from relying solely on natural sand for construction purposes.

5.7 Soil

5.7.1 Trends in Production, Consumption and Trade Fertile topsoil is one of the most exploited natural resources in India. Similar to sand, soil is also formed by constant weathering of rocks. About 56% of the total land area in India is classified as agricultural land which relies on soil fertility. Alluvial, red and black soils cover majority of land area in India and in addition to agriculture, these soils are used for road construction as base materials, and for manufacture of clay bricks. Soil is classified as a minor mineral in India. Based on its end use, soil is further sub-categorised as ‘Brick Earth’ and ‘Ordinary Earth’. As the name suggests, brick earth is used for brick making, while ordinary earth is used mainly in road construction. Soil is also used for back-filling purposes but for the purpose of the study, soil use was assessed only for building and construction purposes.


Figure 22: Overlap of major agricultural soil types with large-scale brick production in India

(Source: Adapted from Development Alternatives, 2012 and Maps of India, 2014)


According to MoEFCC, the legal limit for soil mining in India is 2 metres below ground level (MoEFCC, 2013). Together, alluvial, black and red soils cover almost 89% of the total land area of India, which is equal to about 2.91 million km2. Therefore, soil available for legal extraction for brick making per year is about 6 billion m3. A large number of brick kilns are situated in the Indo-Gangetic plains of India which are rich in fertile alluvial soil. These soils also cover the


arable land of India; thus there is a competing use of soil for agriculture and brick making. Though the top soil in Indo-Gangetic plains replenishes over time as the rivers are perennial, the rate of utilisation of soil for brick making is greater than the rate of replenishment; hence there is an over-exploitation of soil in this region. As mentioned earlier, soil as a resource is used in agriculture, brick manufacturing and road making. There are no exports and imports of soil in India. Every year about 350 million m3 of soil is required to produce bricks (GIZ, 2015b). However, with respect to road making, the soil required cannot be accounted due to lack of data available on amount of land that is allotted for excavation of ordinary earth. Environmental and Social Impacts

Brick kilns are typically found in concentrated clusters in India. Such concentration of kilns in an area puts immense pressure on land for soil resources. The norms that exist for soil extraction are seldom followed. In most cases, the depth of extraction exceeds 2 metres. As a result, the area suffers from land degradation. Since soil mining is an unorganised industry, mining above the legal limit is a common practice. In many cases, the mined pits are not back-filled, creating a long-term impact on the land. It is estimated that soil extraction for brick making is denuding 0.17 million km2 of land every year (GIZ, 2015b). Brick kilns are also huge contributors of CO2. CPCB estimates emissions from 140,000 kilns operating in the country to be about 66 million tonnes (CPCB, 2015). Other harmful emissions from brick kilns include carbon monoxide, sulphur dioxide, nitrogen oxides and suspended particulate matter (SPM). Coal used for brick firing also leaves behind bottom ash as residue. The air pollution and bottom ash generated causes considerable health problems, especially related to respiratory health, while also causing damage to property and crops (CPCB, 2015).

5.7.2 Substitutes for Soil Mining of soil for brick earth has become an environmental and social issue across the country. To streamline this unorganised sector, the Government of India has put in place certain regulations. For instance, the MoEFCC office memorandum which restricted mining of soil up to 2 metres below normal ground level also restricted any soil mining activities within 1 km from the boundary of national parks and wildlife sanctuaries. These restrictions have greatly affected small-scale brick manufacturers. One of the solutions to this is changing the input used for brick making; for example, by using waste material such as fly ash. To promote the use of fly ash, MoEFCC issued a notification (S.O. 763 (E)) in the year 1999, which mandated the use of fly ash in building materials for construction projects falling within a 100 km radius of coal or lignite based thermal power plants. The market responded positively to the sustained efforts of the government, and currently about 12% of total fly ash generated in India is used for the production of bricks and tiles (CEA, 2015). This needs to increase substantially if the pressure on soil resources is to be reduced.


5.8 Stone (Aggregates)

5.8.1 Trends in Production, Consumption and Trade India has rich deposits of stones suitable for construction activities. Historically, stone has been the mainstay of Indian architecture as a load bearing material. It has been used as dimensional stones in famous monuments like the Taj Mahal, Qutub Minar, Red Fort, Sun Temple and many other ancient structures across India. Construction practices have changed in modern times and concrete took over dimensional stones as building material. Concrete utilises stones as coarse aggregates (crushed stone). Granite, basalt, limestone (other than cement grade), marble, quartzite and sandstone, all of which are used in the construction sector, either as crushed aggregates or dimensional stones, cumulatively contributed about INR 74 billion (USD 1.1 billion) to the production of minor minerals in 2010-2011 (Ministry of Mines, 2013). This was the second largest group among minor minerals in the country. Supply-side Concerns Availability and Prices

Stone used for building purposes are categorised as minor minerals as per section 3(e) of the Mines and Minerals (Regulation and Development) Act, 1957. They are used in construction as aggregates for concrete mixing and as dimensional stones, i.e., as blocks or slabs of stone for roofing, flooring, tiles and decorative uses. India possesses a wide spectrum of stones that include granite, marble, sandstone, limestone, slate, laterite and basalt, spread across the country. Though granite and basalt deposits are fairly distributed across the country, hilly states where no granite or basalt resources are available are vulnerable to supply constraints due to distance from the granite resources and difficulty in transportation of processed granite. Additionally, there is a growing emphasis on use of granite as m-sand, which will further create pressure on granite supplies. The Twelfth Five Year Plan estimates that an additional capacity of 1 billion tonnes of concrete is to be created by 2027 to meet demands from road infrastructure and housing. Taking this into account, the coarse aggregate requirement in the year 2027 shall range between 2-10.3 billion tonnes. Apart from concrete, the demand for coarse aggregate required as road base material will also increase in view of the recent commitment of the Indian government to build 30 km of roads per day.


Figure 23: Granite producing states and basalt deposits in India

(Source: Geological Survey of India, 2015; IBM, 2015a)

Environmental and Social Impacts

The granite resource as on 2010 reported by IBM (2015c) is about 126 billion tonnes17. But these are locked resources and exploration is needed to convert them to mineable reserves. This would require extensive mining and crushing operations to produce processed stones to be used as aggregates. Mining and crushing of stones have major impacts on air quality, soil, noise, and land. Stone crushing units not only emit particulate matter thereby causing air pollution, the heavy equipment used in these units causes intense noise pollution as well. Quarrying operations also cause destruction of natural ecosystems and wildlife habitats, as well as disruption of hydrological resources. 17 Considering density of granite as 2.75 tonnes/m3


Environmental impacts of stone mining are closely linked with social impacts around the mining and crushing areas. Stone quarrying has significant land use implications – quarrying of stone is often a source of conflict over traditional uses of land. The clearing of land to develop access roads and to open up mining sites reduces animal grazing areas and affects traditional livelihoods.

5.8.2 Substitutes of Stone Aggregates Even if stones are to be replaced by waste material, crushing of waste will be required to break it into suitable size aggregates to be used in concrete. Therefore, improving the processes of crushing units for better environmental performance should become the prime focus to reduce the pollution arising from their operations. Using alternate materials for aggregates in place of natural stones is a way forward in reducing reliance on mining for this resource. It has been concluded that recycled aggregates can be readily used in construction of low-rise buildings, concrete paving blocks and tiles, flooring, retaining walls, approach lanes, sewerage structures, sub-base course of pavements, drainage layer in highways, and dry lean concrete (Singh, 2007). India generates 716 million tonnes18 of C&D waste per annum. Thus, there is a huge potential of C&D waste to be used as coarse aggregates. In relation to this, steps have been taken by the Bureau of Indian Standards (BIS) to formulate standards for using C&D waste as coarse aggregates in concrete.

5.9 Limestone

5.9.1 Trends in Production, Consumption and Trade Limestone forms due to the accumulation of shell, coral, and algal debris or precipitation of calcium carbonate from lakes or ocean water. The process of limestone formation is slow and takes millions of years. Major constituents of limestone are calcium carbonate and magnesium carbonate. India has abundant resources of limestone distributed widely across the country. It is one of the most extracted minerals because of its varied uses in important industries like cement, iron and steel, chemical, etc. Supply-side Concerns Availability and Prices

Total resources of limestone of all grades in India were estimated to be 185 billion tonnes in 2010. Out of the estimated resources, 15 billion tonnes were under mineable reserves19 and 170 billion tonnes were under remaining resources20 (IBM, 2015d).

18 Author’s calculation based on survey of 10 cities (see GIZ, 2015b). 19 Limestone deposits that are accessible for mining. 20 Limestone deposits remaining after subtracting reserves. These deposits are not accessible for mining.


Following are the uses of limestone in India: • Cement industry uses limestone as a raw material for clinker (94%). • Iron and steel industry uses it as a slag former, i.e., to remove impurities from iron ore

and to lower the temperature of melting (4%). • Chemical industries use limestone for manufacture of bleaching powder (1%). • Limestone also finds its use in industries such as fertiliser, sugar, aluminium, alloy steel,

ferro-alloys, foundry, etc. (1%) (IBM, 2015d). The percentages represent the limestone consumption share of the industry in 2011-2012 (IBM, 2015d). Out of the present available resources of cement grade limestone, about 30% falls under forest, Coastal Regulation Zone (CRZ), and other regulated areas, which roughly translates to 34.7 billion tonnes (Ministry of Commerce and Industry, 2011b). The huge investments planned by the Government of India in the infrastructure sector will require large quantities of cement grade limestone to meet the necessary cement demand. In this scenario, cement grade limestone may be completely exhausted by 2058 at the latest. It is clear that limestone resources are fast depleting. Therefore, there is a need to shift to alternative materials for cement production. Blended cement made of fly ash and other industrial and clay mining waste is a good option to reduce limestone consumption in cement manufacturing. Environmental and Social Impacts

Social and environmental impacts of limestone mining are very similar to those of stone mining. Land degradation and water contamination are major concerns associated with limestone mines. According to a recent study in Meghalaya state, surface water near limestone quarry was found to have elevated levels of pH, electrical conductivity, total dissolved solids, total hardness, alkalinity, calcium and sulphate concentrations, thus affecting local water supply (Lamare and Singh, 2014). With 30% of limestone reserves being beneath regulated areas, the potential for loss of forest cover and land degradation is high. Mechanical processes used for crushing limestone to appropriate sizes for transportation are a continuous source of dust and noise. Additionally, limestone mining also contributes to CO2

emissions. There are no national figures available on Global Warming Potential (GWP) of limestone mining in India. However, reported global average of limestone mining GWP is 0.0021 kg CO2 per kg of limestone mined21. Therefore, it can be roughly estimated that CO2 emissions from limestone mining in India was about 0.6 million tonnes22 in the year 2012-2013.

5.9.2 Approaches for Reduction in Limestone Use Cement production consumes more than 90% of limestone mined in the country. Thus it is the key industry to achieve resource efficiency in limestone use. Government led interventions have mandated and standardised the use of fly ash in cement production to replace limestone. A minimum of 30% fly ash by weight is allowed to be used in cement as per the notification. 21 Source from Ecoinvent Database of SIMAPRO software. 22 Production x GWP.


Proactive adoption of fly ash rules by cement industry has resulted in 69% share of fly ash based cement currently being manufactured in the country. Another type of standardised cement that conserves limestone is slag-based cement. Since the availability of slag varies from region to region, slag-based cements occupies less than 1% share in cement production. India’s plans to rely less on coal-based power may also interrupt the supply of fly ash in future. The concrete dominated construction sector and pressing needs of housing and infrastructure would only drive increased demands of cement in the future. Due to sheer volumes of cement needed, the industry needs to move beyond fly ash and slag-based cements and away from conventional Portland cements which consume 95% of limestone per unit of their production towards new blended/composite cements in which limestone is replaced with supplements widely available in the country. One such initiative of developing a blended cement which utilises 50% less limestone as compared to conventional cements has been taken up by a team of IITs, incubation centres and international research institutes. The blended cement uses china clay as a supplement to limestone. The china clay resource mapping study shows that it is widely available in India. Cement durability studies conducted by various IITs and research institutes in Switzerland show that properties of this cement are comparable to that of general purpose cements (Bishnoi et al., 2014). Demonstration buildings in India have been constructed using this blended cement. Sustainability aspects of the cement are discussed in the next chapter. There are many more research initiatives being taken up by the cement industry as well, for reducing dependency on limestone. Limestone, though abundantly available in the country, is still finite. As discussed earlier, most of the available limestone lies beneath forests. Unchecked mining of limestone in view of huge demand would result in disrupting ecological balance and lead to social injustice to people living on limestone rich lands. Thus, standardisation and adoption of blended cements which reduces use of limestone is a promising approach towards achieving resource efficiency. In addition to reduction/recovery/reuse or recycling of materials in the manufacturing of products, resource efficiency also extends to the nature of use of the product. This brings into perspective the manner in which we perceive the use or function of a good or service. While it is clear that decisions for use of alternative materials/technologies or recycling or recovery is reflective of the design stage of the life-cycle, the concept of ‘collaborative consumption’23 is relatively new concept in India. This concept of ‘shared economy’ allows for complementary and equally valued strategy of sustainable consumption, where goods must be used longer, and a preference for services that support collaborative consumption, i.e. ‘using rather than owning’ strategies. These have the potential to conserve resources, where the aim is to achieve the prolongation and optimisation of the product utilisation phase. This usually takes place in the form of services that replace products. For example, rental or leasing models are able to satisfy consumer needs, thus offering an alternative to purchasing a new product (Leismann et al., 2013).

23 Collaborative consumption refers to the concept of reinvention of traditional market behaviours of renting, lending, swapping, sharing, bartering, gifting, mostly through technology and using the internet as the exchange platform. Refer to Leismann et al., (2013).


6.1 Introduction Resource productivity at a macroeconomic level depends on various factors. An economy with large resource-intensive sectors has usually lower resource productivity values in terms of DMI or RMI than an economy with large service and research sectors, which are, by and large, less resource-intensive. Furthermore, the mix of resource sources largely influences resource productivity in the sector. So this makes it important to not limit the focus to comparing the absolute levels of resource productivities of various countries, but to focus on improvements and productivities of sectors, and the products that belong to these sectors. Additionally, the economic importance of a resource is determined on the basis of its application in key industrial and strategic sectors and the extent of its substitutability by other resources. In this chapter, we bring in the focus on three hot-spot sectors – automotive, construction and IT equipment manufacturing – along the different life-cycle stages of the products belonging to these sectors to be able to integrate resource efficiency from the stage of raw material production. These sectors have high economic importance as well as are facing high consumption of materials as inputs.

6.2 Automotive Sector

6.2.1 Background Automotive industry occupies a prominent place in the Indian industrial scenario with extensive forward and backward linkages, having grown at the rate of 14.4% over the past decade, making India the world’s sixth largest producer of automotives in terms of volume and value (IGEP, 2013). The industry consists of both automotive manufacturers and auto-component manufacturers. There are more than 35 automotive manufacturers and a large number of auto-component manufacturers in the country. The Indian auto-components industry can be broadly classified into the organised and unorganised sectors, with the organised sector catering to the Original Equipment Manufacturers (OEMs) and consists of high-value precision instruments, while the unorganised sector comprising the low-valued products and catering mostly to the aftermarket category. The automotive industry as a whole contributes 7% to India’s GDP and accounts for 7-8% employment generation in the country. The country has been experiencing one of the highest motorisation growth rates in the world over the last decade. There were over 200 million motorised vehicles registered by 2015 (SIAM, 2015). Considering an insatiable demand for vehicles in an economy that is expected to grow at an average of 7% for the next 20 years, the Indian auto sector will require disproportionate

Chapter 6: Approaches for Selected Sectors


amounts of natural resources which could lead to resource constraints in an economy that already has supply-side constraints. Estimates of the material requirements in the automotive sector in India, considering the current use of major resources in automotives reveal that if the current production trend continues over the next 15 years with no substantial resource use reduction and/or substitution, the total demand for six major resources, i.e. iron and steel, aluminium, copper, plastics/composites, zinc and nickel would increase from almost 14 million tonnes in 2015 to more than 102 million tonnes by 2030 (GIZ, 2015a). This translates into an urgent call to decouple potential high growth rate of the automotive sector from increasing resource use by promoting resource efficiency and use of secondary raw materials, thereby enhancing sustainability. As per an estimate from SIAM, with efficient recycling, by 2020 India can hope to recover over 1.5 million tonnes of steel scrap, 0.18 million tonnes of aluminium scrap and 0.075 million tonnes each of recoverable plastic and rubber from scrapped automotives (Automotive Product Finder, undated). The future distribution of different modes of transport – the modal split – has a significant influence on future resource demand. Heavy reliance on private vehicles would naturally mean much higher levels of resource requirements as compared to reliance on public transport options. Thus, due to the 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 or consume lower quantities of fossil fuels, reducing trip length or duration, and promoting clean fuel technology for motorised modes, etc. However, it is a challenge to meet the rapidly rising demand for mobility with an efficient and cost-effective public transportation infrastructure and system. The subsequent sections analyse the existing provisions in the standing policies of the government which promote resource efficiency and use of secondary raw materials, and also highlights the support that is required to improve the same. The analysis is structured along the different life-cycle stages of the product (automotives) in the sector.

6.2.2 Raw Material Production Automotives require a wide variety of raw materials for their production, including iron, (which is made into steel), aluminium, glass, plastics (made out of petroleum products), rubber, and special fibres. To improve resource efficiency in the sector, it is important to ensure that the mine exploration technologies being used are not obsolete. The technologies for processing some of the ores (including lower grades of iron ore or energy efficient processing of titanium, a high value mineral of which India holds large reserves) are still not available or in use in India. Miners rake in the profits of exporting cheaply extracted ores but have not invested in technologies to move up the value chain. There are provisions already laid down by the National Mineral Policy 2008, Minerals and Mining Development Regulatory Act 2015 and the Sustainable Development Framework 2011 that encourage efficient extraction of minerals. However the policies and framework need to put adequate emphasis on specific minerals and how the extraction efficiency could be enhanced including for those minerals that are important for the automotive sector.


There should also be mandatory provision of a holistic mining plan that looks not only at the extraction of the primary mineral, but also at the commercial extraction of associated minor metals that often occur in association with the major metal in the mineral. This is of high significance especially in the case of strategic minerals such as Molybdenum and Selenium from Copper ore, Cadmium and Germanium from Zinc ore, and Gallium and Vanadium from Bauxite. Developing such a holistic mining plan would clearly reduce wastage of strategic minerals. The supply of the raw material should also be enhanced by using more of secondary raw materials. In case of India, there is an import duty that has been levied (to encourage the recovery of domestic scrap) on the import of secondary raw material (@ of 2.5% for metal scrap) which makes the use of these uncompetitive in both domestic and export markets. Moreover, considering the huge quantities of material requirement in India, imposing import duties on scrap may not only fail to encourage domestic recovery of scrap, but also generate shortages of scrap. In this context, lowering the import duties would encourage the usage of secondary raw materials. The use of secondary raw material should be encouraged and mainstreamed by the OEMs, which will enable the various auto-component manufacturers to use the same in the manufacturing of the components. Although the government is gearing up for faster adoption and manufacturing of Electric and Hybrid Vehicles in India, under the National Electric Mobility Mission 2020, the situation regarding availability of the rare earths used in the permanent magnets of electric motors and batteries such as dysprosium, neodymium and lithium is critical. Here, the government could commission a study aimed at identifying resource-related shortages in the electric mobility system as a whole, in order to draft well directed policies.

6.2.3 Manufacturing and Assembly There are many initiatives already by the Government of India that help promote resource efficiency in production/manufacturing of automobiles and to some extent use of secondary raw materials. The Auto Policy of 2002 permits the automatic approval for foreign equity investment up to 100% in the manufacturing of automotive and its components and can bring in technology transfers (for more efficient technologies and those enhancing use of secondary raw materials), thereby encouraging the domestic manufacturers to learn about the efficiency gains through diffusion of knowledge in the long-run. The Auto Policy 2002 also allowed for weighted tax deduction under I.T. Act, 1961 for sponsored research and in-house R&D expenditure. Further, for every 1% of the gross turnover of the automotive manufacturing company that is expended during the year on Research and Development for adoption of low emission technologies and energy saving devices, there is a rebate on the applicable excise duty. The Twelfth Five Year Plan of the Government of India has emphasised the need to achieve global standards in operational efficiency and for this the government also seeks to promote international cooperation in emerging areas of automotive technologies.


Initiatives that have also been taken by the Indian government for providing the financial support for technology upgradation in the automotive sector are helpful in the manufacturing stage to bring in resource efficient technologies and use of secondary raw materials. These include Creation of Technology Upgradation & Development Scheme (TUDS) for Auto Components and setting up of the Auto Component Technology Development Fund (ATDF), to help auto-component companies in accessing loans at reduced rates of interest for research & development activities, upgradation of process, and technology acquisition. This kind of financial support aims to bring in an element of differentiated support for technologies that promote resource efficiency and use of secondary raw materials. Automotive Component Cluster Development Programme for process and productivity improvement of automotive component manufacturing companies helps to strengthen the small and medium-sized automotive component manufacturers (mainly Tier-2 and Tier-3 and other lower tier automotive component suppliers) in the automotive value chain across the country to overcome the challenges related to low productivity, insufficient and inconsistent quality, scalability and to become more efficient, reliable and cost-effective suppliers. However, it is important to enhance and support the efforts for technology upgradation as well as providing training and capacity building for improving resource efficiency in production stage of life cycle, in the absence of which about 20% of material gets wasted. Financial incentives need to be designed in order to encourage the adoption of clean and resource efficient technologies which not only ensure that products have no defects but the process through which a product is made has zero adverse environmental and ecological effects. Offering appropriate incentives in this regard is critical for the success of “Zero-Defect, Zero-Effect” campaign initiated by the Government of India. This will also promote the use of secondary raw materials in production of automotives (GIZ, 2015a). To support the efforts of the government, auto manufacturers should also try to adopt zero-waste-to-landfill policy which includes developing zero-waste policy, carrying out waste audits, developing supplier partnership and identifying opportunities for closed-loop recycling. The government and the auto industry should encourage and support schools and universities to collaborate and design short-term industry relevant courses (GIZ, 2015a). There is a need to establish synergy between OES and OEMs, and some regulation ensuring fair amount of incentives to enhance the use of secondary raw materials and bring about process and resource use efficiency (GIZ, 2015a). OEMs also need to consider various factors during the product design that help reduce the use of hazardous substances and those which facilitate the easy dismantling for reuse, remanufacturing, and recycling at the end-of-life stage. Government should facilitate and/or incentivise the auto-component manufacturers for creation of shared infrastructure and capacity development for R&D and testing labs. Schemes run by institutions like National Manufacturing Competitiveness Council and some Ministries like Micro-Small and Medium Enterprises can be tapped to meet financial requirements of setting up such facilities. There seems to be a lack of awareness about such schemes in the industry. For instance, SME Growth Fund of SIDBI Venture Capital Limited (SVCL) can be tapped to meet the financial requirements for trans-nationalisation of auto-component SMEs. Unlisted companies are the focus of this Growth Fund. The Risk Capital Fund in 2008-09 proposed budgets to be administered by SIDBI Venture Capital Limited that can help Indian auto-


component industry in acquisition of high-end technology and manufacturing facilities outside India (GIZ, 2015a).

6.2.4 Use and Service Auto Fuel Policy, 2003 provided the base to the government for drafting a roadmap on long-term emission and fuel availability. The roadmap focuses on the availability and usage of various auto fuels (including LNG, hydrogen and biofuels) for emission control, energy security and fuel efficiency. It also promotes eco-friendly cars in the country such as CNG-based vehicle, hybrid vehicle, and electric vehicle and imposes mandatory blending of 5% ethanol in petrol. The Bureau of Energy Efficiency (BEE) had 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 (CAFE) gave 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 km/litre. Under this standard, cars were to be assigned labels ranging from one-star labels to five-star labels depending on their fuel efficiency (GIZ, 2015a). The Automotive Mission Plan 2016-26 (AMP 2026) recognises that vehicles need to comply with global standards of safety in line with the United Nations Economic Commission for Europe (UNECE) World Forum for Harmonisation of Vehicle Regulations. These standards while ensuring safety, do not compromise on improvements in fuel efficiency. What is additionally required here are standards and labelling focusing on aspects of resource efficiency and use of secondary raw materials in the production of automotives to establish quality and environmental criteria. Voluntary Vehicle-fleet Modernisation Programme (V-VMP)24 aims at incentivising people to retire their old vehicles that were bought before March 2005, or are below BS IV norms (The Pioneer, 2016). Under the programme, people surrendering old vehicles will have three-fold benefits: (i) scrap value from the old vehicle; (ii) special discount by the automotive manufacturer and (iii) partial excise duty exemption; together these benefits amounts to 8-12% of the new vehicle cost. According to the Ministry, the proposed policy has the potential to reduce vehicular emissions by 25-30% and save oil consumption by 3.2 billion litres a year. It is estimated to result in domestic steel scrap generation worth INR 55 billion to substitute imported scrap. The scheme needs to be scrutinised from two angles: (i) financial implications, i.e. whether the revenue generated from new sales would be enough to compensate the revenue losses from excise duty; (ii) whether End-of-Life Vehicle (ELV) management could be done in a way which ensures higher recovery rate, given the fact that the scheme is expected to retire a huge number of almost 28 million vehicles (PTI, 2016). There will be a need for significant capacity building of those who would be engaged in the ELV management. 24 V-VMP is currently under the process of finalisation.


6.2.5 End-of-Life Vehicle Management Currently, retired vehicles in India usually end up in the unorganised sector where after dismantling the auto components are either refurbished or sent for recycling. The efficiency of material recovery is quite low as the workers are not trained and lack the equipment to dismantle and recycle auto components. While some aspects of ELV recycling are addressed by vehicular policy, environmental policy as well as the different waste management rules, other aspects are not yet covered by the law. To regulate the sector, CPCB has recently come out with the “Guidelines for Environmentally Sound Management of ELVs”. The guidelines advocates for disposing of ELVs in an environmentally friendly manner and recommends a system of “shared responsibility” involving all stakeholders – the government, manufacturers/producers, recyclers, dealers, insurers and consumers. The rules emphasise on the need for embedding the extended producer responsibility within the model of shared responsibility (CPCB, 2016b). The embedding of the EPR should start from the design stage itself along with focussing on the use and end-of-life stage. Also, it is important to recognise that EPR should not been seen as a one-time responsibility, but a continuous process that fosters resource efficiency. CPCB guidelines also explicitly note that since there are large quantities of metal and other materials in the ELVs that are no longer fit for transportation purposes, these resources if salvaged or recycled, can be once again fed into the economy. In turn, the use of primary materials can be reduced and pressure on the environment eased. The Automotive Industry Standards (AIS 129) for ELVs set targets for the minimum reuse and recycling or reuse and recovery rates of vehicles; and make provisions for the type of vehicles approved with regard to their reusability, recyclability and recoverability. However, AIS 129 standards need to be further developed into a regulatory framework in order to ensure compliance by the unorganised sector, where much of the recycling is done and material recovery rate is quite low. Training and capacity building of the unorganised sector along with enhancement of technology and equipment used is going to be key as it can build upon the pre-existing strengths of the sector by overcoming their shortcomings. There have been initiatives for setting up scientific and safe vehicle dismantling facilities in India, but these need to be created across the country and not just be limited to one or two set ups. In 2011, NATRiP facility, which is an automotive dismantling centre - Global Auto Research Centre (GARC), under the National Automotive Testing and R&D Infrastructure Project (NATRiP) at Oragadam, near Chennai25 was set up by the Ministry of Heavy Industries (MoHI) and SIAM. This centre is expected to engage in scientific dismantling and improve resource recovery, management of hazardous waste and encouraging use of secondary raw materials by the OEMs. The non-availability of similar facilities affects the requirements of SME auto-components manufacturers (GIZ, 2015a). Such centres are crucial for training personnel who could then engage in scientific dismantling and thereby achieve better resource recovery. There have also been some private initiatives taken to promote recycling of automobile parts and recovery of material and other resources from ELVs. It has created a business model where incentives are given by the company to help overcome the demand and supply side challenges. 25 Chennai is one of the hubs of automobile and auto-components manufacturing in India.


The incentives include offering scrap value, discount on purchase of new/used car, discount in insurance of the purchased car and in auto loans. The details of this business model are presented in a later chapter. Further, there should be rules in place which mandate the automotive manufacturers to frame the Standard Operating Procedures (SOPs) for dismantling every model and type of vehicle, which would also encourage them to reconsider the material and design in making of their respective automotives. The SOPs could then be shared with the unorganised sector which will enhance efficiency in the recycling process. An incentive structure needs to be designed to make recycling a reality. Fair incentives need to be given in the form of paying the last ELV owner a salvage price according to the value of the ELV. Insights from experiences highlight that this largely remains a market driven process, where the collector pays the last owner (Ahmed et al., 2014). However, there could exist financial barriers such as long payback times, (perceived) high costs and access to capital for the socially and environmentally responsible dismantling and recycling to flourish, making it hard for a business model to come up and/or sustain itself. What would then be required is support from the government in the form of viability gap funding (financial support, concession on land and equipment) that encourages the players (new or existing ones willing to change) to come to the market. The business model once set up will have to upgrade technology to ultimately bring down prices (convert new technology into economic value) and enable competition in the longer run. There could also be setting up of dismantling and recycling benchmarks that all players including the vast informal sector has to abide.

Even if there is no resource shortage for manufacturing of electric and hybrid vehicles, before the large-scale implementation of National Electric Mobility Mission 2020, the government needs to ensure high-grade recycling capacity with the aim of recovering lithium, cobalt and other metals used in traction batteries in electric and hybrid vehicles which is important both from an ecological and industry-specific point of view.

6.3 IT Equipment Sector

6.3.1 Background With a turnover of around USD 150 billion in 2015 and exports accounting for 67% of the revenue, the IT and Business Process Management (BPM) sector in India contributes around 9.5% of the GDP (NASSCOM, 2015). It is projected that the Indian IT and Information Technology Enabled Services (ITES) industry is likely to grow to about USD 300 billion by 2020, focusing on areas like e-commerce, software products, and the IT market (Shine, 2015). Around 375 million people in India are using the internet and this number is expected to reach 459 million in 2019 (Statista, 2015). Indian IT sector’s core competencies and strengths have attracted significant investments from major countries. The computer software and hardware sector in India attracted cumulative Foreign Direct Investment (FDI) inflows worth USD 21.02 billion between April 2000 and March 2016, according to data released by the Department of Industrial Policy and Promotion


(DIPP). India is the topmost off-shoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. Recognising the importance of the sector and its significance, it is important to promote resource efficiency in the IT sector in the country. This would include minimising energy consumption by the sector through development of innovative energy-saving technologies, and promote use of more energy efficient products. The advent of information societies in both developed and developing countries is leading to increasing IT device/systems power consumption rapidly, which is becoming a global issue. Also, it will be important to enhance the IT sector’s contribution to energy efficiency such as improved productivity by the introduction of IT driven energy saving measures. IT has been actively used in quite a large number of fields including industry, transportation, business and homes, and it greatly helps to reduce the environmental burden by improving the operational efficiency of other fields.

6.3.2 Raw Material Production In case of the IT sector, since the rare earths and other strategic metals offer great potential for technological, product and process innovations, their use and efficiency in use needs to be encouraged. In the absence of systematic exploration, there has been no major mineral discovery in India in the last 40 years particularly in the context of technology metals, energy critical metals and rare earths (such as gallium, germanium, selenium and indium-tellurium), which are essential for manufacturing of almost all modern devices and machinery, and those facilitating more efficient energy use. This may have long-term adverse consequences for our mineral resource security. Their recovery, wherever they exist with major minerals, need to be supported and encouraged through the development of a technically sound mining plan that promotes commercial extraction and also avoids wastage. Since the rare earths are present in small quantities in relevant ores and their extraction and processing frequently involve extensive interference with the environment, there is a need to promote research to minimise material losses and environmental pressures in the extraction, processing, use and recovery of rare metals. Further, there is a need to intensify research to explore the possibility of their replacement by less critical/environmentally harmful resources. The use of rare metals in many environmental technologies offers considerable efficiency benefits and thereby makes for better resource conservation in other fields.

6.3.3 Manufacturing Department of Science and Technology (DST) in the Government of India recognises the need and importance of resource efficiency. They have issued recommendations on adoption of green technologies in the telecom sector. These recommendations are: • At least 50% of all rural towers and 20% of the urban towers are to be powered by hybrid

power (Renewable Energy Technologies (RET) + Grid power) by 2015. Further 75% of rural towers and 33% of urban towers are to be powered by hybrid power by 2020.

• All the telecom products, equipments and services in the telecom sector should be certified “Green Passport (GP)” by the year 2015. Telecommunications engineering centre will certify telecom products, equipments and services on the basis of Energy Consumption Ratings.


• Service providers should adopt a voluntary code of practice encompassing energy efficient network planning, infra-sharing, deployment of energy efficient technologies and adoption of RET to reduce carbon footprints.

However, there is a need to implement these recommendations to promote RE and also draw inputs from them to promote RE in other sectors as well. “Green Passport certificates” should be made compulsory for other IT equipments other than those used in telecom sectors. Government of India needs to mandate the use of recycled materials for manufacturing new products, which would lead to greater incentives for compliance with E-Waste (Management) Rules and demand for recycled products. The policies for promotion of IT equipment and electronics manufacturing through the development of manufacturing clusters, software parks and Special Economic Zones (SEZs) needs to be revisited to consider provision of incentives and support for setting up recycling units within or in the vicinity of these manufacturing clusters. The ‘Digital India’ program with its plan for increasing adoption of e-governance, which is expected to lead to higher demand for electronic products, had potential to integrate resource efficiency in many ways. It could have mandated the purchase of equipment manufactured in a resource efficient manner and through the use of secondary resources and planned for recycling of the products used at the end of the life-cycle. In case of IT sector, the most crucial resource used is energy. The advent of information society has led to skyrocketing energy consumption by IT devices which makes it crucial to promote energy efficient technologies. To promote the energy efficiency of IT devices and equipment, manufacturing stage is more important than the use phase. Energy consumption is high at the production of important components such as chips, etc. as compared to their use phase. There is a need to promote importance of expandability and modular construction of devices, the ease with which they can be repaired or dismantled and the ease with which they can be recycled or reused (BMUB, 2016). Centres of excellence in the top technical institutions and universities can be set up and these could become the testing grounds and prototype/pilot evaluation stages for green technologies. Tax incentive structure could be designed to incentivise and reward those manufacturers who want to invest in clean technology. Government needs to promote innovative technologies such as green IT projects, educate and promote green IT and develop frameworks to evaluate environmental contributions of IT to society. India can develop “Green IT Promotion Council” like Japan to discuss and develop innovative technologies to achieve a drastic reduction of energy consumption for entire network systems including data centres, in addition to saving energy from IT devices. Other policy measures should help create approaches and business models that seek to prolong or optimise the product lifetime by increasing sharing, renting, leasing or pooling of products. This idea is based on the need to offer services instead of products. Collective use among a number of individuals can lead directly to resource efficiency by providing individuals with an option of


sharing a product rather than buying one of their own. This contributes to less consumption of certain product types and ultimately leads to less raw material extraction and manufacturing.

6.3.4 Use and Service With the Government of India promoting usage of IT equipment and related services through improving information and communication technologies, this becomes a crucial step in promotion of resource efficiency as information and communication technologies are key technologies which can be used to exploit great resource and energy efficiency potential in other sectors of the economy such as mobility, household, logistics, communication and power grids. There is a need to follow strategy that aims at increasing the contribution of ICT solutions towards more climate protection and resource conservation. Also, for IT equipment and products, social innovations and strategies that support collaborative consumption patterns must be created. “Using rather than owning” strategies, such as product sharing, have the potential to conserve resources by prolonging the use phase of products. For instance, the resource consumption of products that are material-intensive in the production phase can be optimised by prolonging their use phase.

6.3.5 End-of-Life Management of IT equipment The government of India has recently revised the E-Waste Management Rules (MoEFCC, 2016a) to include all stakeholders and to add more clarity for implementation of the mechanism for safe handling of e-waste. What is additionally required is to incentivise compliance to these rules by designing an incentive structure and defining the role of various stakeholders. The rules emphasise on EPR, wherein the producer of electrical and electronic equipment has been given the responsibility of managing such equipment after its 'end-of-life', for which a producer is also entrusted with the responsibility to finance and organise a system to meet the costs involved in complying with EPR. The producers have to collect 30% of the waste generated and the remaining 70% must be collected in the next 5 years. This would create a supply of secondary raw materials that is recovered from this collected e-waste. While it appears that government has considered secondary resource management issues through the e-waste rules, however, due to lack of clarity on how recycled products should be used, currently mostly low-value recycling or down-cycling takes place. There is also a need to optimise the collection logistics and treatment of scrap containing alloys that are rich in precious and special metals to increase the recovery of these materials. From resource efficiency point of view, it is crucial to recognise that IT products have very short innovation cycles and are frequently replaced after a useful life of only a few years due to fast technological changes. For example, the material tied up in approximately 53,000 German computer centres total nearly 40,000 tonnes. Over 70% of this is due to the bulk metals, iron, copper and aluminium. Although precious metals play a relatively minor role in terms of weight, they are of enormous technological, economic and ecological importance. Thus, it becomes crucial to promote research and development for new recycling methods. There is a need to foster worldwide transfer of knowledge and technology to increase the recycling of end-of-life products containing precious and special metals (for example end-of-life electrical and electronic


equipment, catalytic converters, etc.) (BMUB, 2016). In India, recycling technologies for recovery of rare earth elements (REEs) and energy critical elements (ECEs) from e-waste are yet to be developed.

6.4 Construction Sector

6.4.1 Background The construction industry is a major contributor towards India’s GDP, both directly and indirectly. It employs a large number of people, and any improvements in the construction sector affects a number of associated industries such as cement, iron and steel, technology, skill-enhancement, etc. The construction sector is facing a slowdown following shortage of skilled workforce, construction sand, raw materials and in some parts political disturbances acting as growth deterrents. Recently, there have been several positive impetuses to the growth of the construction industry such as Smart Cities project, the Government's ‘Housing for All by 2022’, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), easing of FDI norms in 15 sectors including real estate and construction development, etc. Among its many positive influences, the arrival of new construction technology and the entry of international infrastructure players into India are generating employment across a vast array of different skill sets. Increased impetus to the creation of affordable housing mission, along with quicker approvals and other supportive policy changes will soon result in an increase in construction activity. Also, township housing and infrastructure will also become major drivers for the construction sector in the immediate future (Jain, 2016). The two most crucial raw materials required in the construction sector are iron and steel and cement. The construction industry is the biggest consumer of finished steel in India, accounting for 35% of total consumption in the financial year 2014-15 (IBEF, 2015). The Indian cement industry is the second largest in the world and India is the second largest consumer of cement in the world, which has been the consequence of the exponential growth in both infrastructure and construction sectors. The industry ranks second only to China with a total production of 246.34 million tonnes in the FY14. This accounts for 6.7% of the world’s total output (IBEF, 2016b). Cement production increased at a CAGR of 6.7% to 270.32 million tonnes over FY07-15 and it is further estimated to reach 407 million tonnes by FY17. In addition, the domestic cement consumption in FY15 was 324 million tonnes, with the consumption estimated to continue to rise at CAGR of 16.7% (IBEF, 2016b). Rising demand calls for enhancing resource efficiency in production processes. In case of iron ore, its formation is a slow and gradual process which takes millions of years, fuelling uncertainties about future availability of raw material. Steel products naturally contribute to resource conservation through their durability and 100% recyclability. It can be infinitely recycled without loss of key properties, ensuring that the resources invested in its production are not lost and can be reused again and again. Steel recycling accounts for significant raw material and energy savings.


There is a need to improve resource efficiency even in case of cement production and use in the sector. The Indian cement industry is regarded to be one of the best in the world in terms of process technology and efficiency, product quality and productivity parameters. However, it is an energy intensive industry and is estimated to be the third largest coal consumer in the country after power and steel industries. Coal is required for both electrical and thermal energy for the operations in cement industry. The industry accounts for about 10% of the coal and 6% of the electricity consumed by the Indian industrial sector. Of the total manufacturing cost of cement, 35-50% is spent on meeting its energy demands. Thus, given the high manufacturing costs for energy use alone, the industry has over the past decades made considerable efforts to improve efficiency in technology and continuous up-gradation of technology and innovation in design and material use.

6.4.2 Raw Material Production The main raw materials that are used in the production of cement are limestone, gypsum and sand. Since many of the cement companies have limited reserves of limestone which will last only for another 15-20 years and import gypsum due to its low availability domestically, it has become increasingly important to identify non-limestone bearing raw materials and binders which can partially replace limestone. Government of India has encouraged the utilisation of fly ash in cement concrete. The Revised Notifications for Fly Ash Utilisation, 2015, mandated every coal or lignite based thermal power plant, within 3 months from the date of the notification, to upload on their website the details of stock of each type of ash available to them. Further the ‘cost of transportation of ash for road construction projects or for manufacturing of ash based products’ within a 100 km radius of a coal or lignite based thermal power plant shall be borne by the thermal power plant itself. Beyond the 100 km radius and up to 300 km, the cost will be equally shared by the user and the thermal power plant. This will encourage the sourcing of fly ash for different purposes including for making cement concrete. In addition, the government has been promoting ‘blending of cement’ that replaces limestone requirements and uses alternative binders and composite materials such as fly ash, slag, red mud, etc. According to the MoEFCC, a continuous increase in the production of blended cement is expected to reduce the problem of waste disposal, improve energy efficiency and reduce carbon footprint (CSE, 2016). As regards the metals including iron ore that is used in the sector, like other sectors, emphasis needs to be given to co-production of by-product metals associated with base metal ores through process R&D that will help the country’s need of so-called technology metals and energy critical metals, and strengthening efforts at moving towards raw material security on the one hand and enabling the manufacturing sector to gain a competitive edge on the other hand.

6.4.3 Sustainable Manufacturing The main by-products from iron and crude steel production are slags, process gases, dusts and sludge. Slags are recognised as marketable products. The worldwide average recovery rate for slag varies from over 80% for steelmaking slag to nearly 100% for iron-making slag. There is still much potential to increase the recovery and use of slags in many countries, especially for


environmental and economic benefits. The crucial point here is to design financial incentives for steel plants for investing in research and development to improve process efficiency and for introducing new processes that generate less waste. Further, slag is mostly used in cement production, reducing CO2 emissions by around 50%. It can also be used in roads (substituting aggregates), as fertilizer (slag rich in phosphate, silicate, magnesium, lime, manganese and iron), and in coastal marine blocks to facilitate coral growth, thereby improving the ocean environment. Gases from iron and steelmaking (for example, from the coke oven, or BOF) once cleaned, are used internally to produce steam and electricity, and thereby reducing the demand for externally-produced electricity. Gases can be fully reused within the steel production site, and can provide up to 60% of the site’s power. Alternatively, gases can also be sold for power generation (World Steel Association, 2012). Under the Charter on Corporate Responsibility for Environmental Protection, major steel plants commit to achieving mutually agreed targets to reduce environmental pollution, water and energy consumption beyond regulatory compliance requirements. This commitment, if exercised, will also help in reducing consumption of resources other than material resources. Concerted efforts made by the National Council for Cement and Building Materials (NCCBM) such as exploring and studying feasibility of using various waste materials like refinery waste (E-Cat)26, granulated steel slag, marble dust, etc., as raw materials in cement manufacture and as blending components (Pahuja, 2015) needs to be strengthened and expanded. The use of alternative raw materials provides numerous benefits including a reduced need for quarrying and an improved environmental footprint of such activities. A case example has been a research study conducted by École Polytechnique Fédérale de Lausanne (EPFL), Indian Institute of Technology-Madras, Indian Institute of Technology- Delhi, and Technology and Action for Rural Advancement (TARA), New Delhi, on a new type of cement that is based on a blend of limestone and calcined clay. Limestone Calcined Clay Cement, popularly known as LC3, allows for the reduction in the amount of clinker in cement, thereby reducing CO2 emissions by up to 30% (Bishnoi et al., 2014). LC3 is made using limestone and low grade clays which are available in abundant quantities, thus making it cost effective and does not require capital intensive modifications to existing cement plants. As part of the World Business Council of Sustainable Development (WBCSD), the Indian industry members have formed the Global Cement Sustainability Initiative which aims to assess the opportunities for carbon emission reduction and increased resource efficiency in the cement manufacturing process in India. Low Carbon Technology Roadmap for the Indian Cement Industry has been developed that has enabled reductions in emissions through the use of alternate fuel and raw materials, ensuring higher thermal and electrical energy efficiency, and implementation of waste heat recovery systems. 26 E-Cat refers to spent catalysts in a petroleum refinery. These are solid catalysts containing metals, metal oxides or sulphides, which play a key role in the refining of petroleum for its cleaning, become solid waste after use (Marafi and Stanislaus, 2008).


6.4.4 End-of-Life Management The use of scrap metal has become an integral part of the modern steelmaking industry, improving the industry’s economic viability and reducing environmental impact. Compared to ore extraction, the use of secondary ferrous metal significantly reduces CO2 emissions, energy and water consumption and air pollution. Annual metal scrap consumption in India has been estimated to be about 20 million tonnes by the Metal Recycling Association of India (MRAI) (Sally, 2016). As a result, scrap imports are increasingly important to the industry, which currently imports about one-third of its scrap demand (Sally, 2016), with steel scrap imports alone amounting to 5 million tonnes in 2013-14 (Tewari, 2014). Prominent sources of steel scrap include ship-breaking, automotives and demolition of buildings and infrastructure. Increased reuse of steel can be further enhanced by the government by providing clear guidelines on certification for product reuse, supporting voluntary codes and standards on product durability within industrial sectors, and raising consumer awareness about the benefits of reuse. However, the recycling industry is dominated by the informal sector which limits its effectiveness. Therefore, support is also needed for formalising the informal sector to make sure that livelihood opportunities are increasing in proportion to the growth in recovery potential due to technological enhancement and capacity building. Ship-breaking yards and C&D waste are major sources of steel in India. Steel scrap from ship-breaking yards is consumed by steel and foundry industries in India and contributes to about 1-2% of domestic steel consumption (IBM, 2015b). Steel scrap generated from construction and demolition waste was estimated using TIFAC’s estimation of metal content in C&D waste, which is about 5%. Considering 80% of metal to be iron and steel and 716 million tonnes of C&D waste generated in India, the iron and steel scrap generated from C&D waste is estimated to be 29 million tonnes (GIZ, 2015b). Further, with 8.7 million vehicles which are expected to retire in 2015, it would generate around 2.8 million tonnes of iron and steel scrap. Evidence from various sectors clearly indicate the large scope for recycling and reuse. The recent decision to move regulation of the ship-breaking industry from the Ministry of Steel to the Ministry of Shipping was taken with the objective of formalisation and upgrading of the industry (Simhan, 2014), but concrete measures need to be taken to have the industry adopt modern technology and practices for ensuring greater material efficiency and recycling rates. In recent developments, the Construction and Demolition Waste Management Rules, 2016, have been separated from the Municipal Solid Waste Management Rules, 2016. These ‘rules apply to every waste resulting from construction, remodelling, repair and demolition of any civil structure of individual or organisation or authority who generates construction and demolition waste such as building materials, debris, rubble’ (MoEFCC, 2016b). Products of the cement industry which include the manufacturing of concrete are not only a durable construction material but are also 100% recyclable. At the end of the product life-cycle, concrete can be recycled back into concrete as a recycled aggregate or into the application of other non-load bearing construction material. The emphasis on construction and demolition waste, and the new Guidelines for Environmentally Sound Management of ELVs are steps in the right direction to promote steel recycling from the construction and automotive sectors respectively. In addition to environmental and energy efficiency benefits, the Voluntary Vehicle-fleet Modernisation Programme (V-VMP) that the government is working on would be able to generate steel scrap worth INR 11,500 crore domestically every year (PRS, 2016).


Government should support the development of high-grade recovery options for waste that is currently put to low-grade use or even disposed of completely. This includes the recovery of additional quantities of non-ferrous metals by means of new, efficient separation techniques, for example in the treatment of waste incinerator ash and the optimisation of separate collection and processing of various types of scrap (especially stainless steel). With the allowance of 100% Foreign Direct Investment in the Indian cement industry and high energy costs, the industry has strived to remain competitive in the global market. Global markets comply with greater emission standards, thus Indian cement manufacturers have over the years, implemented energy and resource efficiency measures at the design stage, through a three-pronged strategy on ‘conserve, recycle and renew’ (Pahuja, 2015).


7.1 Introduction The preceding chapters focused on selected economic sectors and selected materials that are of critical importance to the Indian economy and society from a resource efficiency perspective. Opportunities for intervention at various life-cycle stages were also identified. However, there are approaches to address resource efficiency that cut across individual sectors, materials or life-cycle stages. The policy approaches discussed in this chapter attempt to aid in market transformation by promoting sustainable production and consumption practices. These approaches include development of standards, eco-labelling and certification, preferential public procurement and consumer sensitisation. While these policy approaches have been used extensively to promote other policy goals, for e.g., product quality, reduction in toxic chemical use, etc., their use for enhancing resource efficiency is relatively new. This can be seen as a challenge since policy makers may find relatively little guidance on best practices; however, this can also be seen as an opportunity to make a significant impact with policy innovation in a new arena.

7.2 Green Public Procurement

7.2.1 Introduction Preferential procurement by large organisations, public or private, can be used to bolster the market demand of goods and services deemed serving a desirable social goal. Since governments are typically among the largest consumers in an economy, preferential public procurement can have a significant impact on market transformation towards desirable products and services. Preferential public procurement has been frequently used as a policy tool to promote various social objectives in different countries including supporting vulnerable small-scale industries, protecting human rights in the supply chain, improving energy efficiency, reducing environmental impact, etc. Sustainable Public Procurement (SPP), or more commonly referred to as Green Public Procurement (GPP), is “a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life cycle when compared to goods, services and works with the same primary function that would otherwise be procured” (European Commission, 2008). SPP/GPP has been extensively used, especially in OECD countries, to support green production and bring about market transformation towards environmentally preferable products through large scale purchases.

Chapter 7: Approaches for Cross-Cutting Issues


7.2.2 International Best Practices in GPP In the United States, GPP efforts have grown in scope since the 1990s and include statutory mandates from Congress, executive orders by the President and implementation guidance by the agencies. The federal programme now covers recycled content products, energy and water-efficient products, bio-based products, alternative fuel vehicles, and reduction of toxic materials. All of the sustainability mandates have been incorporated into the Federal Acquisition Regulation (FAR). Three agencies have the lead in designating products and providing purchase recommendations: the Environmental Protection Agency, the Department of Energy and the Department of Agriculture. These agencies have designated environmental criteria for more than 300 product categories in a comprehensive online database. Federal agency compliance is monitored by the Office of Management and Budget (OMB) as well as the Council on Environmental Quality (CEQ). In addition to the federal government, GPP initiatives at the state and local government level are also widespread (OECD, 2015). In the European Union (EU), public procurers spend over £2 trillion on supplies, works, and services every year; this is equivalent to approximately 17% of GDP in the EU. The EU has been a pioneer in developing and promoting GPP among its member states, while ensuring the mandate of free competition across the common market. In 2014, the EU developed two directives specifically on public procurement that member states have to adopt into national law by 2016. These directives build on several prior directives related to energy efficiency, eco-labelling, recycling, toxic chemicals, etc. The European Commission develops specific criteria for GPP across a wide range of product categories and also prepares guidance documents to help in implementation. GPP is also prominently featured in strategic initiatives of the EU, such as the “Roadmap to a Resource Efficient Europe”, which is a part of the “Europe-2020” strategy. Many EU countries themselves are leaders in promoting GPP and numerous best practice examples are to be found at the national, provincial and local levels (European Commission, 2016c). In 2000, Japan enacted the Green Purchasing Law for all levels of government. Apart from promoting green procurement, it also aimed to encourage use of eco-friendly goods by providing information on such products and services. The Basic Policy on Promoting Green Purchasing outlines guidelines for procuring materials, products, components and services with low environmental impact. According to the policy, each government agency shall formulate and publish a green purchasing target for each fiscal year, including evaluation criteria. The designated procurement items list includes 246 items in 19 categories of products and services. In addition to the prominent examples above, GPP policies and programs can be found in a wide range of countries including South Korea, South Africa, China, Mexico, etc. (TERI, 2013).

7.2.3 Context of GPP in India Public procurement accounts for almost 20% of GDP in India, wielding substantial purchasing power to the government (TERI, 2013). In India, public procurement is currently governed by rules and instructions contained in the General Financial Rules and the Delegation of Financial Powers Rules (DFPR), apart from ministry/department specific purchase procedures for particular ministries and the Directorate General of Supplies and Disposal (DGS&D). Some states like Karnataka, Kerala, Rajasthan and Tamil Nadu also have their own public procurement policies. Historically, preferential procurement in India has sought to achieve social goals such as


protection of vulnerable industries (e.g., jute), or promotion of handicrafts from disadvantaged areas/communities, etc. (TERI, 2013). The Indian Public Procurement Bill introduced in Parliament in 2012 seeks to regulate procurement by Ministries/Departments of the Central Government and its attached/subordinate offices, Central Public Sector Enterprises (CPSEs), autonomous and statutory bodies controlled by the Central Government and other procuring entities with the objectives of ensuring transparency, accountability and probity in the procurement process, fair and equitable treatment of bidders, promoting competition, enhancing efficiency and economy, safeguarding integrity in the procurement process and enhancing public confidence in public procurement. The bill, which did not become a law, was comprehensive in many respects, but did not specifically include GPP. Therefore, a single law governing public procurement at the central government level still does not exist. The government has attempted to promote GPP through the EcoMark eco-labelling scheme; however, the market uptake was not satisfactory. Some public sector organisations such as the Indian Railways, Bharat Heavy Electricals Limited (BHEL), National Thermal Power Corporation (NTPC), and Indian Oil Corporation have engaged in GPP schemes independently with a major focus on energy conserving equipment (TERI, 2013).

7.2.4 Indian Best Practice in GPP While India does not have comprehensive GPP policies, a few successful examples offer important lessons. New energy efficient LED lights have huge potential for energy savings but are several times more expensive than conventional light bulbs and CFLs. To overcome this problem, the Bureau of Energy Efficiency (BEE) devised a business model based on bulk purchases. The Energy Efficiency Services Limited (EESL), a joint venture of public sector companies, drove down the cost of LED lights from nearly INR 400 to about INR 100 within a couple of years through this model (Agrawal, 2014). The most well-known preferential procurement policy for green building materials has been related to fly ash based products. The original Fly Ash Notification (S.O. 763 (E)) was issued by the Ministry of Environment and Forests (later changed to MoEFCC) in 1999, and was later amended in 2003, 2007, 2009, and 2015, making it more ambitious over time. The policy mandated use of fly ash based bricks, and later fly-ash based cement, within 100 km of coal based power plants, later expanding the mandate to 500 km of such power plants. As a result of this policy, the utilisation of fly ash increased from 13.5% in 1999 to 57.6% in 2014 (Chakravartty, 2016). Several states have also adopted supplemental policies to promote fly ash utilisation.

7.2.5 Challenges and Looking Ahead The successful examples above demonstrate that carefully designed interventions can have a significant positive impact on the market uptake of green products. In addition to the lack of a comprehensive policy on GPP, there are many challenges that need to be overcome. These include limited awareness among producers and consumers, limited capacity and motivation of government agencies to take on additional responsibility, lack of clearly defined criteria for


“green” products, limited experience in using life-cycle assessment tools, perceived higher costs of green products, etc. A comprehensive and well-designed GPP policy can be a key instrument to promote resource efficiency in the economy in addition to many other environmental goals. But it is important to start with a small range of products first, for which the market is already reasonably well established, and then gradually expand as the program matures. Experience from other countries shows that an independent entity should develop criteria and standards and oversee certification and eco-labelling of products. In addition, a list of products and manufacturers of approved green products must be maintained by such an entity. This makes it simpler for each government agency to engage in green procurement without the need to undertake complex assessments with inadequate expertise. Finally, mandatory targets for green procurement help to achieve the desired level of performance; these targets can be graduated and made more ambitious over time depending on the maturity of the program and the market for green products.

7.3 Standards and Benchmarks

7.3.1 Introduction In modern economies, standards have historically been widely used to promote quality in manufacture and performance of manufactured products. Specialised technical organisations set such standards for a wide range of products and technologies/techniques. Some of the most well-known ones are ASTM in USA, British Standards Institution (BSI) in the UK, Deutsches Institut für Normung (DIN) in Germany, and CEN (European Committee for Standardisation) in the EU. However, the practice of using standards to promote environmental goals has been relatively recent. Standards for “organic” food have become widespread in many developed countries over the last couple of decades. But the use of standards to promote resource efficiency is still evolving. Standards for recycled materials now exist in some countries with strong environmental policy leadership. It is being recognised that there are opportunities to expand the use of standards in the upstream stages of the lifecycle, e.g. by establishing stricter requirements at the design phase of products. The principal advantage of standards as a policy instrument is the high degree of certainty they provide about the environmental outcome. In addition, standards, especially those set by independent professional bodies, are often more politically acceptable than other policy instruments such as eco-taxes. However, there are a number of potential disadvantages associated with standards. Setting standards can be a resource intensive and time consuming task requiring a high degree of technical expertise. Technologically prescriptive standards can be seen as reducing flexibility for compliance and increasing compliance costs. Compliance and enforcement is also a major challenge, especially when the number of standards increases. Finally, unless standards are updated at reasonable intervals, they may hinder innovation to go beyond compliance (OECD, 2016).


7.3.2 International Context While standards to promote the use of secondary materials in products are quite commonplace in certain industrialised countries, for e.g. in the EU, there has been a movement towards developing standards to promote resource efficiency in the upstream design phase of the life-cycle. The most prominent example is the EU EcoDesign Directive of 2009. It is not a standard in itself but a framework directive which allows for setting compulsory eco-design requirements for various product groups, and would therefore enable a gradual expansion of standards over time. While its original emphasis was on promoting energy efficiency, its potential to promote resource efficiency is now being actively debated (Dalhammar, 2014). The European Commission has proposed a typology of 20 criteria for development including recycled content, durability and availability of spare parts, dematerialisation, design for recycling, design for dismantling, limitation of hazardous substances, labelling and provision of information. Complexities in developing such a wide range of standards suggest that different standards would be applied to different product groups (Dalhammar, 2014). The International Organization for Standardization (ISO) has been at the forefront of efforts to harmonise standards worldwide. ISO standards are widely followed, particularly by the private sector, to gain recognition in a globalised economy. The ISO 14000 series of standards on environmental management, audits, and labelling have been widely adopted by companies to showcase their environmental performance credentials. The ISO 14040 standard provides guidelines on Life Cycle Assessment (LCA) of products that can help to optimise resource efficient strategies. In addition, new ISO standards under development dealing with “eco-efficiency assessment” and “material flow cost accounting” will also contribute to promoting resource efficiency strategies in the future (ISO, 2016).

7.3.3 Indian Context In India, the Bureau of Indian Standards (BIS) has been the universally recognised professional standard setting organisation created by the Government of India. A wide range of BIS standards and certification for quality and performance of manufactured products exist and are widely trusted. Only in recent years has BIS standards been developed for recycled products that can be used to promote resource efficiency in the economy. Some of the most prominent examples include standards for use of fly ash in concrete (IS 3812) and bricks (IS 12894). In 2016, BIS also amended the IS 383 standard to allow for the use of recycled aggregates from construction and demolition waste in concrete production (BIS, 2016). The fly ash standards have been instrumental in promoting the use of fly ash; in 2014, 57.6% of fly ash produced in India was utilised (Chakravartty, 2016). It is expected that the standard permitting use of recycled aggregates in concrete will have a similarly significant impact.

7.3.4 Challenges and Looking Ahead Well recognised standards such as those from the BIS can have an immediate impact on market acceptance of new products; therefore BIS can play a key role in promoting the production and consumption of resource efficient products throughout the economy. However, as already noted, standard setting is a time and resource intensive process requiring high levels of expertise. In addition for taking up standard development for resource efficiency on a priority basis, BIS can consider ways to speed up the process. One option would be to look for standards developed


internationally and adapt them to the Indian context. Another option, as seen in the recycled aggregates example, would be to amend existing standards rather than creating new ones, say for permitting use of secondary materials, since this can be a much shorter and simpler process. Initially, simpler standards for the use of secondary materials may be prioritised, while more complex standards targeting for resource efficiency in the design phase may be taken up gradually over time. Where formal standards do not exist or may be developed in the future, industry-wide benchmarks can play a similar role, and industry associations, together with stakeholders, can play a role in developing and propagating their adoption.

7.4 Eco-labelling and Certification Schemes

7.4.1 Introduction Eco-labelling, which implies a certification of the desirable environmental attribute or performance of a product or service, is an useful information-based policy instrument that harnesses the buying power of conscious consumers, including public and institutional purchasers, to promote the consumption, and thereby the production of greener products. Most eco-labelling schemes are voluntary but many successful mandatory schemes also exist. Eco-labelling has been a widely used policy instrument in numerous countries for several decades, and therefore much experience has been gained on its pros and cons as a policy instrument. Obviously, the success of eco-labelling depends on the degree of consumer consciousness and motivation, and hence works best in countries where environmental consciousness is more widespread. Experience has shown that eco-labelling initiatives are more effective when coupled with policy instruments, such as public procurement programs (OECD, 2016). Recent years have witnessed a proliferation of eco-labels, including ones that are self-certified and potentially misleading, thereby confusing consumers. Government recognition of trusted eco-labelling schemes that are based on rigorous and transparent standards and are accredited by a government agency or an independent third party can help to improve the effectiveness of eco-labelling as a policy instrument (Prag et al., 2016).

7.4.2 International Context The pioneering German Blue Angel eco-label was introduced in 1977 and it still among the most well known in the world. In the following decades, several countries have introduced eco-labelling schemes. Gruere (2013) identified 544 eco-labelling schemes covering 197 countries that were operating in 2012. These schemes covered a wide range of environmentally relevant policy areas: energy and climate change (24%), chemicals (21%), natural resources (20%), waste (14%), and biodiversity (11%). These schemes have expanded significantly in recent years as can be seen in Figure 24. While non-profit voluntary schemes are dominant, there has been a rapid growth in private schemes (Gruere, 2013), potentially contributing to market confusion as discussed above.


Figure 24: Evolution of the number of eco-labelling schemes by modes of governance and ownership (1970-2012)

(Source: Gruere, 2013)

7.4.3 Indian Context In 1991, India launched its own eco-labelling scheme called “EcoMark”, overseen by the Ministry of Environment and Forests (now MoEFCC). This scheme is unique because it considers both environmental and quality criteria; product quality has to be certified by the Bureau of Indian Standards (BIS) in addition to environmental attribute certification. Criteria have been developed for 16 product categories, with the approved products being awarded the “earthen pot” EcoMark label (CPCB, 2016a).

Figure 25: The EcoMark label

However, the EcoMark scheme has not become very popular even after two decades with only a few dozen products being certified so far. Experts have cited several reasons for this lack of success. Firstly, public consciousness of and motivation to purchase environmentally preferable products is quite low in India; consumers tend to base their purchasing decisions on price and quality. Secondly, while much effort was spent on developing criteria for certification, relatively little was done to promote consumer awareness. Finally, with two sets of certification criteria – quality and environmental performance – producers found it too onerous and expensive to


justify the effort, especially since they were not convinced of the ultimate market benefits (Mehta, 2007). The GRIHA (Green Rating for Integrated Habitat Assessment) rating system for green buildings developed by The Energy and Resources Institute (TERI) has become prominent in the building and construction sector in India. TERI modelled the scheme after the internationally famous LEED (Leadership in Energy and Environmental Design) rating system developed by the US Green Building Council, but adapted it to Indian conditions. Since 2007, the GRIHA rating system has been adopted as the national rating system for green buildings by the Government of India. GRIHA is a voluntary rating system with a comprehensive set of criteria that includes energy efficiency, water conservation, renewable energy, green building materials, etc., with points for each category; the final certification is based on cumulative points earning a star rating ranging from 1 to 5.

Figure 26: Indira Paryavaran Bhawan, New Delhi awarded GRIHA 5 Star rating

GRIHA has been updating their rating system over time and expanding rating criteria for different types of construction projects. They have also started a GRIHA Certified Product Catalogue that lists certified green building products that can be used by developers when undertaking a project for GRIHA certification (GRIHA, 2016). While GRIHA is a comprehensive and well reputed rating system that is being updated continually, its actual impact on the building market is limited only to a handful of eco-conscious developers. In recent years, its impact has improved somewhat with both central and state governments making GRIHA rating mandatory for all new government construction projects. The Indian Green Building Council (IGBC), initiated by the Confederation of Indian Industry (CII), has also achieved prominence with its green building ratings system that covers many different categories including residential and commercial buildings, townships, factory buildings and mass rapid transit systems (IGBC, 2016).


The energy efficiency labelling for appliances by the Bureau of Energy Efficiency (BEE) has also been relatively successful. Launched in 2006, the scheme identifies appliance categories contributing to the highest energy consumption and sets minimum standards for their energy efficiency. The appliance’s energy use performance is then graded by a star rating (on a scale of 1 to 5) and the star label is affixed to products for sale. Additionally, many consumer appliances also have a cost savings estimate that is more directly relatable by the consumer.

Figure 27: BEE Energy Label

The BEE energy label has seen widespread use and its impact have been further enhanced by public procurement programs that mandate the purchase of efficient appliances. While BEE has continued to refine the program over time, experts have called for a more participatory approach involving non-governmental experts to improve transparency, accountability, promotion and adoption, monitoring and evaluation, and capacity building (Jairaj et al., 2016).

7.4.4 Challenges and Way Forward As noted in the discussion above, eco-labelling schemes that have been at least partially successful in India have been supported by some sort of government mandates, e.g. the GRIHA and BEE energy labels. In the Indian market, where public consciousness is relatively low, completely voluntary eco-labels like EcoMark are unlikely to be successful on their own without supportive policies such as public procurement mandates, at least in the initial stages. Very importantly, a long term commitment and strategy should be developed for a sustained public awareness campaign to promote the EcoMark, perhaps with contributions divided between the government and private sector. Lessons can be taken from the relatively successful public awareness campaigns associated with the BIS quality logo and the BEE energy label. The EcoMark scheme should be rejuvenated with a reorganised structure comprising of multiple stakeholders. The scheme should expand into new product categories, especially focusing on products that use secondary resources. So far, there is limited coverage of such products in EcoMark (as well as in the GRIHA certified product catalogue), where the emphasis has been on reducing toxic and hazardous substances. The standard setting and criteria development should take into account international best practices, using life cycle assessment tools wherever applicable and guidance from ISO standards. The certification process should be simplified and streamlined, possibly with the involvement of third-party accreditation agencies, to make it more appealing to


manufacturers. Testing and certification capacities are often lacking for many environmental attributes and these need to be made available across the country before an eco-labelling scheme can be successful. Perhaps a rejuvenated EcoMark scheme can focus on a few chosen categories initially for which the criteria, market, and testing facilities already exist and after a successful initial phase, it can expand into other categories.

7.5 Consumer Sensitisation

7.5.1 Introduction The decades after the 1990s (post-liberalisation, privatisation and globalisation reforms) have seen tremendous growth of the Indian economy. It has given rise to a new and aspirational middle class with greater disposable income. Resultantly, there has been a change in the consumption patterns accompanied by an increase in the range and volume of products available. Higher incomes for the middle class along with rapid urbanisation has led to a surge in demand for a range of products resulting in increased mining, production, consumption and waste generation, specifically in the materials and sectors identified in this study. Consumers, therefore, are one of the key actors in charting a path towards more efficient and sustainable resource use. Along with extended producer responsibility, consumers across the different stages of life-cycle also have a shared responsibility towards resource use and disposal. Their awareness towards availability of more resource efficient alternatives of goods, readiness to buy them, and properly segregated disposal of generated waste into separate waste streams are important steps towards material recovery and environmental sustainability. Here, it must also be noted that identity of the consumer varies across the different stages of life-cycle. For example, the consumer of fly-ash in construction industry would be a cement or a brick manufacturer, which makes the cement companies and brick kilns consumers of resource efficient products during the life-cycle stage of design/production. However, this section will focus on the significance of consumer sensitisation on the consumption and end-of-life-stage of the life cycle.

7.5.2 Indian Consumer Behaviour and Change Indian consumers have been ranked on top of the 18 surveyed countries, continuously since 2008, for showing preference towards use of ‘green products’ by Greendex Surveys conducted by the National Geographic Society. The 2014 Greendex Survey also reveals that since 2012, there has been an increase in the proportion of people who try to buy ‘used’ things. Yet, Indian consumers are also suspicious of the claims advanced by the purportedly green manufacturers and therefore, also unwilling to pay higher prices for these. Interestingly, despite being ranked the highest, Indian consumers show an increasing preference towards using disposable household goods. Despite a rise in consumption levels and changing preferences in favour of discardable goods, there has also been a perceptible increase in the number of consumers preferring environmentally-friendly goods. Green Purchasing Network of India (GPNI), in its 2014 study, argues that the Indian consumer preferences as noted by the Greendex Survey towards repairing and buying ‘used’ goods can be


attributed more to the traditional ethos of the Indian society as opposed to awareness and understanding towards consuming ‘green’ products and following environmentally-friendly practices. The study also highlighted that the middle-class Indian consumers demonstrate a decent level of familiarity with the terms like ‘green’ and ‘eco-friendly’ and also associate these with related terms such as ‘bio-degradable’, ‘recycled’, ‘organic’ and ‘non-toxic’. However, the understanding regarding different meanings and significance of varied terms is limited. Consumers with greater awareness understood the utility of the product in terms of environmental benefits, while others focused on the social and health benefits derived from the green products and goods (GPNI, 2014). Overall, the understanding of what qualifies as environmentally-friendly, and by extension resource efficient product, especially from a life-cycle perspective, is low. In order to increase demand and consumption of green products, four factors need to be addressed:

o Strengthen awareness regarding green products o Improve availability of green products in the markets o Clear certification for green claims made by producers o Lowering costs of green products

While cost remains a major factor influencing the buying decision, lack of knowledge about the green products is a more determining factor. Also, as opposed to the common perception among retailers, design of a product and its social value does not seem to influence the buying decisions much. However, personal health and environmental concern seem to contribute towards buying green (GPNI, 2014). Thus, promoting consumer awareness by highlighting the health and environmental benefits derived from use of a product is crucial for sustainable consumption.

7.5.3 Strategies for Consumer Sensitisation Low consumer awareness about availability and utility of green products can be attributed to two major factors: a) a general lack of understanding of the gravity of environmental issues from a holistic perspective that places patterns of resource use at the very centre; b) lack of availability of communication material giving information regarding assessment of the quality and impact of green products. As eco-labels and certifications are known to positively impact buying decisions, a stronger regime of standards, certifications and labels are imperative as a first step towards engendering greater trust in the claims of the green products. These measures towards labelling and standards also help consumers assess the authenticity of claims by manufacturers regarding the greenness of each product. Thus they help consumers make informed decisions in favour of genuinely green products as opposed to those that make dubious environmental claims. Building this trust in consumers is important as it severely impacts their consumption behaviour. Unsubstantiated claims by manufacturers create ambiguity and can harm the genuine manufacturers and their consumers. However, given the limited consumer understanding of meanings of various environmental/green terminologies and their attributes, labels and standards might not be fully intelligible to all the users. Therefore, simultaneously a robust awareness generation campaign and marketing strategy is required by involving the consumer bodies, government and


manufacturers. These campaigns towards knowledge dissemination can be carried out by showcasing benefits that directly and indirectly accrue to consumers as a result of lower environmental impact of the resource efficient products. These should be done across different media like television, radio, newspaper, internet and social media. For example, awareness regarding consumer rights through consumer courts is regularly promoted through advertisements in television, radios and newspapers. BEE’s success in promoting the ‘Star’ rated household appliances among consumers in India can be attributed to the marketing as well as simplicity and comprehensibility of the scheme. Various manufacturers of household appliances advertised Star ratings of their products and what it meant in terms of energy savings benefits for the consumers. On the other hand, Indian EcoMark scheme in the 1990s had failed due to lack of awareness among consumers. Manufacturers felt dis-incentivised towards producing quality environmental friendly products for a consumer base which was not basing its purchasing decision on environmental criteria. This clearly shows that creation of standards and labels alone is not sufficient to impact purchasing decisions. Information dissemination and awareness generation play a significant part in driving consumer behaviour. Support of related policy instruments like GPP can help bring down prices of the green products and services, thereby driving the market transformation towards sustainable consumption. Furthermore, green marketing that conveys the robustness of claims through labels and standards can create greater familiarity with these in consumers. Self-declarations by producers in a way that is understandable to a common consumer and does not obfuscate the information and specific resource-efficient attributes of the products are required. Further, consumers must also be sensitised and made aware of their responsibility towards waste disposal. This will aid in recovery of secondary raw materials. A more aware and proactive consumer will help close the loop in the life-cycle by increasing the volumes of recyclable and secondary raw materials.

7.5.4 Way Forward Increased fears and awareness about climate change and the increasing prominence of environment as a concern has not translated into changes in consumer preference. While there are pockets of environmentally aware consumers, the vast majority of environmentally friendly goods remain out of the reach of a majority of people due to imperfect information availability and price of the products. It presents vast challenges and equally big opportunities towards charting a path where consumer preferences for resource-efficient products provide able support and drive markets towards production and sustainable management of secondary raw materials.

7.6 Fiscal Instruments It is widely recognised across the world that fiscal instruments play a significant role in helping transform economies to become greener. Fiscal instruments in the form of taxes, charges, subsidies, incentives and budget allocations can also help generate revenue for environmental and social purposes besides shifting behaviour towards resource efficient activities and stimulating investment in cleaner and resource efficient technologies by pricing environmental externalities.


In India, the government had initiated a tax - Clean Energy Cess (@ INR 50 per metric tonne in 2010 for both domestic and imported coal, which has been increased in the 2016 budget to INR 400 per metric tonne). The tax, now known as the Clean Environment Cess, was levied to promote and finance clean energy by setting up National Clean Energy Fund. For the waste sector, the commonly prevalent incentives to address the critical problem of waste management in India include: 1) taxes and fees; 2) recycling credit and other forms of subsidies; 3) deposit-refund; and 4) standards and performance bond or environmental guarantee fund. Volumetric landfill taxes can encourage the reduction of waste and are easy to implement. Their effectiveness, however, depends on the tax rate per tonne of waste and on the existence of adequate monitoring and enforcement measures providing control on types and volumes of waste streams. It is also important to ensure that the tax does not result in increased illegal dumping rather than encouraging 3Rs (reduce, reuse, recycle). Pay-as-you-throw (PAYT) is another way of discouraging waste generation. Precaution against illegal waste dumping or misuse of recycling facilities is therefore needed. Full financing of the waste-management infrastructure has to be assured and sufficient awareness-raising is necessary. PAYT has been shown to have a positive impact on recycling. If we see the case of lead acid batteries (which generate hazardous lead waste with environmental and health implications) in India, there is a deposit-refund system for recycling in Delhi which provides a discount to consumers on purchasing new batteries and returning used batteries to retailers for recycling. For promoting use of cleaner technologies, the Technology Acquisition and Development Fund (TADF) under the National Manufacturing Policy being implemented by the Department of Industrial Policy & Promotion (DIPP) is helping Micro, Small & Medium Enterprises (MSMEs) to acquire clean and green technology at affordable cost across their sector. The fund will support manufacturing of pollution control equipment and reducing energy and water consumption through subsidies.

7.7 Upgrading Informal Sector The informal sector makes a significant contribution to the overall economy and society by reducing the cost of waste management and recycling. They constitute nearly 1% of urban population and belong to the lowest social strata. With substantial increase in volume of waste across dispersed streams, a RE strategy should recognise their role and build upon the comparative advantages of the informal sector (in collection, segregation and dismantling) with an aim to mainstreaming and formalising it.

Towards this end, the informal sector could be organised into cooperatives or jointly owned private enterprises to aid their access to technology and funding for improving their operations, ensuring safe working environment and health for the workers employed in the sector. This will enable them to participate formally in waste management related tenders while ensuring that benefits from SRM accrue to the workers resulting in increased earning potential. From a material recovery perspective, the loss of value and quality of metals and critical mineral resources


due to inefficient and unskilled handling could be minimised. Quality metal scrap would be more in demand, especially as resources become more scarce, and this will enable them to fetch better prices and augment livelihood options. Other kinds of business models could also be developed that build on the positive aspects and overcome inefficiencies. For instance, the informal sector’s expertise and ability in terms of collecting e-waste or other wastes directly from household and segregation can be supported through a web-platform which could be operated by a formal sector enterprise. Therefore, integration of informal sector towards efficient and quality raw material recovery should be made an important element for an Indian RE and SRM strategy.


While it is very important to keep in mind all resources when formulating measures dedicated to improving resource efficiency or assessing improvements after implementation of resource efficiency measures, as also mentioned in 5.1, this first resource efficiency programme focuses on “abiotic resources” (ores, industrial minerals, construction minerals) that are not used for energy production. The future programmes will also consider the material use and flow of biotic resources. The use of these abiotic resources (raw materials) along the whole life-cycle and value chain is closely interrelated with the use of other natural resources. However, as the conservation/preservation strategies for the use of biotic natural resources have been a focus area for long with many existing measures already in place, the focus of the Indian Resource Efficiency Programme is on the abiotic resources. Other resources may be considered to a greater extent in future governmental resource efficiency strategies. This chapter discusses the approach that India’s First Resource Efficiency Programme (IREP) should take.

8.1 General Principles and Perspectives Natural resource management should be shaped by two guiding principles: o Maximising the value contributed by natural resources to overall human well-being

• by raising resource efficiency/productivity (“doing more with less”) • by ensuring equitable access to resources, including for future generations (“fairness

in distribution”) • by using appropriate decision tools (“life-cycle analysis”)

o Minimising the overall costs to society of consuming natural resources

• to the economy by efficient technologies, reducing waste, the 5Rs (Reduce, Reuse, Recycle, Refuse, Recover)

• to the community by fair access, burden sharing and reduced conflict • to the ecosystem by minimising pollution and maximising circular loops

Basic forms of policy instruments that can be used individually or in a mix for shaping the programme include legal and regulatory, economic and financial, voluntary, and information-based. The IREP will need constant stakeholder guidance, collaboration and support to ensure political relevance. The policy instruments need to inspire business and industry to focus on resource-efficient commercial opportunities leading to creation of business models, enhance provision of information on resource efficient good practice technologies and practices and exchange of these between stakeholders, and help create and maintain networks that can be viewed as capacity building channels for stakeholders.

Chapter 8: Approach of India’s First Resource Efficiency Programme


8.2 Integrating Perspectives for Policy Design As presented in detail in the previous chapters, the scientific preparatory work that has been done for the concept of an IREP has identified four main perspectives along which resource efficiency related policy measures could be designed and integrated: the stages of the life-cycle, selected sectors, selected materials and cross-cutting measures. For example, the programme when adopted by a particular sector (to begin with, by the hotspot sectors of the economy identified in this study) will need to look at the life-cycle stages of the product/service provided by the sector, focus on critical materials used in the manufacturing of the product/provision of the service and design policy instruments (including the cross-cutting instruments as discussed in Chapter 7) for promoting resource efficiency of the sector.

8.2.1 Life-cycle Perspective Each product’s life-cycle includes five stages: 1) Mining, 2) Design, 3) Production, 4) Consumption, 5) End-of-life stage, which can be interpreted as a nexus of economic and social activities that also have an impact on natural resources. Moreover, activities at one stage of the life-cycle can have significant impacts on economic, social and environmental aspects at other stages of the life-cycle. For example, the technologies and processes used for mining major minerals may not focus on associated minerals and by-products. The ways in which products are designed and/or used have an impact on their life time and can have further impacts on reusability, reparability, recyclability or cost of safe disposal. The various ways of end-of-life treatment have significant impacts on the quality and usability of the materials originating from those activities, and thus on resources needed for safe disposal or reuse in different forms. The possibility to substitute primary with secondary materials is also influenced by the quality of recycled materials recovered. This striking interdependence of life-cycle stages of products and materials makes it necessary to assess life-cycle wide impacts when policy measures are to be identified to improve upon the status quo situation. If only one part of the life-cycle is considered, there is a danger of burden shifting from one stage of the life-cycle to another. For instance, in the mining stage, the extraction of raw materials should be done in a more resource efficient way by applying better and efficient technologies that allow for maximising raw material yield while minimising burdens on the environment. Transparency standards can be formulated concerning the environmental and social impacts of mining and pre-processing of the raw material. In different raw material importing countries worldwide, there are attempts to certify raw materials according to the environmental and social quality of mining and pre-processing, for e.g. in analogy to certified trading chains. Another avenue for transparency standards is the publication of financial data and governance information related to mining projects. The Extractive Industries Transparency Initiative (EITI) unites countries that have agreed to comply with a specific set of transparency standards in mining concentrating on a group of criteria (EITI, 2016b). The design of products can have particularly high impacts which the enterprises can be sensitised about through provision of information showing LCA outcomes of different design choices for products. The enterprises can then be motivated through incentives like awards and other promotion schemes for designing resource efficient products. Active creation of skills for resource efficient product design through the education system is a possible approach as well. Finally, one could impose regulations on the development of products e.g. minimum life time of a product or


parts of it, recyclability or information needed for proper recycling or repair, modular construction, etc. A concrete best practice example for a changed product design is given in section 6.4.3 “Sustainable Manufacturing”, describing the results of a research study conducted by École Polytechnique Fédérale de Lausanne (EPFL), Indian Institute of Technology-Madras, Indian Institute of Technology-Delhi, and Technology and Action for Rural Advancement (TARA), New Delhi, on a new type of cement that is based on a blend of limestone and calcined clay. As the processes of producing the cement have to be adapted to support this new product design as well, this example has also an aspect that has to be implemented in the production stage. During the production stage, measures can be formulated to promote the use of more resource efficient technologies or organisational solutions, optimally in a sector specific way. This can encompass e.g. R&D, standards, active dissemination of resource efficient technologies, organisational solutions in relevant target groups and incentives for the implementation of environmental management systems. Measures primarily concerning the consumption phase of products can be product labels and information schemes about natural resources, the promotion of new forms of consumption (sharing, leasing, product-service systems) and public procurement. Consumer sensitisation for using RE and/or ‘green’ products is also important. Education is important for changing norms and values. Concrete best practice examples of Green Public Procurement (GPP) are described in section 7.2.4 “Indian Best Practice in GPP” and 7.5 “Consumer Sensitisation”. Measures primarily targeting end-of-life can be avoiding waste by fostering re-use of products and components, introduction of the producer responsibility schemes, the optimisation of recycling chains for specific product groups or waste streams, data collection to support the former, and guidance on the safe disposal of waste that can eventually also maximise potential future economic resource value of the disposed materials. Wastes that have no sufficient economic value as raw materials today can eventually be re-mined in the future, when new technologies or price changes make their use economically viable. Concrete best practice examples of optimal End-of-Life Management have been given in section 6.4.4 “End of Life Management”.

8.2.2 Sectoral Perspective Another perspective for policy design is through the focus on different sectors, particularly the key industrial and strategic sectors (also referred in this study as the hotspot sectors) of the Indian economy. Previous studies have identified sectors that are of particular relevance for the economic development and resource use in India. In the report India’s Future Needs for Resources Dimensions, Challenges, and Possible Solutions, “it was decided to first concentrate on the use of critical raw materials in three hotspot sectors - mobility, housing, and renewable energy” (IGEP, 2013). Two of these sectors – the automotive and the construction sector have then been analysed in further detail in the study Material Consumption Patterns in India - A Baseline Study of the Automotive and Construction Sectors (GIZ, 2016a), and has found high material requirement in the coming years. The activities in different sectors vary to a certain degree, but are also surrounded by many common features. For example, from a resource perspective, the need to systematically collect


and analyse data on resource flows in an enterprise is a precondition for economic and environmental optimisation of processes in the same. On the other hand, due to several products with varying properties to be produced, different raw material sources and degree of processing and diverse customer groups to be served, there are significant disparities in the technologies applied, skills needed and contextual issues in general. These disparities necessitate assessment of policies to ensure that they sufficiently address and account for the distinctive features of the activities of a sector. Concrete policy measures in use and few best practice examples attributed to certain sectors can be found in sections 6.2 "Automotive Sector", 6.3 "IT Equipment Sector" and 6.4 "Construction Sector". For German enterprises belonging to different sectors, there are concrete good practice technology examples that have been implemented in some of these enterprises through the support of the VDI Centre for Resource Efficiency (VDI ZRE, 2017a).

8.2.3 Material Perspective The significance of material specific focus for priority/critical materials in different sectors can be observed at all stages of the life-cycle and value chain, and is crucially determined by the different physical and chemical properties of the materials. They determine the scope of applicable processing technologies, the realisation of specific product solutions as well as their features and functionalities. Metals differ from other material groups as they have comparatively beneficial properties that support the realisation of a circular economy; theoretically, they can be recycled forever and ever nearly without losses. The ways in which they are integrated in products usually allows for achieving a comparatively satisfactory grade of purity for metal wastes entering that can be put back into the recycling processes, especially in contrast to plastic waste streams. There are exceptions for complex products or dissipative use where practical combined with economic reasons lead to losses or even make recycling impossible. The same holds true for the cost of collection, separation, recycling processes or metallurgical challenges in recovering all materials contained in waste streams separately in high quality. And obviously, recycling itself also consumes resources. Therefore, material specific formulation of measures for enhancing efficiency may be the most effective. The common thread between the material specific measures is the promotion of recycling cycles and markets for secondary products of individual materials, the targeted substitution of critical materials by less critical materials or R&D for the development of materials fulfilling certain conditions to allow for a specific product function or property. Concrete examples for best practice technologies and business cases focused on single materials can be found in the previous sections of the document. One example described in section 6.4.3 “Sustainable Manufacturing” is the use of main by-products from iron and crude steel production: slags, process gases, dusts and sludge. Slag is mostly used in cement production, reducing CO2 emissions by around 50% and it can also be used in roads (substituting aggregates), as fertilizer (slag rich in phosphate, silicate, magnesium, lime, manganese and iron), and in coastal marine blocks to facilitate coral growth, thereby improving the ocean environment.


8.2.4 Perspective of Cross-Cutting Policy Instruments Policy instruments can and often have to be adapted to specific characteristics of their diverse subjects. Nevertheless, there are a range of policies that are of a cross-cutting nature when taking into account their applicability or their potential impact. Such policy instruments can have an impact on all stages of the life-cycle and to a vast array of different materials and sectors. The collection, interpretation and publication of statistical data and other information can be such a measure. It can be applied to individual sectors or materials, but unfolds its full potential only if a sufficiently big picture is covered to give orientation for different actors’ activities. Other possible approaches that can be used broadly are the promotion of private investment in resource efficiency or economic instruments including fiscal instruments such as subsidies, taxes and similar schemes which can incentivise (or dis-incentivise) the actors concerned. The “Input Paper by the Indian Resource Panel for a Policy Vision Document” includes the summarised results of a screening of existing resource related policies in India (GIZ, 2016b). Another cross-cutting policy instrument option is the development and standardisation of methods to assess resource efficiency in companies, for products, buildings or planned projects of different nature. This can include calculation methods, balancing rules, criteria to assess resource efficiency on a life-cycle basis and conventions on the forms of data to be used. Further cross-cutting approaches are the promotion of R&D and innovation in and together with enterprises, the creation of public awareness for resource conservation, the introduction of resource related issues in the education system, capacity building support for municipal and regional bodies in resource efficiency policies and last but not least the engagement in international discussions and policy processes dealing with resource efficiency. Concrete best practice examples for cross-cutting measures are discussed under the section 7.2 “Green Public Procurement (GPP)” approaches, section 7.3 “Standards and Benchmarks” to ensure and promote quality in manufacture and performance of RE & SRM related products, section 7.4 “Ecolabelling and Certification Schemes” for promoting and supporting conscious consumption, and section 7.6 “Fiscal Instruments” for incentivising businesses to move towards a resource efficient economy.

8.3 Stakeholder Engagement The United Nations (UN) Sustainable Development sub-goal 16.7 states that the UN strives to “ensure responsive, inclusive, participatory and representative decision-making at all levels” (UN, 2015). The participation of stakeholders in political processes can significantly contribute to the successful implementation of political goals. Obviously there is a risk that particular interests, not representing the optimum solution for the majority in a society, get too much attention and that public policy gets influenced by vested interests. To overcome this risk, policymakers should moderate discussions with stakeholders in a proactive and professional manner. Moreover, independent sources of scientific knowledge are needed to verify or falsify arguments made in the discussions.


However, it is also true that stakeholders have a tremendous knowledge about the concrete situation, the context and inter-relationships in their field of activity. Policy makers and implementing bodies cannot know all details of the economic, technical or societal processes they intend to influence. Consequently, the ways in which policies are formulated and implemented runs the risk of neglecting important aspects and achieve political goals sub-optimally. Targeted access to practical expert knowledge can help to overcome such barriers to optimal governance by providing decision-makers with information that allows them to formulate and implement policies in the best possible way. If actors that are affected by a policy are consulted before a policy is formulated or when it is implemented, a learning process on the whole bouquet of societal interests may be started. This can enable actors to integrate their views within a broader context and learn more about possible collective optimum solutions. It can be very helpful for political and administrative decision-makers to learn from the discussions between the different stakeholders affected by a policy. This can help maximise acceptance and legitimacy of political activity. Broad stakeholder processes usually include actors from public administration, scientific community, businesses and civil society. They can be organised before policy formulation to learn more about specific focus areas of a given policy and for their support in implementation. For crucial parts of political programmes, regular milestone workshops can be organised with stakeholders to discuss progress, hurdles and drivers of success. This can result in learning more about the reasons a policy does or fails to achieve its objective. There are numerous examples for such stakeholder involvement processes in policy formulation and implementation in Germany. The principle of corporatism, meaning that the representations of societal actor groups, as e.g. unions, employers, agriculture, industrial sectors or environmental NGOs, etc. are systematically consulted in the formulation phase of policies, that affect these groups, has a long tradition in Germany. One example is the working group on emissions trading (BMUB, 2014). Actors concerned by emissions trading are regularly invited by the government to discuss possible forms of implementation of European law in German law and the way in which goals can be optimally achieved. Working groups work on different aspects. Public actors are setting the agendas of the meetings, moderating the discussions, wrapping up discussions and deciding on how results of discussions are used in policy formulation and implementation. Other examples for broad public consultation processes in policy formulation in Germany include those that took place in the preparation of the first and second German Resource Efficiency Programme – ProgRess & ProgRess II (BMUB, 2016). The public authorities managing the policy formulation processes were continuously in exchange with all relevant stakeholder groups. The exchange was moderated by the public actors and took place systematically in different formats. On the one hand, there were high level meetings between the ministries and core stakeholders from different industry sector associations affected by the planned policy elements. Moreover, thematic workshops with larger stakeholder groups were organised to discuss about core areas of action like indicators, activities and options in the building sector, etc. And finally, a broad public consultation was organised, in which a draft of ProgRess was published, sent out to all kinds of societal and public stakeholder groups, who then had the opportunity to give written feedback on the elements of the draft. Large amounts of


feedback were collected from economic and industry associations, environmental NGOs, scientific and educational actors, public bodies, initiatives and citizens. Public discussions with the stakeholders and interested people took place at conferences of the German Resource Efficiency Network NeRess (VDI ZRE, 2017b). The consultation processes resulted in broad support for ProgRess by relevant stakeholder groups and a policy formulation that took into account many details of societal and business reality without losing track of the political targets of resource efficiency and sustainable development.

8.4 Business Models Business and industry have an important role to play in the necessary transformation to a more resource efficient society. The term “business model” was established in the discussion in the late 1990s. Though many economic scientists have published definitions since that time, no common definition has been achieved so far. Osterwalder is one of the leading scientists publishing on business models since well over 10 years (Osterwalder, 2004). Together with Pigneur, he proposed the following definition: “A business model describes the rationale of how an organisation creates, delivers, and captures value” (Osterwalder and Pigneur, 2010). Another definition is given by Malone et al: “A business model is a description of the activities that a company performs to generate revenue or other benefits, and the relationships, information, and product flows a company has with its customers, suppliers, and complementors” (Malone et al., 2006).

On that basis, one could imagine rather broad or rather narrow interpretations of business models related to resource efficiency. The narrow one would mean that resource efficiency is an essential part of the value proposition of an enterprise. The broad one would mean that each company that takes into account aspects of resource efficiency in its conventional activities has a resource efficient business model as well. The narrow interpretation would cover for e.g. consulting companies helping other organisations to become more resource efficient. Another category could be all kind of providers of product-service systems, not selling products’ possession to customers but the use, maintenance or in other words the possibility to use it to a certain extent. Prominent examples are car leasing and renting schemes or the leasing and renting schemes for electrical appliances, e. g. printers. Such models are often also considered to be part of the “sharing economy”. Literature identifies lots of different products that can be used in that way from chemicals (“chemical leasing”) to machinery equipment (Fischer et al., 2012). These are business models supporting resource efficiency because the incentive structure between suppliers and customers is changed in a way that suppliers get a hard economic interest in maximising products’ life times and minimising costs of operation and maintenance. Tukker et al. (2006) translated the basic rationale of product-service systems into the following visualisation.


Figure 28: Product–service system

(Source: Tukker et al., 2006)

This kind of approach is of course an important part of policy frameworks directed at increasing resource efficiency. At the same time, it is just one element and it cannot be applied to all enterprises or parts of the value chain. For example, an enterprise producing and selling screws will not have the opportunity to change its business model and to lease screws. For many enterprises it would already be an extremely important approach to simply introduce resource efficiency criteria in the management of relevant parts of their production process and it may already be very hard to achieve such changes in businesses from a policy perspective. A simple distinction of different types of business models related to resource efficiency includes the following types:

1. An RE business model that helps others to reduce their resource consumption (this could include a product like a machinery or service like consulting or both)

2. An RE business model where increasing internal efficiency reduces resource consumption leading to cost savings or positive environmental impact.

Barriers to RE business models include limited awareness or knowledge about available RE technologies and suppliers, lack of financial resources or limited return on investment compared to other investment opportunities, lack of government support in form of subsides, tax incentives, etc. and lastly lack of internal motivation. Policy can provide sectoral, even process-specific information and support to convince businesses that conscious resource management does not only reduce the burden on the environment, but that it can reduce cost of production by reducing material and energy costs and thus create competitive advantages for the company. This usually is the case when a company begins to


assess its resource flows, hot spots and losses in a systematic manner. This is not necessarily a change in business model, while it may change the way in which enterprises create value. Another option for companies to acquire economic benefits while reducing the pressure on the environment stemming from a specific product is to develop, produce and sell products that use less resource especially in their use phase. Examples are exceptionally resource efficient cars, electric applications or buildings. Suppliers of such products can gain market shares or even create new market segments. This, too, requires not necessarily a change in business model, while it may change the product portfolio with which enterprises create value. There are horizontal and vertical relations between different stakeholders that may be affected by changes in business models. The vertical relations of a given enterprise include the previous and succeeding parts of the life-cycle, value or supply chain. The horizontal links may rather concern whole sectors than single enterprises and encompass the relations to other actor groups as public, scientific, other economic sectors or interest groups. Appropriate mapping of transactions between the different businesses, their customers, suppliers, and other exchange partners is extremely important. Appropriate business models create value for the customers and are able to capture part of the value. The financial viability for each of the stakeholders needs to be created. For this, viability gap funding (public actors can grant credits or subsidies for their development and/or implementation) may be needed to encourage players to come to the market; this will help address the challenge that integrating/mainstreaming resource efficiency may require high initial costs, compared with conventional businesses and technologies. Overtime, the business model will need to build up scale, upgrade technology to ultimately bring down prices (convert new technology into economic value) and enable competition in the longer run. The financial support for RE business models can also be public funding to partly finance consultation and implementation projects for RE. Public actors could, for example, finance half of the cost of a 5 day-consultation with the aim of identifying possible RE measures. If the consultation results are promising in terms of identified RE measures from an environmental and economic perspective, one could imagine a further financial public support of a part of the investment cost that may be refundable within a generous amount of time in comparison to current market loans.

8.5 Monitoring of the Programme and Further Development As concrete potentials of environmental and economic gains of resource efficiency are very complex to estimate and cannot be predicted exactly, the main aim should be to achieve visible progress in the right direction. This means that resource efficiency is significantly increasing, while negative side effects are avoided or minimised. The Programme then needs to identify a method for monitoring its progress over time. Without necessarily setting fixed targets at all levels from national to state, regional, municipal, sectoral and at enterprise level, the necessity of contributions from all these levels should be made explicit and implemented in the planned


concrete policy actions and the monitoring method needs to capture this in a fair manner to be able to identify gaps and potential strengths. Moreover, specific priority materials or material groups could be highlighted and the respective development discussed in progress reports. This would presuppose a sufficient degree of detail in the collected data. Targets could also be set and there could be monitoring of progress toward achieving them through benchmarking. To give a more clear orientation, a political target of, say, 25% higher raw material and energy productivity to be achieved at the national level within 10 years could be set. Monitoring progress towards a target then calls for definition of clear indicators, data sources, a baseline and the regular formulation of progress reports including qualitative interpretations of indicator values. For identifying the most appropriate indicators, it is advisable that India follows international accounting methods, particularly the conventions of SEEA (UN et al., 2014), in order to measure Domestic Extraction, Imports and Exports as well as derived indicators such as DMI and DMC. We recommend following the approach of the majority of countries and UNEP in measuring resource efficiency as GDP per DMC as a first step. It is further advisable that India improves the measurement of waste and recycling rates as these are central components of resource efficiency programs on an international level. Therefore, statistical bodies of India should be enabled to assess the required statistics (in terms of financial, knowledge and technical requirements). Indeed, as long as India is nearly self-sufficient in terms of materials consumption, the difference between DMC and RMC is rather small. Thus, the imperative of putting the effort in the complex measurement of RMEs of traded goods is rather small during the next few years. However, there are two arguments in favor of India putting effort in measuring RME of traded goods: (1) As DMC is insufficient, increasingly more countries adopt RMC as the key indicator. (2) According to estimations from UNEP (2016), India’s RMC is smaller than the DMC as exports are higher than imports measured in raw material equivalents. As RMC is a better indicator for international comparison, India would currently perform better. However, with increasing future resource demand of India’s economy, this may change. It is also important to highlight here that the indices developed/identified should also be able to evaluate the set standards in terms of the compatibility with the requirements of users (more so in the case of SRM), processes and manufacturing technology in line with current technology and knowhow available in the country. Indices will be sectoral and their standard setting can only be achieved through the inputs of agencies having strong domain knowledge. Sectoral benchmarking can be created which establishes reference points within an industry as to the use of process inputs and the generation of waste per unit of product by the most efficient producer in the sector, globally, regionally, or nationally. These benchmarks then can be considered as tangible targets toward which the inefficient industries can strive towards. Benchmarking is particularly important for resource-intensive industries, such as steel, cement and automobiles. Industrialised countries aim at an increase of economy-wide resource efficiency linked to a decrease of absolute material consumption. In contrast, India is facing an increase in resource demand for future development, amongst other, for further infrastructure and related activities. This may even be linked to a temporary decrease of resource efficiency in spite of a medium or high GDP growth. Therefore, it is advisable to analyse examples of resource demand and efficiency of emerging economies. Based on the results and considering the results of resource


consumption and efficiency in India, an ambitious but realistic aim for economy-wide resource efficiency in India can be suggested/decided by the Indian Resource Panel. Regarding waste and recycling related indicators, India may decide on the improvement of recycling rates of specific waste fractions such as construction materials or metals based on country-wide assessments of waste and current recycling rates. Such indices/indicators will always have to fit in the definition of RE given above translated on the micro-level as output (product output, service, functional unit, monetary values) per resource input. There shouldn’t be too strong deviations from that to ensure coherence, i.e. the indicator given at the macro-level (national, regional, global) above – GDP per amount of material input can be translated on the micro level using “product output/ service/ functional unit or monetary values” per amount of material input. For better understanding of developments happening in target and stakeholder groups, regular workshops could be organised, in which specific drivers and obstacles to resource efficiency in different contexts can be discussed and analysed. The results could then be used in the further implementation of the programme and eventually for the refinement of measures to maximise their impact. To conclude, the approach towards India's First Resource Efficiency Programme as discussed in the previous sections of this chapter, needs to create a constructive foundation for a platform of dialogue between industry and policy-makers on resource efficiency. Policy-makers could subsequently set long-term targets and goals for the stakeholders to comply with and encourage economising of use of natural resources and use fact-based input to inform their decision-making. In future, work for a resource-efficient India, an independent arena for knowledge exchange between the political, business and academic spheres and a continued dialogue on industry competitiveness, innovation and attractiveness is needed. Here, government of India's efforts on digitalisation has a very big role to play, as do resource networks including the Indian Resource Panel and partnerships between the public and private sectors of industry.

The public sector needs to continue to play the role of a client, provider of administrative and logistic support and a financial agent to provide the viability gap funding to enable the creation of a business model. Policy coordination among various branches of government to reinforce resource efficiency throughout the economy can only be strengthened over the medium-to-long term through constant effort. The program may be reviewed after a period of 3-5 years for refinement and readjustment based on implementation experience.


8.6 Conclusion In conclusion, it can be said that there is a wide array of opportunities for businesses, governmental institutions and society to benefit from resource efficiency. The message that needs to be conveyed as an incentive for change to enterprises introducing sound resource management and those who innovate in green product segments and sell them on the market is that they can obtain significant economic gains. While this first Indian Resource Efficiency Programme limits itself to improving resource efficiency and management of secondary raw materials for high-priority abiotic resources, especially in selected sectors, future versions may consider other types of abiotic as well as biotic resources. The implications of trends and patterns of resource use on social welfare (e.g. on food production, drinking water, access to energy, housing and healthcare) also need to be studied in order to devise a holistic and equitable resource efficiency strategy. The resource problematique of India, given its development trajectory, needs to at all points be geared towards goals of resource equity, access and productivity.


Development of a first India-specific RE programme aims at mainstreaming a Resource Efficiency (RE) & Secondary Raw Materials (SRM) strategy which is based on life-cycle approach targeting reduced abiotic resource use, especially of high priority materials in selected sectors, and addressing issues that cut across life-cycle, materials and sectors. To accomplish the same, in the initial phase, the following major action points for the RE Strategy could be emphasised:

1) Recommendation to develop suitable standards (including product design standards) through a consultative process involving stakeholders including ULBs, industry, civil society, registered consumer forums and academia, and with a timely review mechanism to analyse the applicability and success of standards by an independent body of scientific experts.

2) Enabling Viability Gap Funding for RE interventions in a competitive manner with an objective to encourage players to come to the market, build up scale, upgrade technology, and enabling competition in the longer run.

3) Promotion of green public procurement of RE & SRM products.

4) Development of certification and eco-labelling with emphasis on RE & SRM addressing product reuse, durability as well as secondary resource usage.

5) Development of a system to specify, monitor and control waste streams leading to data base for volumes and types of waste and their feasibility for the production of secondary raw materials and thus substituting primary resources.

6) Aiding formation of decentralised industry clusters of MSMEs and OEMs for encouraging systematic exchange of secondary raw materials across industries.

7) Development of consumer awareness especially for communicating standards, labels and rules to aid the acceptance of green purchasing and products from waste recovery.

8) A comprehensive effort towards capacity development of key actors responsible for undertaking or overseeing RE/SRM strategies, including ULBs, MSMEs, as well as the informal sector.

9) Include RE/SRM principles in India’s (I)NDCs commitments.

10) In order to enable Action Points listed above, the creation of an institution with a strong mandate similar to the Bureau of Energy Efficiency (BEE) is recommended that works in

Major Action Points for a Resource Efficiency Strategy for India


coordination with BIS and other related government bodies. The functions of this institution could include the following: a. Development of RE measures across the lifecycle to avoid burden shifting across

stages, sectors and resources (including on biotic resources) keeping in mind ease of implementation.

b. Assessment of RE measures for their effectiveness and potential negative impacts along with providing regular bulletins of findings for stakeholders.

c. Serving as storehouse of best practices and business models.

d. Development of indicators to measure the RE progress in India. Proposed initial suitable indicator: GDP/DMC27 (later changed to GDP/RMC28).

e. Development of statistical models for data generation, analysis and interpretation reflecting on indicator values for environmental, social and economic development. Regularly bringing out reports discussing the state of affairs, and ensuring their wider dissemination.

This institution could be supported by a commercial entity (on lines similar to Energy Efficiency Services Limited (EESL)) that could enable financing technology adoption, capacity building and awareness. Further, it would also be responsible for coordinating research and providing policy advice in coordination with the Indian Resource Panel (InRP).

27 DMC: Domestic Material Consumption 28 RMC: Raw Material Consumption


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