TREND Setter 2023 Spotlight: Santosh Kumar Sahu’s Research on Industrial Carbon Efficiency

A main charter point of the Energy Consortium is to focus on exploratory and collaborative research. The TREND Setter program is one such initiative with an aim to identify the long-range research initiatives of the industry and build capability within the consortium to address it. Faculty members are invited to address industry challenges, and eight were chosen for the first cohort in 2023.

In a conversation with Santosh Kumar Sahu, Associate Professor, Department of Humanities and Social Sciences, we delved into his research on Green Sustainability and Environmental Quality: CO2 Footprint Modelling at Firm Levels. He further highlighted on the outcomes and also on his TREND Setter experience…

The Energy Consortium (TEC): Can you provide a brief overview of your TREND Setter project?

Santosh Kumar Sahu (SKS): My project aimed to contribute to understanding the industrial energy consumption, particularly focusing on CO2 emissions that were computed using a bottom-up approach. This allowed to determine how much emission a specific firm generated during production and linking those findings to emission standards and classifying them as high energy or high carbon-intensive. From there, the concept of carbon productivity was examined.

For example, if a firm produces 100 items while consuming 20 units of energy, it achieves an energy intensity of 5 items per unit of energy. Similarly, another firm may produce 120 items with the same energy consumption, resulting in an intensity of 6 items. Here, the second firm is more efficient. The energy efficiency could have been achieved by many means like altering energy mix, optimizing material usage, increasing production while maintaining the same energy usage,… But for an accurate measure, understanding carbon efficiency is necessary. I proposed measuring carbon productivity by evaluating the output generated per unit of CO2 emitted. This approach assigns a value to carbon emissions, prompting discussions on potential carbon pricing.

TEC: What was the main objective of the project?

SKS: The project’s primary goal was to conduct carbon footprint analysis and identify industry’s CO2 emission levels. Then, I connected emissions to technological capability and investigated why some industries emit more CO2 than others.

TEC: Can you share on the outcomes of your project?

SKS: Close to 13,799 firm-year observations were made across the manufacturing space. We discovered that firms participating in Perform Achieve and Trade (PAT) scheme achieved better energy efficiency than those outside of it. Additionally, firms with high research and development (R&D) investments showed improved performance. Notably, industries like pharmaceuticals, rubber, plastics, and textiles demonstrated high carbon intensity. An interesting point is, pharmaceuticals are classified as high-tech due to their significant R&D investment while textiles are considered low-tech. Despite this classification, both industries behave similarly in the pollution market because pharmaceuticals generate waste in addition to carbon emissions.

One of the key conclusions we’ve reached is that we need to establish a price for carbon. Additionally, firms that are effectively engaging in carbon mitigation should receive incentives from the government to encourage broader participation in this market. We also need to integrate the concept of circularity by identifying technologies that can help mitigate carbon emissions. Estimating the social cost of carbon is crucial, which includes evaluating health outcomes related to pollution and understanding the associated costs.

TEC: What were the challenges that you faced?

SKS: The challenges revolved around data acquisition, accuracy and robust reporting standards. Currently, we rely on publicly available information, such as annual budgets and audited financial statements, to analyze segment-wise energy consumption. The merging of these datasets is often problematic, requiring careful handling. Access to firms for primary data collection and discussions would greatly enhance the study.

Another challenge is reaching a consensus on an appropriate carbon cost, which necessitates extensive consultations with various stakeholders. Companies are unlikely to pay for emissions simply because they exist; they need to be engaged in policy discussions that highlight the implications of their pollution. We should be able to create regulations that offer incentives for adopting new technologies and practices.

TEC: What was the most rewarding aspect of this project?

SKS: One of the most rewarding aspects of this project has been the academic rigor. We’ve had multiple project meetings to track our progress, with regular monthly updates on our activities – something that’s not common in most projects. Additionally, I’ve had the opportunity to present the preliminary results at about seven conferences, and two manuscripts are currently in the process of being published in academic journals.

The industry partner, has been very proactive throughout this process. They were particularly impressed with the work and invited me to their headquarters in Pune to present my work. For someone with an economics background, this experience has been an invaluable way to bridge research and industry. Working in this environment has shown me that economists can significantly contribute to industrial innovation and research dynamics, alongside engineers.

For researchers from non-technical backgrounds, it provides an opportunity to learn about technology. This understanding will help create synergy and industries begin to recognize the value of involving economists in their projects.

TEC: What were the key takeaways from your TREND Setter experience and what would be your piece of wisdom for this new cohort?

SKS: TREND Setter offers a highly structured research platform and each project benefits from diverse insights by a heterogeneous group of participants. It fosters a sense of community among all awardees in a cohort. This reliance on knowledge transfer is invaluable, as experts from different disciplines come together, share their expertise, and address technical questions collaboratively. The time-bound nature of the projects adds to the challenge but also emphasizes the importance of continuity. Guidance from industry partners, elevates our research beyond pure academics, ensuring it has practical applications.

The upcoming cohort should aim to set clear, achievable milestones within a one-year timeframe, as even a small delay can impact the project. Maintaining continuity in research activities is crucial. Even marginal progress in our work is significant, especially since industry funding sets high expectations and is crucial for continuing support to future TREND Setter initiatives.

TEC: Currently what are you working on?

SKS: My research focuses on three key areas. First, I’m continuing my work in energy economics. Second, I’m delving into climate change economics as part of a climate economics course. Lastly, I’ve started exploring institutional economics and its implications for climate issues.

Specifically, I’m examining how corruption can explain energy-related carbon emissions and inefficiencies. The absence of effective regulations due to corruption leads to higher emissions and hinders progress toward sustainable development goals. I am trying to see if it is an issue of institutional structures, corporate governance, or purely economic factors? This inquiry is guiding my understanding of institutional economics and the economics of climate change.

Additionally, I’m exploring technology validation through the lens of behavioural economics. My PhD student and I are working on a project focused on, how to encourage acceptance of new technologies, such as microgrids, solar PV, water management systems,…

TEC: What are the current trends in your field of research?

SKS: Since the last decade, energy related research has deepened significantly. Numerous research papers have been published, making it one of the most prioritized Sustainable Development Goals (SDGs). Energy is critical, particularly for a country like India that relies on imports. This raises the question: can renewable energy serve as a safeguard for India’s future energy demands? Consider a scenario where oil supplies are suddenly cut off due to geopolitical tensions. In such a case, renewables become essential. To address this, we need robust, competitive and affordable energy technologies that leverage our geographical advantages.  

However, a crucial gap exists between technologists and economists. While there’s extensive laboratory work happening, we need more focus on the economics of energy technology and how it can be integrated into viable government policies. Interdisciplinary research is key to addressing energy challenges effectively and accelerating the transition to sustainable solutions. Given IIT’s strength in technology, we have the opportunity to merge energy technology with economics, generating valuable insights for public policy that can ultimately support governments to create a roadmap for future development.