Enabling Global Leadership Through Energy Transition

By: Probir Ghosh Issue: Big Ideas, Smart People Section: Business

invVEST is a nonprofit organization whose mission is to enable Global Leadership through Massive Scaling of Sustainable Energy Initiatives (SEI). invVEST stands for invest in Energy that’s Sustainable through Virtual Collaborative Teams. The stretch goal is for major economies of the world to strive to generate at least 35 percent of their energy from sustainable energy sources by 2030. One key area of focus for invVEST is to exponentially increase joint SEI between Colorado and India that lead to significant business and job opportunities for both sides. To understand why this is critical to our future, we in developed countries must first understand the impact of globalization that is leading to rapid growth of emerging nations, especially China and India and how we can leverage their growth for our prosperity.

Energy is the lifeblood for economic development. Since the start of the Industrial Revolution during the mid-1800’s, the growth of developed countries has historically been powered by fossil fuels to fire our power plants, run our cars, heat our buildings, and cook our food. In fact, it is hard to think of anything we do that does not use energy in some form.

After the Second World War, the United States emerged as the world’s largest economy, and by the year 2000, its GDP was more than twice that of Japan, the second largest economy at that time. The U.S.’s GDP surpassed the combined GDP of the five largest countries in Europe. The bone of contention by most other countries was that the USA, with only five percent of the world’s population, was consuming 25 percent of the world’s energy resources.

United States’ energy consumption since 2000 has hovered around 29 trillion kilowatt hours, with roughly 39 percent of energy used coming from oil for transportation, 23 percent from coal for power generation, 22 percent from gas used for power generation and heating, and the balance coming from nuclear, hydro & biomass. At this time, wind and solar-based energy were almost non-existent. So even while the economy grew from $11 trillion in 2000 to roughly $14.5 trillion in 2010, energy consumption in the U.S. stayed relatively flat.

With the turn of the century, globalization accelerated and emerging economies, led by China, started growing rapidly. China’s double-digit growth over the last decade stems from its transition to the manufacturing mecca of the world, which is emphasized by the huge trade imbalance between the U.S. and China. In 1985, trade with China and the U.S. was even, at roughly $3.8 billion from each side. In 2010, China’s imports to the U.S. ballooned to $369 billion, while exports from the U.S. only reached $100 billion. The energy requirements for China surpassed U.S. energy consumption in 2010, much earlier than analyst projections. If China continues to maintain its growth profile, its energy consumption will be one and half times the energy usage in the U.S. Because its use of coal as a fuel is significantly higher than the U.S.’s, its greenhouse gas emissions surpassed U.S. levels in 2008 and will continue to be significantly higher going forward.

And while there are still many unknowns to be solved, the majority of scientists are convinced that fossil fuel usage is the cause of exponential increases in CO2 levels, leading to global warming. It should be noted that the U.S. is no longer the largest emitter of greenhouse gases as much of the world still presumes. More importantly, rapid growth of China and other emerging countries will significantly increase the demand for fossil-based resources for energy, leading to a quicker depletion of fossil-based resources unless the U.S., China, and India work aggressively towards more sustainable energy resources.

The following example notes how important moving towards more sustainable energy truly is. Last year, the Chinese imported more cars from the U.S. than ever before, an event that was unimaginable just 10 years ago. Twenty years from now, even if only 40 percent of China’s population has cars, there will be 560 million cars in China alone, twice the amount of cars on the roads in the U.S. today. Considering this, even if more fuel efficient cars are manufactured, the world’s demand on oil will escalate significantly as a result.

China’s leadership has concluded that the continued use of fossil fuels will not only continue to deplete their coal resources, but it will hold them hostage to foreign oil. Yet, China’s ability to grow and become the dominant superpower will depend on its ability to transition to sustainable and renewable energy sources. Currently, China is aligning its policies, technology, and funding to exponentially grow its renewable energy-based infrastructure. China has become the world’s largest manufacturer of solar and wind energy, and surpassed the U.S. in 2010 in installed wind capacity.

Compared to China, India was a slumbering giant until the year 2000. Most of the country’s growth was based on domestic demand, with the majority of its exports focused on service sectors like information technology and back-office support. In 2010, India’s trade with the U.S. was close to $30 billion in exports and around $20 billion in imports. During the last decade, realizing that growth would be stunted unless officials urgently addressed their woefully inadequate infrastructure, India’s government started reforming its policies to address these issues. According to The Economist, over the last five years, despite the global economic turmoil, India grew on average eight percent a year and is geared up to grow approximately 10 percent per year in the coming decade. If India maintains an 8-10 percent growth rate, its purchasing power parity based on GDP will grow from $3.8 trillion to $10-$15 trillion by 2020. Moreover, its energy consumption could more than quadruple by 2030, if business continues as usual. Even if India incorporates invVEST’s recommendation for aggressive energy transition to sustainable energy initiatives (SEI), India’s energy consumption will grow to around 65 Quads (unit of energy equal to 1015 BTU) by 2030 from its current usage of 23 Quads.

This staggering statistic brings about some significant implications. First, India’s energy growth in the next 20 years will grow to 40 or 50 Quads, which is roughly what China will install in the next 20 years. And while 70 percent of all new energy growth happened in China over the last decade, China and India will each install 30–35 percent of the world’s total new energy infrastructure within the next two decades.

However, India is at a crossroads. While many of the policymakers and businesses are leaning towards following what developed countries and China have done in the past to grow their energy infrastructure by relying heavily on coal based energy infrastructure, there are more and more policymakers and businesses being educated by entities like invVEST to consider a much more rapid transition to SEI-based growth. Even if India incorporates invVEST’s recommendation to aggressively address energy efficiency and conservation, India’s need for fossil fuel will grow at least two times, instead of the projected three to four times, over the next 20 years. This provides a huge opportunity for Colorado and U.S.-based entities to provide state-of-the-art fossil-based energy products and services.

India leapfrogged technologies when it bypassed building landline infrastructure and jumped straight to cellphone based telecommunications infrastructure. Today, India has not only the most modern and reliable communications system in the world, but phone connections have grown a mind blowing 1000 times in 10 years. invVEST believes that while energy issues are far more complex and capital intensive, the same can be done for energy transition. And while developed countries and China had to rely on fossil-based energy infrastructure growth because SEI sources were not a viable option, for India, which is going to exponentially increase its infrastructure in the next 20 years, there are quite a few SEI options that are viable today, and by 2020 there will be more reliable and economically viable sources of energy.

Given this background, the U.S. and Colorado in particular can exponentially increase joint initiatives to create business and job opportunities for both sides. Besides California and a few communities in other states, Colorado, can showcase its own energy transition initiatives. By identifying a spectrum of energy products and services to specifically targeted entities in India, collaborative public and private partnerships can engineer pilot programs or joint ventures that can snowball into multi-million dollar businesses within the next few years.

invVEST has put together a strong team of advisory board members and experts known as ambassadors in Colorado and India, who in turn work with private and public entities, governments and institutions in both places to identify specific joint initiatives that can be turned into tangible business opportunities. The invVEST team headed by Mr. Subir Das in India and Probir Ghosh in the U.S. have conducted extensive research on India’s Energy Infrastructure needs and have published a position framework paper, Global Leadership Through Breakthrough Sustainable Energy Initiatives: Will India Forge A Breakthrough Like The Cell Phone Revolution? that resulted in an invitation to present at several major conferences and interact with key executives from public and private businesses, grassroots organizations, educational institutions, as well as government entities involved with creating the future energy infrastructure of India.

For the U.S. to prosper in the future, the government must figure out how to sell more products and services to China and India, who together will potentially have a combined purchase power parity based GDP that will be double that of the U.S. by 2020 resulting in more balanced trade. For India, building a state-of-the-art portfolio of energy infrastructure that can support its aspired 10 percent annual growth over the next two decades is going to be a major focus and investment area. Through the support of private and public partnerships, invVEST can enable Colorado and U.S.-based companies to make this a reality.

For more information about energy transitions or energy based opportunities in India, please contact Probir Ghosh at 720-323-6896 or email to info@invVEST.org.