Clean tech developers must find niches in the economy that will drive growth(Getty Images/iStockphoto)
Clean tech developers must find niches in the economy that will drive growth(Getty Images/iStockphoto)

In a slowing economy, the quest for sustainability

India needs a new consensus on its energy and economic transition for a sustainable future. Time is running out
By Arunabha Ghosh
PUBLISHED ON FEB 23, 2020 10:32 PM IST

This month, maximum temperatures hit 18.3 °C on the Antarctic Peninsula, the highest ever recorded. What we do to the planet will determine what the planet does to us. We need new — and sustainable — drivers of economic growth. In the middle of an economic downswing, environmental standards risk getting diluted or clean tech industries shift down the list of priorities. How can we sustain sustainability in the time of a slowdown?

The problem with shifting from a brown to a green economy is that the time horizons for transition vary for different constituencies. The pace at which renewable energy projects can be set up is much faster than it takes to shut down polluting thermal power plants (as the finance minister advised in her budget speech). Disruptions are also unequally distributed. Renewables already employ 99,000 people. This workforce could rise to 330,000 with current targets, comparable to 300,000 jobs in Coal India. But the geographical and skill distribution of these two energy-related workforces varies — and not easily substitutable.

We need vision to mediate across different time horizons and institutions to moderate the disruptions. In a slowing economy, we must tap new pockets of growth and invest in resilient infrastructure. Both tracks can boost jobs, growth and sustainability.

In the past decade, 350 million Indians have got access to electricity. But more localised solutions are needed (via off-grid systems) for about 35 million last mile customers. Again, 700 million got access to an LPG cylinder, but only one-third of the rural population, in six most energy-deprived states, uses LPG as their primary cooking fuel. For rural energy access, we have to think beyond connections and consider affordability, reliability, safety and ease of use.

It is in rural areas that opportunity also resides. Recent research has identified a $50 billion market opportunity for clean energy solutions for productive uses in the rural economy. Renewables-powered or energy-efficient solutions, such as solar-powered looms, sewing machines, cold storages, oil expellers, rice and flour mills or food processors, convert energy access from a consumption paradigm to an economic driver. To catalyse this potential, a new programme — Powering Livelihoods — aims to provide capital and technical support to help scale up enterprises that are deploying such innovations.

New pockets of sustainable growth are needed when clean technologies face challenges from incumbents. Renewables were first ignored; then the big targets were ridiculed. With 86,000 MW of clean electricity installed, incumbents are fighting back. The financial health of distribution companies, and the lack of political will to reform electricity markets, make it unlikely for clean energy to win a direct David versus Goliath fight. Our research finds that discom payment delays to conventional independent power producers was seven months (October 2018 to September 2019) but 11 months on average for renewable energy producers.

Instead, clean tech developers must find niches in the economy that will drive growth and jobs. Distributed energy — for commercial and industrial establishments, urban rooftops, and rural microgrids — remains a huge opportunity (only 10% of the targeted 40,000 MW installed so far). Demand for sustainable cooling will be another growth driver. Energy efficiency and less harmful refrigerants could service an eleven-fold growth expected in residential air conditioning until 2038, or the four-fold growth expected in cold chains, thereby again helping with farmers’ incomes.

A heating planet will put infrastructure investments at risk. Recent studies find that by 2100, Amravati could experience temperature rise of 3.7 °C. Rainfall could increase 13%. In Madhya Pradesh, by mid-century, temperatures could increase by about 1.3°C in Indore and 1.5°C in Gwalior compared to current levels. Rainfall is likely to increase across all Smart Cities in the state (Bhopal by 8%; Indore by 10%). Temperature extremes could damage the integrity of road surfaces and adversely affect water levels in reservoirs, heavy rains would inundate low-lying areas and damage limited sewerage infrastructure, and extreme climate events could destroy physical infrastructure.

Investing in disaster resilient urban infrastructure would give a boost to the economy, create jobs and be more sustainable. But it is more expensive, up to 30% more. New financial solutions would be needed, such as Resilience Bonds or by factoring in lower insurance premiums in future for infrastructure that has been designed to withstand more severe climate risks.

Sustainability is an economically prudent choice, even when the economy is down. India has set a direction of travel for a transition in the electricity system. We now need consensus on a broader energy transition and we must begin a discourse on an economic transition. We need belief not fatalism, imagination of alternative futures, and action at scale.

Arunabha Ghosh is CEO, Council on Energy, Environment and Water

The views expressed are personal

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