Climate change is a global challenge

Climate change deserves new and serious examination by Indian business. For long, it has been seen as a somewhat impractical and long-term attempt to bring the rise in global temperatures to less than 2 degrees Celsius above pre-industrial levels and if possible, to 1.5 degrees Celsius. Scientists say these targets will prevent cataclysmic disasters later this century, which are presaged by numerous devastating weather events in recent years.

The opportunities opening up for Indian business arise from the many possibilities to leapfrog technologies and bring long-lasting improvements in living standards for most people. Among other things, they involve building smarter energy grids to cut costs and make distribution much more efficient. The entire energy economy can benefit from artificial intelligence, quantum computing, and new technologies for transmission.  

The good news is that a start has already been made to investing trillions of dollars in these and other new technologies, including carbon capture, sun, wind and hydrogen renewables and reduced use of coal. These changes will be powerful creators of jobs and profits.

John Kerry, the US climate envoy who recently visited India, says International banks are moving at least $4.15 trillion into climate investment. The emerging energy marketplace is clearly gearing up for a new future based on high technology energy products and services.

The International Finance Corporation (IFC) earlier estimated investment opportunities of $24.7 trillion by 2030 in emerging markets from green buildings alone, as cities expand and modernise to handle population growth and rapid urbanisation. The floor area of buildings is expected to double by 2060 and choosing green construction will reduce carbon content and create millions of skilled jobs. The gains will come from new low carbon materials, innovative energy use, and new technologies for air-conditioning and heating.

Above all, they will come from a whole city approach to energy use in smart cities, including transportation and package deliveries linked to online commerce. Installation of smart water systems for urban living and agriculture will be another climate-related growth area. Indian companies should be looking at these opportunities within and outside India because they require big-data-based software and systems integration.

Whatever the political loopholes underlying US President Joe Biden’s recent climate summit, he did put his presidency’s prestige on the line. He made commitments from which he cannot backslide without causing a severe loss of foreign affairs credibility for his administration.  Some saw the summit as a public image exercise to discredit former US President Donald Trump in the eyes of Americans for abruptly withdrawing the US from the December 2015 United Nations Framework Convention on Climate Change, known as the Paris Climate Accords.

Whatever the politics, the business facts are becoming increasingly clear. Colossal amounts of money will be invested worldwide in new energy and climate-related technologies regardless of whether climate change turns out to be catastrophic or a gross exaggeration as some still argue despite the science.

Biden’s energy summit and US’ commitments signalled the direction of those investments. Governments are still quarrelling over responsibility, especially whether emissions come from large countries like China and India or the US and Europe are the chief culprits and should do much more than poorer nations.

Regardless of this mudslinging, reducing emissions is a global challenge and 85 per cent of current emissions would still come from the rest of the world even if the US suddenly went down to zero. Now, protecting India’s people from adverse climate change impacts is more important than the politics of apportioning blame.

The Biden summit of 40 leaders, including Indian Prime Minister Narendra Modi, committed countries representing 55 per cent of global GDP to more vigorously pursue emission reductions. The US pledged to reduce greenhouse gas emissions by 50 per cent by 2030, compared to 2005 levels. The European Union will cut emissions by 55 per cent compared to 1990 levels, and Britain, Canada and Japan will also make steep cuts. China, India and Russia are also committed to reducing emissions and the overall target for all those in the Paris Climate Accord is to reach net zero emissions in 30-40 years.   

Modi and Biden have installed a new partnership on energy which should provide funding pools and open investment opportunities for Indian businesses. India’s per person carbon footprint is 60 per cent lower than the global average, but that does not make Indians less vulnerable to adverse climate impacts. Hopefully, the Covid-19 catastrophe in India will catalyse efforts to avoid further devastation through climate change by turning to green technology-based growth.