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- India’s Green Gamble
Welcome back to The Strawman, the daily climate newsletter that’s hotter than the curry you had one time trying to impress a girl but then you regretted it the morning after because you were stuck to the loo. Yeah that’s us - damn we spicy.
Today, we're talking about the energy transition in India - currently the world’s third largest producer of energy after the US and China, they’re prioritising the shift to renewables early - with some interesting consequences.
China overtook the US like it was going out of fashion - and people worry India might do the same
Governments seeking greeniums
When governments want to get s*** done, they have to go out and get the money for it. Usually, this is in the form of taxes which, we all know and love, or bonds - the premise is simple: you give me money now, I repay you with some interest over a set period of time.
India made some serious headlines in January this year when sold their first “green bonds” - bonds where the cash they received goes specifically towards financing their energy transition.
Beyond saving the planet, there’s another benefit too - a green premium, or a “greenium” is paid by investors for these green bonds. As the cash is being used for the energy transition, investors are willing to be paid slightly less as these green bonds are seen to be lower risk, and allow them to put a nice little tick in their ESG check box.
Investors be sweating real hard when this question comes up on the exam
India’s shift to renewables
On a mission to paint the town green, India has committed to cutting the emissions intensity of its GDP by 45% and increasing the share of non-fossil fuel energy sources to 50% by 2030. To achieve this, India is planning to auction a jaw-dropping 50 gigawatts of solar and wind power capacity annually until 2028.
What does this mean? For companies building sources of renewable energy, this is music to their ears. It’s a chance to earn revenue from one of the most reliable sources possible - a government. It’s not all sunshine and rainbows though.
The Practical Issues
While India's goals are like shooting for the moon, there are genuine concerns about whether the industry can scale up quickly enough to build a ladder to the stars. Companies like ReNew, Tata Power, and Adani Green are already feeling the squeeze. For this to really work, they need to:
Raise sufficient capital
Hire the right talent
Successfully execute these projects
Getting all of these right is harder than finding the perfect curry-to-rice ratio, but is always worth the effort.
India's energy transition is a colossal undertaking, and only time will tell if they can maintain the momentum. But with governments seeking greeniums, massive shifts to renewables, and a keen focus on overcoming the challenges on the ground, it looks like they’re better positioned than most to make this transition.
Stay tuned - and remember, vibes are renewable so if this newsletter taught you something, send it to a friend!
Keep it chill,
The Strawman