by Palle Ellemann, Lead Emerging Market Engagement at GES
A recent engagement trip to India showed that it is as busy, loud and crowded as ever. India will soon overtake China as the largest population in the world and also economically it is currently growing faster than China. The economic growth is partly driven by an increasing population, but also by the changes and optimism following the reforms implemented by the Modi government.
The growth is a double-edged sword in India because the country needs it to bring millions of poor and uneducated citizens out of poverty, but at the same time it is further straining the already scarce resources. For example, World Bank studies show that water scarcity in parts of India will be significantly worse already by 2030. And more than 60 per cent of India’s energy production is based on coal with the massive environmental problems that follow from that.
The Indian government has, however, decided to do something about the latter. It has announced the ambition to reach 175 GW of renewable energy in just 6-7 years. The target seems difficult to achieve, also according to CSE, the leading Indian environmental NGO with whom I recently met in Delhi, in particular taking into account that the local provinces have difficulties in providing land for the huge amount of wind and solar parks needed to reach that ambition. Moreover, the grid is not ready to take in such massive expansion of renewable energy capacity. To understand the proportions of the ambitions, it would increase India’s current renewable energy production by 400 per cent and add 50 per cent to the total energy production today. So it is perhaps fair to be sceptical, but this is certainly a good step in the right direction and local as well as international companies and investors are seeing big opportunities in this transition.
When renewable energy becomes available, the automotive industry will be ready with electric vehicles. For the time being, the environmental benefit from more electric cars will be limited with the electricity being mostly coal-based. The Indian government has envisioned that all new cars sold in 2030 should be electric. Again, a highly ambitious vision, which seems unlikely to be achieved. On the other hand, if only half of the cars sold in 2030 would be electric at the same time as the Government had been successful in removing the old cars from the roads – a new program launched this year – then this could be revolutionary for air pollution and the liveability of urban areas like Delhi and Mumbai. And just imagine driverless cars in India – cars actually staying in lane and not tooting horns all the time. It would be a totally different experience – incredible in another way.