ETHICAL ENERGY INDEX (EEI)
We have been thinking as to how to quantify emission related risks for any business in an objective manner as we found that most of the current indices used in stock markets for this purpose involve considerable subjective assessment. Further such measurement should be consistent with financial reporting.
Based on our experience in energy industry we evolved an index which, in our opinion, gives a true picture of emission related risk faced by a business. We did this about 10 years ago and based on market research we ,also, found that it is possible to have published information about the data required for determining EEI for certain energy intensive listed companies in India. As per the Regulations in force at that time, certain identified sectors of industry, if listed on stock exchange, were required to publish information related to their energy consumption in the Director’s Report as a part of their annual report. We used such published information and were able to estimate EEI for almost 300 listed companies in India.
We then approached a stock exchange in India to consider use such index as ‘CARBON RISK INDEX”. We made considerable progress in this regard. However, by early 2014, the Regulations changed and companies were not required to publish the energy consumption details as per earlier format. This made estimation of EEI for listed companies difficult as it was possible only if they voluntarily declared it. Due to this development the plan for developing carbon risk index for a leading indian stock exchange could not take off.
However, we are clear that the EEI still has relevance and sooner or later such a concept would have to be adopted by stock exchanges to quantify carbon risk of listed companies.
We would be more than happy to associate with any stock exchange in developing such index as and when they want it.
Further, we believe, that EEI can, also, be used by value investors (with ESG focus) to analyze carbon risk of companies in their portfolio. We would be happy to associate such interested value investors.
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Various countries in the world have different energy mix and energy consumption also depend on their economic development and population.
We have been continuously analyzing the trend in energy consumption and emissions from energy use over the years.
We have prepared a model to analyze these trends. This will help in monitoring the progress being made by various countries in terms of meeting their NDC targets under COP 21 agreement.
We have tried to promote one of the biggest initiative for emission reduction in India by developing an innovative concept of repowering existing coal based plants to gas based plants. The project was to reduce GHG emissions by 25 million TPA which is the largest project for emission reduction planned anywhere in the world.
This concept has some unique advantages and was very actively pursued with a state Government by us on behalf our client. We have done a very detailed techno economic analysis of some specific power plants to implement this concept.
Unfortunately, despite its merits, the project could not be implemented as requisite approvals could not be obtained (in our opinion due to lobbying by vested interests and bureaucratic reluctance to adopt disruptive change).
We believe that this is still having merits in India as, in our opinion, unless such a concept is adopted, meeting NDCs committed by India for emission intensity of economy, under COP21, would be impossible.