Plastic Waste Explosion! – By The Numbers

Researching for an upcoming post on Landfill Gas to Energy opportunity in India, I came across some astounding numbers that make clear how our use of plastics and rubber has exploded over the last decade. Check it out in By The Numbers. Use of paper has increased significantly too, but it’s nowhere near as dramatic as plastics and rubber.

There used to be a time when most of us carried our own bags or baskets when we went shopping for vegetables or groceries. Take the poll below and let us know whether you still do.

Oil Below $60: Time to Wean India off Petroleum Subsidies

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As oil fell below $60/barrel last week from its peak of $145 in July 2008, Indian government has come under increasing political and public pressure to decrease fuel prices. So far Dr. Manmohan Singh has held firm citing the need for India’s oil companies to make up some of the massive losses they incurred over the past couple of years. After all, as oil climbed to record highs, Indian government increased prices just twice in two years.

The move is in line with what most economists argue vehemently: if consumers and industry are protected with artificially low prices when oil prices in free markets soar, they should also be prepared to pay higher than free market prices when prices fall. Sure this is simple economic sustainability, but only in a rather narrow sense. In my mind, all this talk about what the price of petrol or kerosene should be misses a bigger and more opportune question to consider: Shouldn’t the government stop meddling in fuel prices?

Not exactly a new idea, I admit, but in the Indian context it would be radical. Not the least because it would take a significant shift in energy policy, and that too at a politically inconvenient time not far from general elections. Despite the seemingly insurmountable odds of getting this done, I strongly feel it’s an idea whose time has come.

For decades the Indian government has indulged in bizarre practices of price-setting and cross-subsidization of petroleum commodities in the name of protecting the poor. These tactics have proved downright counter productive. For example, the artificially low price of diesel have inflated demand so much that losses from diesel account for 50% of all petroleum losses. Why? Turns out the government has inadvertently made diesel cheaper than fuel oil, a commodity used in industrial power generation. This growth in demand, now at 18-20% per year, will force India’s public sector oil companies to import diesel as they are prepared to meet only 12-15% growth with domestic refining. This in turn will magnify the losses incurred.

Kerosene subsidies are another case in the point. Cheap kerosene is used to adulterate as much as 40% of petroleum products sold nationwide according to a study by CONCERT (Centre for Consumer Education, Research, Teaching, Training and Testing).

Add current energy price volatility to government’s inability to effectively limit subsidies only to those who truly need them, the result is that even the most well-intentioned price intervention is bound to result in perverse negative consequences that will hurt us for decades to come. Energy efficiency improvements and renewable energy resources, both critical for future economic and social health, are victims of petroleum subsidies.

If there ever was an opportune time to say goodbye to petroleum subsidies, it is NOW. Why? Because low oil prices allow such a move while inflicting least short-term pain on Indian consumers and industry. Global energy demand is expected to stay low over the next year, but as the economy recovers, so will oil prices as IEA predicted in its latest World Energy Outlook. So instead of incurring record petroleum losses (Rs. 1,30,000 Crores in this fiscal year), we would be much better served to find ways to divert that money to energy efficiency efforts, hybrid or electric vehicles, smarter electricity grid and local renewable energy resources instead.

Author and Copyright:  Raghu Dharmaraju

Can the Poor Afford Cleantech?

That’s a question I get often from friends and family in India and the US. “We need to feed our masses and eradicate poverty before we can worry about the environment,” the logic goes. That there must be a trade-off between the economy and the environment is the entrenched public and political opinion in India.

On the surface, there appears to be plenty of evidence to support this view: Solar costs aren’t at grid parity yet. LED and fluorescent lamps cost way more than incandescent bulbs. The poor will never pay for water, leave alone the latest purification technologies. And the fact that electricity and water are both government-controlled utilities makes matters worse with red tape and inefficiency.

My response to this usually involves two examples: SELCO India and WaterHealth International. SELCO has been bringing photovoltaics to the poorest customers for more than 10 years now, while thousands of villagers are paying for water purified by WaterHealth’s technology.

How? Well, the secret sauce in their success, other than of course the extraordinary commitment of their leadership, is what Stu Hart terms “radical transactiveness.” To put simply, radical transactiveness is to dive deep into your customers’ experience, often with stakeholders other than just the company, to co-create/evolve a business model that works for the customers at the “base of the economic pyramid”(aka BOP).

SELCO recognized that its customers had no access to grid and were instead heavily reliant on kerosene! He recognized that with the appropriate microfinancing mechanism, daily payments toward a solar home system cost his customers less than what they shelled out for kerosene. The improved quality of light and air also enabled additional income generation and healthcare cost avoidance. (Click here for an awesome first hand account of how SELCO works by Raj Melville)

“Grid parity” simply does not matter to the approximately 100,000 villages of India that aren’t yet connected to the grid! Even in urban India, the cost of backup power generation from diesel or petrol must be accounted for to draw a fair comparison in many cases. (See article regarding India’s dependence on liquid fossil fuels for backup power generation.)

WaterHealth did not create a home purification system for the poor. Instead they discovered by engaging local communities and NGOs, that even the poorest were willing to “pay per use” via a community-level water purification system. The source of water itself does not change from before the project.

At 1 Rupee for 15 litres, 60% to 80% of total village population uses WaterHealth’s facilities. Turns out the poor will indeed pay for basic necessities such as clean water. Villagers reported improved health and ability to work for a living.

Any venture capitalist or entrepreneur will tell you that a superior technology does not ensure market success. That’s true for cleantech as well. I am not down playing the difficulty of introducing new technologies in the BOP market. But it’s not the technology’s fault if the business model imposed is inappropriate.

The poor certainly can afford cleantech. And as the examples above prove, often they stand to benefit the most from clean technologies.

Cleantech: a panacea for India’s foreign policy mess?

American politicians of all stripes have jumped on the corn ethanol bandwagon in the name of energy security and some even propound ethanol will solve the country’s foreign policy problems related to Middle-East. By contrast, you can’t find many Indian politicians talking up alternative energy though like the Us, India’s energy needs have left its foreign policy in mess. At least to some extent, I agree with the US politicians. No, I am not proposing ethanol alone and certainly not corn ethanol. Instead I believe clean technologies (a.k.a. cleantech) in energy transmission and energy efficiency represent a not-so-obvious solution to significantly reducing India’s energy demand and curbing the need for “dirty” oil and gas.

First, let me explain India’s foreign policy “catch 22″ situation. That India is desperately trying to overcome internal resistance to complete the nuclear energy deal with US is no secret. What’s not as publicized is the fact that India has been trying to join hands with China to compete with western oil giants in bidding for some African oil & gas fields. Similarly, the long-standing proposal for an Iran-Pakistan-India natural gas pipeline isn’t common knowledge either.

Ironically, deeply distrustful of its new business partners – China and Pakistan – India continues to build its military might with help from the usual suspects: US, Russia, UK and Israel. Also, as unthinkable as it sounds, India started joint naval exercises with US and followed that up with joint military exercises with China at the same time.

Most recently, India’s space agency ISRO launched an Israeli spy satellite into orbit, upsetting both Iran and Pakistan, who now threaten to take the natural gas pipeline to China instead. The prospects of the Indo-US nuclear energy deal don’t look much better either. What a mess!

So here’s an idea: How about pouring the same billions of dollars into economic incentives and R&D support for distributed energy generation, reducing transmission losses and energy efficiency projects instead? India’s electric grid losses are legendary (26% of production on average and 62% in some states) and India’s agriculture and manufacturing sectors are no models of efficiency either. Take a look at these case studies by The 3 Country Energy Efficieny Project for an inkling of what the the most unglamorous of energy efficiency initiatives could achieve.

Seriously speaking, I reluctantly admit that cleantech will not solve all of India’s foreign policy troubles, but you cannot deny that we cleantech zealots may be onto something here, after all.

KPMG survey shows Cleantech and India have VC’s mind space

In a recently concluded survey conducted by KPMG, venture capitalists responded that they are most interested in directing capital to cleantech (24%), biotech (15%), internet (13%) and mobile technology (11%). In the same survey, China (29%) and (23%) were voted top destinations for capital outside of the U.S.

What the snippet on Yahoo does not tell us is: What is the % of all VC’s that said they will invest in cleantech in India? Venn diagrams anyone?

Cleantech Group in India… Finally!

A year ago when I first contemplated the idea of a cleantech blog focused on India, there was precious little to report or write about.

In February 2007, at the Cleantech Forum in San Francisco, while investors and media alike feted China’s emergence as a cleantech leader, I wondered whether India was on anyone’s radar. “India” was conspicuous by its absence but for an occasional appearance in a sentence that began “China and India…” Even Vinod Khosla himself responded he didn’t have enough time when asked if he was doing anything with biofuels in India yet.

Well, what a difference a year makes! At the recently concluded Cleantech Forum XVI, the Cleantech Group finally announced its expansion to India. Mr. Khosla himself will serve as Chair, while Jaswinder Kaur (executive director of IVCA) will head the effort as Country Director. A handful of Indian VC/PE firms including SUN Group, Sequoia, IDFC and Nexus have already signed up as members.

All very exciting, no doubt, but does this really mean anything? Are we going to see a significant up-tick in number of cleantech entrepreneurs in India? How about cleantech R&D? Will the VC’s have enough deal flow to present significant funding opportunities? Or will they confine their activity to project finance type deals?

Any one’s guess, of course, but I think understanding the context for cleantech in India and contrasting that with the US and China will present us some pointers as to what to expect. That’s precisely what I will attempt in future posts here. Stay tuned!