Daily Current Affairs 4th November – 2021
Topics
- One Sun, One World, One Grid
- RBI and Revised PCA Framework
- Ganges River Dolphin
- The Global Methane Pledge
- Zuari Bridge
1.One Sun, One World, One Grid
#GS3 -Climate change, Infrastructure- energy
Context:
- Initiative for Green Grids India and the United Kingdom unveiled the One Sun, One World, One Grid effort at COP26 to tap solar energy and have it transit seamlessly across borders.
- The goal was to offer more than enough clean energy to meet the requirements of everyone on the planet by trading energy from the sun, wind, and water across borders.
In depth information
- More than 80 countries have signed on to the programme.
- The ISRO has created a programme that can calculate the potential solar energy at every location on the planet and determine whether it is suitable for solar energy installations.
- A Ministerial Steering Group will seek to hasten the construction of massive solar power plants and wind farms in the finest sites, which will be connected by continental-scale grids that straddle national borders.
- The Ministerial Steering Group will comprise representatives from Africa, the Gulf, Latin America, and Southeast Asia, as well as France, India, the United Kingdom, and the United States.
Implementation:
- A Ministerial Steering Group will seek to speed up the construction of huge solar power plants and wind farms in the best sites, which will be connected via continental-scale grids that straddle national borders.
- The Ministerial Steering Group will comprise representatives from Africa, the Gulf, Latin America, and Southeast Asia, as well as France, India, the United Kingdom, and the United States.
The importance of a global grid:
- With a single global system, we can obtain renewable energy from anywhere. The requirement for energy storage would be reduced, and the viability of solar systems would improve.
- The initiative’s potential and benefits are as follows:
- India has pledged to generate 40% of its electricity from non-fossil fuels by 2030, and has urged for solar energy supplies to be connected across national borders under the slogan “One World, One Sun, One Grid.”
- For all parties involved, the planned integration would result in lower project costs, better efficiencies, and increased asset utilisation.
- Due to the fact that it would function with current grids, this proposal will just require incremental expenditure.
- It will assist all participants in attracting investments in renewable energy sources as well as maximising the use of skills, technology, and finances.
- The economic gains that result would have a positive influence on poverty alleviation and assistance in addressing water, sanitation, food, and other socio-economic issues.
- It will enable India’s national renewable energy management centres to expand to regional and global levels.
- Up to 2050, about 2,600 GW of worldwide connectivity capacity may be achievable, resulting in anticipated annual power savings of 226 billion euros.
Declaration of One Sun:
- The announcement was accompanied by the “One Sun Declaration,” which stated that “realising the vision of ‘One Sun One World One Grid’ through interconnected green grids can be transformative, enabling all of us to meet the Paris Agreement’s targets for preventing dangerous climate change, accelerating the clean energy transition, and achieving sustainable development goals.”
2. RBI and Revised PCA Framework
#GS3- Indian Economy & Related Issues
Context
- The Prompt Corrective Action (PCA) Framework for scheduled commercial banks has been amended by the Reserve Bank of India (RBI).
- The updated framework’s provisions will go into effect on January 1, 2022.
In depth information
- Previously, the leverage was also evaluated as part of the PCA framework, but profitability was the most important factor.
- The return on assets (ROA) was rigorously monitored during profitability. The RBI’s Risk threshold for restricting banks activities was triggered by a negative ROA for two years in a row.
- Proposed new mechanism: While capital, asset quality, and profitability were the focus of the 2017 framework, capital, asset quality, and leverage will be the focus this year.
When does a bank become a part of this list?
- The RBI has defined regulatory trigger points for the start of the process based on three parameters: capital-to-risk weighted assets ratio (CRAR), net non-performing assets (NPA), and return on assets (RoA).
- CRAR: There are several stages to it. If the CRAR falls below 9%, the RBI requires banks to submit a capital restoration plan and imposes restrictions on new enterprises and dividend payments.
- If the CRAR is less than 6% but equal to or greater than 3%, the RBI may take further action if the bank fails to submit a recapitalization plan.
- Net nonperforming assets (NPAs): If net NPAs exceed 10% but are less than 15%, a specific drive to reduce bad loans and limit the development of new NPAs begins. The Reserve Bank of India examines the bank’s loan policies and takes initiatives to improve credit-appraisal abilities.
- If the bank’s return on assets (ROA) is less than 0.25 percent, it will be restricted from accessing/renewing costly deposits and CDs, and the RBI will prohibit the bank from entering new lines of business. Borrowings from the interbank market, dividend payments, and hiring new employees will all be prohibited.
Revisions to the framework’s provisions
- Return on assets is no longer included as a measure that could prompt action under the amended framework.
- Payments banks and small financing banks (SFBs) have also been removed from the list of lenders who can be subjected to immediate corrective action.
- Key areas to keep an eye on include: The revamped framework’s core areas for monitoring will be capital, asset quality, and leverage.
- Capital, asset quality, and leverage indicators to follow are the CRAR/common equity tier I ratio, net NPA ratio, and tier I leverage ratio, respectively.
- Under Section 36ACA of the BR Act 1949, the RBI has the power to supersede the board of directors.
- CAR Ratio Revision: The RBI has revised the level of total capital adequacy ratio shortfall that would put the lender into the ‘risk threshold three’ category.
What is the definition of Prompt Corrective Action (PCA)?
- The RBI uses the PCA framework to keep track on banks with poor financial performance.
- The PCA framework was introduced by the RBI in 2002 as a structured early-intervention mechanism for banks that have become undercapitalized or fragile due to a loss of profitability.
- Its goal is to address the issue of non-performing assets (NPAs) in India’s banking system.
- Based on the recommendations of the Financial Stability and Development Council’s working group on Resolution Regimes for Financial Institutions in India and the Financial Sector Legislative Reforms Commission, the framework was reviewed in 2017.
PCA Framework Issues/Challenges
- Lack of capital: The PCA framework applies to banks with capital levels below the regulation requirement of 9%. Because government budgets are extremely tight, these PCA banks have been in desperate need of funding for a long time. These institutions are unable to raise cash on their own.
- Increased nonperforming assets (NPAs) are bad for a bank’s soundness since they represent inadequate credit standards and a failure to recover loans through collateral. Before initiating any new loans, these banks will need to make more provisioning from profits to cover any future losses. At this moment, lending to the SME or MSME segment is too risky.
- A clean-up mission of the balance sheet is already underway: This is a good long-term activity, as well as a strong bankruptcy law recovery and restructuring method. With some short-term pain, these approaches would stabilise. Any relaxation of the PCA framework at this point will jeopardise the process, maybe with long-term consequences.
- There isn’t much in the way of governance or reform: In PSBs, there is a larger issue of governance reforms. The Bank Board Bureau (BBB), for example, is a half-hearted measure with limited powers. The next obvious step, forming an investment holding company for all PSBs, does not appear to be feasible.
PCA Framework Advantages
- Maintains capital: Because most bank activities are funded by deposits that must be repaid, it is critical that a bank maintains sufficient capital to continue operations.
- A regulator and an alert mechanism: PCA is designed to inform the regulator, as well as investors and depositors, if a bank is in difficulty.
- It tries to address the issue of non-performing assets (NPAs) in the Indian banking sector.
- Correct the bank’s errors: PCA’s goal is to correct the bank’s mistakes before they become crisis-sized.
- Regulation: The RBI will regulate PCA banks’ loan disbursals/credit to unrated borrowers or those with high risks, but it will not outright prohibit the banks from lending.
- Restoring a bank’s financial health: Essentially, PCA assists RBI in restoring a bank’s financial health by monitoring key performance indicators and taking corrective action.
- Reinforcing the institution’s financial core: It may also prevent banks from entering other lines of business, thereby strengthening the institution’s financial core.
3. Ganges River Dolphin
#GS3-Conservation
Context
- A guide for the safe rescue and release of trapped Ganges River Dolphins was just produced by the Ministry of Jal Shakti.
- The Turtle Survival Alliance and the Uttar Pradesh Government’s Environment, Forest and Climate Change Department (EFCCD) collaborated on the publication.
- In 2009, the Indian government designated it as the country’s national aquatic animal.
In depth information
- Platanista gangeticagangetica is the scientific name for this species.
- It was first discovered in the year 1801.
- They live in Nepal, India, and Bangladesh, in the Ganges-Brahmaputra-Meghna and Karnaphuli-Sangu river systems.
- The Ganges river dolphin is a blind dolphin that can only live in freshwater.
- They hunt by producing ultrasonic noises that ricochet off fish and other prey, allowing them to mentally “see” an image. They’re also known as’susu.’
- Population: The species has a global population of 4,000 individuals, with roughly 80% of them living on the Indian subcontinent.
- It serves as a trustworthy measure of the overall health of the river environment.
Threats:
- Bycatch: Both dolphins and people prefer regions of the river where there are more fish and the current is slower.
- This has resulted in fewer fish for humans and more dolphins dying as a result of bycatch (inadvertently captured in fishing nets).
- Another major driver of habitat degradation is pollution, which includes industrial, agricultural, and human sources.
- Dams: Because dams and other irrigation-related constructions prevent them from moving to new places, they are more prone to inbreeding and other hazards.
- Heavy pollution, increasing fishing activity, and vessel traffic are all threats to dolphins living below a dam. They also have less food because dams disrupt fish and other prey migration, breeding cycles, and habitat.
Steps Taken:
- Project Dolphin: In his Independence Day Speech 2020, the Prime Minister announced the government’s plan to create a Project Dolphin. It’s similar to Project Tiger, which has aided in the growth of the tiger population.
- Dolphin Sanctuary: In Bihar, the Vikramshila Ganges Dolphin Sanctuary was built.
- National Ganga River Dolphin Day is observed on the 5th of October by the National Mission for the Clean Ganga.
- The Ganges River Dolphin Conservation Action Plan 2010-2020 “recognised risks to Gangetic Dolphins and the impact of river traffic, irrigation canals, and depletion of prey-base on Dolphin numbers,” according to the plan.
4. The Global Methane Pledge
#GS3-Conservation, environmental pollution and degradation
Context:
- The Global Methane Pledge was just announced at the United Nations Climate Change Conference (COP26) in Glasgow. Over 90 countries have signed the promise so far, which is a collaborative effort led by the US and the European Union.
- Because methane is the second most abundant greenhouse gas in the atmosphere after carbon dioxide, efforts to reduce its emissions are important.
In depth information
What is the Global Methane Pledge, and how does it work?
- The US and EU initially announced the pledge in September, and it essentially amounts to a global pact to cut methane emissions. One of the main goals of this agreement is to reduce methane emissions by up to 30% by 2030 compared to 2020 levels.
- Methane is responsible for roughly half of the 1.0 degree Celsius net rise in global average temperature since the pre-industrial era, according to the latest Intergovernmental Panel on Climate Change assessment.
- Rapidly reducing methane emissions is seen as the single most effective technique for reducing global warming in the short term, alongside action on carbon dioxide and other greenhouse gases.
What effect does methane have on the environment?
- According to the United Nations, methane, a greenhouse gas that is also a component of natural gas, is responsible for 25% of the current global warming.
- Its presence in the atmosphere raises Earth’s temperature since it is a greenhouse gas.
- Methane comes from a variety of places, including both human and natural sources. Landfills, oil and natural gas pipelines, agricultural activities, coal mining, wastewater treatment, and some industrial processes are also sources of methane, according to the US Environmental Protection Agency.
- The oil and gas industry is one of the greatest contributors to human-caused methane emissions.
- Human sources of methane (also known as anthropogenic sources) account for 60% of worldwide methane emissions, according to NASA. The burning of fossil fuels, decomposition in landfills, and agriculture all contribute to these emissions.
- In India, for example, the Ministry of Coal urged state-owned coal miner Coal India Limited (CIL) to produce 2 MMSCB (million metric standard cubic metres) of coalbed methane (CBM) gas per day in the next 2 to 3 years in 2019.
What is the significance of dealing with methane in terms of climate change?
- When methane has a significantly shorter atmospheric lifetime (12 years compared to centuries for CO2), it is a lot more effective greenhouse gas simply because it absorbs more energy while in the atmosphere, according to the International Energy Agency (IEA).
- The UN emphasises in its factsheet on methane that it is a strong pollutant with an 80-fold greater global warming potential than carbon dioxide,approximately 20 years after it was released into the atmosphere
- The average methane leak rate of 2.3 percent, according to the UN, “erodes much of the climate benefit gas enjoys over coal.”
- The IEA also claims that current technology can offset more than 75% of methane emissions, with up to 40% of this done at no additional cost.
Methane is a type of natural gas.
- The simplest hydrocarbon is methane, which is made up of one carbon atom and four hydrogen atoms (CH4).
- It’s combustible and utilised as a fuel all over the world.
- Methane is an extremely potent greenhouse gas.
- Natural sources account for roughly 40% of methane emissions, while human-influenced sources account for 60%, such as cattle farming, rice agriculture, biomass burning, and so on.
- Potential for Increased Global Warming: In terms of global warming potential, it is roughly 80-85 times more potent than carbon dioxide.
- As a result, it’s an important objective for lowering global warming faster while also attempting to reduce other greenhouse gases.
- Encourages the production of tropospheric ozone: Increased emissions are causing an increase in tropospheric ozone air pollution, which kills over one million people prematurely each year.
5. Zuari Bridge
#GS1-Places in News
Context
- By September 2022, the new Zuari bridge should be completed.
- The bridge will function as a highway between Panaji and Margao, crossing the Zuari river.
River Zuari
- In the Indian state of Goa, the Zuari River is the largest river.
- It is a tidal river that starts in the Western Ghats in Hemad-Barshem.
- In the interior, the Zuari is also referred to as the Aghanashani.
- Zuari is 92 kilometres long, but it is connected to a number of canals and trenches, including the 62-kilometer-long Mandovi Stream and the Cumbarjua Canal (15 km).
- An estuary system is formed by the Zuari and Mandovi rivers. They form the backbone of Goa’s agricultural industry.