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India’s MSME sector largest after China’s. But no one is talking about its role in emissions

Adopting bold measures to transition to clean energy by India’s small businesses would enable them to compete in the global market.

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India has recently been ranked as the country with highest amount of atmospheric Particulate Matter 2.5 – 40 microns per cubic metre, making it one of the deadliest nations due to air pollution. And yet, not many are talking about the role our MSME sector has to play in mitigating climate change.

India’s small business community is the second largest after China, with over 64 million traders, manufacturers and retailers. But seldom have their role been considered in reducing emissions, decarbonising, and thereby mitigating climate change.

We have been studying the linkages between air pollution and the global small business communities for several years now. We have also worked with several of them in India, especially in Surat, where the air pollution levels have surpassed national air quality standards. There are several practical and feasible solutions that have emerged from our engagement with them.

Also read: Understanding human footprint on climate: Research for which 3 scientists got Physics Nobel

Dangers of PM 2.5

The World Health Organization’s latest Air Quality Guidelines, released after a gap of 15 years, confirms the fatal repercussions of pollutants in the atmosphere. It points to new findings on the dangers of Particulate Matter that are 2.5 microns (PM₂.₅) or smaller. The WHO says “PM₂.₅ can even enter the bloodstream, primarily resulting in cardiovascular and respiratory impacts, and also affect other organs.”

India has the world’s highest concentrations of PM₂.₅, about 40 microns per cubic metre, making it one of the deadliest countries when it comes to air pollution. This does not come as a surprise because New Delhi’s air pollution has been making global headlines in the past few years. The Global Burden Disease (GBD) study suggests that it causes a fifth of all deaths in the country annually— nearly two million people died in 2019.

Air pollution also significantly impacts people’s quality of life and health, especially those of industrial workers. This adversely affects industrial productivity, which eventually impacts the economy. Another 2020 WHO study estimates the economic cost of air pollution at a whopping Rs 14 lakh crore, approximately $188 billion, or 7 per cent of India’s GDP.

Also read: Oil drills, safaris — Amendments to forest act could increase economic activity in reserved areas

Small business’ pollution burden

Half of all outdoor air pollution in India is caused by industrial emissions and one third by automobiles. The common catalyst contributing to both industrial and vehicular emissions is fossil fuels. As a subset of industries is India’s sprawling small business landscape categorised as Micro, Small, and Medium-sized Enterprises (MSMEs). There are 63.4 million small businesses in the country. The second largest small business community globally after China, and a third of them are manufacturing companies. This sector contributes over 40 per cent of the country’s exports and a third of the nation’s GDP.

There are over 200 energy-intensive manufacturing clusters in the country. The energy use of MSMEs in India is estimated to be equivalent to 50 million metric tonnes of oil used per year. Therefore, adopting clean energy measures by this often-overlooked sector could significantly reduce air pollution, mitigate climate change, and boost the economy. In China, improvements in energy use led to a savings of 11 per cent of power supply between 2000 and 2014. It also avoided 1.2 gigatons of carbon dioxide (CO2) emissions in 2014 alone – equivalent to planting nearly 20 million trees over a decade. These benefits in energy efficiency and subsequent reductions in air pollution were achieved through mandatory programmes in the industry, a building retrofit, and a consumption metering reform.

To address air pollution, India has ambitious plans to increase renewable power production and energy efficiency of a wide range of infrastructure, including the grid and the construction sector. However, the MSME sector lacks mass adoption of these clean energy measures. Few major reasons include the lack of capital to invest in renewable resources like rooftop solar, and lack of energy usage profiling, and benchmarking of the production process.

MSMEs in India depend on a range of fossil fuels, the bulk of which is coal. Others include light diesel oil, high-speed diesel, natural gas, and biomass fuels like wood and bagasse. WRI analysed the MSME cluster in Surat, Gujarat, to study the linkage between energy and air pollution. Surat is a non-attainment city, meaning it has air quality worse than the National Ambient Air Quality Standards. The city has been selected under the National Clean Air Programme (NCAP) to reduce 20-30 per cent PM emissions, taking 2017 as a base year.

Surat is one of the oldest textiles and diamond processing hubs in India. Industrial development in Surat is attributed to the presence of these units, along with chemical and petrochemical industries (District Industrial Profile – Surat (2018-2019)). WRI analysed data provided by the Gujarat Pollution Control Board (GPCB) and postulated the energy consumption patterns in MSMEs. We identified interventions having the potential to improve air quality and accelerate transitioning to cleaner energy sources. These interventions can well be applied to other similar sectors.

The foremost challenge in the MSME sector is absence of data to evaluate energy consumption and emissions. A significant number of MSMEs neither meter nor monitor their energy and fuel consumption. They need to begin with simple automations, which could revolutionise working practices, improve process productivity and reduce energy use.

MSMEs often lack technological expertise and are unaware of recent advancements. They commonly use small to medium-sized boilers to produce energy. Currently, the fuel used for firing these boilers is predominantly coal, a major emitter of Particulate Matters. Small boilers are significantly inefficient compared to large ones by 30-35 per cent, and incur more energy loss. Moreover, small enterprises often do not maintain Air Pollution Control Devices, or APCDs. Our study in Surat revealed over 70 per cent of the industries had either inadequate APCDs, or were poorly maintained. Replacing the small boilers with energy-efficient common units attached with sophisticated APCDs would reduce air pollution in the Surat cluster by 60-70 per cent, and would cut fossil fuel usage by 25-30 per cent. This would in turn improve efficiency and reduce CO2 and PM emissions.

Also read: ‘It’s like a dam exploding’: the man who swam the Arctic recounts how climate change ‘feels’

Technology prioritisation

Small businesses do not prioritise technology adoption due to capital limitations, market dynamics, profit pressures, and owners’ focus on sales. Government departments have several programmes and subsidies to enable clean energy measures and provide for technological upgradation for this sector. However, pollution control boards, sector-specific ministries, and industrial development authorities must collaborate to have cluster-specific ‘Resource Efficiency Plans’ to address clean energy concerns.

Additionally, any external crisis like earthquakes and epidemics could be fatal to small businesses. The disease burden study states that exposure to workplace pollutants like PMs, carbonic compounds’ fumes, dust, and oxides of nitrogen and sulphur have already damaged workers’ lungs due to reduced use of personal protective equipment. We now have more knowledge that damaged lungs are more vulnerable to the Covid-19 virus, leading to severe conditions among India’s daily wage labourers. (Occupational Health and Safety Practices at Workplace during COVID-19 Pandemic, A Viramgami et al, 2020)

As India is among the most vulnerable nations to climate change, addressing clean energy measures is imperative to tackle it. Adopting bold measures to transition to clean energy by India’s small businesses would not only significantly mitigate the effects of climate change, it would enable them to compete in the global market, as increased awareness about corporate practices is influencing consumers’ loyalties. 

Kajol @kajol19 and Zahir Shaikh @ZGSHAIKH are researchers with WRI India’s Energy and Cities Programmes, respectively. Kunal Shankar @kunalshankar leads communications for WRI India’s Energy Programme. Views are personal.

(Edited by Anurag Chaubey)

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