Recently Mongabay India carried a detailed story around India’s circular fashion economy with inputs from key ecosystem players who are making an impact.

The story titled, “Rethinking, recycling and re-loving: A peek into India’s circular fashion economy” features insights from Venkat Kotamaraju, Director, CAIF and highlights Circular Apparel Innovation Factory’s extensive work in the space.

In the recent years, the textile industry has been the subject of criticism for its negative environmental and societal impacts, which have only grown, owing to fast fashion and the culture of fashion influencers. The greenhouse emissions of the global textile industry are known to be greater than all international flights and shipping combined. It is considered to be one of the largest polluting industries after food and construction, and its supply chain needs an urgent makeover.

However, the industry’s transition to building a sustainable ecosystem cannot be achieved overnight. The business models have been following a linear pathway of ‘take, make, wear and throw’, for several years; producing a staggering 13 million tonnes of global textile waste that ends up in landfills or is burned.

Delhi-based fashion label Doodlage collects post-consumer waste for segregation, to help Indian shoppers responsibly discard the clothes they no longer want. Photo from Doodlage.

According to anthropological estimates, the history of clothing dates back to 100,000 – 500,000 years, with animal fur and natural materials such as grass and leaves, primarily playing the role of the modern-day fabric. The humble beginnings were followed by a series of innovations, making clothing and fashion a visible expression of social identity.

Today, the fashion industry employs over 300 million people across the value chain, on a global scale. In India, the sector provides direct employment to over 45 million and 100 million people in allied industries.  The statistics indicate that an overhaul in the legacy business structures would require an incremental approach that is both planet and people-positive.

The statistics have injected a slow, but rising dose of consciousness among industry stakeholders, who are now finding inventive solutions that are building the foundations of a circular fashion economy, one that is resilient, restorative and regenerative in nature.

Building an ecosystem of green micro-entrepreneurs

Mumbai-based Circular Apparel Innovation Factory (CAIF) – an initiative by Intellecap supported by the DOEN Foundation – describes itself as an ecosystem-builder, accelerating the transition of the apparel and textile industry towards circularity. The people at CAIF primarily work at two levels: First, they create a pipeline of innovations for brands, helping them achieve their 2030 sustainability goals to reduce carbon footprint. Second, their focus is on building an ecosystem and designing circular textile waste models that aim for closing the leakage loop.

In November 2021, they partnered with sustainability innovators Enviu and IKEA Foundation, to build capacities and skills among India’s informal waste workers, in order to unlock green jobs among the marginalised communities.

CAIF has been actively working with over 20 Indian and global brands through different pilot projects and initiatives creating ‘green micro-entrepreneurs’. Photo from CAIF.

“In the absence of an organised system that would help us identify and trace where these waste collectors take the waste from factories and households, we asked ourselves some basic questions –  ‘How can we leverage their current understanding of the waste ecosystem?’, ‘Can we give them access to knowledge, capital, network and solutions?’” Venkat Kotamaraju, Director, CAIF and Climate Solutions, Intellecap, told Mongabay-India.

With the intention to create an organised pathway for textile waste collection, the cohort has launched area-specific pilot projects in Mumbai and Bengaluru. The focus predominantly is on training waste workers in sorting post-consumer waste and aiding them to become “green micro-entrepreneurs”, who are informed to identify the difference between repairable, reusable and worn-out clothing.

Kotamaraju said that currently, waste workers are not formally trained to identify the composition of the fabric. “They usually sell secondhand clothes and factory waste in kilos. We are imparting skills that help them identify that the value of a torn t-shirt is not the same as denim. When they understand the monetary value of the garment and direct it towards the right recyclers or cloth aggregators, we reduce the leakage of wastage into the environment.” He adds that eventually, the idea is to set up hyper-local collection and segregation centres for both manufacturers and consumers to bring circularity within reach.

For this, CAIF works closely with anchor partners – Hasiru Dala and Sahas Zero Waste in Bengaluru and Aasra Welfare in Mumbai, respectively. These partners identify waste collectors in these areas, who are then trained on various aspects of material integrity. So far, a group of 38 waste collectors have been trained. CAIF aims to increase the number to 250 workers in the first phase, creating a framework where the waste is collected in a responsible manner.

Building authenticity in the secondhand clothing market 

As the former CEO of the fashion brand Okhai, Kirti Poonia is credited for scaling its business operations and building a community of artisans, especially women. However, during this process, she also identified the problem of overfilled wardrobes, largely owing to changes a woman’s body undergoes. “An average woman goes through 31 body changes in her lifetime,” said Poonia.

While it was just one part of the problem, the other was the environmental impact of fast fashion on the planet. Realising that the problems in the fashion industry were systemic and multidimensional, she felt the need to find a capitalistic solution to social or environmental problems, because that makes it easier for brands to adopt.

Relove works to build authenticity in the thrifting process and establishes direct partnership with brands. Photo from The Summer House.

Her solution to fashion pollution came in the form of Relove – a technology-backed system that enables brands to run their thrift shops. Poonia, along with her partner and co-founder Prateek Gupte launched the platform on Instagram in November 2021, with one fashion brand on board. In a span of nine months, they have partnered with 30 brands.

What makes Relove stand out, is their direct partnership with brands, which allows buyers an authentic history of the garment.

“We are building authenticity in the thrifting process that is otherwise marred by ambiguity,” Poonia said. “No one knows the origin, source or owner of the garments that are being sold in the name of secondhand fashion.”

Reselling a garment enhances its lifespan. According to Gupte, every time a garment is resold, it saves “six times its weight in CO2”. “You are eliminating the entire cycle of producing a product that is resource-intensive,” he says.

Underlining the change in perception, especially among Gen Z, Gupte shares that they receive orders from across the country, reflecting a growing acceptance of secondhand clothing culture in the country. “Our average selling time of a pre-loved garment is six days,” he added. The authenticated business model surely makes a strong business case, considering this segment is expected to reach $64 billion within five years.

The pricing conundrum in circular fashion

Not all brands have a resale policy. Neither does India have a robust system of textile waste collection. However, India has been a recycling hub for textiles for several decades and is also one of the lead importers of used clothes. While the latter has only contributed to the existing burden of clothing wastage in India, the recycling factories have been the feedstock of several sustainable brands. One of them is the Delhi-based fashion label Doodlage, which has been converting upcycled factory waste into limited edition collections since 2012. Their recent initiative involves –collecting post-consumer waste for segregation to help Indian shoppers responsibly discard the clothes they no longer want.

Doodlage upcycles factory waste into limited edition collections. Photo from Doodlage.

While Doodlage arguably has the first-mover advantage in the sustainable fashion industry, the one question they were repeatedly asked in the initial years was of pricing: Why were their clothes made of waste so steeply-priced?

The conundrum of higher unit pricing especially for all sustainable brands limits their outreach to a larger consumer base in India, whose fashion choices are still driven by several e-commerce websites and brands that are selling fast fashion at a cheap cost. “The price tag attached to slow fashion labels is the true price of slow production, which is better for people producing products and the planet,” said Kriti Tula, co-founder and creative director of Doodlage.

Meanwhile, Kotamaraju examines the puzzle of pricing through the economics of demand and supply, highlighting that the affordable cost of fast fashion is a result of scaled operational models, off-shore manufacturing and low-cost labour, among others.

“The unit pricing is fundamentally the reason why scaling the circular economy is critical,” he said. “However, because of a complex value chain, the adoption of sustainable practices is slower. For a company whose infrastructure is designed for a cotton economy, switching to an alternative, more sustainable material would add up to the cost.”

To read this story on Mongabay India– Click Here

Globally, there is an increasing market demand for carbon credits from initiatives that deliver additional advantages including gender equality, improved health outcomes, and community economic growth.

A national carbon finance platform has been launched by Intellecap and Transform Rural India Foundation (TRIF), which will help Indian smallholder farmers in utilizing climate and carbon finance for sustainable agroforestry, climate smart agriculture, and other activities that can result in carbon sequestration and mitigation.

More than a million smallholder farmers are linked together by the platform, and they will receive support and training in agroforestry and climate-smart farming.

Globally, there is an increasing market demand for carbon credits from initiatives that deliver additional advantages including gender equality, improved health outcomes, and community economic growth. However, Indian carbon producers are unable to benefit because of a lack of knowledge about climate change and carbon financing mechanisms, technical limitations that prevent the development and implementation of high-quality carbon projects, a lack of clarity regarding equitable price sharing, unclear legal arrangements, and other factors. A platform that would increase smallholder farmers’ ability to actively engage in the voluntary carbon market is required.

The newly launched platform will play a key role in empowering smallholder farmers by:

Smallholder farmers will be able to participate in and profit from the monetization of the carbon credits that will be generated under an independent carbon crediting mechanism in the voluntary carbon market through the platform, which will be registering various types of carbon offset projects. By 2050, the market for voluntary carbon emissions is expected to be worth $200 billion. The platform is already in talks with Indian and international corporations that are eager to take part and help smallholder farmers by buying carbon credits from these projects.

Speaking on the launch of this platform, Anish Kumar, Co-Lead, Transforming Rural India Foundation said, “At TRIF we are excited about launching this platform which will provide fair pricing while ensuring an increase in income of smallholder farmers and vulnerable communities as well as supporting India achieve its net zero goals sustainably. While climate finance and carbon finance are becoming a major source of financing climate action for enterprises and big corporates, smallholder farmers struggle to get access to climate finance for the projects that are not only producing climate outcomes but also creating jobs and building resilience of the local communities. This platform aims to be the guide and champion of these smallholder farmers for climate/ carbon finance.”

Santosh K. Singh, Managing Director- Agri and Climate, Intellecap said, “We are committed to increasing smallholder farmers’ income and transitioning them to climate-smart agriculture. Climate finance, specifically carbon finance provides a great opportunity for these farmers to undertake climate action projects, which would not be possible in absence of carbon finance. The platform also helps corporates and other stakeholders who are committed to net zero goals and looking to offset their residual carbon footprints from projects which not only give carbon emission reduction but also empower and benefit local communities. We are already seeing a huge demand for carbon emission reduction certificates from the voluntary carbon market. This platform will help our smallholder farmers to participate in the carbon market seamlessly.

Intellecap and Transform Rural India Foundation (TRIF) on Monday announced the launch of a national platform that will help Indian smallholder farmers leverage climate/carbon finance for sustainable agro-forestry, climate smart agriculture and other activities that can result in carbon sequestration and mitigation. According to a statement, the platform brings together more than one million smallholder farmers who will be provided support and training for climate smart agriculture and agro-forestry.

Globally, there is a growing market demand for carbon credits from projects that provide co-benefits like community economic development, improved health outcomes, biodiversity enhancement, gender equality etc. However, Indian carbon producers are unable to reap the benefits due to poor awareness about climate/carbon financing mechanisms, limited technical capacity to design and implement high-quality carbon projects, lack of clarity on fair price sharing and legal arrangements, among other aspects. There is a need for a platform that would enhance the capacity of smallholder farmers to effectively participate in the voluntary carbon market.

The statement added that the newly launched platform will play a key role in empowering smallholder farmers by:

Speaking on the launch of this platform, Anish Kumar, Co-Lead, Transforming Rural India Foundation said in the statement, “At TRIF we are excited about launching this platform which will provide fair pricing while ensuring an increase in income of smallholder farmers and vulnerable communities as well as supporting India achieve its net zero goals sustainably.While climate finance and carbon finance are becoming a major source of financing climate action for enterprises and big corporates, smallholder farmers struggle to get access to climate finance for the projects that are not only producing climate outcomes but also creating jobs and building resilience of the local communities. This platform aims to be the guide and champion of these smallholder farmers for climate/ carbon finance.”

The platform will be registering different types of carbon offset projects in which smallholder farmers would be able to participate and benefit from the monetization of the carbon credits that will be generated under an independent carbon crediting mechanism in the voluntary carbon market. The global voluntary carbon market is expected to be worth $200 billion by 2050. The platform is already in discussion with Indian and global corporates who are keen to participate and support smallholder farmers by purchasing carbon credits from these projects.

Santosh K. Singh, Managing Director- Agri and Climate, Intellecap said, “We are committed to increasing smallholder farmers’ income and transitioning them to climate smart agriculture. Climate finance, specifically carbon finance provides a great opportunity for these farmers to undertake climate action projects, which would not be possible in absence of carbon finance.We are already seeing a huge demand for carbon emission reduction certificates from the voluntary carbon market. This platform will help our smallholder farmers to participate in the carbon market seamlessly.”

August 1 , 2022– Prime Minister Narendra Modi may launch a national carbon trading platform on 15 August asIndia presses ahead with its climate commitments, two people aware of the development said. The government may also come up with guidelines where carbon trading would be obligatory for some sectors.

Carbon markets are trading systems where credits are bought and sold, permitting an entity to emit a certain amount of greenhouse gases.

There are generally two types of carbon market—compliance and voluntary. The Centre’s move would make it a compliance market for some sectors, the people cited above said on the condition of anonymity.

The push for carbon markets comes when India aims to turn carbon-neutral by 2070. Several companies have announced energy transition and net-zero targets in line with the government’s plan. A formal carbon market will provide flexibility to businesses in hard-to-abate sectors to supplement their efforts with credits from the carbon market.

Queries sent to the Prime Minister’s Office, and the ministries of power and new and renewable energy remained unanswered till press time.

This comes against the backdrop of planned amendments to the Energy Conservation Act to mandate the use of clean energy, including green hydrogen, and to institute a regulatory framework for carbon trading.

After the bill provides a regulatory framework for carbon trading in India, the government will develop guidelines.

Santosh Singh, partner and managing director, climate and agri solutions at Intellecap, an advisory firm, said: “The PAT (perform, achieve and trade) scheme of the Bureau of Energy Efficiency (BEE) and the Renewable Energy Certificates (REC) mechanisms provide a good experience and basis for building the carbon market trading platform.”

 Sectors such as cement, steel, thermal power plants and fertilizers may be mandated for carbon trading on the platform, Singh added.

 PAT is a market-based mechanism to minimize specific energy consumption in energy-intensive industries. BEE provides specific energy consumption targets to energy-intensive industries (known as designated consumers) depending on their operational parameters.

Carbon markets have proven to be one of the most effective drivers of reducing emissions, offering the lowest-cost emission reductions. Incentives in the form of carbon credits against the deployment of clean technologies will lead to the private sector’s involvement in climate actions.

A recent Intellecap report said carbon credits would incentivize entities with low reduction costs to reduce emissions beyond their mandate.Trading in the carbon market could reduce the overall cost of emission reductions at the societal level in India, it said. A carbon market can enable India to participate effectively in an interlinked global carbon market.

It can spur innovation and finance clean projects from Indian MSMEs, which have huge scope for emission reduction. They can also provide greater liquidity to reduction certificates from India, encouraging greater reductions globally.

The Renewable Energy Certificate (REC) mechanism is a market-based instrument to promote renewable energy and facilitate compliance with renewable purchase obligations.

 RECs are traded in the Indian Energy Exchange and Power Exchange India Ltd at a price within the forbearance and floor price determined by the Central Electricity Regulatory Commission.

Mumbai, 25^th July–  Recently Entrepreneurs Startups Magazine featured an article by Santosh Kumar Singh, Managing Director and Head– Clean Energy, Climate Change and Agriculture on ‘Transforming Innovation and Entrepreneurial Ecosystem for Achieving our SDGS’s (Out on Print).

In the article Santosh speaks about the potential new market opportunity, Impact Unicorns and how creating an ecosystem for empowering women and investing in R&D will help us in realizing the SDG goals.

The Covid-19 pandemic is a big setback to one of the most ambitious goals humanity has ever set for itself: the Sustainable Development Goals (SDGs). According to a recent study by UNDP, even in a non-Covid scenario, the global community would be struggling to achieve the SDGs by their 2030 deadline. The long-term impact of the pandemic has moved us further away from achieving these goals. There is a need to push and accelerate our efforts to an unmatched level to achieve the SDGs by 2030. This will not be possible without bringing in disruptive and innovative technologies, adopting more inclusive business models and nurturing entrepreneurship to achieve these inter-connected and cross-cutting goals.

Achieving SDGs has the potential to create a new market opportunity of USD 12 trillion while making the world more sustainable, equitable, and prosperous. Local entrepreneurs and small enterprises will be critical in this journey, as they can harness technologies and innovations to develop solutions that address the challenges faced by communities at the ground level, since they are also most in touch with the needs of these communities.

India, with pioneering progress in building the ecosystem for innovations and entrepreneurship, is poised to become one of the leaders in achieving the SDGs. According to the Economic Survey 2021, India had 41,061 startups in 2020. Currently, India has over 75 start ups classified as unicorns, each with an estimated valuation of more than USD one billion or more. This has also led to increased investments coming into India to fuel these startups and their innovative solutions. While a majority of the unicorns are in the e-commerce and fintech space (such as Slice, Upstox, Grofers, Bharatpe etc.), we now have the experience and ecosystem required to create impact unicorns that could provide universal quality healthcare, address challenges in the provision of education, address climate-related issues and transform our agriculture sector, both in terms of economic contribution as well as making it more resilient to climate impacts.

The “impact unicorns” are going to happen sooner than later. India has almost achieved universal access to power (99.99% households having access to electricity), addressed major challenges in financial inclusion (through government programs such as Jan Dhan-Aadhaar-Mobile, in order to ensure access to finance for last-mile customers), and probably also hosts the world’s most advanced digital inclusion framework (by building IndiaStack, a unified digital platform to conduct financial transactions and provide government services at scale). Access to power, access to finance, and data and digital technologies are the ingredients that will help us scale and develop the solutions that are needed for many of the SDGs.

While these foundational blocks are being put in place, the enormity of the challenges and the complexity of the development goals also require us to put consistent emphasis on addressing some of the gaps in our current innovation and entrepreneurship ecosystem.

Ecosystem for Empowering and Enabling Women

The first and foremost priority should be to focus on empowering and enabling Indian women to leverage innovation and entrepreneurship. A recent RBI survey found that only 5.9% of Indian startups have all-women founders. Gender segregated data further shows the harsh divide, especially in rural India. Only 25% of the women in rural areas use the Internet compared to 48% of rural men.  Around 64% of the population in India still relies on solid fuels for its cooking needs, and women are disproportionately exposed to dangerous air-pollution. Our entrepreneur and investor ecosystems continue to be male-dominated and biased towards men. Within the agriculture sector, women are still struggling to get their land rights, and while they account for nearly one-third of the agricultural labour force in the country, they hold only 12.8% of operational land holdings. They are also among the most impacted by the adverse effects of unsustainable agriculture practices.

We need to make the innovation and entrepreneur ecosystem more gender-just as we can never achieve the SDG goals if women continue to remain at the fringes of the entrepreneurship and innovation ecosystem.

Investing in Research and Development

There have to be concerted efforts to increase investment in R&D and labs that will help create proofs of concept and streamline funding to undertake pilots to scale and commercialise operations for startups. We are significantly behind in terms of per capita spending on R&D compared to other regional leaders. Korea leads in terms of R&D spending, at USD 1995 per capita, followed by Israel (USD 1991). Other countries’ spendings include China (USD 1127), Brazil (USD 719), and South Africa (USD 520). India’s per capita R&D spending stands at USD 464.

Dedicated Focus on Scaling up Sustainable Agriculture and Forestry

Entrepreneurship, technologies, and innovative business and financing models can provide us a great opportunity to transform the lives of small-farmers and forest-dwelling communities.

India has to alter its path in order to achieve SDG 2 (Zero Hunger) while ensuring SDG 12  (Responsible consumption and production). To reach a sustainable stage of food security, India needs to emphasise and promote sustainable farming practices and support innovative solution providers in agriculture and livestock that help reduce hunger and risks of nutrient deficiencies. Development of innovative solutions across the agriculture value chain can address multiple SDG goals.

In addition to large agricultural land coverage, India also has vast forest lands which impacts SDG 15 (life on land) and several others, as forests can act as carbon sinks and create great value for the environment. As per a 2019 assessment, India had a total forest cover of 7,12, 249 sq. km., accounting for 21.67% of its total geographic area. Our goals  to increase the forest cover and improve the quality of our forests can be expedited with use of technologies and new business models (such as global carbon markets and payment for ecosystem services).

Incubators and Accelerators for Climate Tech

India is gradually emerging as the hub in the global south for incubation and acceleration but we need more deep-science climate tech incubators and accelerators. These are essential for developing a pipeline of climate tech startups focusing on achieving SDGs.There is a massive upsurge in climate tech investment globally but only a fraction of that is coming to the global south. In the first half of 2021, about 250 deals were made in climate tech ventures worth about USD 16 billion. In terms of regions, North America has the most climate tech venture funds coming in, followed by China and Europe.

Globally, India ranks ninth with the country’s climate tech start ups receiving USD 1 billion in venture capital funding between 2016 and 2021. Over this time, 120 Indian climate tech startups raised more than 200 funding rounds from 272 unique investors. Indian climate tech investment activity has been growing in terms of the amount invested as well as the number of deals – it has grown from 18 deals in 2016 (USD 102 million) to 58 deals in 2019 (58 deals; USD 506 million). This number decreased slightly in 2020 owing to the pandemic, with 48 deals (USD 236 million). Majority of the climate tech investment in India flows to the sectors of energy and sustainable mobility. The sectors gradually gaining traction in the market are climate smart agriculture, circular economy and waste management, and natural resources and environment.

Though there has been significant growth in recent years, the climate tech entrepreneurial ecosystem in India is still at a nascent stage. Investments in climate tech account for less than 10% of the funds that are flowing into impact sectors in the country. Some of the challenges impeding growth of climate tech start ups include limited early-stage and long-term financing, lack of business support services covering mentorship, strategic advisory and talent management and low customer willingness to pay a premium for green products and services.

Carbon market has once again become a global buzzword with increased focus on net zero goals by corporations, and with countries firming up their climate commitments under the Paris Agreement. It is seen as one of the most effective market-based mechanisms to price greenhouse gas (GHG) emissions and achieve climate goals. Carbon market had been operational since the launch of the Clean Development Mechanism by the United Nations in 2006, has evolved in its new version.

There are two types of carbon markets, the compliance market (emission trading resulting from legal and regulatory requirements); and the voluntary market (resulting from voluntary climate commitments by corporations). While the compliance market mainly driven by emission trading systems (ETSs) have been operational since the mid-2000s, the voluntary carbon market (VCM) has gained traction in the past few years. The VCM is led by corporations and industries in the hard-to-abate sectors which rely on carbon credits to achieve their ambitious ‘voluntary’ climate goals. This market grew by more than 60% from 2020 to reach $1 billion in November 2021 and is expected to reach at least $50 billion by 2030. One of the differentiating factors of VCM is premium pricing attributed to projects that generate co-benefits such as biodiversity conservation, gender and community economic development. Prices of carbon credits for these projects can vary widely from $5/tCO2e (e.g., agriculture, forestry etc.) to $25/tCO2e (e.g., clean cooking for low-income households) depending on the types of co-benefits (1 tCO2e is equal to 1 carbon credit).

These additional revenue streams from carbon credits have the potential to fundamentally alter the economics of key activities such as agriculture, forestry, cooking and waste management – possessing high social, economic and environmental impact potential. These activities are either capable of removing carbon from the air or avoiding emissions by adopting better practices and technologies. They play a key role in empowering local communities by:

For example, a low-income household using traditional cooking stoves can derive carbon benefits by switching to cleaner cooking solutions; and smallholder farmers can get benefit from planting trees and changing agriculture practices to reduce GHG emissions without harming productivity. The carbon credits from these activities can give almost $20 to $40 per year to a household switching to clean cooking and $7 to $20 per year per acre additional income to smallholder farmers.

Carbon markets can play a very critical role in India’s journey to achieve its net zero and decarbonization goals as well as in catalyzing certain key sectors such as transportation, agriculture, forestry, waste management etc. While India is aggressively reducing emission intensity of many sectors, it would still rely heavily on the carbon market for offsetting residual emissions to achieve net zero. This resulting carbon market is estimated to be at least worth $50 billion.This estimate only factors seven hard-to-abate sectors comprising cement, steel, aluminum, electricity utilities, aviation, automobile (passenger cars), oil and gas (refining and extraction). Additionally, India can achieve a carbon market potential of $30 to $50 billion by 2050 (at a conservative price of $15 per carbon credit) from agriculture, land restoration activities, and reducing emissions from deforestation and forest degradation (REDD+).

Rapidly growing carbon markets coupled with a dynamic international policy environment, are driving countries to develop action plans to leverage carbon markets to meet their climate commitments. India is already proactively working on shaping the domestic carbon market with the Ministry of Environment, Forest and Climate Change (MoEFCC) and Ministry of Power (MoP) developing the requisite legal, institutional and technical infrastructures.Once developed, these would be able to address aspects related to double counting, corresponding adjustments and issues of quality and integrity of carbon credits, especially in the compliance market.

While the domestic compliance carbon market is critical for India’s net zero ambitions, there is a significant opportunity to leverage the voluntary carbon market. We can be one of the major destinations for attracting global capital pools chasing voluntary carbon projects in the Global South. For this, there is a need for a more structured mechanism for private sector participation in the voluntary carbon credit projects.A proactive approach from India on developing a framework to promote public-private partnerships, and to attract private investment in carbon projects through inclusive business models can unlock significant social, economical and environmental benefits.

The world has witnessed a rapid in­cre­ase in installed solar photovoltaic (PV) capacity over the past few yea­rs. Acc­o­rding to IRENA, in 2020 alone, over 126 GW of solar PV capacity was installed glo­bally. As of now, over 713 GW of solar po­wer has been insta­lled, having multiplied ne­arly 10 times over the past 10 years. In 2011, the capacity stood at 73 GW, and has grown at an average of 70 GW per year.

Solar modules have a life of around 25 years, at the end of which they become un­­profitable. Thus, it is expected that star­ting in 2026, around 70 GW of solar ca­pacity will have to be retired every year. This translates into about 4 million panels per GW or 280 million panels decom­m­issi­oned per ye­ar. Most of these panels will find their way to landfills where they will do more harm than the good done over their lifetime. Moreover, as the dema­nd for solar pa­nels increases with time, raw materials will become increasingly scarce. It is, the­re­fore, an opportune time to understand and establish a circular ec­o­nomy for solar en­ergy to enable an eco­system that en­co­urages repair, reuse and recycling of solar PV materials.

Intellecap attempts to explore the various aspects of the solar circular economy to en­hance the sustainability quotient of solar energy and create an ecosystem to tackle this massive issue that can potentially overwhelm the global solar PV industry.

Defining the ecosystem

By definition, a circular economy is aimed at minimising waste by segregating materials and components derived at the end of a product’s life and reusing them in the manufacturing process of new products, to keep the raw materials circling within the ec­onomy to the maximum extent possible. Extending this definition to the solar industry, a circular solar economy is essentially a process of extracting reusable valuable components and elements from retired so­lar panels and using them to develop new so­lar cells and panels. Productive re­use generates further value out of the product and prevents essential ingredients from ro­tting in the landfills for aeons to come. It also prevents toxic elements used in products from contaminating the environment by making their disposal sustainable.

Driving a circular solar economy

Solar panels use many elements that are precious and finite in nature including silicon, indium, silver, tellurium and copper. These are rare earth elements that are mined and refined to be used in solar panels. Developing countries have large reser­ves of these raw materials. According to the Center for Strategic and International Stu­dies, China produces nearly 90 per cent of the world’s rare earth metals, a large part of which is also used in making solar cells. Neither the mining nor the refining process is sustainable and leads to gross wastage of resources. Therefore, at the end of a so­lar panel’s life, discarding the panels al­to­gether will not only lead to wastage of precious metals and associated was­tage of resources, but also cause environmental poisoning. Developing a circular economy will create a process to feed the recovered material back into the system to avoid wastage at multiple levels.

As the demand for solar energy increases, the need for these elements will become greater. However, there are not enough reserves of precious metals for the entire fossil fuel-based generation to be replaced by renewable energy, including solar. Re­using elements could be one of the primary solutions for the production of solar en­ergy to match the anticipated global demand in the future.

Increased profits, enhanced job prospects and cost savings are the key consequen­ces of developing a circular solar economy. The manufacturers may be able to re­duce production costs by reusing preci­ous elements recovered from retired panels. Given the magnitude of solar waste expec­ted to be generated, third-party recycling could become an independent segment of the solar industry and provide sustainable livelihood opportunities, especially in deve­loping countries.

Building a circular solar ecosystem

A circular solar ecosystem has three foundational factors that need to be developed – technological expertise, economic maturity, and regulatory support. At present, a circular solar economy is largely a theoretical concept with little on-ground progress. Only a handful of companies are engaging in buybacks or refurbishment of solar panels after the end-of-life is ac­hieved. The market is also at a nascent sta­ge at present since the number of retir­ed solar panels is very low. However, this may soon change.

In 2019, the world generated 720 TWh of solar power, accounting for 3 per cent of the total power generation, using 46 million metric tonnes (mmt) of solar panels. It is expected that by 2026, around 70 GW of solar power capacity will be ready for decommissioning every year. As per estimates, around 8 mmt of decommissioned solar panels could be accumulated by 2030. Technological expertise that can re­furbish solar panels at scale will be re­quir­ed to tackle such massive quantities of so­lar waste. While other components su­ch as aluminium frames, glass, ethylvi­ny­la­cetate and backsheets are also used, the rare earth metals used in manufacturing the ce­lls and other metals such as copper can justify the refurbishing costs. In some cas­es, general e-waste recycling processes are being employed for solar waste management but there is a strong need for research and development in this area. Veolia, a French waste management company, has developed a recycling line specific to solar panels. ROSI Solar, an­other French enterprise, has created a process to extract precious metals from used panels.

Standards and regulations will be re­quired to sustainably extract the reusable materials from solar panels. Moreover, the un-recyclable materials will also have to be sustainably discarded so as to prevent waste. Initially, manufacturers and waste managers may have to be incentivised to encourage the recycling of solar panels. In India, which is looking at 8-10 GW of solar capacity deployment every year by 2030 through the tendering route, sustainable solar waste management guidelines and requirements at the end-of-life of a project could be built into the tender me­chanisms. This may make it mandatory for developers to put in place solar was­te ma­nagement mechanisms and encourage solar recycling.

The ecosystem will require low-cost investments to effectively develop the required technology and provide recycling and reuse services at affordable prices. Climate finance may be required in the form of public-private partnerships. Initially, government efforts might be nee­ded to push the mandates and set up facilities. However, the future of the circular solar economy lies in engaging with the private sector. It may be necessary for large-scale solar manufacturers to de­velop this technology using low-cost investments to ensure in-house circularity of the process. Alternatively, third-party recyclers may be encouraged to develop a technological core competency, which may further be licensed to provide de­centralised recycling systems. Many te­chnology start-ups are taking positive steps towards this.

Challenges and outlook

The price volatility of metals extracted from used solar panels could create a ch­allenge in determining a standard economic model for recycling of solar waste. Moreover, technologies are being explo­red for replacing rare earth elements in the solar cell development process, whi­ch, if popularised, may make the investments in the circular solar economy un­jus­tifiable. Further, quantification of the sustainability quotient of solar panel production and recycling is not currently avai­lable, which may be able to provide a definite direction for creating the circular solar economy.

Every solar panel ever deployed presents an opportunity for recycling and can play an important role in building a circular solar economy. According to Mercom In­dia, it is ex­pected that the global solar ca­pa­city may increase to around 3,000 GW by 2030. The amount of solar waste generated during this period and beyond presents a colossal challenge to the sustainability of the sector and the environment. It is, therefore, the right time to build mechanisms, technologies and processes to en­able a circular solar economy and make solar more sustainable.