Transcript India and the global Green Energy Transformation

ECONOMY OF
TOMORROW
India and the global Green Energy Transformation
Contact: Marc Saxer, [email protected]
Contact: [email protected]
With labour intensive industries moving out if China…
… India hopes to attract manufacturing investment
to create millions of jobs
However, there is a second trend in
global investment flows…
South to North
1 trillion USD since July 2014
North to South
2 trillion USD from 2009-2014
… manufacturing is moving back to the old industrial centers
Contact: [email protected]
Digital automation reduces labor cost,
making old industrial centers competitive again…
… while creating less jobs than hoped for in emerging economies.
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Manufacturing cost in emerging countries reach the
level of the United States…
… undermining their comparative advantage.
Contact: [email protected]
The window for export driven industrialization is
closing…
ECONOMY OF
TOMORROW
Development
…turning development into a gigantic race against time.
Contact: [email protected]
If labour cost advantages are levelled,
other factors become more important…
• Long transport distances
• Supply chains
• Rule of Law
• Political Stability
• Quality
…not at least the cost of ENERGY.
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• Skilled workforce
In the old industrial centers,
the cost of energy starts to surpass the cost of labour …
Labour
Energy & Raw Materials
Other
… as the biggest cost factor in manufacturing.
Contact: [email protected]
Germany Manufacturing Cost
The energy transformation is driven by interests beyond
climate change…
Capital:
Carbon Bubble
Civil Society:
Climate Change
Security Sector:
Geopolitical Risk
Contact: [email protected]
Industry:
Competitiveness
… but is a strategic project to restore the competitiveness
of the old industrial centers
Contact: [email protected]
TECHNOLOGY
The green energy revolution is made possible by
technological breakthroughs…
… reducing the cost of solar power as well as
new solutions for storage and distribution
MARKET
While in the short run, the energy transformation drives
up energy cost…
Source: Fraunhofer ISE
… in the long run, higher energy efficiency and lower cost for solar
energy will significantly reduce the cost of energy
Contact: [email protected]
Historical price development of photovoltaic modules
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GEOPOLITICS
Renewables are a way to improve energy security…
… by reducing dependency on geopolitical hotspots
LEGISLATION
European governments have started to legislate the exit
from the carbon economy…
National Targets for Energy from Renewables,
as codified in national energy laws:
Germany
2025: 45 %
2035: 55-60%
Sweden
Finland
2020 – 38%
Italy
2020 – 17%
… calling into question trillions of subsidies for fossil fuels.
Contact: [email protected]
2020 - 50%
2050 – 100%
CAPITAL
The Bank of England warned institutional investors
against a USD 28 trillion “carbon bubble”…
Pension funds, required by Law to invest only in assets rated
secure, need to hedge their exposure to “carbon risk”...
….Major utilities corporations (Eon, Enel) have started to sell off
their entire conventional power plant fleet….
Contact: [email protected]
…. „Peak Oil“ may have already happened in financial terms.
… if resources in the books of fossil assets cannot be produced due to
climate change legislation.
If India wants to win the race for development...
With the comparative advantage of cheap labour eroding….
….and energy cost slowly becoming a disadvantage ...
… India will find it increasingly difficult to attract manufacturing.
… or will the biggest infrastructure build-up in history lead into a
technological dead end?
… it must not miss the bus of green growth
Contact: [email protected]
Will India become a world leader in renewable energy (PM Modi,
February 2015)….