Green Entrepreneurship and Sustainable Development – Challenges for MSMEs
Unprecedented climate action has prompted countries and corporations to address climate change since 2019. Sustainability is high on the business and political agendas throughout the world, with many nations aiming for carbon neutrality in the next decades. Surprisingly, the net-zero idea and the United Nations’ Sustainable Development Goals (SDGs) are inextricably intertwined. As a result, the shift to a more ecologically sustainable future is a larger step toward fulfilling the UN SDGs.
Placing climate change at the centre of its environmental policy, India made major vows in 2021, with Prime Minister Narendra Modi declaring at the critical international climate gathering COP 26 that India is the only country executing on the Paris Agreement’s obligations in letter and spirit.
From aiming to become a net-zero carbon emitter by 2070 to generating 500 gigatonnes of non-fossil energy capacity by 2030, India has led from the front on environmental problems this year, capturing attention worldwide.
Furthermore, the Micro, Small, and Medium Enterprises (MSMEs), which are considered the backbone of the economy, have emerged as critical stakeholders in reaching global climate obligations. The main worry in India is the hurdles and subsequent support that would be required to accomplish sustainability goals.
According to experts, millennials have played a huge role in creating awareness on sustainability and bringing up more sustainable options like reusable cups, metal straws, reusable cloth bags etc.
The major challenge with waste management is that most of the waste (around 75%) produced in India is recyclable but unfortunately only around 30% of it gets recycled. This is due to the lack of proper guidelines and means of disposal of waste.
MSMEs in India have experienced several problems, which have been worsened by the unprecedented pandemic. When such actors are fighting for survival, they place little emphasis on honouring climate pledges and transitioning to a low-carbon economy that ensures long-term development. Furthermore, the absence of a strategic framework to steer the transition to a low-carbon economy exposes the industry to significant risk.
One significant disadvantage that MSMEs confront is the application of energy efficiency standards due to unfavourable economics of scale. They must also deal with antiquated technology, gaps in skills, business capacity, and finance, a heavy regulatory load, and a scarcity of low-cost investment.
Industrial emissions account for half of all outdoor air pollution in India, with autos accounting for one-third. Fossil fuels are a typical contributor to both industrial and automotive pollution.
The MSMEs are a subset of sectors in India’s enormous small company environment. The country has 63.4 million small enterprises. After China, it has the world’s second-biggest small company community, with one-third of them being manufacturing firms. This industry accounts for more than 40% of the country’s exports and one-third of its GDP.
The country has about 200 energy-intensive manufacturing clusters. MSMEs’ energy consumption in India is estimated to be comparable to 50 million metric tonnes of oil used per year. As a result, this often-overlooked sector’s adoption of clean energy measures may dramatically cut air pollution, alleviate climate change, and benefit the economy.
To combat air pollution, India has ambitious plans to enhance renewable energy output and energy efficiency across a variety of facilities, including the grid and the building industry. However, these sustainable energy solutions are not widely used in the MSME sector. One of the primary causes is a lack of funds to invest in renewable resources such as rooftop solar, as well as a lack of energy usage profiling and benchmarking of the manufacturing process.
MSMEs in India rely on a variety of fossil fuels, most of which are coal. Light diesel oil, high-speed diesel, natural gas, and biomass fuels such as wood and bagasse are among the others. WRI examined the MSME cluster in Surat, Gujarat, to investigate the relationship between energy and air pollution. Surat is a nonattainment city, which means that the air quality in the city is poorer than the National Ambient Air Quality Standards. The city has been chosen by the National Clean Air Programme (NCAP) to cut PM emissions by 20-30% using 2017 as a baseline.
Surat is one of India’s oldest textile and diamond processing centres. The existence of these units, as well as chemical and petrochemical industries, is linked to Surat’s industrial development (District Industrial Profile – Surat (2018-2019)). WRI examined data from the Gujarat Pollution Control Board (GPCB) to hypothesise energy consumption trends in MSMEs. We found measures that have the potential to enhance air quality while also hastening the shift to greener energy sources. These initiatives might very easily be applied to other industries.
The most significant difficulty in the MSME sector is a lack of data to assess energy usage and emissions. A large majority of MSMEs do not metre or monitor their energy and fuel use. They should start with small automation that can revolutionise working processes, increase process productivity, and minimise energy consumption.
MSMEs frequently lack technical knowledge and are ignorant of contemporary technological breakthroughs. Small to medium-sized boilers are often used to generate energy. Currently, the fuel used to power these boilers is primarily coal, which is a major source of Particulate Matter. Small boilers are 30-35 percent less efficient than large boilers and cause higher energy loss. Furthermore, small businesses frequently fail to maintain Air Pollution Control Devices or APCDs. Replacing the tiny boilers with energy-efficient common units linked to advanced APCDs will reduce air pollution in the Surat cluster by 60-70 percent while reducing fossil fuel use by 25-30 percent. As a result, efficiency would improve while CO2 and PM emissions would be reduced.