‘Follow the money trail’, this adage from crime novels is proving true to look at the developments towards zero-emission economies. Literally, a sea change in mindset and flow of capital is needed to prevent reaching to the point of no return towards ecological damages. Finance Minister in her budget speech rightly pointed out that, “The risks of climate change are the strongest negative externalities that affect India and other countries.” Prime Minister had also said at the COP26 summit in Glasgow last November that, “what is needed today is mindful and deliberate utilisation, instead of mindless and destructive consumption.”
Presently around two-third of capital goes into high carbon emission economic activities, which need to be reversed completely towards low emission activities. The low carbon development strategy as enunciated in the ‘panchamrit’ that PM announced is an important reflection even of India’s strong commitment towards sustainable development. Further, This strategy opens up huge business and employment opportunities in multiple domains.
Consulting firm McKinsey identifies 11 domains with huge churning and opening up new business opportunities going forward. These are Transport, Building, Power, Water, Consumer, Agriculture and land use, Oil Gas and Fuels, Hydrogen, Waste, Industrials and Carbon Management. Some of these are surely on radar of budding entrepreneurs in India. With Gati Shakti promising to build unprecedented transportation infrastructure, electrification, micromobility and infrastructure for electrical vehicles are seeing increasing number of startups. It is becoming clear that automakers would cease to manufacture cars with internal-combustion engines and roll out EVs instead. Oil consumption would drop, in part because drivers would no longer need to fuel up—and electric-power generation would increase to help charge the world’s expanding fleet of EVs. A much greater share of that electricity would come from solar and wind rather than today’s coal- or gas-fired power plants. Similar opportunities are becoming viable in other domains too.
Capital to fund these have to increasingly come from Green Bonds. India issued $6.11 billion in green bonds in 2021, One of the strongest year since green bonds were first issued in 2015. India’s green bond issuance is set to reach a new record in 2022. Budget promised that, “As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.”
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