Entrepreneurs of the green era

Prime Minister Narendra Modi committed India to net zero by 2070 at COP 26 in Glasgow. This is a historic decision because it fundamentally resets India’s development pathway. With our net zero direction now clearly established, billions of dollars of global capital will start flowing to our green entrepreneurs. Consider how the cost of renewable electricity has plummeted below that of coal; that same green revolution is now going to be unleashed in multiple other sectors such as battery storage, nuclear fusion, green hydrogen, and alt-food. As these zero emission technologies are rolled out, India will be transformed with more jobs, better health, and higher gross domestic product (GDP). At the Green Frontier, net zero will prove to be massively net positive. 

The Green Frontier comprises those innovations (technologies and business models) that are both zero emission and much more cost-effective. Electric vehicle (EV) manufacturers are good examples of companies that operate at the Green Frontier. All major EV companies (such as Tesla and Lucid) are committed to net zero manufacturing. Namely, when they produce an EV, they ensure that the vehicle manufacturing supply chain does not generate any emissions. Then once the EV is put into use, it uses electricity (hopefully from a renewable-powered grid) and not fossil fuels. The total cost of ownership of the EV over its useful life, is lower than that for a petrol or diesel car. While the purchase price may still be 15-20 per cent higher for the EV car, it has lower operational costs. The EV has far fewer moving parts, lasts longer, and a full charge costs 20 per cent of what it costs to fill up a petrol or diesel car.

This same game-changing combination of engineering, entrepreneurship, and funding is now being applied to many other sectors. Energy storage through battery farms is among the most important. Solar and wind energy are intermittent technologies that generate electricity only during certain periods.  Battery farms are, therefore, required to store this renewable energy and then release it as required. While lithium-ion battery modules are currently the most affordable, technologists and entrepreneurs are working on a wide range of alternative technologies that promise much lower-cost, extended discharge, and safer storage. Among these technologies are lithium-metal, graphene-based aluminum-ion, liquid metal, and iron-air. Entrepreneurs (at companies such as Quantumscape, Form Energy, and Ambri) have already raised billions to scale up these promising new technologies.

Even as these storage technologies are converting renewables into baseload power sources, the holy grail of nuclear fusion is now finally getting closer to commercial viability. There are more than 20 well-funded start-ups (such as Commonwealth Fusion Systems and General Fusion) seeking to solve the nuclear fusion puzzle through more powerful and compact tokamaks, laser pulse ignition, and magnetised target fusion. Fusion, unlike fission, does not require expensive fuel and does not generate radioactive waste. Fusion reactors are safe enough to be put next to cities and provide stable baseload electricity. Most experts now believe that fusion reactors will start being brought into service within the next 15-20 years, well before we start retiring our baseload coal plants.

With ample sources of green electricity becoming available, green hydrogen could serve as the fuel for the steel, cement, fertiliser, shipping, aviation, and other hard-to-abate industries that generate some 30 per cent of GHGs. Green hydrogen could be manufactured by splitting water using a green energy source. While green hydrogen is a zero emission fuel source, it is currently not cost-effective. Major energy producers, top energy companies and hundreds of start-ups are investing billions of dollars to change that.

Alt-food is another major contributor to achieving net zero. Industrialised agriculture, massive animal herds, and extensive poultry farming generate 10-20 per cent of all GHGs due to methane and carbon emissions. Start-ups such as Pure Harvest, Oatly, Beyond Meat, and Just Egg are changing the way the world gets its food. Highly efficient greenhouse and vertical farming is producing top-quality fruit and vegetables without using fossil fuel energy or harmful chemicals. All types of milk products are now available from plant-based sources such as oats, soy, and almond. Carnivores can consume plant-proteins and cultured meat products delivered from factories, not farms. Chicken eggs are being replaced by eggs produced from mung-proteins.

With entrepreneurs and investors taking us to the Green Frontier, what should policymakers do? First, we must recognise that our fundamental national competitiveness is at stake. Green technologies will rapidly become more cost-effective than brown technologies. Moreover, brown technologies will likely face large carbon border taxes, which will further diminish our competitiveness. Note that China has committed to net zero by 2060 because it wants to lead the green transformation of the global economy. Therefore, it is in our national interest to accelerate our net zero pathway by developing supportive policies for each sector.
 

Second, we have to ensure that we are pricing carbon correctly. This requires carbon taxes that are aligned with global carbon prices. High carbon pricing will drive innovation and rapid adoption of green technologies. The transition to simple, clear carbon pricing for our economy will probably be as challenging as the transition to goods and services tax.

Finally, policymakers need to provide appropriate blended capital support for green industries. This includes grants for basic research, capital subsidies for early adopters, and guaranteed returns for financial institutions. While there is plenty of global capital available for growth investing, early stage investing in green technologies will require nuanced policy support. We need to mobilise multilateral institutions, impact capital, and philanthropic foundations to support our green transformation in the next few decades.

Human progress is the story of technological and business innovation. As we seek to avoid a climate disaster, it is our scientists, engineers, and entrepreneurs that will save us. The good news is that they are already hard at work getting us to the Green Frontier. Let’s give them the support that they need so that we get to net zero as quickly as possible. 

The writer is the chairman of the Standing Committee on Finance in Parliament and a Lok Sabha MP from Hazaribagh, Jharkhand.

Views are personal