The apocalyptic air pollution over northern India once again reminded us that our future is threatened by severe environmental challenges. Significant policy initiatives are underway to address them. Nonetheless, India’s longterm development model must ensure tight coupling between economic growth and environmental sustainability.
This will require the creation of many new green industries in the next decade or so. Prime Minister Narendra Modi’s green policies are recognised globally as being both progressive and impactful.
He has repeatedly emphasised how India’s ancient culture reveres nature and believes in living in harmony with Mother Earth. Applying these principles, India has taken several major steps.
First, India was a prime mover in the Paris COP (Conference of the Parties) 21 negotiations and committed to far-reaching nationally determined contributions (NDCs) to reduce carbon emissions. As part of these NDCs, India will reduce carbon intensity (carbon emissions per unit of GDP) to 33-35% below 2005 levels, increase renewable energy contribution to power supply to 40%, and restore 26 million hectares of degraded land. All these goals are to be achieved by 2030.
Second, through the Jal Shakti Abhiyan, clean drinking water will be provided to every household. In combination with the Swachh Bharat Abhiyan and the Namami Gange programme this will substantially reduce water pollution and reduce the health burden associated with water pollution.
Finally, a complete policy framework in support of electric mobility and metro transportation is being implemented in major cities. These efforts will reduce both particulate and carbon emissions. In fact, the PM’s environmental leadership has led to many major awards, including the United Nations Champion of the Earth award in 2018.
With India’s carbon reduction targets now largely in place, its entrepreneurs must step forward to build the industries that will enable us to move to a low-carbon economy. Studies have shown that building green businesses that use energy more efficiently and reduce carbon emissions are also more profitable. In addition, with environmental, social and governance (ESG) factors becoming ever more important for investors, green businesses are also considered much more valuable. Green business is good business.
Renewable energy is already a major success story for India. Modi recently increased our renewable energy target from 175 GW to 450 GW. High quality equity and debt financing have been available for renewable energy companies and they have expanded rapidly. Similarly, there are at least four other industries where green businesses can be scaled up quickly: electric mobility, waste management, food packaging and green finance.
Making the Right Moves
The transportation sector is inexorably moving away from fossil fuels. This transition will probably take decades. But it provides incredible opportunities for entrepreneurs. Electric scooters, rikshas and buses are already in common use. In time, they will replace the existing stock of vehicles. Moreover, electric vans and trucks will also start to replace diesel vehicles.
A full electric mobility ecosystem is developing and includes batteries, charging stations, software control systems and large fleet operators. Drones will also become an important part of the overall transportation ecosystem. Many experts have predicted that most electric vehicles (EVs) will be owned by fleet operators, rather than individuals, because of efficient ride sharing and logistics. EVs have far fewer moving parts and low maintenance costs. Thus fleet ownership, with high utilisation levels, becomes much more cost-effective.
Waste management is also likely to be transformed. Once efficient pricing approaches (either tax- or fee-based) are worked out, every household could be serviced through small waste pick-up vans. These vans could then transport their garbage to waste incinerators where garbage can be safely disposed. We need to develop our own technologies and form factors for waste management since large-scale incinerators don’t really fit Indian requirements well. Developing the right waste management systems and business models for Indian conditions open up many large-scale possibilities for entrepreneurs.
Packing a Punch
Green packaging is another major opportunity area. Increasingly, producers will have to move away from single-use plastic to closed-loop solutions that recycle plastic packaging. This will require new business models for logistics and recycling. Innovation in biodegradable packaging is also underway, and existing equipment will probably have to be replaced to provide for new packaging materials.
For instance, most packaged milk is sold in environmentally harmful plastic pouches. These will have to be replaced over time. Also, as consumers use more prepared foods and food delivery, new green packaging formats will have to be developed.
Each of these new industries will require significant financing support as they scale up. Venture capital, both debt and equity, is necessary to get these businesses off the ground. As these businesses scale, they will require thousands of crores of growth capital from both the private and public markets. Green industries are classic ‘impact investments’ — investments that offer both investment and social returns.
Indian financial institutions have been very successful in building up such industries, like microfinance, educational technology (EdTech) and affordable healthcare. However, financial support for green industries will have to be many times larger, for which financial institutions must be ready to deploy capital.
India is now the world’s third-largest carbon emitter, and will play a crucial role in getting the planet to a low-carbon trajectory. GoI has defined its national targets and established a clear framework for action. We must now build the industries that will help us shape a clean and green future.
The writer is a BJP MP from Hazaribagh, Jharkhand