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| Jamshed Irani & Michael Treschow: What would you do with $1 trillion? |
| Jamshed Irani & Michael Treschow / Oct 16, 2011, 00:38 IST |
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After years in the wilderness, the tiger is now purring. India’s population — today numbering 1.21 billion — is tipped to become the world’s largest by 2030, before marching on to reach 1.5 billion by 2050. India’s economy, currently the fourth largest in the world, is expanding by around 9 per cent per year, becoming the envy of the developed world, still reeling from the hangover of the economic downturn. Indeed by 2020, India’s economy is expected to quadruple its current size.
To meet the challenges presented by its extraordinary demographic and economic boom, India — like all countries — will need to decouple its growth from greenhouse gas emissions. India is among the countries most threatened by climate change, with scientists warning that rising temperatures will lead to more floods, heat waves, storms, rising sea levels and unpredictable crop yields.
The Government of India says it understands the gravity of the challenge, committing to reduce the country’s carbon intensity by 20-25 per cent on 2005 levels by 2020. It must follow through on this pledge. The trading of Renewable Energy Certificates and the trialling of the Perform, Achieve and Trade (PAT) scheme are steps in the right direction.
India’s ability to achieve lower-carbon growth hinges on the future of its infrastructure. The roads, power plants, ports, electrical grids and telecommunications systems — making everyday commerce possible — typically have a long life span. This has the effect of shaping the country’s economic growth, and so its carbon behaviour, over generations.
Efforts to develop India’s infrastructure should receive a mighty boost from the upcoming 12th Five-Year Plan, which will reportedly call for an impressive $1 trillion in investments. This money can make significant inroads into building the 80 per cent of the India of 2030 that still needs to be built.
However, before we all stop to applaud, it is important to pause and consider how this $1 trillion should be invested. If India continues to build infrastructure that relies on high-carbon inputs, then it effectively splices carbon dependency into the DNA of its long-term development. In an emerging economy like India, where infrastructure is still relatively immature, a golden opportunity exists to break that cycle and build infrastructure that forms the backbone of its low-carbon future.
There is also an investor risk to consider if India fails to embrace low-carbon infrastructure. Of the $1 trillion identified, half is expected to come from the private sector. Without explicit recognition that low-carbon growth is a key driver, India risks seeing investors’ money going to countries that have implemented more comprehensive low-carbon strategies.
China, for example, has recognised the opportunity by adopting an aggressive low-carbon growth agenda in its own 12th Five-Year Plan. In an increasingly globalised world, India competes for foreign investment with other emerging markets. If investors do not like what they see in India, they can just as easily invest their money in China or Brazil.
Of course, ambitious mitigation efforts cannot altogether eliminate the risks posed by climate change — they can only soften the blow. It is therefore important that the infrastructure that is developed in India must also be capable of withstanding extreme weather events that are already built into the climatic system. India’s power plants, roads, communications systems, ports and railways all need to be weather-proofed.
Putting India’s infrastructure on a lower-carbon path should open up enormous business opportunities, requiring win-win collaboration across sectors and borders. We have recently co-chaired a roundtable meeting of the Global Leadership and Technology Exchange India Infrastructure Partnership, a private sector initiative focused on maximising the benefits arising from a regional approach to defining a low-carbon model for growth.
The partnership is designed to address India’s pressing infrastructure needs by forging partnerships between leading businesses in India with counterparts in other key countries, notably from the Nordic region. These businesses share the vision of infrastructure playing the defining part in building an India whose growth is neither reliant on, nor defined by, an increasing carbon dependency.
It was clear from the roundtable that both regional collaborations — such as the Indo-Nordic partnerships discussed at our roundtable — and the private sector have a pivotal role to play in India’s low-carbon future. Companies from outside India can exchange their technical know-how for a seat in one of the world’s most exciting markets.
Indian companies will share their local expertise and benefit from collaboration with global players and cutting-edge technologies. Most importantly, India itself stands to benefit from leap-frogging its way to adopting lower-carbon infrastructure capable of meeting the long-term needs of a bulging population and a growing economy.
Jamshed Irani is a former Executive Director of Tata Sons and Michael Treschow is Chairman of Unilever. Together they are Co-Chairmen of the Global Leadership and Technology Exchange India Infrastructure Partnership
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