Member Article

CLIMATE PROOFING INFRASTRUCTURE PROJECTS

A need for planning and policy

INTRODUCTION                                                                                                                        

A unique change has come about in the last 200 years in the earth’s paleo-climatic history. Continually increasing emission of various greenhouse gases in the atmosphere has raised their concentration at an alarming rate, causing an abnormal increase of the earth’s average temperature. [1]  Scientists have confirmed, with a high degree of certainty, that this trend is not a normal phenomenon. [2] Widely referred to as “Climate Change”, if accepted as reality, this phenomenon is responsible for changing the face of our planet. Glaciers are receding. Arctic ice is thinning. Coral reefs are bleaching. Sea levels are rising. The frequency of extreme weather events is increasing. Unique and endangered species are under threat of losing their traditional habitats to changing climate patterns. The food, habitat and energy security of people around the world is at risk.[3]

World over, nations are initiating major policy shifts to address climate change. As measures of climate change impact mitigation, developed and developing economies are now concentrating heavily on mainstreaming renewable energy projects with public and private investments in related infrastructure. This movement is spurred by growing concerns of threatened energy security.

In India, similar concerns have caused the government to initiate steps to reduce our unhealthy dependence on non renewable sources of energy which are a major contributor to greenhouse emissions. In an effort to address climate change mitigation, India’s National Action Plan on Climate Change has been set up with eight missions.[4] The Government’s initiatives for the diffusion of renewable energy sources are part of this broad spectrum of efforts to integrate climate change concerns in sustainable development. We are therefore witness to a major policy thrust on “renewables” – solar, wind, geothermal, tidal and also nuclear energy.

While measures of mitigation are integral in combating climate change irreversibility, it should not be forgotten that climate change impacts are inevitable. Hence, adaptation is as necessary as mitigation. It is this author’s view, that the unidirectional focus on climate change mitigation in India, has blinkered an adaptation based multidirectional risk assessment approach which recognizes infrastructure or energy projects as a potential victim of climate change. This concept paper is a brief introduction to the issues at stake.

INFRASTRUCTURE DEVELOPMENT IN INDIA

To maintain economic growth at the present rate, India needs to invest about US$ 500 billion in infrastructure in the country in the five year period ending 2012. Investments of about US$ 150 billion are required just in energy. 

With increasing demand and necessity for power plants, airports, ports, roads, bridges etc., environmental concerns have hitherto been viewed as a barrier to development. This is in part due the complex statutory framework on environment and various requirements under law which are pro environment.

Infrastructure Development and the Environment

 The statutory framework for the environment includes the Indian Forests Act, 1927, the Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981, the Forest (Conservation) Act, 1980, and the Environment (Protection) Act, 1986. Other enactments include the Public Liability Insurance Act, 1991, the National Environment Tribunal Act, 1995 and the National Environment Appellate Authority Act, 1997.

 The concept of environmental clearances for projects after conducting an environment impact assessment (“EIA”) study was started in 1978 as a directive of the Planning Commission for the Government of India funding. In 1994, obtaining environmental clearances for projects was made mandatory for most major projects (both state and private funded). Consequently, any person who desires to undertake such a project in any part of India or the expansion or modernization of any existing industry or project has to make an application for environmental clearance to the central government or the state government, as the case may be, and support such application with an EIA report of the proposed project activity and an environment management plan (“EMP”).

An EIA process in India is broadly made up of the following phases:

 Screening

·      Scoping and consideration of alternatives

·      Baseline data collection

·      Impact prediction

Impact of the project on air, water, land, noise, biological and socio-economic and health environments

·      Assessment of alternatives, delineation of mitigation measures and environmental impact statement

This includes site selection, risk assessment, hazard identification, maximum credible accident analysis and preparation of an onsite and offsite disaster management plan.

·      Public hearing

·      Environment Management Plan

·      Decision making

·      Monitoring the clearance conditions.

EIA’s for projects requiring environmental clearance are evaluated and assessed by the Impact Assessment Agency which is responsible for the environmental monitoring process.

The expert committee for EIA should consist of experts in the following disciplines:

·      Eco-system Management

·      Air/Water Pollution Control

·      Water Resource Management

·      Flora/Fauna conservation and management

·      Land Use Planning

·      Social Sciences/Rehabilitation

·      Project Appraisal

·      Ecology

·      Environmental Health

·      Subject Area Specialists

·      Representatives of NGO’s/persons concerned with environmental issues.

 All nuclear power and related projects, river valley projects, ports, harbors, airports, thermal power plants, highway projects require environmental clearances.

Clearly, the concept of sustainable development and the precautionary principle have impressed the need for considering the environmental impact of all major projects. Statutes make it apparent that despite environment being considered a barrier to development, the simultaneous view of development as a threat to the environment carries equal weight requiring a balancing act.

 In lay man’s terms, an infrastructure project can be likened to a pebble which is placed in a glass of water (the environment). An EIA study assesses the impact of such placement on the water in the glass and the glass.

 It is pertinent that an EIA study does not consider the impact of such placement on the pebble itself. This hitherto unfelt need has resulted in major lacunae in law and policy which may now be exacerbated by the phenomenon of climate change.

CLIMATE CHANGE IN INDIA

 Reports of the Intergovernmental Panel on Climate Change (“IPCC”) predict that due to human induced climate change, average global temperatures could rise by 1 to 3.5 degrees Celsius over the next century. However, it is erroneous to think of climate change as just a warming trend. Climate change primarily manifests itself in terms of temperature increases, sea level rise, variability of precipitation pattern, change in the frequency and intensity of extreme events like cyclones, etc. Effects of these primary changes are observed on humidity, water availability, flooding and water logging, vegetation growth, structural stability, land slides and land erosion. These secondary changes, along with the primary manifestations of climate change, act as main force causing impacts.

 A preliminary analysis of climate change impacts in India has been carried out by various agencies.[5] India is considered particularly vulnerable to climate change and its adverse socio-economic effects. Its agricultural output is already affected, frequent damage is wrought by droughts, floods and storms which are on the increase and a rise in sea level is palpable in some coastal areas.

 It is anticipated that by the 22^nd century, India will be lashed by up to 30 per cent more monsoon rains. The southern coastline will be extremely vulnerable to extreme sea-level changes. The harvest of rain-fed crops will see a decline and temperatures will go up by about four degrees Celsius. Studies conducted on three river basins - the Krishna, the Ganges and the Godavari showed climate change would affect them immensely. [6] There is perceivable danger of losing the Himalayan glaciers completely.

 The probability that such events may come to pass has already changed, in the opinion of respectable scientists, to a foreseeable possibility.

Internationally, countries have recognized the threat of climate change through international instruments like the United Nations' Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol as the main framework for responding to climate change problems.

 Recently, the new President of the United States proposed a "truly global coalition", including Asian giants India and China, to combat climate change and ensure collective energy security of the world.[7]

Combating climate change and ensuring energy security has also become a major agenda for India. India is the world's sixth largest energy consumer, accounting for about 3.5% of the world's total annual energy consumption. The installed power generation capacity in India has increased by more than 85 times since independence and is sourced from thermal, hydro, nuclear and other renewable energy sources like wind and solar. Yet, India is facing an acute energy scarcity which is hampering its industrial growth and economic progress.

 It is estimated that India's energy sector requires investment to the tune of $120-150 billion to meet the Ministry of Power’s agenda of providing Power to All by 2012.  Setting up of new power plants is inevitably dependent on import of highly volatile fossil fuels. Thus, it is essential to tackle the energy crisis through judicious utilization of energy resources, such as nuclear energy, biomass energy, solar energy, wind energy and geothermal energy.

The Electricity Act, 2003, requires State Electricity Regulatory Commissions to specify a percentage of electricity that the electricity distribution companies must procure from renewable sources. Several commissions have already operationalized this mandate, and also notified preferential prices for electricity from renewables.

This has contributed to acceleration in renewable-electricity capacity addition, and over the past three years, about 2,000 MW of renewable-electricity capacity has been added in India every year, bringing the total installed renewable capacity to over 11,000 MW. Of this, a little over 7,000 MW is based on wind power; India now has the fourth largest installed wind capacity in the world. The National Hydro Energy Policy has resulted in the accelerated addition of hydropower in India, which is now over 35,000 MW. 

Several states like Rajasthan, Gujarat and Haryana are viewing renewable energy projects with private participation as a panacea to the power shortfalls they are suffering from. Several MOU’s and ventures are being crafted to set up the infrastructure required for energy generation. Energy transport infrastructure such as ports, railways, pipelines and power transmission networks is also being focused upon and should attract significant amount of investment.

Climate change mitigation is in part responsible for India’s focus on developing new energy efficient technologies and infrastructure for power generation through nuclear resources and renewables. However, investment in cleaner projects only means fewer emissions when compared to similar projects using “dirty” technologies. As less developed economies, that far outnumber developed economies grow, overall, greenhouse gas emissions (“GHG”) will multiply manifold and the spectre of climate change will more likely than not become reality. Moreover, the consequences of GHG emissions already in the environment shall flow in any event. Therefore climate change is inevitable and climate change mitigation can at best ensure that it is not irreversible.[8]

 In light of this inevitability, it is ironic that adaptation to climate change has been completely overlooked by our planners in law and policy. In terms of vulnerability, climate change adaptation is of particular importance to infrastructure projects given their life span.

CLIMATE CHANGE IMPACTS ON INFRASTRUCTURE

There is little doubt that India will face some effect of climate change over the next thirty to fifty years irrespective of global and local efforts to reduce green house emissions. Infrastructure projects, typically, are designed to tolerate a reasonable level of variability within a climate regime that existed when it was designed and built. The inevitability of climate change has changed these project assumptions.

Climate change impacts can broadly be classified as temperature level increases, precipitation pattern alterations, sea level rises and an increase in extreme events.

In infrastructure projects, these impacts may translate into the following:

·      Temperature level increases:

 -         Increase in temperatures would lead to increase in peak demand for electricity;

-         Increased cost of cooling buildings and/or retrofitting would be required which would affect energy efficiency;

-         Higher temperatures are likely to affect the transmission efficiency of power lines;

-         Extreme temperature events (heat waves) could cause disruptions to transport particularly due to damage to transport infrastructure (roads and railways);

-         Maintenance costs could increase as materials may need to be replaced more often and/or with more resilient ones;

-          Higher temperatures may cause decrease in longevity of exterior materials of buildings and infrastructure leading to increased maintenance and replacement costs; and

-         Higher temperatures (and decreased rainfall) will make large water reservoirs more susceptible to toxic algal blooms;

-         Higher water temperatures (combined with reduced water availability) will result in decreased cooling capacity for thermo-electric power generation.

·        Precipitation pattern alterations:

 -         Increase in rainfall may lead to the coping capacity of storm water and wastewater systems being exceeded leading to flooding and associated damage to infrastructure and property;

-         Damage may be caused to structures due to landslides and erosions;

-         There may be increased incidences of disruption to key services such as electricity supply and transport;

-         Increased damage to physical and socio-economic infrastructure;

-         The potential for increased frequency and intensity of extreme storm events may cause significant damage to electricity transmission infrastructure and service;

-         Increased wind and lightning could damage transmission lines and structures while extreme rainfall events may flood power substations.

-         The increase in storm activity could potentially generate significant increases in the cost of power supply and infrastructure maintenance from increased frequency and length of power blackouts and disruption of services.

-         Retreating Himalayan glaciers and decrease in rainfall in catchment areas may create great uncertainty in the management of dozens of rivers and associated hydel power projects;

-         Acceleration of the degradation of materials and structural integrity of power generation and refinery plant foundations is likely as well as transmission lines, gas and oil pipelines through increased ground movement and changes in groundwater. If left unchecked, this accelerated degradation may reduce the life expectancy of infrastructure, increase maintenance costs and lead to potential structural failure during extreme events;

-         Coastal and offshore gas, oil and electricity infrastructure is potentially at risk of significant damage and increased shut-down periods from increases in storm surge, wind, flooding and wave events, especially when combined with sea level rise.

·       Sea level rises:

 -         Port and harbor infrastructure is particularly at risk. Relocation and reconstruction costs may increase sharply;

-         Coastal and offshore gas, oil and electricity infrastructure is potentially at risk of significant damage;

-         Increased risk of high salinity I some coastal areas may cause corrosive damage to building and infrastructure;

-         Degradation of materials and infrastructure may accelerate increasing damage and repair costs.

·       Extreme events:

 -         The world over, it is recognized that extreme weather events are already a major cause of damage to infrastructure. One of the impacts of climate change is an exacerbation of extreme weather events. This may lead translate to an increase in the probability of force majeure events and consequential short closing of projects;

-         Contaminants could be released from landfills and other contaminant storage sites once thought to be sake increasing risk of liability;

-         higher accident rates particularly on roads, maritime shipping and aviation could increase mitigation costs;

-         Insurance costs for extreme event damage are likely to increase.

CLIMATE CHANGE IMPACT AND INCREASED RISKS

Huge investments are planned in infrastructure projects keeping in mind that such projects have a long life span. Large infrastructure projects are of great national importance. Due to its very nature an infrastructure project is more prone to risks than ordinary industrial projects. Risks, consequently, have the ability to adversely affect the implementation of an infrastructure project and make it completely unviable. A crucial aspect of successful infrastructure development and its financing is the suitable identification, allocation and management of risk.

Climate change impacts are risks which have not been identified or allocated amongst the stakeholders in an infrastructure project by current contractual framework for infrastructure projects. Even if this risk is allocated contractually, current technical and legal policy is incapable of mitigating the risks associated with climate change. This unmanaged risk has the capacity to devastate the physical and commercial viability infrastructure projects.

Due to lack of identification of the risks of climate change impacts, stakeholders have not been empowered in any manner to deal with this risk if it arises. This is particularly pertinent for operation and maintenance contractors and insurers. Any asset like infrastructure, having a long life, has a tub shaped cost curve for repair and maintenance. In the initial stabilization period it may require frequent maintenance. The maintenance requirement decreases once the system has stabilized. It increases again due to wear and tear as the asset reaches the end of its useful life.  It is clear that any future climate change will definitely increase expenditure on repair and maintenance activities. Hence, climate change impacts become important because they change existing assumptions in cost benefit and cost effectiveness analysis models. This may result in an unforeseen increase in project cost, operating costs, costs incurred in maintenance and repair and therefore decrease anticipated project revenues.

Climate change impacts on an infrastructure project may therefore be of consequence for governments, project developers, investors, lenders and insurers. Despite these adverse effects, infrastructure projects are presently being planned without any conscious analysis of climate change related impacts on project assumptions. It is pertinent that the period through 2030 and to a lesser extent 2050 is one that is most relevant for decisions about adaptation strategies for infrastructure projects. This is because most decisions that could be affected by climate risks involve assets and business systems whose economic life falls within or near this time horizon.

THE WAY FORWARD

Infrastructure, environment and climate change issues have significant overlap and implications for the national economy. Therefore, decisions about climate change mitigation and project adaptation have to be integrated with decisions made at the planning stage itself.  Site assessment and selection should necessarily be studied from a climate change perspective. Technical specifications and building plans may have higher thresholds keeping in mind potential climate change impacts in the long run. Assessment models for project risk, insurance costs and operation and maintenance costs may need to be revised to meet the consequences of climate change impacts.

Clearly, every large infrastructure project needs a “reverse impact assessment” to ascertain how the environment, in particular climate change, could affect the project in the medium to long term. As already detailed, the present EIA framework is inadequate to deal with and factor in climate change impact.

 The way forward could possibly be the inclusion of a climate change impact study by policy/decision makers and furthered upon as part of the EIA process by the inclusion of an expert on climate change in the present panel of experts.

A Climate Change Impact Assessment would ideally incorporate the following steps:

·      Defining existing conditions/components;

·      Projecting and estimating likely future changes;

·      Taking each component one by one and applying change;

·      Recording extent of interactions;

·      Indentifying the forcing variables;

·      Determining critical thresholds when risk of a climate change impact becomes dangerous; and

·      Determining value of these impacts economically as financial loss and biologically.

Such studies carried out for selected projects of different sectors will be able to enhance our understanding of climate change impacts. Preventive steps can thus be taken to minimize such impacts.

CLOSING THOUGHT

As a closing thought, consider a hypothetical situation.

A few years back, the National River Linking Project was proposed as an undertaking of the International Water Management Institute. It was believed that the river linking project will generate 34,000 MW of hydropower and irrigation of an additional 35 million hectares (135,135 square miles) of land. Estimated to require an investment of Rs 5, 60, 000 crores, imagine that twenty years from now this mega project is completed and has achieved commissioning. About this time, the Himalayan glaciers feeding these rivers completely melt, recede and disappear (predicted as a consequence of climate change). Social and environmental impact aside, consider the financial losses incurred and the resource wastage in such a situation. 

This may be a fantastic hypothesis and has merely been employed to give pause to our actions and provoke thought. A few decades from now, this may neither be a hypothesis nor so fantastic. Infrastructure projects, having a long life, become more vulnerable to climatic change particularly a couple of decades from now. Efforts need to be stepped up to reduce such vulnerability not only in view of long term investments of public and private money, but also due to the national importance of such projects.