Green Innovation - Innovating our way to the Net Zero future
As Prime Minister Narendra Modi announced the Panchamrit, or five key elements, of India’s Net Zero pledge, the implication was clear – not only would it require rapid adoption of existing technologies but also an accelerated focus on innovation. Meeting these objectives will require aggressive carbon abatement across energy, industries, cities, mobility, and agriculture.
The Indian context is particularly challenging due to the need to economically mitigate the impact of coal, which is the dominant fuel in the largest segments, energy, and industries. Even in other sectors, the ingrained adoption of current frugal methods will require innovation to break the cycle to economically support sustainable practices. However, as much as innovation is a necessity for the net zero pathway in India, it is also an opportunity – what works in India is likely to have an impact in many developing and developed parts of the world.
India’s Net Zero transition will be the greatest technical, social, political, financial, and organizational innovation challenge in its history. Achieving this ambitious aspiration will need innovation across five inter-related, but distinct, ecosystems:
Innovation in the Government/Public Sector Ecosystem: It is often easy to overlook Government and Public sector led innovation. Globally, government funded innovation helped humanity conquer space, create the internet, and defeat several diseases. In India, Government and public sector action have enabled ISRO, Aadhaar, Jan Dhan, and supported local innovation to battle Covid-19. In the Net Zero context, balancing growth and sustainability will require significant policy innovation, which the government and the public sector will need to address. This will include supporting the private sector on the path to viability, legislating of policies, mandating the adoption of green standards such that they facilitate adoption rather than hinder growth, funding innovation, enabling societal change, and overall, playing the anchor role in shaping our pathways to Net Zero.
Innovation in the Corporate Ecosystem: We estimate that the Mission 2070 Net Zero transition might offer India Inc. a USD 15 Tn opportunity over the next 50 years. Innovation in areas like battery storage, mobility, charging networks, smart grids, alternative fuels, precision agriculture etc. require investments which only companies with access to patient capital can manage. However, each of these is a substantial opportunity and corporate innovators can potentially gain a first-mover advantage in several of these spaces. Key success factors for corporate success will include focused R&D, innovative business models, risk sharing, and extensive ecosystem wide partnerships.
Innovation in the Startup Ecosystem (Climate-Tech): The last 10 years have witnessed the blossoming of the startup sector in India. The year 2021 so far has already witnessed more than 30 companies enter the unicorn club. As India and the world prepare for Net Zero, Climate Tech is likely to emerge as one of the greatest spaces for startup led disruption and value creation. Already, companies like ReNew Power, Greenko, etc. have created substantial value in India’s Green Economy. Going forward, technology and business model innovation are likely to create many unicorns and decacorns in spaces such as Carbon Capture, Storage, Hydrogen, Mobility, Circular Economy, Sustainable Food, and other areas that might not even be in the investment radar yet.
Innovation in the MSME Ecosystem: Not all innovation needs technologically complex problems to be solved. India’s vast semi-urban and rural markets provide ample opportunities to adapt existing technologies in innovative ways that allow a sustainable approach. For example, the pervasive adoption of LED torches and lights, solar powered pumps and water heaters, and digital mandis/ marketplaces requiring reduced travel have all been enabled by existing technologies, adapted by MSME entrepreneurs to serve local needs. While the innovation may happen organically, the role of the government and social institutions will be high in enabling widespread and fast adoption to accelerate the sustainability impact.
Innovation in the Social / Non-Government Ecosystem: Reducing carbon emissions and sequestering carbon are no longer enough to entirely halt the impacts of climate change, and India already needs to start adapting to a warming world. Millions of lives and livelihoods are likely to be impacted by Climate Change even within this decade – and the damage could only worsen over the coming decades. Along with Government support, India will need its Social and NGO ecosystem (including the Media) to innovate, educate, enlighten, and support the individuals and families that are most susceptible to the adverse impacts of Climate Change in India.
Mission 2070 can translate into India’s Mission Innovation for the next 50 years, with the scope to disrupt, transform, and evolve every segment of the economy. Given that the world is still in the early stages of the green industrial revolution, we now have a once-in-a-generation opportunity to emerge as a global green innovation hub – with the potential to create entire new industries, tens of millions of jobs, and trillions of dollars of economic impact. Some of the immediate steps to achieving this aspiration could include:
1. Development of a supporting policy framework, to tackle large problems like CCUS and Hydrogen, with explicit enabling incentives and support for partnerships. Carbon pricing could play a key role.
2. Support to corporates for developing green innovation hubs in India – Incentives and R&D subsidies for the private sector could help position India as a global tech and entrepreneurial hub for sustainability.
3. Development of green tech business incubators and R&D centers in close collaboration with universities, attracting innovative foreign businesses to establish or expand their presence in India and create jobs in high-growth sectors.
4. Support for the emergence of a domestic market for low-carbon, high-value added products and services (i.e., by developing standards for maximum emissions).
With only between a quarter and third of carbon emissions potentially mitigable with existing technology, the need for innovation is clear. India can take a lead on sustainability innovation, in addition to its demonstrated approach to adopting current technologies aggressively.