A hot cup of freshly brewed tea is a beverage beloved by many. But how often do we think about the origins of each neatly packaged tea bag on our kitchen shelf? Millions of people across the planet earn livelihoods from the tea industry, but many tea-producing regions face a myriad of sustainability challenges. From climate change impacts to price fluctuations, producing tea can be a volatile business.

As part of our advisory services work for governments, IISD’s State of Sustainability Initiatives (SSI) team conducts research to identify practices to help address these challenges. These practices include the use of voluntary sustainability standards (VSSs)—certification schemes that define a set of requirements for producing and selling products sustainably. Here are three examples of how VSSs and other measures have been used effectively in Kenya, India, and Sri Lanka.

Kenya

Tea production provides five million Kenyans with livelihoods

Tea is a big industry in Kenya. First introduced to the country in 1903, it now contributes an estimated 5 million direct and indirect jobs. That means 10% of Kenyans rely on the industry for their livelihoods, including more than half a million smallholder tea farmers. 

Kenya is also one of the top tea-exporting nations, with an export value of a whopping USD 1.2 billion in 2019. It is leading the way in the trade of sustainable tea, with nearly all of its tea production complying with VSSs like Rainforest Alliance and Fairtrade. But with so many people relying on the industry, has this made a difference to farmers’ incomes?

Certification and training can help ensure fair, stable wages

Thanks to the growing global demand for sustainable tea, complying with VSSs can provide farmers with access to new markets, which can offer higher prices and premiums. Providing fair wages is also often part of the criteria for certification. For example, Fairtrade sets a minimum price for most of its products and provides farmers with additional funds to invest in the community. When used to fix roads and bridges, this can also improve farmers’ connections to supply chain actors.

In Kenya, Farmer Field Schools also help train farmers in how to use sustainable production methods, such as better pest and soil fertility management. Introduced by the Kenya Tea Development Agency Holdings Limited and partners in 2006, the schools have helped producers increase yields. Studies show that they have also encouraged farmers to work collectively to source equipment and sell their produce—all of which can enhance farms’ profitability.

India

Poor working conditions and inequality affect tea growers in India

Records suggest that tea drinking has been part of Indian society since the 12th century. Cultivation was escalated by the British in the 19th century, and India is now one of the world’s leading tea-producing countries. In 2016, the Tea Board of India estimated that the country produced 1.3 billion kilograms of tea.

However, studies have shown that many tea plantation workers are denied their rights to decent working conditions. Tea-growing regions like Assam and Darjeeling often experience labour conflicts over issues like wages and access to healthcare. In addition, women bear the biggest brunt of inequality as they are most likely to be involved in plucking, which is low-paid and can lead to health issues.

Certification and policies can improve living standards

Respect for human rights and protecting the health of workers are two criteria often included in VSSs. In India, almost half of tea is produced under the Trustea label, a VSS developed specifically for the Indian context. Trustea includes requirements for appropriate working conditions in their criteria for certification, including the provision of adequate training, maternity entitlements, and equal pay.

The Indian government has also helped improve working conditions for tea farmers and workers. For example, the Plantation Labour Act legally requires plantations to provide certain health and welfare benefits, from housing to medical facilities. Additionally, organizations like the Ethical Tea Partnership are increasingly focusing on gender equality projects, such as training to enhance women’s nutrition and participation in decision-making.

Sri Lanka

Sri Lankan tea production is vulnerable to climate change

Sri Lanka is one of the oldest tea-producing regions in the world. Ceylon tea exports contribute to around 2% of the country’s GDP, and the industry supports more than 450,000 smallholder farmers. Due to favourable climates, tea is primarily grown in the central highlands and southern inland regions.

However, given that Sri Lanka is a developing island nation, tea production is particularly vulnerable to stresses induced by climate change. Rising temperatures, unpredictable weather patterns, and pests are putting strain on an industry already weakened by competition and labour costs. What is more, these challenges are exacerbated by deforestation and the excessive use of chemicals and pesticides.

Certification and governments can support climate adaptation

Many certification schemes seek to help communities adapt to climate change. The Rainforest Alliance runs programs in Sri Lanka that help workers adopt climate-smart agricultural practices. They educate tea farmers on how to maintain tree cover and reduce synthetic pesticide use. Their research shows that such practices benefit not only the environment but also the profitability of certified farms.

In addition, the Sri Lankan National Adaptation Plan for Climate Change has outlined a strategy to combat the effects of climate change. Measures range from introducing new heat, drought, and flood-tolerant cultivars to establishing a climate communication system that connects with tea farmers via mobile and Internet alerts. 

Learning From Others

Amid a variety of intense and complex sustainability challenges, these examples show that there is a range of approaches that can help tea farmers adapt and thrive. The impacts of these practices are the subject of ongoing research, but it appears that VSSs can play a major role in the quest for a more sustainable tea industry—particularly when supported by measures put in place by governments and other actors that support farmers. Identifying such practices forms a central part of the SSI team’s advisory services work, as it can help inform authorities seeking to tackle similar challenges.

This blog was written from research conducted by Vivek Voora and Sara Elder. The author would like to thank Sara Elder, David Perri, and Cristina Larrea for their valuable feedback on earlier drafts of this article.

July 15, 2021, New Delhi—New research suggests that India needs to grow financial support for renewable energy to reach its goals for Aatmanirbhar Bharat and clean energy transition as part of the economic recovery from COVID-19.

A study titled Mapping India’s Energy Subsidies 2021: Time for renewed support to clean energy, released today by the International Institute for Sustainable Development (IISD) and the Council on Energy, Environment and Water (CEEW), finds that subsidies to renewable energy fell by 45% from the fiscal year (FY) 2017 peak of INR 15,470 crore to INR 8,577 crore in FY 2020.

According to IISD and CEEW experts, new funding for clean energy is crucial to progress the transition that is already underway in India. Researchers point to positive trends such as the increasing subsidies for electric vehicles, which jumped 135% from FY 2019, reaching INR 1,141 crore in FY 2020 due to growing public demand for electric mobility. But they also note that the full benefits of electric transport can only be achieved if there is a green electricity mix.

The report explains that renewable energy subsidies are at a standstill due to a combination of factors including grid-scale solar and wind achieving market parity, lower deployment levels, and subsidy schemes nearing the end of their allocation period.

“It is time for a new wave of support measures focused on emerging technologies such as grid integration and storage, decentralized renewable energy, green hydrogen, and offshore wind,” says study co-author Balasubramanian Viswanathan of IISD. “India must deploy historic levels of about 39 GW every year to meet its admirable target of 450 GW of renewables by 2030. It is hard to imagine achieving this goal without the right support policies. And the prize is big: curbing air pollution, addressing the climate crisis, and kick-starting a green economic recovery.”

On the other hand, oil and gas subsidies jumped 16% from FY 2019 to FY 2020, largely due to financial support for household consumption of liquefied petroleum gas (LPG). Experts note, however, that LPG subsidies were suspended during the FY 2021 oil price crash and have not yet been reintroduced. This may reduce oil and gas subsidies in future years, but has led to new concerns around clean energy access, as no alternative support for clean cooking has been provided. Meanwhile, the researchers commended the government on its commitment to successfully phase out kerosene subsidies by FY 2022, which should also reduce total oil and gas subsidies.

Overall, the study finds that support for fossil fuels has increased as of the latest year of comprehensive data, hitting INR 70,578 crore in FY 2020. This is over seven times the sum of subsidies to clean energy.

Experts highlight that reforming fossil fuel subsidies can generate valuable additional resources for economic recovery from COVID-19 and investments in clean energy.

The report also identifies other government measures that can promote energy transition.

“Redirecting a share of coal tax revenues to clean energy and supporting communities, regions, and livelihoods impacted by the transition will help ensure a just and equitable energy transition,” says co-author Prateek Aggarwal of CEEW. “Further, the government should encourage public sector undertakings, which are currently investing more in fossil fuels, to set ambitious targets for high levels of investment in clean energy and establish national capacity in manufacturing.”

For the government, now is an excellent opportunity to support a green recovery aligned with Aatmanirbhar Bharat by designing a new generation of support measures for clean energy—in a way that ensures no one is left behind.

New Delhi, April 28, 2021—As millions of Indians await the government’s response to a record increase in the price of liquefied petroleum gas (LPG), experts warn that poor households may benefit two times less than better-off consumers from LPG support if the government doesn’t change the design of the LPG subsidy policy.

According to a new report (How to Target LPG Subsidies in India from the International Institute for Sustainable Development and the Initiative for Sustainable Energy Policy, at Johns Hopkins University),  the poorest 40% of households in rural and urban parts of Jharkhand received less than 30% of government LPG support in FY2019, when LPG subsidies comprised nearly 28% of all central government energy subsidies. 

The government halted LPG subsidies in May 2020 due to low oil prices and consequently lowered domestic LPG cylinder rates. However, LPG cylinder prices have recently increased from INR 594 in May 2020 to INR819 in March 2021, leaving millions of Indians struggling to afford the cooking fuel. Experts warn that LPG price support for poor households is vital and needs to be reintroduced urgently, but the existing policies need redesign to support those who need it the most.

“It's clear that poor households need LPG subsidy so when the government reintroduces LPG subsidies, it should avoid repeating old mistakes and channel benefits toward poor households, who are otherwise compelled to rely on less-clean biomass-based solid fuels,” says the report author, Shruti Sharma. “Rationalizing subsidies will be crucial for steering away from a regressive subsidy regime and saving the government crores during these tough economic times.”

According to the experts, the main bottleneck in improving subsidy distribution is high consumption of subsidized LPG cylinders by better-off households. The majority of India’s rural households continue to use more of the freely available wood and biomass-based fuels instead of subsidized LPG, while better-off households with higher consumption of subsidized LPG end up receiving a larger share of the subsidies. 

Experts highlight that the lack of data on the efficiency of the LPG subsidies has prevented the government from recognizing the inequity in distribution. “Jharkhand’s case study shows clearly that there is a knowledge gap in identifying poor households accurately,” says Sharma. “If we want to fix the problem of unaffordability, targeting is key.”

Experts recommend that focusing subsidy benefits on a narrower subset of beneficiaries can not only support the poorest consumers but also lower the overall program cost. 

The study estimates that poor households in Jharkhand with a Pradhan Mantri Ujjwala Yojana (PMUY) connection consumed only 5.6 cylinders annually—far lower than the current annual limit (or quota) of subsidized cylinders set at 12. Until poor households can increase their LPG cylinder consumption, the government can consider further reductions in the annual limit from 12 to 9 cylinders. The study estimates that this could reduce subsidy expenditure by 14% in rural areas and 19% in urban areas without significantly changing the average distribution of benefits. 

The study also found that there was no good link between poverty and whether or not households were PMUY beneficiaries: there was a mix of low-income and higher-income households among both PMUY and non-PMUY households. This means that trying to focus the subsidy only on PMUY beneficiaries—a commonly aired suggestion over the past several years—might create more problems than solutions. 

In the short term, the Centre must invest in mapping the knowledge gap and identifying the equity of LPG subsidies across India. In the medium term, experts recommend that state governments should consider testing smarter indicators like vehicle ownership to better identify well-off households and restrict their LPG subsidy. “Poverty is contextual, and this report tested interventions for Jharkhand, a state with high poverty, so findings might not be the same for states with lower poverty levels,” said Christopher Beaton, a study co-author. 

The COVID-19 crisis has severely affected the incomes of poor households, further stressing the need to increase their support for LPG subsidies. “The lack of clarity on LPG subsidies may push poor households who cannot afford unsubsidized LPG to using unclean biomass, severely impacting the health of women and young children—already, we found that the poorest households had to dedicate 9%–11% of their monthly expenditure, compared to only 3% among better-off households. The government should consider better targeting of LPG subsidies to increase affordability for the poorest,” said Beaton.