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BW Businessworld

The Cleantech Imperative

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Déjà vu, it feels like a repeat of 2008. All economic indicators across equity, money and credit markets are flashing red. We might be staring at stagflation in the western world or a double dip recession, or merely a pause in what is to be another decade of breakneck growth across BRICS. Central bankers across the world are scrambling to intervene, salvage the trillions of dollars of economic stimulus they have happily meted out to unsuspecting investors, in the hope that it will translate into jobs and prosperity. But who is thinking ten, twenty and fifty years ahead?

Yes I am talking about energy prices: oil, coal and natural gas. Because suddenly after Japan's nuclear disaster, what seemed like a viable alternative has become taboo. What is troubling though is statistics - to achieve 1 per cent GDP growth, energy consumption needs to go up by 1.5 per cent, and so does energy production. Hence, to achieve global GDP growth of 4 per cent, energy production needs to grow by 6 per cent every year! Over a decade we will be witnessing an almost 79 per cent increase in energy production. In real terms, this means nearly double the number of oil rigs and coal mines. Phew! As Mark Twain said: "There are three kinds of lies: lies, damned lies, and statistics". I really hope these numbers lie.

In this context, what is discerning is how hooked we are to 'inexpensive' energy. In 2009, world energy consumption decreased for the first time in 30 years (-1.1 per cent), as a result of the financial and economic crisis (GDP drop by 0.6 per cent in 2009). However, world energy consumption grew by over 5 per cent in2010, more than making up for all the losses and indicating a strong upside bias. I am tempted to play the doomsday pundit here by proclaiming that the global economy is in deep trouble and there is nothing we can do about it. But on second thought, this has the familiar whiff of opportunity. The opportunity to invest in oil companies, opportunity for oil workers to demand higher salaries and more importantly opportunity for our leaders to steer us in the direction of cleaner and more sustainable energy sources.

Not that there have not been promises: Obama promised a major push towards clean energy in his campaign, Merkel has promised the Germans complete transition to clean energy by 2050 and even Mr. Singh promised bold steps in the 12th Five Year Plan. However, progress on the ground remains a pipe dream. Every time we even think of a hydroelectric power project it becomes a complete political ruckus, solar panels are prohibitively expensive and windmills are inefficient and too unexciting to construct. Also, in a market based economy isn't it the responsibility of entrepreneurs to do all the dirty work?

Facing limp fundamentals and an unfriendly investment climate, the clean energy sector needs a major policy push to kick start a new phase of exponential growth. Growth, which will translate into new jobs, new infrastructure and a solid foundation for my generation to build on. The US approved $300 billion in 2008 to save troubled financial institutions through the The Troubled Asset Relief Program (TARP), and has since spent more than a trillion dollars in the form of economic and monetary stimulus to kick start economic growth. That is considerably more than the Indian GDP. Only if a fraction of this were to be spent to aid clean energy investment and create jobs in the sector.    
As an emerging economy, it is even more important for India to look at this opportunity closely. It resonates so strongly with our Gandhian foundations and our desire to protect our culture so closely interlinked with the environment. With great respect and admiration, Mr. Hazare if you were to read this could you please devote a day of your fasting campaign to sustainable energy? Because all of us are hungry for change.
Abhijit Parashar is an IIM Bangalore alumnus and supports Delta Climate, a campaign aimed at sustainable educational campuses. The views expressed here are entirely personal.