India commonly conjures up images of pollution-choked cities and litter-strewn streets, so the thought of an environmental movement here may seem laughable to some. As one cynic in London remarked to me: “Do they care about the environment in India? I would think they would be more worried about having enough to eat.”
It is true that most Indians are more concerned with eking out a living. But private-sector companies in India are no different than those anywhere else: they are concerned with profit. They are waking up to the fact that huge savings can be derived from making cars, trains and jet engines more fuel-efficient; upgrading energy-guzzling factories and power plants; and installing better lighting, heating and cooling systems for buildings.
Changes are happening in fits and starts and are slow to take hold in bureaucratic government entities. But momentum gathers very quickly when businesses sense that money can be made.
General Electric said last month it would target $8bn in sales from India by 2010, with $1bn to come from “green products”. That’s no small sum considering its total revenue generated here is about $2bn today.
GE’s recent launch of its “Ecomagination” green initiative in India may sound like fluffy corporate-speak. But the company’s green products are not confined to energy-saving washing machines or quintessential lightbulbs, they also include jet engines, water treatment equipment, trains, wind turbines, and a coal mine gas engine that traps methane.
Although better technology carries a higher price tag, customers — whether airlines or governments buying new trains – are keen to potentially save millions of dollars over the years coming. GE clearly sees potential of the market.
So does Applied Materials, the US semiconductor company, which this week agreed to develop a solar panel production line for Indian DVD maker Moser Baer. Moser Baer will invest $250m over the next three years to produce “thin film”, or large glass sheets for solar panels, in an industrial zone dedicated to renewable energy near New Delhi.
Moser Baer estimates that energy production from film-based solar panels alone could grow 10-fold from 250 megawatts to 2 gigawatts by 2010 with a market size of $5bn.
Sceptics might point out that solar energy has not caught on in other parts of the world because the equipment is too expensive. But in reality, solar energy – once seen as a nice but largely inconsequential “green” badge – is gathering momentum driven by eye-opening financial performance.
In the 10 months to April 2005, solar stocks rose on average 133 per cent, according to a report from CLSA. Solar energy production grew from 1.1 GW to 1.5 GW in the same period, revenue rose from $8.3bn to $11.1bn and profit swelled to $1.2bn from $2.3bn.
Moser Baer says if the equipment can be mass-produced to bring down costs, solar energy could take off in India. Anyone who has felt the power of India’s scorching sun would be inclined to think so.
APJ Abdul Kalam, India’s president and a physicist by training, has said that large scale solar energy farms could eventually generate about 55,000 MW. He last year outlined lofty goals of boosting renewable energy – including wind, biomass, hydro and solar – from 5 per cent of power generation to 25 per cent by 2030.
“A major shift in the structure of energy sources from fossil to renewable energy sources is mandated,” he told a conference in New Delhi last year.
India is far from relinquishing its reliance on fossil fuels. Coal still accounts for 56 per cent of the country’s power generation, with hydro accounting for 25 per cent, gas 12 per cent; wind and alternative sources 5 per cent, and nuclear 2 per cent.
But the country’s call for renewable energy is not mere lip service nor a publicity campaign. Indian states are required to produce a certain percentage of power via alternative energy technology. The urgency to boost renewable energy is borne of necessity because developing countries have little bargaining power for oil and gas.
India’s need for energy is particularly pressing. The world’s second-fastest growing economy imports about 70 per cent of its oil and gas, and estimates it needs to boost energy capacity from today’s 130,000 MW to 400,000 MW by 2030. Yet most of its power plants will rely on coal reserves.
Today top government officials, including India’s science and power ministers, regularly expound on the need for alternative energy and the looming spectre of global warming.
At a meeting of Asian leaders in January, Prime Minister Manmohan Singh endorsed a joint statement highlighting concerns over the limited global reserve of fossil energy and “the urgent need to address global warming and climate change.”
At the heart of the matter, it is trivial whether India’s energy concerns wear labels such as “energy-efficiency”, “alternative energy” or “environmentally-friendly”. India’s urgent need for energy solutions underpins all these initiatives. Even a hard-nosed cynic would not deny that.