Intro: This time on the Socio Economic Voices, we have Shalini Goyal Bhalla, Circular Economist & MD, International Council for Circular Economy (ICCE) sharing deep insights about the future of the Indian masses and its economy amid the severe threats that drastic climate changes are posing to it. India has already announced a ban on single-use plastic starting July 01, 2022 - a move that is being hailed abroad. But a lot more needs to be done. So what should be the focus over the next decade? Speaking to Senior Journalist Mahima Sharma, Ms Bhalla asserts that when businesses innovate to bring in new approaches towards a better climate, this action generates more profit opportunities for them. Demand for reverse logistics, remarketing, remanufacturing, refurbishment, and recycling would grow, new business models would be generated. Thus, Ms Bhalla suggests promoting innovative technological business models and use of digital technology towards better waste management. Also, she emphasises that the fashion industry (which is responsible towards a large waste generation as well as depletion of resources) needs to be reigned in, made more responsible and ethical by re-thinking rethink not only what they are selling to customers but also how much. This and more in an intense interaction below:

MS: As a Circular Economist, what current picture do you have of India that has claimed to achieve Net Zero Emission Target of 2027? Please share both sides of the picture, as well as how can India meet this target in reality considering that India has revised its target from 2050 to 2070.

SGB: At the COP26 climate summit in Glasgow in 2021, hon’ble PM Modi said that India will achieve net-zero emissions by 2070. This was one of the five major commitments he made on behalf of India, to mitigate climate change. India’s commitment to reach 40% of installed electric capacity from non-fossil fuel-based sources has been achieved, 9 years ahead of schedule. The target of 10% ethanol blending in petrol has been achieved 5 months ahead of the November 2022 target. This is a major accomplishment given that blending was hardly 1.5% in 2013-14 and 5% in 2019-20. India has already achieved emission reduction of 28% over 2005 levels, against the targeted emission reduction of 33-35 % by 2030. But then it's important to understand that electricity is only 18% of our energy. 82% of energy in India is very hard to abate sectors like refinery, steel, fertiliser, long distance transport. These are all highly polluting sectors where coal or fossil fuel is used. Even 100% renewable electricity will make very little difference unless these hard to abate sectors go green by using green hydrogen.

MS: There have been several calls for banning the plastic, rules and laws also announced in some states. End result is quite sad with plastic trash just growing by mounds each day. Can a developing nation like India, actually ban plastic? If not, then how can India achieve high levels of sustainability without diminishing the profitability of its shrinking economy?

SGB: The debate between the plastic industry and environmentalists remains an area of concern. Countries need to emphasise on mismanagement of plastic waste and concerns around its production. The latest amendment in Extended Producer Responsibility (EPR) policy introduced by MoEFCC in India and its targets are meant to ensure the end-of-life management of plastic waste. The 17% clause will bring recycled plastic back into circulation. Along with these measures, we need to address the challenges linked to greenwashing as a strategy to avoid taking actual effective measures against plastic pollution. (Note: The term Greenwashing, is derived from the word "whitewashing" to describe a more modern concept: pretending to be more environmentally friendly than you actually are - hence the word "green".) Key emphasis should be on redesigning products and processes to implement the three R(s) in the plastic value chain - Reduce, Reuse, and Recycle. Techno commercial assessment of various technologies and processes should be carried out to take forward the sustainable alternates.

MS: Recently we read - ‘A law to Recycle e-Waste, Push to Startups for Battery Manufacturing is the Centre's latest 'Circular Economy' Agenda.’ But then, the charge for these batteries or furnaces comes from Coal-based electricity. So how soon will India be able to phase out Coal as the main power source? And what steps need to be taken to strengthen the moves towards the same?

SGB: When India has to grow rapidly, it will have to do this on the back of a circular economy. One of the key things that India has done in recent times is to have very rapid advancement in its renewable energy. We are the only G-20 country which has met its NDC targets. India took upon itself the task of going in for massive Renewables. India is climatically blessed, and therefore we went in for massive, massive renewables. We went in for wind, we went in for hydro. We've done about 110 GW of renewables. This has been possible because of a very top-class entrepreneurship and young entrepreneurship which disrupted the sector. But, the challenge for India is that we also import about 160 billion worth of fossil fuel. The Indian economy is growing on the back of imported fossil fuel. The prime minister said in his Independence Day address, that by 2047, by the time India becomes 100, we must become totally fossil fuel independent. This can only happen if we keep strengthening our renewable sector. Be it solar, wind or green hydrogen.

MS: What kinds of strict laws and policies need to be brought in so that the ‘end consumer’ becomes more cautious towards a safe environmental economy? Please mention State and Central steps both as this needs to work as an overall plan.

SGB: In financial year 2020, over 95 percent of the wards in India enjoyed 100 percent door to door waste collection service. In the past few fiscal years, service coverage increased significantly, resulting in improved waste management and disposal. However, the factors like high cost of segregation at municipality level, lack of standardisation in municipal waste collection systems, lack of focus on waste reduction and waste minimization amongst the generators, difficulties in collecting small multilayered packaging are major challenges. So, what we need is the mapping of social entities engaged in managing or guiding waste management to promote collective and informed efforts that can be promoted at the municipal level. Promoting innovative technological business models and use of digital technology to promote ethics and transparency in waste management is the need of the hour. Promoting Lifestyle for the environment (LiFE skills) is essential so that each citizen becomes a pro-planet person. India can look at introducing tax on landfill to promote waste segregation at sources like the EU.

MS: At the recently held India Circular Economy Forum 2022, your address highlighted: "It is estimated that a circular economy path adopted by India could bring in annual benefits of INR 40 lakh crores or approximately USD 624 billion in 2050." Please throw a big spotlight on the same, as to how this can be achieved and the detailed steps towards the same, for the understanding of the common masses.

SGB: Circular economy aims at more productive use of material inputs. It suggests looping of products, components, and materials. New economic models, more activity in business would boost the economic growth. If we study the economic modelling for Europe, it has shown a reduction in annual cash-out costs of € 0.6 trillion (4.5% of the EU's GDP). It would increase the GDP by 7% by 2030.¹ Similar impact might be expected in India. Reduced annual cash-out costs of INR 14 lakh crore (USD 218 billion, 11% of India's GDP).

Quantifying these impacts for India would require detailed modelling of the effects on GDP of the lower cash-out costs. This analysis would also have to quantify opportunity costs and costs of externalities and consider consumption increases triggered by higher household income. In the circular economy scenario, cash-out cost in the three focus areas would be INR 14 lakh crore (USD 218 billion, 11% of India's GDP) lower in 2030 and INR 40 lakh crore (USD 624 billion, 30% of India's GDP) lower in 2050, compared with the current scenario. ²

MS: You have also mentioned "ROI-based solutions to companies to fasten the circular transition," at some forums. Please explain the concept and the win-win situation in detail. And where all this has already been successfully implemented in India, via ICCE?

SGB: Introduction of Circular economy principles would generate new ideas, new ways of working, more use of digital technology. Innovation in these areas would help small businesses to grow. It will also create new business opportunities. Uncovering the issues and challenges will help businesses innovate to bring new approaches. This in turn will generate more profit opportunities for them. As the demand of reverse logistics, remarketing, remanufacturing, refurbishment, and recycling would grow, new business models would be generated. Focusing on service models would open new markets for engaging customers. Service model contracts that build long term customer relationships would become popular. With the increasing recycling units, dependence on virgin material would reduce. This would significantly reduce the costs of virgin material procurement for businesses. With better system designing, lesser material used would reduce the dependence on volatile raw material prices. This would help strengthen the resilience.

I am happy to share that one analysis showed that circular economy approaches could save INR One Lakh Crore in 2030, increasing to INR Two Lakh Crore, on annual material costs for constructing residential and commercial buildings. Similarly, in the circular economy scenario, consumption, and therefore total costs of synthetic fertiliser would be 39% lower in 2030 and 62% lower in 2050 compared with the current development path. These results are consistent with analyses in other economies. Detailed product-level modelling of complex, medium-lived products in the EU found annual net material cost savings of up to USD 630 billion in an advanced circular economy scenario. Analysis of fast-moving consumer goods showed additional, global savings potential of up to USD 700 billion. Countries like India that have a growing middle class and expect more material-intensive consumption stand to capture a significant share of this value. ³

MS: In which all sectors and what all kinds of Circular Economic measures must India adopt on a priority basis so as to create job opportunities? Please answer this in deep details, listing every key sector possible that you eye, so as to impart strength to the job sector which has taken a major hit due to the Pandemic.

SGB: Looking at India's growth especially after the pandemic reveals a few important facts. India has shown exemplary resilience in recovering from a crisis due to the COVID-19 pandemic. A lot of this happened at the back of the MSME sector. Construction, automobile and manufacturing amongst the top five fastest developing sectors in India, needs to concentrate on these sectors while we make transition in the energy sector.

The Indian automobile sector is heading into 2022 with a bullish outlook in its effort to reclaim pre-pandemic sales volume, despite manufacturing being hampered by semiconductor scarcity. Furthermore, the sector has the strong backing of the government with favourable policies, such as the FAME-II scheme, the enhancement of incentives for two-wheelers, and the launch of the production-linked incentive (PLI) scheme sector and PLI for advanced chemistry cell, worth INR 26,000 crore and INR 18,000 crore, respectively. The vehicle scrappage policy will pave the way for making this sector circular.

India's renewable energy sector is expected to boom, with an estimated investment of more than USD 15 billion as the government focuses on EVs, solar equipment manufacturing, green hydrogen, and meeting the ambitious 175 GW renewable capacity target. India has somewhat more than 150 GW of installed renewable energy producing capacity, with an aim of achieving 175 GW by 2022. Solar would provide 100 GW, wind would provide 60 GW, bio-power would provide 10 GW, and small hydropower projects would provide 5 GW. FDI inflows into India's non-conventional energy industry totaled USD 10.28 billion between April 2000 and June 2021, according to statistics supplied by the DPIIT (Department for Promotion of Industry and Internal Trade). In 2018, the country's new renewable energy investment was USD 11.1 billion.

MS: In India, MoEFCC, i.e. Ministry of Environment, Forest and Climate Change, plays a pivotal role in promoting the circular economy across all key sectors. A regulatory authority like CPCB has mandated waste-prone industries (plastic and electronic manufacturers in particular) to secure the EPR authorisation. What would be your advice/ suggestions to them (as the MD of ICCE) in terms of what more needs to be done? As well as what strategies adopted so far, need an upgrade in terms of the use of modern technology?

SGB: The NITI Aayog identified 11 areas to facilitate transitioning from linear to circular economy and to give an impetus to manufacturing through the circular economy process. One of the key areas of consideration was EPR (Extended Producers’ Responsibility) in areas like electronics, solar manufacturing where producers’ responsibility has to be very critical. As India advances as a manufacturing nation, the design component is very critical. Multi-level stakeholder participation is critical in ensuring that businesses are not impacted. Industry-academia partnerships that help build case studies supporting transition to circularity should be developed. Key emphasis should be on redesigning products and processes to implement the three Rs in all sectors.

I see that India needs a body/centre/institute that could focus on managing waste reduction, behavioural change, climate change, cleaner production and circularity. We need to foster local and global collaboration on technology sharing and learning from good practices. Capacity building is required to enhance the development, adoption, use and dissemination of technologies for a 'just' and 'responsible' transition. Promoting Research and Development on system thinking by involving academia will promote development of new business models that could elongate products lifespan. Use of technology and digital platforms would enable a secondary waste market. India needs to also look at the transboundary regulatory frameworks to enable the trade opportunities.

MS: How can the circular economics be made to work better for a developing nation like India, to reduce the impact of environmental crisis and climate change? Also, what more needs to be done/ can be done to strengthen India towards a robust GDP in the next ten years?

SGB: Do you know that we are going to see 500 million Indians getting into the process of urbanisation in the next five decades? Thus, it's very important to do sustainable urbanisation on the back of renewable energy, public transportation, recycling of water, waste management, secondary waste use by incorporating the principles of Circular Economy. We need to take the path of regenerative growth to sustain India's growth story. ‘Changing lifestyle’ where we are able to bring in circular economy concepts is the need of the hour. The Hon’ble Prime Minister, in his speech at COP26 in Glasgow had talked at length about LiFE (Lifestyle for the environment). It's very critical that we change lifestyles to complement the circular economy process. We need to foster local and global collaboration on technology sharing and learning from good practices. Capacity building is required to enhance the development, adoption, use and dissemination of technologies for a ‘Just’ and ‘responsible’ transition.

While we grow, we must ensure that the growth should be equitable, inclusive and green. We need to design cost-effective and politically implementable policy measures; robust indicators, data and mechanisms to help track progress; and dedicated platforms and innovative ways to facilitate knowledge sharing and cooperation at the international level.

if we do not change course, the impact on our quality of life and health will be significant, with an increasing economic burden. More and more financial and human resources will need to be spent to make enough water available and drinkable, keep the land productive, ensure that the air is breathable, and supply industry with the raw materials it needs.

Green growth is not a replacement for sustainable development. Together with innovation, going green can be a long-term driver for economic growth. Thus, inclusive green growth offers an optimistic, realistic alternative to countries looking for new sources of growth that make economic, environmental and social sense.

MS: Fast fashion is also a cause of depleting resources. What kind of circular economic policies are needed in India, which is one of the largest consumers of fashion in the world, to strike a balance with our already diminishing resources like water?

SGB: Fast fashion has a huge impact on the environment. In 2015 alone, the clothing industry was responsible for 1.714 billion metric tons of carbon dioxide emissions and used 141 billion cubic metres of water. Water-dyeing textiles have resulted in the industry also being the second-largest polluter of clean sources of water globally, after agriculture. ⁴

In 2015, 'Behind the Barcode' released a report on the knowledge of brands about the origin of their products. They found that 91% of companies didn't have full knowledge of where their cotton is coming from, 75% didn’t know the source of all their fabrics, over 85% of companies were not paying their workers enough to meet basic needs, and 48% hadn’t traced where their clothes were being made. Brands have to become more responsible and ethical in the new circular model. They need to rethink not only what they are selling customers but also how much. Fashion industry should become fair, transparent, and ethical.

The Indian textile industry needs to work to ensure that the material for production of textile is safe. The production cycle should reduce the negative impact during production, use and after-use of the apparel. To enable recycling, material of concern should be eliminated from the production processes. Improving the quality and durability of clothing can increase the value of the material by increasing its lifetime. Setting industry standards that drive high usage rates requires a commitment from the industry to design garments that last longer. Common guidelines, aligned efforts and increased transparency could lead to an industry transition.

MS: In your experience, why are businesses reluctant to adopt a circular economy in India? And what steps or strict policies/laws are needed to be taken to bring them into the righteous fold of the Circular Economy?

SGB: The circular economy (CE) is an economic model conceived as an alternative to the linear economy with major implications for most branches of industry today. Let me explain this in a detailed way. The linear model involves the production and consumption of goods or services without considering the environmental externalities (increasing waste generation, pollution, endangered biodiversity) arising from the irrational exploitation of virgin resources. Specifically, in the linear paradigm, the economic objectives tend to prevail above environmental considerations. In contrast, the circular economy refers to the production and consumption of goods and services through closed-loop material flows in which the environmental externalities are taken into account from the beginning of the design phase of the product or service. Moreover, CE accounts for the social and economic spheres at the same time (i.e., eliminate waste to prevent loss of economic value, avoid reliance on feedstocks which are subject to price fluctuations, etc.), while separating economic prosperity from the consumption of resources.

An essential factor contributing to the negative externalities of the linear model is the economic activity of organisations all around the world. Companies whose prosperity is inherently linked with a profligate manner of raw material consumption will have no other choice but to rethink their processes, activities and relationship with the environment. In this manner, companies can create competitive advantage and adhere to the targets imposed by the European regulations and strategies.

However, increased circularity in organisations means changes in the way companies understand, generate value and maintain competitive advantages. As companies are forced to interact in an ecosystem composed of various actors, this transition requires innovation for rethinking existing business models and their collaboration approaches.

While scholars are focusing on identifying and understanding the relationships between innovation and organisational change, practitioners are under coercive stress to transform business models for the incorporation of circular thinking.

In order to help companies adjust economically to the new circular economy view, the concept of circular business model was developed. Circular business models generally reconcile business value creation with the adoption of resource efficiency strategies, through approaches such as repair, remanufacturing or capitalising the economic and environmental value embedded in products. Unlike linear business models, in which a product is usually outdated after a single use and its built-in value decreases, circular business models support the development of product systems that incorporate strategies to keep the built-in value at its highest degree of utility for a long period of time.

MS: Last question is for our global student readers. What scope and future does a Circular Economist have in the modern world? And how can the next generation make their respective careers in this field to strengthen the economy of their respective nations?

SGB: We must know that just around 6% of materials bought and consumed worldwide are then recycled back into new products. The global natural resource use is expected to double between 2015 and 2050, from 85 to 186 billion tons annually. 99 percent of the stuff we buy is trashed within 6 months. Without urgent action, global waste will increase by 70 percent on current levels by 2050.

I see that the Business models that increase the value and use of a product during an extended life are essential to shift to a circular economy. One core value opportunity lies in increasing the utilisation of an asset i.e how much of the time it is deployed in value creation. All stakeholders must understand that one of the objectives of any circular economy is to reduce the expense of waste in macro & micro environments.

With modern advances, digital technology will assist the transition to a circular economy by radically increasing virtualisation, dematerialisation, transparency, and feedback-driven intelligence. The ambition to replace one-way products with goods that are ‘circular by design’ and construct reverse logistics networks and other systems to support the circular economy is a powerful motivation for new ideas. Smart design and production that reduce waste and recycle materials at the beginning of a product’s lifecycle are essential to ensure circularity.

The closed-loop recycling strategy requires a heightened level of organisational collaboration and communication to be effective. Higher levels of engagement and coordination between different departments need to be closely coordinated for a smooth transition. Retraining and upskilling staff to meet the demands of transitioning to a circular economic model will help boost motivation levels amongst employees and help them feel part of something new, exciting and environmentally friendly. All these elements need the latest skills that opens a vast arena for the next generation.

Source:
¹ Ellen MacArthur Foundation, SUN, McKinsey Centre for Business and Environment, Growth Within: a circular economy vision for a competitive Europe, 2015

² Ellen MacArthur Foundation, Circular Economy in India

³ Ellen MacArthur Foundation, Towards the circular economy, Vol. 2, 2013

⁴ Indian Express, What is Fast Fashion

About Shalini Goyal Bhalla

A post graduate environmentalist, Ms Shalini is the author of India’s first book on Circular economy. Managing Director at International Council for Circular Economy, she has represented India on multiple international platforms through her speeches and programs. Ms Shalini Goyal Bhalla writes for many Indian as well as international magazines. Passionate about Circularity, she has been on Circular Economy Committees of Niti Aayog and several other policy dialogues. Working on several international projects, she is a true woman leader who dons multiple hats. She has been a part of several FDPs and Executive training programs at IIMs and IITs and is associated with MSME, Delhi Govt on their Entrepreneurship Mindset program.

About the Interviewer

Mahima Sharma is a Senior Journalist based in Delhi NCR. She has been in the field of TV, Print & Online Journalism since 2005 and previously an additional three years in the allied media. In her span of work she has been associated with CNN-News18, ANI - Asian News International (A collaboration with Reuters), Voice of India, Hindustan Times and various other top media brands of their times. In recent times, she has diversified her work as a Digital Media Marketing Consultant & Content Strategist as well. Since March 2022, she is also an Entrepreneurship Education Mentor at Women Will - An Entrepreneurship Program by Google in Collaboration with SHEROES. Mahima can be reached at media@indiastat.com

Disclaimer : The opinions expressed within this interview are the personal opinions of the interviewee. The facts and opinions appearing in the answers do not reflect the views of Indiastat or the interviewer. Indiastat does not hold any responsibility or liability for the same.