Clean technology or cleantech is a happening business opportunity worldwide. Venture capitalists invested $2.2 billion in US cleantech companies in 2007. It was a jump of 45% over the previous year and the future is promising, according to Cleantech Comes of Age, which was recently brought out by professional services firm PricewaterhouseCoopers.
India is in step with the world. Says Jaswinder Kaur, country director, Cleantech Group – India, The country offers an incredible opportunity in cleantech. India is a great innovation lab for the world. Venture capital and private equity in cleantech went up 100% from $140 million in 2006 in India to $290 million in 2007, according to the US-headquartered group, which is a network of cleantech investors, companies and members with assets of $6 trillion. Venture capitalist Vinod Khosla chairs its India advisory board.
Besides, M&A and IPOs are picking up. The government is also making investments, adds Kaur. So are UN agencies like UNIDO and multilateral institutions like the World Bank. UNIDO has recently announced a programme of $4.2 million to support employment generation and greening of industry in India. The World Bank and a host of developed countries are taking a lead in setting up a $5-billion clean technology fund to enable developing countries pursue clean development programmes.
It seems to be only the tip of the iceberg. Says Vilas Muttemwar, Union Minister of State for New & Renewable Energy, Renewables alone offer an investment potential of Rs one lakh crore. Cleantech is the new IT for investors. The 11th Five Year Plan (2007-2012) targets generation of 10% of energy mix from grid interactive renewables, up from about 8% in the 10th Plan. It should help that the government provides incentives like capital and interest subsidy, accelerated deprecation, concessional excise and customs duties to offset high capital costs in renewables.
Including energy generated from wind, solar, hydro, geothermal, tidal, biomass and biofuel sources, renewables are just one segment of cleantech industry. Other cleantech areas include air pollution and environment; water and wastewater treatment; recycling, transportation, agri- culture and materials.
Clean is more than green, according to Cleantech Index United States (CTIUS). The index tracks the market performance of 46 cleantech companies with a total market capitalisation of about $340 billion, which are traded on the US stock exchanges. Its new technology that offers competitive returns to investors and consumers while providing solutions to global challenges. Cleantech embraces products, services and processes that provide superior performance at lower costs, greatly reduce or eliminate negative ecological impact, and improve the productive and responsible use of natural resources, adds CITUS.
The growth of cleantech business is being particularly catalysed by growing concerns about global warming, depleting natural resources, increasing cost of fossil fuels and more demand for electricity, which has led to more interest in generation of renewable energy.
India is already a leader in renewables. The country is ranked fourth in installed wind energy capacity today. Solar energy generation is also following in the footsteps of wind energy sector. India is emerging as a big market and manufacturer of solar photovoltaic modules. Saying that its a sunrise industry, Ratul Puri, executive director of Moser Baer India, adds, Innovation is driving growth in renewables. There is significant investor interest in the sector. The group-owned subsidiary Moser Baer Photo Voltaic Ltd is a leader in solar power and photovoltaics in the country.
Renewables also offer a big business opportunity in carbon trading. Since India is a signatory to the Kyoto Protocol and doesnt have binding emission reduction targets, it is a destination for rich countries for buying carbon credits under Clean Development Mechanism (CDM) to meet their emission targets. India and Brazil were the joint second largest sellers of carbon credits in the world with 6% share each in 2007, according to State and Trends of the Carbon Market 2008, which was published recently by the World Bank. The monetised potential seems more impressive. Nationally approved CDM projects till mid-2007 have the potential to secure an investment of Rs 60,000 crore, according to the Union ministry of environment and forests.
There is scope for more business. Says Ashwin C Shroff, CMD, Excel Industries, “India can increase its share in CDM trade by playing a leadership role at the global level by working for a more enabling regime. Excel is a technology leader in waste management and has developed biodynamic products and processes to treat waste.” Recently, Shroff led an industry delegation to Carbon Expo in Germany.
And the country needs to move fast. Says Y K Modi, a former president of industry body Ficci, “We need to act quickly. The government and the industry need to work together to create a more enabling environment.” Modi is chairman and CEO of a coal-bed methane company, Great Eastern Energy Corporation Limited, and has led several CDM initiatives in India and abroad.
More importantly, creating awareness about the issues and the challenges in the first place is imperative. Saying that there is a misconception that going green is expensive, Suneel Parasnis, country director, New Ventures India, says that that it should be actually cheaper because cleaner businesses are about optimising the use of resources, increasing energy efficiency and using waste as bye products. Capital investment may be bigger in some industries, but it pays off in the long run. He is talking from first hand experience. New Ventures provides small environment friendly businesses access to resources and markets. He adds further, “Every business has the potential to go green.”
Going by the trends, it should happen sooner than later. Its only a question of entrepreneurship, investment, tech- nology and public policy coming together before the cleantech wave harnesses rich dividends.
Source: The Financial Express
Published on 05 June 2008