As the world strives to reduce CO₂ emissions from fossil fuel usage and mitigate the threats of climate change, the primary challenge is to decarbonize industry, which depends heavily on fossil fuels but also drives and sustains economic development.  In India, industry accounts for nearly a quarter (24.1%) of India's total CO₂ emissions in 2022 (IEA).   At the same time, industry provides core inputs to every sector of the rapidly growing Indian economy and supports the livelihoods of millions of people.

The barriers to decarbonizing Indian industry straddle the domains of awareness, technology, policy, finance, and capacity. These barriers are particularly formidable in India's vast micro, small, and medium enterprises (MSME) sector, with its 63 million units contributing 45% of the nation's manufacturing output and providing employment to over 110 million people. Most MSME units continue to use inefficient, fossil fuel-based technologies and practices that lead to high-emission levels as well as low-productivity and profitability.  Other major barriers that MSMEs face include low-awareness levels, regarding energy efficiency; the lack of readily available (off-the-shelf) energy-efficient (EE) technological options; inability to secure dependable supplies of clean (low carbon) fuels at affordable prices; difficulties in accessing formal avenues of finance; and lack of capacities and opportunities in the domains of technical up-skilling, management, and marketing. 

TERI's Industrial Energy Efficiency Division (IEED) initiated its efforts to decarbonize the Indian MSME sector in the early 1990s—a time when MSMEs were struggling to find ways to upgrade their low-efficiency technologies and practices swiftly in order to survive in the new, fiercely competitive markets that were emerging with the progressive liberalization of India's economy. The MSMEs also confronted the challenge of meeting increasingly stringent environmental regulations.

Intervention

TERI has successfully implemented two broad strategies to promote clean, EE technologies in the MSME sector. Partnerships, pooling of expertise and knowledge-sharing constitute core elements of each strategy, entailing activities from shop-floor to policy levels.

The strategy known as research, development, demonstration and dissemination (RDD&D), first applied under a long-term project supported by Swiss Agency for Development and Cooperation (SDC), that has enabled the development, demonstration and widespread adoption of new/ innovative low-carbon EE solutions such as EE furnaces in the small-scale foundry and glass sub-sectors, and EE biomass gasifiers for thermal applications in a range of industrial sub-sectors.   In each case the intervention required intensive and iterative processes of R&D, field trials, technology demonstration and adaptation, training, and capacity building, with the close and sustained involvement of industry associations and other cluster-level stakeholders,  and pooling of the multi-disciplinary competencies of Indian and international experts.

The strategy known as 'deep dive' or 'saturation approach', which has enabled the large-scale adoption of commercially available EE technologies like IE3 motors, EE air compressors and pump sets, and LED lighting systems, etc., in a number of MSME clusters under different sub-sectors in close partnership with industry associations and other cluster-level stakeholders. The key elements of this approach are:

Conducting detailed energy audits (EAs) on a large number of MSMEs in the cluster

Identifying a set of energy conservation measures (ECMs) including best operating practices (BOP) for each MSME unit, that promise quick paybacks on relatively low or even zero  investments

Supporting interactions with technology vendors/suppliers, and providing technical assistance during implementations 

Quantifying the benefits of the ECMs in a few units at the early stages, so as to spur other units to follow suit 

Developing innovative business models to encourage the rapid and widespread uptake of the ECMs such as models based on deferred payment mechanism and demand aggregation, that are attractive for both equipment suppliers and end-users.

Under both strategies, TERI has focused on establishing and strengthening cluster-level capacities on the EE technologies through awareness and training programmes for operators and other plant personnel. Local service providers (LSPs) have been identified and given suitable training so that technology replications take place without entrepreneurs having to seek support from external agencies.

For example: in the foundry sub-sector, the divided blast cupola, an EE melting technology that yields coke savings of 25% to 65%, first demonstrated in the Howrah foundry cluster under the SDC–TERI partnership project, has been successfully promoted in the Ahmedabad, Coimbatore, Nagpur and Rajkot foundry clusters.  Also, ECMs in other process areas of foundry have been identified and promoted in Belgaum and Kolhapur foundry clusters under GEF–World Bank projects, and in the Ahmedabad, Howrah, and Rajkot foundry clusters in the last phase of the TERI–SDC partnership project.  Under a UNIDO-supported project, TERI has strengthened the capacities of LSPs in the Belgaum, Coimbatore, and Indore foundry clusters.

In parallel with its cluster-level activities, TERI has conducted a sustained knowledge dissemination campaign through electronic and print media as well as through workshops, seminars, and conferences at regional and national levels  supplemented by site visits, to spread awareness on the EE interventions more widely, in industry circles, as well as among other MSME stakeholders such as government officials at policy and regulatory levels, bankers, state development agencies (SDAs), donors, technical consultancies,  academia, R&D institutes, and others. This campaign has helped place energy efficiency at the core of the policies and programmes formulated for the MSME sector by various government agencies at the Union and state levels. It has also spurred the development of financing schemes and innovative business models that make it easier and more attractive for MSMEs in India to adopt EE technologies.

Partnerships

Starting with the pioneering RDD&D project supported by SDC from 1993 onwards—a project that would extend for 25 years (till 2018)— TERI has been  engaged  in a large number of EE initiatives in the MSME space in collaboration with a host of other public and private organizations and institutions, Indian and international, for example,  Agence Française de Développement (AFD), Bureau of Energy Efficiency (BEE), Energy Efficiency Services Limited (EESL), International Finance Corporation (IFC), Institute for Global Environmental Strategies (IGES), International Energy Agency (IEA), Japan International Cooperation Agency (JICA),  MacArthur Foundation, Ministry of MSME (MoMSME), Ministry of Environment, Forest and Climate Change (MoEFCC), Ministry of New and Renewable Energy (MNRE), Petroleum Conservation Research Association (PCRA), SED Fund, Small Industries Development Bank of India (SIDBI), Shakti Sustainable Energy Foundation (SSEF), United Nations Development Programme (UNDP), United Nations Industrial Development Organization (UNIDO), YES Bank, and the World Bank. 

Platform

In the course of its work, TERI has established an informal and expanding network of MSME stakeholders and partner organizations—entrepreneurs, industry associations, LSPs, machinery and material suppliers, NGOs,  R&D institutes, SDAs, consultants, and others.  In order to provide a permanent forum with global outreach for these and other stakeholders in the MSME sector to share and synergize their knowledge, expertise, and experiences, SDC and TERI in collaboration with BEE and Ministry of MSME have established the web-based platform SAMEEEKSHA (www.sameeeksha.org) with its secretariat at TERI. SAMEEEKSHA hosts a range of knowledge resources on EE in the Indian MSME sector including case studies and videos on EE technologies and implementations, detailed cluster profiles/manuals, cluster summaries capturing key features of over 130 MSME clusters in different sub-sectors, and an interactive 'MSME Energy Map' that allows exploration of these and other resources. SAMEEEKSHA also publishes a quarterly newsletter, currently in its 57th issue (December 2024).

Snapshots

Nearly 4000 energy audits (EAs) have been conducted in both large industries and MSMEs followed up in many cases with technical support services including training and capacity building, in a range of sub-sectors such as cement, ceramics, chemicals, engineering, fertilizer, foundry, forging, food processing, glass, iron & steel, power, pharmaceuticals, pulp and paper, etc. In addition, EA consultancy services have been extended to other countries such as Bhutan, Colombia, Ethiopia, Ghana, Guyana, Indonesia, Maldives, Nigeria, Tanzania, UAE, Uganda, Uzbekistan, and Zimbabwe.

Under the aegis of SAMEEEKSHA, two National Conferences on Energy Efficiency were organized in 2012 and 2017. These events brought together MSME stakeholders at all levels from across the country, and helped in sharing success stories in adopting clean, EE technologies;  capturing the key challenges in the overlapping domains of technology, finance, and capacity that continue to impede EE improvement among MSMEs; and outlining policies and measures that could help overcome these challenges.

TERI supported BEE in preparing a manual titled 'Energy Conservation Guidelines for MSME Sector'. The  guidelines cover the primary energy-consuming process equipment/systems used by MSMEs in 25 energy-intensive sub-sectors, as well as a range of auxiliary systems and utilities such as air compressors, boilers, fans and blowers, etc., that are used by MSMEs in all sub-sectors.

As a part of the SAMEEEKSHA initiative, TERI has organized 24 platform meetings with various industry stakeholders across the country to gather insights and understand various issues facing the MSME sector in adopting clean energy technologies and practices.

Energy and resource mapping studies have been done for 10 MSME clusters: five each in the chemical sub-sector and glass and refractory sub-sector.

Taking Stock

Through its successful promotion of low-carbon EE technologies in the MSME sector and sustained engagements with stakeholders at every level, TERI has progressively strengthened its own reputation as a dependable implementing agency, knowledge partner and strategic advisor with expertise in domains such as cluster/sectorial studies and energy mapping; diagnostic studies and energy audits; RDD&D initiatives; and technical assistance. Its initiatives have helped in the development of supportive policies, financing schemes and business models for EE technology delivery, and also catalysed a large number of EE initiatives by other agencies and organizations,   thus helping the MSME sector achieve successful transition to clean energy. #