Going green makes business sense

Going green makes business sense
Fri Jun 8, 2012 1:47 am (PDT) Going green makes business sense....Hemant Joshi The telecom industry has a huge potential to contribute to the reduction in greenhouse gases. Although the telecom tower market is highly fragmented, the major six firms have around 90% of the total market After the Copenhagen climate summit in 2009, India agreed to cut carbon emissions intensity by 20-25% below the 2005 level by 2020. In India, around 20 million tonnes annually (mta) of CO2 emissions are from the telecom industry. In line with the challenges of global warming, India has begun to take small but decisive steps to address the problem as greenhouse gases are increasing the carbon footprint. The telecom industry has a huge potential to contribute to the reduction in greenhouse gases. Although the telecom tower market is highly fragmented, the major six firms have around 90% of the total market. India has around 400,000 telecom towers spread across rural and urban areas. Of the total wireless subscriber base (919.17 million as on March 2012), 35% comes from rural areas, where 70% of the population lives. Building energy efficient infrastructure across a vast country such as India involves huge investments. By 2016, Pike Research forecasts sustainable telecom network infrastructure investments will be over 61% of global telecom capital expenditure, representing a $194 billion (Rs. 10 trillion) market. Also, the towers in rural areas are still run with ageing diesel generators. The telecom sector, the second highest consumer of diesel after the railways, spends Rs. 12,600 crore annually on diesel. Officials monitoring towers estimate around 15-20% of total diesel consumption is pilfered. Rising running costs, widespread diesel pilferage and taxes are taking a toll on the cash flows of debt-laden telecom tower companies. For tower operators, going green is not only a viable business proposition but also a necessity. Applying Pareto's principle, 80% of the greenhouse effect can be reduced by ensuring efficient working of 20% of all greenhouse gas sources. According to analysts, the telecom tower industry can claim around 80 million carbon credits (1 carbon credit = 1 tonne of CO2) if it moves to complete green methods of power usage. Infrastructure sharing is the first step towards cost reduction, resulting in better returns by achieving economies of scale from the telecom tower business. It is becoming imperative for the telecom industry to explore alternative sources of fuel to run base stations, such as solar power, wind power, biodiesel and biogas. Companies such as Urban Green Energy Inc. are manufacturing more versatile wind turbines and hybrid wind/solar systems for use in applications ranging from suburban to off-grid telecoms towers in rural areas. Regulatory perspective The draft Companies Bill insists that companies voluntarily disclose contributions to improving ecology and promoting sustainable business. The Bill shows significant interest in wind power generation as well, aided by fiscal incentives, including tax breaks for 10 years and depreciation benefits of 80% on investment in the first year of a project's operation, besides earning carbon credits. Such provisions could be a boon for companies that voluntarily formulate environment-friendly operations and hence could gain customer loyalty in the long term. However, the crux of the problem is not in the laws, but in compliance. In India, 70% of the pollution is generated by micro, small and medium enterprises (MSMEs). These businesses should be encouraged through green financing by banks, education on the benefits of clean technologies, and improvement of their skill set to deploy these technologies and systems for upgrading and modernizing facilities.
Service providers Service providers are validating the strategic implications of green technologies and networks-in terms of cost, alternative business models and corporate social responsibility. For example, Vodafone has an ambitious plan to cut carbon emissions from the 2006-07 level of 1.23 mta to 0.615 mta by 2020. Vodafone has unveiled a solar-powered mobile handset in India to better serve the nation's energy-starved rural population. Idea Cellular Ltd is installing, at 200 sites in rural Bihar, solar hybrid sets that will reduce the fuel consumption of power generators from running for 15-16 hours to less than 5 hours a day. Bharti Airtel Ltd's GreenTowers P7 initiative is a comprehensive energy efficiency and alternative energy programme that will reduce diesel consumption by 66 million litres and CO2 by 0.15 mta. Close to 60% of Bharti's telecom sites in Africa are now powered by hybrid battery banks resulting in major reductions in emissions and operating costs for the company. Operators are building flexible networks to embrace new technologies (LTE, or long-term evolution, NFC, or near field communication, M2M, or machine-to-machine communication) and retiring legacy technologies that become obsolete with time. With increased focus on adopting green information technology, the recycling of electronic and computer waste is becoming increasingly accepted as the best practice as it presents significant value for customers, ensures compliance with all regulatory requirements, and benefits the environment. With the increasing demand for data services, both enterprises and service providers are building energy efficient data centres through improved system architecture and design. According to a report by the Telecom Regulatory Authority of India, savings achieved from video-conferencing and tele-commuting with moderate ICT, or information and communications technology, penetration in 2030 can offset greenhouse gas emissions more than 70 times what they are now. Just think, what if half the people don't go out to work but work from home and half the vehicles go off the road. Here again, with the road congestion, high cost of fuel and cars, and health implications of long travel, going green makes a great proposition. Focusing on, and, adopting green technology has become a necessity due to high energy costs and access issues in rural areas. Serving the underserved is an emerging business model to tap the value at the bottom of the pyramid. Doing good is also about contributing to the larger issues of serving the underprivileged, reduction of the carbon footprint and making money out of it.
Hemant Joshi is partner at Deloitte Haskins & Sells. URL: http://www.livemint.com/2012/06/07195316/Going-green-makes-business-sen.html