A crumbling foundation? – Issue #48
The shift towards clean energy is a global reset, leading to "green creative destruction". Countries can benefit by dominating emerging tech, cheap renewable power, or fast decarbonisation
The Big Picture
Decarbonisation is likely to be no less than a global reset. As the world pivots from one energy architecture to another, what the world will see is nothing less than "green creative destruction."
Countries can capitalise on this pivot in several ways. They can develop – and dominate – emerging technologies and the new energy economy. Or they can produce renewable power cheaply – and export to the world. Or they can decarbonise fast and boost access to global markets being fenced by carbon border taxes. On a more defensive level, with global weather turning increasingly volatile, there is the imperative of adaptation and mitigation.
And so, last week came additional proof that other parts of the world are pivoting faster than us. The USA is seeing a rebound in the number of factories, reported WSJ. Between a Covid-triggered realisation that far-flung supply chains carry their own vulnerabilities and Joe Biden’s Inflation Reduction Act, manufacturing seems keen on returning to the country. The EU has responded to Russia’s invasion of Ukraine by decisively switching to green energy. In the continent, for instance, work on new internal combustion engines has all but stopped, said the CEO of Renault Group. “All the money is going to electric or hydrogen,” he said. Poland has become the world’s second largest manufacturer of Lithium Ion batteries. Its capacity now stands at 73 GWh, 3 GWh more than the USA, but yet dwarfed by China’s massive 893 GWh.
Turn to the east and there is stunning news from China – sales of petrol and diesel cars have fallen by an extraordinary 20% over last year. People are switching to EVs faster than anticipated. China wanted EVs to account for 40% of all car sales by 2030. Now, as the Telegraph reported, that target could be hit as early as this year. By 2030, EVs might account for 80% of all car sales in China.
The larger fallouts are striking. As Chinese EV producers enter other markets, prices are likely to fall there as well, boosting EV sales outside of China. With that come larger questions about OPEC’s claims that oil demand will continue to rise till the middle of the century. Even on wind and solar, China is moving much faster than envisaged. It’s expected to hit its 2030 target for wind and solar by 2025.
Back home in India, things seem a lot less certain. As CarbonCopy has reported earlier, there is little room for R&D in the country’s flagship scheme for reinvigorating its manufacturing sector. Its plans to emerge as a global manufacturing powerhouse for new energy sectors like polysilicon and batteries have problems too – like India’s capacity to choose sectoral champions; if the chosen companies can build worldbeating scale across the entire value chain at a time when global peers are focusing on one rung of each value chain; if import substitution can even result in export competitiveness.
Not to mention the yawning question on whether the country will be able to secure supplies of the critical minerals it needs.
There are problems in the domestic push for clean power as well. The market for solar power continues to be poorly designed – hampering growth in both rooftop and ground installations. Falling behind its targets, the government has now decided to accelerate clean energy capacity addition by doubling the size of its tenders between now and 2028. It’s not clear if the country’s renewables players can rise, all of a sudden, to this challenge.
The country is not even doing a good job of defending itself – despite rising volatility in a number of critical fronts like ocean temperatures and faster onsets of summer -- against climate change. Last week we highlighted the surprising failure to alert farmers about aseasonal rains and hailstorms. This week, we had the government sanguinely claim this freak weather would not affect crop yields.
We now know better. Reporters’ dispatches from states like Punjab and Haryana project steep losses – as high as 50%. As this newsletter had reported earlier, farmers from other states like Madhya Pradesh have also reported large losses. Even as India looks set to extend its ban on wheat exports, and may even be mulling importing it, Union transport minister Nitin Gadkari spoke about shunting surplus production of sugar and wheat into ethanol production.
The outcome is one where some states take action – this week, Maharashtra decided to include ‘incessant rain’ in its list of natural calamities– more than 10 mm rain for five consecutive days – within its ambit. Elsewhere, people are left to their own devices. As are other species.
In tandem, the country continues to slash at its ecological foundations. The new amendments to the Forest Conservation Act, despite the country’s high rates of deforestation, are one instance. While the latest Forest Survey of India report celebrated an increase of 1540 sq. km of forest cover in the country, questions persist on the methodology of the assessment which counts any plot with a tree canopy density of at least 10 per cent as forest, including agro-forestry plantations. Likely closer to reality is the forest diversion statistic shared in the Parliament -- 88,900 hectares of forest land was diverted for non-forest purposes in the last five years. Equally damning is the fact that over 100 changes were made to India's Environment Impact Assessment notification in the same time period.
These decisions stand in marked contrast to a decision by the European Parliament on 29 March. After a unanimous vote in the legal affairs committee last week, it added “ecocide” to its list of environmental crimes.
According to the draft, as Euractiv reported, “Member States shall ensure that any conduct causing severe and either widespread or long-term or irreversible damage shall be treated as an offence of particular gravity and sanctioned as such in accordance with the legal systems of the Member States. The addition of ecocide in EU law will also be backed by sanctions – ranging from fines to imprisonment – for companies and individuals guilty of crimes against the environment.”
News of the Week
After Oban, it’s Asha’s turn to stray outside Kuno. We are talking about the Cheetahs India imported recently. There was more news on the big cat front. Prime Minister Narendra Modi, speaking at a commemoration event marking the completion of 50 years of Project Tiger in Mysuru, launched the International Big Cat Alliance with the stated intent of mobilising financial and technical resources toward the protection and conservation of big cat species. The launch came with an open invitation to countries that are home to any of the world's major seven big cats including tigers, lions, leopards, snow leopards, pumas, jaguars and cheetahs. Although the PM stopped short of explicitly mentioning the possibilities of exchanges between countries, one wonders how long before we see pumas and jaguars are seen in India.
In other news, India has a new gas transportation pricing plan. Cash-strapped Himachal Pradesh has slapped a cess on hydel projects. “Himachal Pradesh’s water cess Bill provides for levying a 10 paisa per cubic metre cess on projects with heads up to 30 metres, 25 paise on 30-60 metres, 35 paise on 60-90 metres, and 50 paise per cubic metre over 90 metres,” reported Indian Express. The measure might generate as much as Rs 4,000 crore for the state government. Generators are not happy, though.
Meanwhile, CFC concentrations are rising again. “Although at current levels they don’t threaten the ozone layer’s recovery, the gases are joining other emissions in heating the atmosphere,” reported Canary.
What we learnt about Adani last week
A firm linked to Adani’s infrastructure projects is owned by a Chinese national, triggering another round of questions about national security
Adani got coal mine in auction where only other bidder was firm linked to Hindenburg storm
Rajiv Jain, the investor betting Adani will bounce back from crisis. FT looks at the man heading GQG Partners.
The Big Con, Pankaj Mishra on Adani.
Grand Tamasha: Menaka Doshi joins Milan to unpack the scandals surrounding the Adani Group.
Radio Episode of the Week
“Melinda Janki has filed seven separate cases aimed at blocking oil drilling in Guyana, but only one of them explicitly names climate change as a problem the project is guaranteed to exacerbate. It’s a constitutional case that invokes Guyana’s constitutional right to a healthy environment — an amendment Janki herself helped to write. Plaintiffs Dr. Troy Thomas and Quedad DeFreitas argue that the government’s choice to fast-track permits and oil production threatens their right to a healthy environment, and the rights of future generations too. The government of Guyana argues that, ironically, it needs oil money to adapt to climate change.”
Drilled Podcast has an interesting episode.
Climate Long-Reads of the week
Sustainable fishing sorely needed to save sharks off India’s coastline
The Rise and Fall of a Commercial Seaweed – and a Community’s Fortunes With It
Book of the Week
This week, we are reading A Certain Curve of Horn: The Hundred-Year Quest for the Giant Sable Antelope of Angola.
The book is nothing less than a modern history of the species. In the last 500 years, the species has had to contend with colonialism, the creation of game reserves from which locals were excluded but colonial settlers could hunt, hunting itself – first as trophy and then for western museums’ natural history collections – and then the messy three-way battle for supremacy between rival militia backed by the US, USSR and China as they fought to bring Angola under their respective spheres of influence. We are 156 pages down and it’s safe to say that the book is unputdownable.
One reads this book – and thinks of the universality of the tale it tells.