Clean Tech: A Far Cry
Unlike the developed West, India seems to be nearly half a century away from being driven cent per cent by clean and sustainable technologies. And the path ahead is capital intensive
Early in March, a seemingly disparate crowd congregated at the city state of Monaco on the French Riviera for one of those myriad conferences, where the dress code is “business attire” and the day ends with cocktails and dinner. Business conferences are all about networking and building “relationships” among stakeholders in any business. So, CleanEquity 2018 may have seemed typical to the uninitiated. It is, however, quite a bit more than another networking jamboree.
The conference has over the decade gone by, striven to brainstorm on technologies that could make industries and businesses sustainable in the years ahead.
CleanEquity, conceived by Prince Albert II of Monaco and Innovator Capital Chairman, Mungo Park, drew more than 250 delegates from companies that generate solar, wind or hydel power, to those that create water treatment plants, among a myriad other businesses. The common thread that bound them together was clean technology. In its 11th edition in March 2018, the CleanEquity conference mulled on “innovative” solutions for clean technology.
With 2030 as the cut-off year for achieving the 17 Sustainable Development Goals that members of the United Nations have committed themselves to, “clean technology” must loom large on the policy framework of any nation. Most of Asia (not counting Japan and South Korea) Latin America and Africa are still laggards in switching to technologies that could ensure economic development without depredating the earth. The Scandinavian nations of Denmark, Finland and Sweden, continue to be at the forefront of clean technology, followed by Canada and the United States. In the Global Clean-Tech Innovation Index, India ranks 22.
The Global Scenario
Global investment in clean-technology companies was at its peak in 2011, but has begun growing steadily again since 2013. Transportation is one of the leading sectors in which clean-technology solutions have been implemented. Clean technology is often associated with clean energy, but has applications in many other sectors as well, like sanitation, for instance.
Global trends indicate an exponential rise in clean technology. As clean technology becomes more popular, it is likely to create more avenues for fresh employment. Says Gagan Vermani, Founder and CEO of MYSUN, “Even the oil rich countries are seeing these winds of change and making huge investments in the clean-tech space to hedge the over-dependence of their economies on oil. This shift towards clean-tech is also changing the employment statistics. More new technology jobs are being created while the traditional ones are reducing.”
To avail of the opportunities in the emerging avenues for employment, reskilling would be necessary on a massive scale, feels Vermani. “Even though a 100 per cent clean-tech country would still be a distant possibility, the strong winds of change towards clean energy will ensure that our earth survives much longer,” says he, adding, “And a new world order is likely to emerge.”
Few see renewable energy sources replacing fossil fuels entirely. “No country is 100 per cent independent, and no country will ever 100 per cent give up coal, gas, and oil,” says Alex Brooks of Canaccord Genuity Limited. “A 100 per cent is simply too ambitious: it’s a great slogan but not something that can be readily achieved,” he emphasises.
Others believe that even if a 100 per cent target for achieving clean technology is ambitious, obliterating fossil fuels entirely by 2050 is not. Sandeep Gupta, Partner at Pyfera Capital, also believes that “coal does not have to be phased out, for achieving 100 per cent clean energy, as there exists technology to convert waste to coal energy, and even reduce emissions from coal.” Gupta also believes that it will be important for India to “adopt, manufacture and deploy clean tech solutions, rather than just import them, as it will reinvigorate the economy and create jobs in the clean tech sector.”
Towards Sustainable India
India remains at the crossroads of economic development and environmental sustainability. According to the Global Clean-tech Innovation Index, India is now at rank 29 among the 40 countries considered by the index, which is actually eight spots below India’s ranking in the 2014 report. “India’s position is strong, it has a leader who recognises the problem and wants to do something about it, that is the first challenge,” says Mungo Park, Chairman and Founder of Innovator Capital and Co-founder of CleanEquity, Monaco. “India has high levels of engineering education levels to source, select, localise, distribute, install and maintain technologies — a huge asset,” he says, adding, “More and more of these technologies can be researched and developed locally.”
A 100 per cent clean-technology economy is one that is driven by technology and solutions that ensure a sustainable future. “A country can be called 100 per cent clean technology when the country is able to meet its energy gaps through clean energy — windmills, solar, biomass etc. Rural India still does not have enough grid power,” points out Avinash Upadhyaya, Head of Sales and Marketing at GreenCHILL Storage, a clean-tech company.
“To be a 100 per cent clean technology country, all energy generation and industrial activity must run on clean sources of energy with zero emissions. There is no major country in the world that is anywhere close to being a 100 per cent clean technology country. India is just starting out, so it is way down the list. It may take 50 plus years and advancement in technologies for that to happen,” says Raj Prabhu, CEO, Mercom Capital Group. Prabhu’s views find resonance around the industry.
“While wind and solar are gaining ground in industrial and commercial usage, a 100 per cent clean tech goal is at least 30-50 years away in our view. Two key factors that could help in achieving 100 per cent clean tech ambitions much faster would be (a) availability of sustainable, affordable financing and (b) energy storage technologies that are far more accessible and cheaper than what we have today,” says Simmi Sareen, CEO of Loans4SME, an investor in the clean-technology sector.
According to Steve Kyryk, Senior Partner at Hobbes and Towne, “Being 100 per cent clean technology implies that there is no fossil fuel based power generation used to produce electricity. Our global clean-tech practice provides a unique perspective on the world’s clean technology efforts and India has the opportunity to efficiently build a strong position in non-fossil fuel energy production. With price per kilowatt hour extremely competitive across all forms of power production, some estimates have India achieving 100 per cent renewable power status by 2050.”
Most players in the clean technology business see India many years away from a 100 per cent clean tech economy. “By my definitions, it is going to take a very long time. Maybe if things go incredibly well, by 2050? Maybe even a lot longer,” says Michael Gardner, CEO of Aqaix, a water-finance clean-tech company. “There is probably a long tail of progress, to get to 100 per cent clean technology. Just getting to 80 per cent or 85 per cent, or even less as a waypoint will be huge,” says he. There seems to be a consensus that India is still three to five decades away from being 100 per cent clean- technology driven. Even that target is ambitious and challenging and involves capital-intensive measures.
In 2012, $6.9 billion (roughly Rs 44,850 crore) was invested in clean technology in India, prompted by a massive gap in the demand and supply of energy. The size of the Indian market for clean technology, including renewables, green buildings, waste management, water management, energy efficiency, off-grid solutions et al, was estimated to be over $25 billion (Rs 1,62,500 crore at Rs 65 to a dollar) in 2017.
The demand for energy, it goes without saying, is galloping with rapid industrial growth, rise in population and rapid urbanisation. The demand for green energy is stoked by the abundance of untapped renewable energy resources in the country, along with the growing awareness of environmental and social issues associated with conventional sources of energy, like fossil fuels. The combination of a growing demand for energy and untapped resources for renewable energy, makes India an active player in the market for clean technology. Suzlon Group Managing Director, Tulsi Tanti firmly believes that India “has the potential and capability to become the renewable energy technology manufacturing hub to the world”.
The opportunity comes with challenges, like a shortage of skilled manpower, adoption of new clean technologies, grid integration and high capital expenditure. To achieve the Sustainable Development Goals, India needs to use available clean-technology resources and scale up available capacities. Pricing models need to be reworked for better adoption of new technologies on a large scale. Government policies, incentives, tax-credit schemes, subsidies, models around phasing out of conventional sources of energy and replacing them with the newer non-conventional ones, are necessary.
While clean-technology investment is steadily growing in India and across the globe, becoming a 100 per cent clean-technology economy is a challenging task. A shift in the interregnum towards a “circular economy”, which entails gradual decoupling of economic activity from consumption of finite resources and designing waste out of the system with energy from renewable sources, is critical when shifting to a clean-tech economy.
A Policy Framework
Michael Gardner feels that the stride towards clean-technology would require many policy interventions. “Policy is incredibly important to encourage the right behaviours,” says he. “Solar wouldn’t have taken off in the US and wind in Europe, without subsidy policies that made them economically feasible and helped drive the scale that yields the breakthrough economic inflexion point,” says he.
Achieving 100 per cent clean energy, an important element of clean-technology, implies phasing out the coal industry, which is again a major employer and provider of energy. Meanwhile, millions of people still lack access to electricity, and it is important that affordable clean-energy be made available to those who need it most. “To phase out coal in India, clean energy will first have to become readily accessible and affordable for people. Even though India is the third largest energy consumer when it comes to electricity consumption, it is also a very energy-deficit country, where 240 million people don’t have access to basic electricity,” says Vermani. “The sooner clean technology is made affordable and available, the sooner coal and other non-renewable sources of energy can be phased out,” says he.
In India, the thrust is mainly on solar and wind power. Some energy experts though, consider a shift towards nuclear energy critical. “France and Sweden have come close to becoming 100 per cent clean technology countries by using nuclear power. Germany’s emissions are increasing as it shuts down nuclear plants, becoming more dependent on coal and lignite, despite increased investment in renewables,” says Seth Grae, President and CEO of Lightbridge Corporation, a nuclear-fuel technology company. “Here in the United States, California is similarly failing to advance towards its goal of clean energy as it shuts down nuclear plants, with renewables unable to compensate for such great losses of clean power from reactors”, says Grae.
Clean technology also involves verticals like waste-management, which can be restructured to integrate energy needs. “Only Solar Power has been given a lot of consideration in India, but other clean technologies such as fuel from plastic, energy generated through waste etc. have still not been propelled in a major way. We can learn from the world how waste to energy plants can contribute to making a country 100 per cent clean technology country, at the same time solving the problem of waste management,” says Sunita Gupta, Co-founder and Managing Director of Greenlogix.
A clean-tech economy will require structural changes, policy interventions and capital-intensive investments, along with divestment of conventional energy sources. Says Vinay Rustagi, Managing Director of Bridge to India Energy, “We need massive investments in storage, transmission and grid systems. We also need a complete overhaul of the policy and regulatory system as well as the entire energy sector value chain. It means growth of many new businesses and business models but also destruction of a huge amount of capital and investments made in the conventional energy systems”.
Sushil Kumar Sarawgi, Director of KOR Energy (India) says, “Becoming a 100 per cent clean technology country implies that all technologies used in the country should have zero- emission or zero-pollution. The raw material used in any process or technology should be clean and the by-products of the technology or process should also be zero polluting.” Sarawgi of KOR Energy (India) finds India becoming a 100 per cent clean-tech country a bit ambitious. “I think by year 2022 our major energy requirements will be fulfilled by clean energy, but other things like use of electric vehicles, industrial process improvements will take a little longer time. I think by year 2028 India can probably become a 100 per cent clean technology country. Political will and commitment will bring a major change.”
India has a relatively inefficient clean-tech conversion rate, which means that there are higher inputs for innovation required, with lower outputs for innovation. This means that compared to countries like Germany, Singapore, South Korea and so on, India requires a relatively higher investment in clean-tech innovation, with a lower output per input of the clean-tech innovation. Basically, clean-tech innovation and efficiency is relatively low in India for the resources allocated towards it.
“The objective of becoming 100 per cent clean technology country will happen in phases only. India is a responsible country and has to define long-term goals by identifying the annual incremental targets of phasing out the use of traditional sources of energy,” says Sarawgi. “Fossil fuels and more particularly coal have to be slowly phased out for energy requirements. Coal-based power plants will either shut down in the long run or be converted into Green energy or Solar/Wind Hybrid Plants as the case may be,” says he.
Aneesh Jain, Senior Consultant (Energy Sector - India Market), ICF India Consulting says, “Clean technology is a broad term covering areas of clean energy, clean transportation, green buildings, water and waste water, industrial efficiency, amongst others. Being a 100 per cent clean technology country implies that the country uses clean forms of energy in all consuming sectors, uses low polluting forms of technology for industries, is majorly dependent on renewable energy, and uses sustainable and environmentally friendly technology in all areas.” Jain also believes that supporting policies and a push from the government could help India move towards clean technology.
“A 100 per cent clean energy India is an ambitious target and it would take decades to get there, particularly given the country’s current reliance on coal generation,” muses Andrew Hines, Co-founder of CleanMax Solar. “But that is not to say that it is impossible — far from it,” he goes on to say. “I think it has never looked more achievable or more important. But it will take a clear vision and very detailed planning to get there from the present.”