When Barack Obama talked about harnessing renewables in his presidential address, he was summing up the agenda of his new green deal for an energy secure United States unveiled during his election campaign.
The New Energy for America plan provides for an investment of $150 billion over ten years to fuel private endeavours in clean energy, generate five million green jobs, do away with imports from the Middle East and Venezuela, generate 10% electricity from renewables by 2012, deploy 1 million US-made plug-in hybrids by 2015, and reduce greenhouse gas emissions 80% by 2050 and make the US a leader on climate change.
Five millions new green jobs are sought to be created by not only generating 10% of electricity from renewables by 2012, and 25% by 2025, but also by focusing on energy efficiency, weatherising one million homes annually and developing and deploying clean coal technology.
US-based as well as Indian companies are upbeat about the business potential of the energy plan. DuPont is not only looking forward to the administration and Congressional efforts to stimulate the US economy and address short-term needs, such as job creation, but also long-term goals, such as creating energy security and reducing greenhouse gases. Efforts to foster innovation that will lead to new technology solutions in the area of alternative energy are welcome, says a DuPont spokesperson. The company with its diverse portfolio of products in markets such as solar energy, among others, is well-positioned to benefit from the stimulus package.
Indian companies share the optimism. Commenting on Obamas plans, K Subramanya, CEO, Tata BP Solar, says it will expand significantly the American market for renewable energy sources, including solar PV, which will in turn improve the prospects for Indian exports.
Subramanya adds, “America, as the worlds largest economy, has a demonstrative value for the rest of the world in terms of percolation effect.” As solar becomes more popular in the US, it is expected to catch on in the rest of the world helping expand market in countries like India, which will be accompanied by technological and new application development. Indian entities can benefit by entering into joint research, development and deployment of new renewable technologies, he explains.
He is not alone in thinking on those lines. Kamal Meattle, CEO, Paharpur Business Centre & Software Technology Incubator Park, says the US green deal means more research and a drop in the PV prices from $ 5 million/ MW to around $ 1 million/MW, thereby bringing it at par with coal-fuelled power plants. He adds, “More risk capital for ventures in the clean energy sectors will now be available to US firms and it is for Indian firms to tie up with them to share the benefits.”
Meattle is already doing it. His GreenSpaces project being constructed on the outskirts of Delhi is a flagship project for the Asia Pacific Partnership, which has the US as a partner along with India, South Korea, Japan, Australia, China and Canada. He is looking forward to support from the US administration for the project, which seeks to demonstrate the possibility of reducing energy use in green buildings by 75% as compared to the conventional buildings.
At the heart of the US green agenda is the quest for energy security. It is sought to be achieved by improving fuel economy standards, formulating a low-carbon fuel standard, deploying 1 million US-made plug-in hybrids by 2015 and setting up $7,000 tax breaks for the purchase of advanced vehicle in a bid to do away with oil imports from the Middle East and Venezuela within 10 years.
Automakers have a big role to play here. Says Karl Slym, president & managing director, General Motors India, “GM is completely aligned to Obama’s vision for freedom from petroleum-based energy and is already in advanced stages of technology research and implementation to make it possible for the automobile.”
The automaker has been pursuing a multi-pronged strategy to displace petroleum through energy diversity, thereby reducing the dependence on fossil fuels and the environmental impact of the automobile. GM’s plans include, in the short term, to improve fuel efficiency of the conventional internal combustion engine, and in the longer term, develop viable technologies that include the electrification of the automobile, develop and deploy hydrogen fuel cell technology and conduct biodiesel research, he adds.
Indian automakers too have a cause to cheer the Obama plans. Chetan Kumaar Maini, deputy chairman & CTO, Reva Electric Car Company, says these policies will provide a tremendous boost for electric vehicles as well as technologies and components that go into such vehicles. Over 50% of the cost of an electric vehicle is due to batteries and electronics. Globally no country has a real early mover advantage and hence there is a fair level playing field. He adds, “India can take a lead by harnessing its R&D capabilities in hardware and software combined with a strong automotive component base to create new industries in electric vehicle technology areas.”
Importantly, the agenda aims to reduce 80% greenhouse gas emissions by 2050 with the help of a cap-and-trade programme. Says Vinod Kala, managing director, Emergent Ventures India, a climate change mitigation advisory firm, “It will kick-start investments not only in the US, but also worldwide. It will also create a large demand for carbon credits.”
Carbon trade will also get a boost if an international agreement on gradual but planned reduction targets for large emitting countries is achieved during the next round of climate change negotiations at Copenhagen by 2009-end. It will open up an international market for carbon credits, accelerating clean tech investment and financial flows to such countries. Opportunities for India and other developing countries are also likely to arise in outsourcing of transaction and research processes related to emission monitoring, accounting of greenhouse gases, triple bottom-line reporting, trading and carbon finance, he adds.
Its only the beginning of the early days, though. Details about how the agenda will be pursued are still awaited. “While it is very clear that more efforts will be made to harness renewable energy and to combat climate change, it is not clear how much of that effort would rely on market mechanisms and/or economic policy instruments,” points out Ram Babu, managing director of CantorCO2e India, a carbon emission trading brokerage. Carbon trade will get further push to the extent markets are relied on to address climate change mitigation.
The new green deal is only a part of Obama’s change agenda. So, it will be also guided by how he implements his bigger action plan. Brushing aside apprehensions about a protectionist policy being pursued by the new administration, Ron Somers, president of US-India Business Council, says, “With the new US trade representative being pro-free trade, I am confident the Obama administration will not fall prey to protectionism but will forge an even stronger commercial and trade relationship with India.”
Energy Plan Overview
Moving towards climate leadership
Provide short-term relief to American families
• Crack down on excessive energy speculation
• Swap oil from the strategic petroleum reserve to cut prices
Eliminate current imports from the Middle East and Venezuela within 10 years
• Increase fuel economy standards
• Get one million plug-in hybrid cars on the road by 2015
• Create a $7,000 tax credit for buying advanced vehicles
• Establish a national low-carbon fuel standard
• A use it or lose it approach to existing oil and gas leases
• Promote responsible domestic production of oil & natural gas
Create millions of new green jobs
• Ensure that 10% of electricity comes from renewable sources by 2012, and 25% of it by 2025
• Deploy the cheapest, cleanest, fastest energy sources
• Weatherise one million homes annually
• Develop and deploy clean-coal technology
• Prioritise the work on the Alaska natural gas pipeline
Reduce greenhouse gas emissions 80% by 2050
• Implement an economy-wide cap-and-trade programme to reduce GHG emissions 80% by 2050
• Make the US a leader on climate change
Source: Whitehouse.gov/agenda/energy_and_environment
Source: The Financial Express
Published on 27 January 2009