How saving the world is the next business opportunity | Sumant Sinha | TEDxGateway
Transcriber: sepsa Alhaj Yousef Reviewer: David DeRuwe It was a hot and windy summer day in 2012. We were standing in the vastness of the Kutch region in the state of Gujarat. We had just commissioned our very first wind farm, and I remember thinking to myself, “Wow, given the scorching heat here, wouldn’t this be a terrific place for setting up a solar plant?” At that time, the cost of solar was high, but three years later, costs had actually halved, and we commissioned our very first solar plant at that time. Today, we have more than 110 such wind and solar plants all over India, accounting for 1% of India’s total electricity production, and also helping prevent over 10 million tons of carbon dioxide from being emitted into the atmosphere. But despite our best efforts, climate change remains an intractable issue so far. We all know it is bad for the planet, but unfortunately, humans have not been great at solving this existential problem. The reason is that it requires cooperation amongst all countries and all people, something we humans have not been good at, at all. But the reality is that we’re all in the same ship, and it is called planet Earth. The fact is that our ship is not heading in the right direction. With temperatures increasing rapidly on account of carbon emissions, we only have the next 10 years to save the planet. As per the latest IPCC report, climate change is fast becoming irreversible. If things continue as is, we will soon cross three degrees Celsius temperature threshold, and this will lead to catastrophic climatic change. Small island nations are sinking, and vulnerable countries like India will find it very hard to cope with the consequences. India does not have the money to spend on adapting to climate change We must therefore do all within our power to prevent it. Where does the problem lie? Our consumption of energy accounts for 80% of carbon emissions. But consumption of energy is inherently linked to our quality of life. It is connected to progress and to economic development. We cannot simply stop people from aspiring for a better life. Progress requires energy, and energy causes carbon emissions. We need to break the cycle, and now there are technologies that can help do that, but they need to be implemented at massive scale. Simply expecting people to do so out of the goodness of their hearts is a forlorn hope. Unfortunately, we are fresh out of good Samaritans What we have, though, is a good supply of people wanting to make money. The world rewards capitalists, but saving the world has not been profitable so far. Now things are changing, and that’s leading to hope for the future. Over the last decade, I’ve had a ringside view of what’s happening in the clean energy sector. I felt that climate change would be a big problem requiring big solutions, and I wanted to be at the center of finding them Therefore, I founded ReNew Power, a renewable energy company, back in 2010. Today, our company is the 10th largest renewable energy company in the world. Our investors are some of the most commercially-minded in the world. In the last few years, we've observed a tremendous change in mindset, which gives me hope for the future. I believe we have crossed the inflection point. These changes are now becoming more evident. First, a decisive shift has happened. People have now realized that climate change is an existential crisis that needs solutions immediately. More resources are now being thrown at solving this problem. The most significant of them are human talent and human ingenuity. Heightened societal awareness is leading to more pressure on the system to change. Young people are becoming more vocal in demanding climate action. They are saying to us, “This planet belongs to us. How can your generation exploit all the planet’s resources and leave nothing for us except a polluted atmosphere?” Their parents and grandparents will have to listen. This groundswell is becoming stronger, and in the years to come, those of you still young must raise your voices even more. Put pressure on my generation and demand us to do better. Two, we are seeing more rapid changes in technology. Solar showed the way with its massive cost reduction of 80% over the last 10 years. Today, carbon-free solar is by far the cheapest source of new energy. The same cost reductions are happening to batteries, offshore wind, electric vehicles, green hydrogen, carbon capture and storage, and many other new technologies on the drawing board. Three, governments have now understood both the power of technology as well as the urgency of saving the planet. Multilateral action is fast picking up pace, and policymaking is encouraging faster adoption of new technologies. Governments have also realized that countries that take advantage of this opportunity will thrive in the green future of tomorrow, and those that don't will languish. Countries like India and others like it can leapfrog carbon-intensive growth to a cleaner path. They can create a carbon-free economy right from the get go. They can create the green industries of the future with the right policies today. India’s prime minister sees a path to becoming energy independent by 2047. For a country that has always imported energy, 160 billion dollars of it every single year and growing massively, this is terrific news. India has begun to lean into the energy transition and to climate action. Since we are the third-largest emitter of carbon and growing rapidly, India’s decisions have far-reaching implications in the global fight against climate change. As a result of all this, the capitalists are piling in, big time. Financial markets around the world are recognizing the need for change and sensing a great investment opportunity. The world’s biggest fund managers are encouraging companies to pay more heed to sustainability, with almost half the world’s fund managers now making sustainability a key factor in their investment decisions. Oil and gas companies, large incumbent electric utilities, coal power companies, big financiers, specialist renewable energy companies, scientists, technologists, business people are all now plowing into the sector at record pace, and the results are there to see. Take Tesla, the electric car manufacturer, its market valuation is now more than 700 billion dollars, more than that of marquee names such as Toyota and Mercedes, BMW, Nissan, Ford, Honda, and General Motors all put together. Clean energy companies such as Ørsted and NextEra are now trading at valuations higher than legacy oil and gas companies such as Royal Dutch Shell or BP or Total. A number of new battery manufacturers and other clean tech companies have listed recently to great investor reception, showing the tremendous interest for the sector. Renew became only the third Indian-listed company in the US market. Green technologies are now becoming the new oil, and it is becoming really a gold rush for the next generation. Our big ship is beginning to turn and turn faster and not a moment too soon. We have a scant 10 years in which climate action needs to shift into overdrive. We are verily competing against time. I confess that I’m an optimist. Yes, change was slow in the last decade, but in the next decade, a new green economy will emerge rapidly. Tremendous amounts of new capital, by some estimates, 100 trillion dollars by 2050, far more than ever went into the oil and gas industry will be needed to make this green transition happen. This capital will need the right return, and that return is now increasingly possible. The capitalists have recognized this new reality, and therefore large pools of capital are now beginning to swing into the sector. Doing good and making money are coming together at a massive scale, as never before. This is every capitalist’s dream - to make money and to feel good doing so. The green transition is therefore an awesome opportunity. I’m convinced that we’re on the cusp of a takeoff to a new future, a new green economy, and no longer on the abyss of a climate apocalypse. To my mind, that inflection point is now behind us. The momentum has swung decisively. Saving the world is now a profitable enterprise.