MSMEs and Energy

"I understand now that the MSMEs first have to be climate-resilient themselves to keep their business operations healthy. Only then they can be a part of the solution that offers products and services for others to be climate resilient."

"Correct! And then there are crucial elements of the economy that must function well for MSMEs to operate effectively."

"Urm…I don’t know what you mean by that."

"If I recall correctly, reports that identified economic sectors in South Asia that would be impacted by climate change were 'Agriculture’, ‘Urban’, and ‘Energy’."

Tashi tries to elaborate further.

"IPCC’s report on Key Economic Sectors and Services lists Energy, Water Services, and Transport as the first three key sectors. It has stated that the energy sector will be transformed by climate policy, but understanding climate change's impacts is important to secure a reliable energy supply. In the report, they have indicated that although more research is needed, the limited results indicate that developing countries likely face a greater negative GDP impact from climate change implications for the energy sector than developed countries, largely because of higher expected temperature changes.

Energy is now vital not just for our day-to-day livelihood, but it is important for the functioning of MSMEs. Just take India for example. According to a Bureau of Energy Efficiency study, a cluster of 180 energy intensive MSMEs use 261.45 billion units of energy annually. This accounts for around 20% of India's annual electricity usage. On the other hand, 48.2% of MSMEs rely exclusively on electricity, while 38.6% use no formal power sources at all (Mallya & Ghosh, 2020). So, with the majority of MSMEs relying on electricity, having reliable access to electricity is a must for effective business operations.

So, when we correlate the significant contribution of MSMEs to countries in South Asia and the negative impact on GDP from climate change implications for the energy sector, I would like to suggest that you keep in mind the importance of energy in the business you run."

As they walk, Lalima’s father’s shop becomes visible across the street.

"Ah! We’re here. We can continue to talk about energy next time. I’ll go hello to your father."