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Market Brief
POWERED BY
Research, Market Intelligence
& Interventions Team
Sustainability Outlook
rmii@sustainabilityoutlook.in
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Market Brief
Sustainability Outlook carried out extensive industry-wide surveys and interviews amongst various stakeholders to uncover latest Energy
Management Trends by Indian Industries. These included:
In depth interviews with 50+ senior business leaders, subject matter experts, and catalysts
Through these interactions Sustainability Outlook has identified key demand side and supply side energy management initiatives. This market
brief provides insights to the following questions:
Power shortages (primarily owing to transmission and distributions losses) currently cost India 0.4% of its GDP. A large number of Indian
businesses use back up energy sources (mainly diesel gensets) and also schedule production activities based on power shortages in their
region; however this is not a long term solution. Also the cost of electricity has been steadily growing and is expected to continue rising in light
of shortage of conventional energy resources.
Industrial energy efficiency is imperative to reduce emission intensity by 2030 and ensure low carbon growth for
India
Planning Commission estimates two scenarios by 2030 for Indias growth the baseline scenario (which incorporates inclusive growth policies
as outlined in the Twelfth Five Year Plan) and a low carbon growth scenario (with additional efforts to bring down overall emissions for India).
In the low carbon scenario, the GDP growth is about 3% lower due to the extra investments required for increasing the share of renewable
energy for the country, however the resultant reduction in total GHG emissions is enormous.
By 2030, in the low carbon growth scenario, the emission intensity of the country is expected to decrease by 42% over 2007 levels. This
reduction would primarily be driven by a shift towards low carbon energy sources (64%), however a large chunk of this reduction in emissions
Market Brief
intensity (i.e. 24%) would be owing to energy efficiency measures expected to be undertaken by Indian industries. Hence businesses have a
huge role to play in implementing energy management measures to ensure Indias transition towards a resource efficient economy.
Figure 2: Growth scenarios by 2030 and need for industrial energy efficiency1
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
Energy management has emerged as a key focus area for government due to its clear business case as also the
existing energy shortage in the country.
Given that industry is one of the key energy guzzlers, the Government of India has rolled out as well as announced a number of energy
management regulations. The most widely acclaimed is the Perform Achieve and Trade (PAT) Scheme rolled out by the Bureau of Energy
Efficiency which is a Cap and Trade mechanism that has put energy efficiency on the strategic priority map of the top energy consuming
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industries
The designated consumers who are required to lower their energy consumption under this scheme have the flexibility of sale and purchase of
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Energy Savings Certificate (ES Certs) . This gives an opportunity to the more resource efficient companies to also translate their efforts into
Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive
Growth)
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Thermal power plants, iron and steel, cement, fertilizer, aluminum, pulp and paper, textile, chlor-alkali
3
Each ES Cert is valued at one metric ton of oil equivalent of energy consumed
Market Brief
cost savings. In 2015, the coverage of the units under the scheme (from the 478 designated consumers) would be increased and also the scope
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would be widened to bring under its ambit three more heavily polluting industries- railways, oil refineries and power distributors .
Sustainable infrastructure driven by voluntary standards and government incentives mandates slowly coming into
play
Over the past few years, businesses have started developing green buildings and have implemented measures for energy, water and waste
management. In fact, India has over 2,380 registered green building projects and is amongst the top five countries in the world involved in
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spearheading the global green building movement . Most of these measures have been voluntary and taken up by forward thinking
businesses; however government is also now proactively developing incentive mechanisms and policies to further instigate the industry into
action.
The Energy Conservation Building Code (ECBC) rolled out by the Government of India sets minimum energy standards for new commercial
buildings having a connected load of 100 kW or contract demand of 120 kVA. The Centre has also given the flexibility to the State governments
to customize the Code based on the geographical conditions of the regions. In 2014, while some states have already adopted the Code, others
are in the process of discussions and rollout. There have also been recent incentive schemes like the proposal for incentivizing green buildings
and formulating regulatory mechanism to monitor construction, operation and maintenance of rainwater harvesting structures of buildings
and campuses by the Delhi Development Authority in December 2014.
Over the next few years, as the construction sector continues to grow, the Code and resultant state policies are expected to play an immense
role in promoting sustainable buildings.
GANGA and YAMUNA of Technopark Phase III Campus, Trivandrum. Image Credits wikipedia
http://www.business-standard.com/article/economy-policy/centre-eyes-higher-targets-for-energy-efficiency-mission114120401384_1.html
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http://timesofindia.indiatimes.com/home/environment/developmental-issues/India-in-top-five-position-in-spearheading-theglobal-green-building-movement-IGBC/articleshow/30368691.cms
Market Brief
Due to the rollout of such forward thinking compliances as well as increasing business consciousness, more and more businesses have been transitioning from the use of compliances as
a checkbox activity to using them as an enabling tool for improving their sustainability strategy.
Domain of Policy Impact
Key policies for promoting resource
management within the Indian industry
Type of policy
intervention
Sustainable
Manufacturing
Sustainable
Facilities
Potential to move
the overall needle
on resource
management for
Indian industry
Current level of
adoption/ uptake
within industry
Sectors
impacted
Electronics
N/A
N/A
N/A
N/A
N/A
N/A
The potential to move the needle on resource management is an estimate of the expected resource efficiency achieved based on actual/expected number of businesses impacted.
The color gradation for sectors impacted refers to the overall number of sectors impacted (High= Many, Medium = Few, Low = One or Two)
Since some of the policies are upcoming, N/A is mentioned wherever the details of the policy have not been announced publicly.
Market Brief
Demand side Energy management: These are initiatives to reduce the consumption of resources in facilities and/or
production. These primarily include process modifications to lower energy/water consumption, changing raw material usage,
effective waste management etc.
Within demand side resource management, 136 initiatives pertained to Sustainable Facilities management primarily for
energy, water and waste management
A total of 95 initiatives were for aimed towards Sustainable Production comprising of energy, waste and water
management initiatives as well as efforts related to use of materials sustainably.
b)
Supply side Energy management: These are initiatives to increase the generation of resources (primarily energy and water)
by businesses for their own use. In case of supply side energy management, there would include efforts like installation of solar
panels, biogas plants etc. and supply side water management would include actions like rainwater harvesting, groundwater recharge
etc. A total of 73 initiatives for supply chain resource management were analyzed within the sample companies primarily for energy
and water management.
While energy management results in direct and significant reduction in cost, the benefits of water management initiatives are often difficult to
quantify. Waste management and recycling initiatives also indirectly reduce expenditure because they lead to a reduction in the cost of raw
materials used.
Some of the key sectoral trends observed are:
Manufacturing industries like textiles, automobile, processed food and beverages focus on demand side management, mainly for
rolling out resource efficient manufacturing technologies. All surveyed businesses with manufacturing units have invested in
improving their production processes, waste heat recovery or in use of chemicals/raw materials which lower energy usage.
Energy management is a key priority for the power, oil & gas sector which directly deals with energy supply and transmission. These
companies focus on demand side energy management as well as supply side by exploring alternative energy sources.
Sectors like IT and IT enabled services, infrastructure and hotels/hospitality focus on demand side energy management primarily for
resource efficient facilities. It may be worth mentioning here that though the number of respondents belonging to the IT and
Hospitality sectors was lower compared to other sectors, the number of initiatives taken by each company was among the highest.
This goes to show that there is scope for implementing energy conservation measures is high even in sectors that are not among the
most energy intensive ones.
Supply side energy management is also gaining prominence amongst various sectors, especially in production heavy unites like
textile, manufacturing, automotive etc. where units are trying to bring down their dependence on external energy sources and
becoming more self -sufficient.
Figure 3: Snapshot of Energy Management initiatives undertaken by various sectors
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
Market Brief
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
1.
Metering Solutions are increasingly being used to track and reduce energy consumption across businesses
Increasingly businesses are putting in measures to quantify their resource usage using metering solutions. In fact, the fundamental step for
businesses intending to improve energy efficiency is to install meters to track energy consumption. Using the results, businesses can determine
the energy intensity in infrastructure and identify areas with a potential for reduction in energy consumption. This data can also help
businesses prioritize the efforts being undertaken.
Market Brief
The monitoring efforts of Indian businesses fall under either of the following three kinds of energy management systems : a) Enterprise
energy management which uses systems to help users monitor and report energy consumption across various business lines within a
corporation; b) Operational energy management which uses systems to monitor and control energy usage in highly intensive equipment like
heating, ventilation and HVAC; c) Information and communication technology energy management which includes systems used by IT
administrators to monitor energy usage by IT infrastructure like data centres, PCs and servers.
The monitoring solutions provide insights into resource usage and are further interpreted by businesses to identify potential areas of energy
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savings. It is estimated that just by tracking usage and reducing wastage, consumers can reduce electricity consumption by at least 15% .
2.
With Indias energy demand threatening to double itself by 2030, the Indian organizations have taken up innovative ways for conserving
electricity. Efficient Lighting solutions can be implemented either before design phase or onto a pre-existing building. Table summarizes
some of the energy efficient lighting solutions that have been implemented by various businesses.
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New buildings can install intelligent daylighting solutions effectively bring down their energy consumption between 20-70% . Existing buildings
can also be retrofitted using technologies like sky-roofs, efficient lighting and solar light pipes with quantifiable impacts for lowering energy
costs
Table 1: Key energy efficient lighting solutions implemented by Indian businesses
Technology
About the
Technology
Case in Point
Measures
Taken
Savings
observed
Day Lighting
New Building
Using natural light during
the daytime instead of
artificial lights by ensuring
proper size and orientation
of windows
ABB Mumbai.
(Heavy electrical equipment
manufacturer)
Sky Roof
Retrofit
Installation of a sky roof/sky
light in a room to increase
the amount of natural light
entering the room
3.
Building Envelope Analysis for reducing energy wastage is being taken up by mainly by the IT and Hospitality sector
Since India has a primarily warm climate, over 40% of commercial building energy is spent in air conditioning and cooling and the main aim of
building envelope analysis is to reduce this load. All the external heat gain of the building comes from the building envelope with the roof,
walls and windows contributing about 30%, 15% and 20% respectively.
Building Envelope analysis involves a heating or cooling load analysis, taking the entire building as a single system. Even simple measures like
using shaded windows can lower heat gain, thereby reducing the load on the air conditioning system. Most of the building envelope analysis
should be done before a building is set up, so as to utilize green building principles most effectively. The orientation of buildings, windows and
opening must allow for cross-ventilation and entry of light, but minimize the heat gain into the building.
Table 2: Key energy building envelope solutions implemented by Indian businesses
Technology
About the
Technology
Building Orientation
By orienting buildings in an east-west direction,
it is possible to maximize the amount of light
infiltration, while minimizing the heat
absorption from the sun.
Wall Insulation
Increase in insulation reduces heat
transfer from the buildings external
surface to its internal walls.
http://www.cognizant.com/InsightsWhitepapers/The-Future-of-Energy-Management.pdf
As per Schneider Electric, a leading provider of metering solutions
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http://www.treehugger.com/clean-technology/intelligent-daylighting-solution-saves-20-70-energy-costs-no-investment.html
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Market Brief
Case in Point
4.
Sustainable alternatives for heating and cooling are gaining prominence in the industry
Heating and cooling are among the most common uses of energy across all sectors. Cooling is used primarily for thermal comfort or for storage
of particular items at a specified temperature in the commercial sector, or for some specific processes in manufacturing. Heating, on the other
hand can be used for a large variety of purposes ranging from cooking, washing, cleaning, sanitization to boilers amongst others .Commonly
used cooling technology to become more energy efficient involve the use of Water cooled chillers and Wind Air Ventilators.
With a relatively small investment requirement, businesses can benefit by significant direct cost savings with a minimal payback period of less
than a year in most cases.
Table 3: Alternative heating and cooling solutions for energy management
Technology
About the Technology
Case in Point
Measures Taken
The chillers spray water into the cooling tower instead of using
air-cooled condenser coils. Water cooled chiller are most
commonly used in buildings larger than 200,000 sq. ft., where the
cooling load is large enough for the increase in efficiency gains to
offset the higher equipment cost.
Mahindra & Mahindra
Replaced 125 electric driven exhaust fans with 225 rooftop wind
ventilators.
Savings observed
Annual savings of 1.26 Lakhs KWh of energy annually resulting in
Initial investment cost of Rs.10.63 lakhs, with monthly savings of
savings of INR 12.6 lakh/ year.
Rs. 1.5 lakhs and a payback period of 7.5 months.
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
http://www.cseindia.org/userfiles/cool_idea.pdf
Market Brief
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
Figure 6: Current level of uptake of initiatives for Energy management within sustainability focused Indian businesses
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
Figure 5 and 6 provide an overview of the uptake of initiatives for sustainable facilities management within Indian businesses. The businesses
can identify themselves as Sustainability Followers, Sustainability Leaders and Sustainability Thinkers based on the level of uptake of their
internal initiatives within the overall industry.
As expected, energy and water management initiatives with high feasibility and low payback period have seen an active uptake for sustainable
facilities management. Within the overall gamut of initiatives that can be undertaken for sustainable facilities management, efforts like energy
efficient lighting, efficient water fixtures etc. have become business-as-usual for sustainability focused businesses (and hence these businesses
have become Sustainability Followers). Some initiatives like the Sewage Treatment Plant despite a higher cost has seen uptake within the
hospitality sector due to compliance mandates. While the efforts being undertaken by these Sustainability Followers are commendable, they
need to step up their efforts and move beyond the low hanging fruits going forward.
Initiatives like wind air ventilators are typically undertaken at factory premises and have a comparatively longer payback period (2-4 years)
with medium feasibility of implementation. And water as a commodity has a very low price due to which there is very little incentive for
businesses to monitor water usage this behavior is further augmented by the higher price of water meters. Hence wind air ventilators and
Market Brief
water monitoring initiatives are currently being taken up by only those businesses which are looking to move beyond business-as-usual efforts
sometimes despite higher investment such forward thinking businesses are Sustainability Leaders.
Initiatives like building envelope require higher investment with a long payback period and mostly done on new buildings hence requires
strategic planning by businesses in advance. Similarly water cooled chillers are medium feasibility technologies for energy efficient cooling in
buildings, however the investment required and payback period are high. Hence such initiatives are being undertaken only by innovative
Sustainability Thinkers who have a strategic long term outlook for ensuring sustainability in their operations and facilities.
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
1.
Up-gradation of existing technologies and processes has longer payback periods but huge benefits
Up-gradation may involve replacing older machines with less energy intensive ones, optimizing process parameters, adding new processes in
the production line to reduce overall energy consumption or replacing old equipment and production technology with more modern ones.
Technology up gradation or improvement of the machines used in processes has led to significant savings in many manufacturing units; even
though there is high capital expenditure and the payback periods purely from an energy savings point of view may be longer than 3 years.
There are multiple benefits of updating old equipment, like flexibility of operation and shorter processing time apart from just energy savings.
Technology Up-gradation
Mindarika (a unit of Minda Industries Group) in Gurgaon Plant
Bhanu Farms, Food processing company
Using new electric based injection molding machine in place of
Upgradation of old capacitors with fully automated capacitor
Measures Taken
hydraulic machine (initial investment of Rs. 40 lakhs)
panels that constantly keep the power factor to 0.9
Energy savings worth Rs. 18.37 Lakh annually
Energy savings of 850 units a day which translates to annual
Savings
savings of Rs. 29.7 lakhs
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
Case in Point
Market Brief
Savings
Owing to the high capital cost of technology up-gradation, Government of India provides subsidy to manufacturing units under the Credit
Linked Capital Subsidy Scheme (CLCCS) covering above 1500 technologies and machineries under 51 sub-sectors. Due to the positive uptake of
the scheme within the industry, the government is now planning to expand this list of technologies and sectors eligible for subsidy to promote
adoption of upgraded technology.
2.
Industrial processes require transfer and exchange of heat for cooling down or heating up the main medium. During the cooling process, the
heat exchanger fluid heats up and this heat can be captured for reuse within the heating cycle. This type of industrial heat recovery efforts
saves a lot of energy, since the additional energy required to heat up the fluid by a few degrees is a lot less than heating it up from room
temperature. The reverse is true for fluids that are cooled in industrial processes. This is usually done through use of boilers, evaporators,
condensers, etc.
Companies like Shree Cement have successfully used waste heat recovery to generate 46MW of green power, leading to a reduction of CO2
emission by 1.2 lac tons/day.
3.
Businesses observe huge benefits in simple process optimization and timed production
By simply optimizing current production processes, businesses across industries have been able to save significant amount of money and
energy, while improve productivity.
Process optimization and timed production
Case in Point
Hindustan Unilever (Fast moving consumer goods company)
Mahindra & Mahindra (automobile manufacturers)
Measures Taken
Process optimization involving pre heating of steam
Eliminated the Sealer Oven in their paint shop
Savings
25% reduction in energy consumption in the process
Saved 5 Lakhs KWh and 175 MT LPG annually
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
Market Brief
Figure 9: Current level of uptake of initiatives for Energy management in sustainable production within sustainability focused Indian businesses
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
It is interesting to note that while businesses are undertaking initiatives for sustainable production, more than 60% of these initiatives have
become business as usual within the industry. However, unlike sustainable facilities management, a large number of businesses have moved
on to undertake the next level of sustainability initiatives.
Initiatives like installing heat recovery unit for energy efficiency, improving process integration for energy and water savings, wastewater
recycling etc. have become a fair practice amongst sustainability focused businesses (Sustainability Followers). Many such sustainability
focused businesses have also started using alternatives to plastic packaging and recycled material during production. Although these initiatives
are not always highly feasible with short payback periods, many businesses are undertaking sometimes in response to compliance mandates
and also due to the direct observable benefits. Hazardous industrial waste management is one of the most expensive waste management
measures, but since it is mandated by law, industries have put it steps for implementation.
Some forward thinking companies have gone further than the low hanging fruits/compliance mandated initiatives to mainstream sustainability
in their production (Sustainability Leaders). These businesses are often undertaking cost intensive initiatives like technology up gradation for
better energy and water management and also increasing the efficacy of production for creating lesser material waste. These businesses are
also making efforts to create closed loop systems to reuse waster, energy and waste within production systems itself as much as possible.
Sustainability Thinkers are innovative forward thinking businesses who are going even further to automate processes and investing in R&D to
develop technologies and products for reducing resource consumption.
It is pertinent to note here that all businesses undertake initiatives depending on their technological need, level of resource consumption and
funds available sometimes in response to mandates or sometimes for thought leadership. Hence, most often the result is that a company
might be exceptional in managing one aspect of resource consumption (for instance, energy) and lagging in other efforts (for instance use of
materials sustainably). There are hardly any Indian businesses that can be sustainability thinkers in all resource management dimensions since
sustainable production is an ongoing journey.
Market Brief
Figure 10: Snapshot of supply side energy management trends in Indian businesses
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
1.
Despite the high upfront capital expenditure, renewable energy generation technologies are being implemented by a
large number of corporates
Decentralized solar power systems are the most popular choice for industries and businesses. Most companies have systems with battery
back-ups that can store the surplus energy generated during the day and utilize it at night. Unlike solar panels which can be installed on the
roof of any building, installing wind turbines is a project on a much larger scale. The other issue with wind power is that it is very location
specific, and detailed analysis is needed before the project installation can begin.
Solar water heaters provide a popular alternative for water heating, used for low temperature applications (60-90 degrees C) like cooking,
cleaning, etc. While the temperature of the water is not high enough for industrial use in most cases, it is ideal for domestic purposes, and can
be used in hotels, kitchens and other commercial buildings that require hot water.
Generation of Energy from Biomass, is a particularly attractive option for industries that already produce biodegradable waste, like sugarcane
manufacturing, food processing etc. Energy can be generated from Biomass by either directly incinerating waste material like firewood, rice
husks, crop stalks, or by producing Biogas from organic materials such as animal dung, canteen wastes, and industrial wastes. The gas
essentially comprises of methane which has a high calorific value.
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Estimates show that there exists a potential of generating 956 MW of energy from waste by 2017 . With technological improvements,
improved waste management systems and better quality of source waste due to increased segregation, the potential capacity for waste to
energy plants is expected to grow to approximately 2200 MW by 2030 and 5400 MW by 2052 and hence biomass can play an important role.
Biogas can be generated from organic material and has a low carbon footprint when used as a fuel. Recognizing this, a lot of businesses are
using their waste to generate biogas and generate heat from combustion of the gas. Biogas uses the organic raw material as a fuel and it is
incinerated to produce heat and electricity, either by pyrolysis or gasification.
For instance, automotive major, TVS Motors has installed a Biogas plant (using waste food) in their facility which has a feeding capacity of
5MT/day which is currently generating 60-70 kg of gas. Another leading example is Kirloskar Oil Engines is also generating 500kg biogas per day
from kitchen waste.
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Report Value Out of Waste: The USD 1.5 Billion Opportunity, cKinetics, Feb 2015
Market Brief
2.
Flare Gas Recovery has a fair number of takers amongst oil refineries
In oil refineries, flare gas is burnt off as a pressure relieving mechanism. However, some oil and gas companies have initiated flare gas recovery
projects by which they do not waste the energy in the flare gas by combustion, but instead the gas is recovered and burnt as a fuel to generate
heat needed for the operations. Hydrogen is generated as a by-product of certain industrial processes, and it can then be stored and used as a
fuel. This is mainly done by oil refineries.
3.
Improved energy storage systems involves the use of large capacity batteries that can be used with renewable electricity generation like solar
or wind power to store the energy for use, as and when required. The larger the capacity of the battery the longer the back-up provided and
the more reliable the system becomes.
However, due to the prohibitively high cost of advanced energy storage systems, very often, it is not an economically viable option still a few
front runners have started using energy storage systems to back up their renewable energy initiatives.
Case in Point
Hydrogen Generation
Market Brief
Figure 11: Feasibility vs. Payback Period of Initiatives for Sustainable Production
(Feasibility represents the ease of access to technology and ease of implementation. Payback period between 1-5 years has been considered low, and more than
5 years has been considered as high.)
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
Figure 12: Current level of uptake of initiatives for Energy management in Supply chain
Source: Sustainability Outlook analysis (based on data from The Final Report of the Expert Group on Low Carbon Strategies for Inclusive Growth)
Market Brief
This brief is an outcome of on-going industry engagement efforts by Sustainability Outlook to capture the resource sustainability trends in the
Indian industry.
To get engaged in the process of identification of sustainability trends in India for 2015, nominate your sustainability initiatives for the 2015
Parivartan Sustainability Innovation Awards
To receive the reports, get engaged or to learn more about the on-going work related to Smart Cities, please email us at
mait@sustainabilityoutlook.in (Market Access & Insights Team at Sustainability Outlook)
Market Brief
Image: Flickr