This weekend, environment ministers from the BASIC countries will meet in New Delhi to try to seize the lead on climate issues. Brazil, South Africa, India and China have until the end of the month to present a slate of voluntary measures to cut carbon emissions as the next stage in agreeing to a legally-binding global climate pact.
Much as it needs to join with BASIC partners in finding a new way forward on the global stage, India also needs to revamp its own energy strategy. Last year the government wrecked its new solar energy initiative by caving in to political pressure to back away from a commitment to subsidies aimed at underwriting ambitious thirty-year energy-generation targets. Instead, it trotted out the tired argument that the West should correct historical imbalances by paying for clean energy in India.
Instead of asking for handouts to fund clean energy, India needs to recognise the major transformative opportunity that that the new energy economy presents. The major Western economies cannot meet their existing carbon targets with their current industrial base. Britain has to cut emissions by half by 2050, but the lion?s share of the wind-farm contracts it awarded earlier this month went to foreign companies. Flush with cash, Gulf investors are rapidly becoming the funders of choice for Western clean-energy products. But their economies lack the capacity to produce the technologies they are funding, even as they realise that their oil-fuelled boom years will soon be over.
India needs to turn its energy politics around. The clean-energy economy is not about righting historical wrongs: it is a chance to leapfrog ahead of developed economies. What India needs is not Western subsidies but smart, market-based choices. India must leverage the size of its own infrastructure needs to incentivise Western companies into effectively subsidising its clean-energy drive by transferring production to Indian factories. Where Western companies struggle to scale up production at reasonable costs in their home economies, India?s cheaper labour and capital costs allow expensive technologies to become affordable.
There will of course be bottlenecks and difficulties. For example, nearly all of the rare-earth elements that make up rechargeable batteries are currently mined in China. But the biggest emerging producers of rare-earths are Canada, Australia and South Africa, Commonwealth partners which India can and should convince to work closely with Indian industry. If it can secure access to the right raw materials, India is well-placed to service large emerging markets for clean energy in the Gulf and Africa.
But India needs to act sooner than later. Rising production and capital costs will eventually make it less attractive to produce new technologies in the country?and more expensive to underwrite real economic growth. At the same time, India?s own energy needs are rapidly becoming a serious strategic challenge. India has been outflanked by China in the search for new oil and gas supplies in Africa and Myanmar, and it now faces the prospect of becoming dependent on Pakistan for piped supplies of gas from Iran and the Gulf.
India must act quickly in order to avoid paying other countries over the odds for its own clean-energy infrastructure. The neatest solution is one that might look distinctly retrograde in light of Indian industry?s swadeshi past: domestic-content regulations. But technology and production standards in India are a far cry from their swadeshi predecessors, and the products of a temporarily regulated clean-energy economy will surely be able to compete and win in the global marketplace.
India also needs to spur enough innovation . This will not happen unless private enterprise, government and the universities learn to operate in new ways. If the country is to become a leader in clean-energy science, Indian universities need to produce engineers, technicians and research scientists who have been trained to solve energy problems. They will only be able to do so if corporates and private capital see a rationale for investing in the labs, researchers and teachers they need. That, in turn, can only happen if there is a strong and viable clean-energy sector. At the same time, diplomats and educationists will need to try to shift the global research economy: American and European scientific grant-giving bodies will have to be convinced to channel some of their funds into projects involving Indian partners and, eventually, to open up more of their research grants to Indian institutions.
Both government and the private sector will have to change the way they view risk-taking if innovation is to take off. A thriving clean-energy sector will need dense clusters of start-ups and venture capitalists to fund them. The best way to energise both is to do the opposite of what Indian business has often done: share information, create networks of entrepreneurs and encourage best practice by mentoring. The government will need to take an even bigger step: it needs to create an independent funding body driven by innovation that funds the best and brightest to take risks on big ideas. A good model is the US department of defense?s DARPA research hub, which funds high-risk, game-changing research concepts that may later be taken up for production by the private sector.
Making India a hub of the new clean-energy economy will not be easy. But the old arguments about historical injustice are dead, and India needs a new approach.
The author has taught Indian history at Oxford and Cambridge Universities