02 Feb How this Budget 2018 enabling tech innovation can deliver growth for India
Budget 2018: India has been increasingly intentional about reducing the emission intensity of its economy: incentivising, regulating and enforcing adoption of cleaner sources. While good intent reinforced by strong policy is a great start, it is too little, too late. The Draft National Energy Policy suggests the share of fossil fuels in India’s energy mix will remain at similar levels to 2012 in 2040. This is alarming. Forging a deep decarbonisation pathway while reaching 24/7 electricity to every household will require blue-sky thinking and a willingness to move beyond business-as-usual. Recent global trends such as 40% increase in sales of electric cars and the supply of 50% of global electricity demand from renewables suggest transformative actions are producing notable results in some parts of the world. India must commence a systemic transition to a low-carbon model through transformative actions.
A recent example of such an action is the government’s plan to mainstream electric vehicles (EVs) in the public transportation system. The combined strategy of deploying policy pressures and basic incentives is mobilising businesses to act, albeit slowly. For the government to make significant headway towards its energy goals such as 100% EVs on Indian roads by 2030, it must invest heavily in spurring innovation across the value chain and strengthening the enabling environment. New financing models, charging infrastructure, vehicle-to-grid interfaces and more are needed.
A simple idea: funding innovation in energy technology
The government has a history of enabling innovation through Union Budget allocations—for the railways in 2016 and allocations to encourage innovation in secondary and online education last year. Budget 2018 ought to bring support for innovation across the spectrum of energy technology. An innovation fund deployed through existing ecosystems such as Start-up India, Invest India, Make-in-India, IITs and RECs would open the door for young and aspiring innovators, accelerating systemic transformation of India’s energy sector.
Awards must be of sufficient size and on flexible terms to enable meaningful efforts, facilitating progress from design to pilot testing and scaling of solutions. Often, solutions can emerge from adapting tested technologies for local context or responding to needs such as deployment at scale.
The government’s UJALA scheme is a good example, where proven LED technology reached millions as a result of an innovative approach to market. Through demand aggregation, the initiative served beneficiaries countrywide, saving 37,000 million units of electricity consumed and reducing 30 million tonnes of carbon emissions per year.
Nurture collaboration with and within the private sector
A recent Department of Science and Technology study suggests that businesses are increasing investments in R&D. These investments can deliver faster and greater returns if deployed through cooperation, in a cohesive manner and for collective benefit. This is particularly relevant in the energy sector where generating an innovation pipeline can be expensive and risky. There is a need for structured platforms such as the India 2022 coalition encouraging collaboration between businesses and rules to safeguard all interests. The government can pro-actively nurture such mediums.
An integrated approach to regulating
As the effectiveness of innovations in the energy sector are hugely dependent on the potential for integration and functioning within broader systems, a cross-cutting approach to policy design is necessary. A great example of this is Japan’s cross-ministerial strategic innovation programme, which goes beyond the traditional frame of ministries and disciplines, to achieve systemic change and enable acceleration.
The Indian imperative
Investing in energy technology innovation has dual imperatives for India. Along with achieving reductions in emissions, innovations can deliver a range of developmental goals—jobs, lower health costs, economic growth and cleaner air, to name a few.
As the government races to reach electricity to 200 million citizens (many of whom are off-grid), and deliver on its promise of Saubhagya and Power for All by 2019, innovation in decentralised energy systems can augment efforts to enhance energy access. Within electrified households, there is a rich scope for energy technology innovations to have a positive impact on everyday life by improved offers for cooking, lighting and cooling. Much of this will directly contribute to improving the lives of women and children.
As India leapfrogs to realise universal access to electricity, innovation will become ever more critical to ensure power quality, expand smart grid infrastructure, and integrate large-scale renewable energy. There are also a host of related technologies with promise, i.e. energy storage, electric mobility, cold storage and waste-to-energy that are relevant for India.
India has the potential to lead the way for a new energy transition. We have a qualified talent pool. A Budget enabling technology innovation and a positive policy environment incentivising global investments, combined with a systemic approach, can deliver clean new growth for India.