Make GI, not GDP, the measure of growth

All over the world, public policies on energy are still heavily biased towards conventional energy sources. The reasons have understandably to do with many years of familiarity with conventional energy-oriented technologies, machinery and equipment, project construction and management, and mode of operation and distribution.

Coal, oil and natural gas, which have been the mainstay of conventional power generation, are going to be exhausted sooner than imagined. Their continued use is also doing grave damage to the environment, including climate change and consequent global warming. A radical and immediate shift away from them has become imperative for the effectiveness and success of mechanisms and measures to guarantee, sustain and safeguard energy security and energy independence.

There is urgent need to rouse the consciousness of the governments and peoples everywhere to the vital importance of replacing fossil fuel by alternative, non-conventional and renewable energy from wind, as also from solar, geothermal, nuclear and hydropower projects, and channeling the maximum possible resources for their development. The effort has necessarily to be massive, and should go hand in hand with harnessing established, as well as emerging new, technologies.

Indeed, Green investment (GI), as it has come to be called, and not GDP, will, and should, be the measure of the growth potential, political stability and economic viability of countries.

It is heartening to know from a working paper (WP/11/296) brought out by the Fiscal Affairs Department of the IMF, that there has been a conspicuous rise in GI and green capital accumulation in recent years, led by technological progress, economies of scale, strong policy support, and favourable public opinion.

The paper says that “As of today, GI is already a significant contributor to electricity and energy generation.

Renewable energies and nuclear power represent one-third of electricity generation worldwide, and almost one-fourth of total energy consumption… Between 2000 and 2010, renewable GI increased more than twentyfold from $7 billion to $154 billion.”

R&D forms the bedrock of any drive towards green energy. Here too, the trends are quite positive. There has been a steady increase in R&D in renewable sources, with the largest investments in Europe and the US, divided almost equally between public and private sectors.

FAST ADVANCING TSUNAMI

The paper throws light on a hitherto little known aspect of the national fiscal stimulus packages put together during the 2008-09 global financial crisis. Commendably, green programmes, mainly in the form of support for clean energy and energy efficiency were notable components of such packages. As much as 15 per cent of the total fiscal stimulus went for GI, with South Korea alone earmarking a whopping 80 per cent. Energy efficiency measures claimed the largest (nearly one-fourth) share of the green stimulus while on average, the allocation to R&D out of the stimulus constituted 14 per cent.

By far, the most interesting revelation contained in the paper is about the vigorous push given to GI by China through a series of new laws and financial support measures (including loans from state-owned banks). At the heart of its energy security strategy was the speedy completion of large renewable energy projects, with a view to promoting domestic manufacturing industry.

It overtook the US in 2009 with the highest financial investment in renewables, and the next year it was ahead of the entire European region in GI. According to the paper, it is now the world leader in the production of photovoltaic modules and wind power equipment. By virtue of the powerful thrust it has given to R&D, it has the lead in clean technology patents and Initial Public Offerings (IPOs) in the renewable sector.

In India, unfortunately, alternative energy development is looked upon as an unglamorous activity, very low on the snob scale of the governments and the public at large. The realisation is yet to dawn that, to the contrary, without any exaggeration, the very survival of humankind is linked to it. Both at the Centre and the States, the portfolio should be entrusted to go-getting political heavyweights if India should be saved from a fast advancing tsunami of an energy crisis.

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