World is Green

Atanu looks at the global energy needs in the future and analyses the option of using solar or nuclear energy for India and concludes:

As far as I am concerned, the answer to the question–solar or nuclear–is a no-brainer. It has to be solar. Otherwise India is up the proverbial creek without a paddle.

BBC NEWS | Special Reports | The cost of food: Facts and figures

The cost of food: Facts and figures
Explore the facts and figures behind the rising price of food across the globe.

Line graphs showing rising food prices 2005-07 and price rises by food type, 2007

Graphic illustrating price rises in corn, rice, soya and wheat

As biofuels get the blame, the BBC provides a FAQ which provides some analyses into the real causes.

What are the main causes?

The first reason why prices are rising is growth in the world’s population, which is expected to top nine billion by the middle of the century.

That is an incredible number of mouths to feed and will put pressure on a range of resources, including land, water and oil, as well as food supply.

But lurking behind the headline figures for population is an even more significant factor pushing up prices, and that’s the economic miracle driving emerging economies such China and India.

To put it bluntly, rich people eat more than poor people, and all this economic growth is generating a whole new tier of middle-class consumers who buy more meat and processed food.

The FAO estimates that processed food now accounts for 80% of food and beverage sales.

What other factors are involved?

There is also the added environmental pressure all these extra people are loading onto the planet, as well as the impact of climate change.

Desertification is accelerating in China and sub-Saharan Africa, while more frequent flooding and changing patterns of rainfall are already beginning to have a significant impact on agricultural production.

And global warming has played a significant role in another driver of rising prices: the shift in agricultural production from food to biofuels.

Ethanol production is on course to account for some 30% of the US corn crop by 2010, dramatically curtailing the amount of land available for food crops and pushing up the price of corn flour on international commodity markets.

So what is happening in India? The report argues that the real issue is the purchasing power of the poor and farm productivity.

There has never been an acute shortage of food in India, not even during the infamous famine in Bengal in 1943 in which more than 1.5 million people are estimated to have died of starvation.

The problem then - and now - is entitlement or access to food at affordable prices.

Given the low purchasing power of India’s poor, even a small increase in food prices contributes to a sharp fall in real incomes.

The current crisis in Indian agriculture is a consequence of many factors - low rise in farm productivity, unremunerative prices for cultivators, poor food storage facilities resulting in high levels of wastage.

The Tata Mundra power project has been provided the necessary loans and subsidy by the IFC to start the project. As I argued yesterday in Coal power or no power, the power plants need to be built.

Dot Earth considers the dilemma and provides more stark numbers.

India faces power shortages that leave more than 400 million people without access to electricity, mainly in poor rural areas. The country needs to expand generation capacity by 160,000 megawatts over the next decade, and this new project helps address this gap.

As Michael Wines reported last year, the 700 million people of sub-Saharan Africa outside of South Africa have access to the same amount of electricity used by the 38 million people of Poland.

Dot Earth concludes, “Is all of this bad? If you’re one of many climate scientists foreseeing calamity, yes. If you’re a village kid in rural India looking for a light to read by, no.”

Sreenivas Ghatty points me to a interview with Thomas M. Connelly, Executive Vice President & Chief Innovation Officer of DuPont. The main important part of the interview is the discussion on the food vs fuel debate in bio fuels.

But how is it that DuPont, which thinks much ahead of others, was caught on the wrong foot on this issue of using food crops?

It is not a question we did not recognise. We thought the timescale on which we will move there would be different. Keep in mind, for example, that certain other agricultural commodities were trading at low prices for decades. And frankly, many farmers were looking for additional markets for their products.

So while we recognised that in time the supply trends would become a limiting factor, that the grand plan would accelerate in a matter of five years we never anticipated. We thought it would be at least ten years. The pace at which this has been progressing has been surprising to us.

I think it is because of the global emphasis on climate change, run up in the prices of petroleum. All these are pushing us to non-food crop sources of carbon material for the production of fuel.

I should say we anticipated the direction but not the speed at which we would reach there.

This is the interesting part. How fast the food prices have gone up and the increasing ban on exports from various countries. In some cases, countries like India are ready to sacrifice growth to curb food inflation.

Six Environmental groups, Environmental Defense Fund, Friends of the Earth US, National Wildlife Federation, Bretton Woods Project and the International Accountability Project are fighting the World bank to stop providing a subsidy for the construction of the Tata Mundra coal plant which will provide electricity to 16 million people in 5 states in western and northern India.

The IFC says that the Tata Mundra Project (PPT)

• will have amongst the lowest GHG emission rates globally - lower by 40%, 18% and 16% compared to the average GHG emission rate of coal based plants in India, across the globe and OECD, respectively

• first supercritical project sets a precedent for efficient coal usage: consumes 1.7 million tons of coal less per year than traditional subcritical plants of comparable size

The environmental groups want to consider the costs to the environment and have suggested wind and solar technologies as alternative to the coal plant. The coal plant would cost about $4.2 billion with the World bank providing a subsidy of $450 million. The wind or solar alternatives would cost around $24 billion for the same capacity.

Clearly, coal is the cheapest option at this point in time.

The question that these groups need to consider is this - what happens when there is no power? What are the costs and benefits of providing the least cost power to poor people in a developing country to providing no power at all? Who is working on the side of the people?

The following image from the German Advisory Council on Global Change’ provides a good idea of the countries without power.

The interesting option is the reliance of people on biomass. In some ways Coal may be a better option.

It is a very clear case that development around the world has been due to the emergence of cheap power. What these environmentalists miss in the entire picture is the case for the poor people to come out of poverty using energy. What about the person who dies since there was no electricity in the hospital? What about the child who cannot study because of the lack of electricity?

Interestingly, there are other people supporting the environmental groups. For example, Sreekumar Raghavan at the International Business Times. He provides examples of countries like Australia and the US where there is a movement towards not supporting coal powered plants unless there is a carbon capture mechanism. That is a really good initiative. However, he misses the point. Firstly, Australia and the US do not have millions of people without electricity in their countries. If that is the case, they would have gone ahead with the coal powered plant like the UK has done recently. Also, the US and Australia are highly dependent on coal powered plants. 75% of Australia’s electricity comes from coal.  Second, the per capita GDP of these countries are way above India. There is no comparison at all. It is foolish to think that India can solve its poverty issues without abundant and cheap energy.

Robert Zoellick, the president of World Bank,  makes an important point. He said, “…that if developing nations are deprived of energy it will be counter productive and a setback for the larger issues of climate change.” Mr. Raghavan calls this a weak defense. However, it is he who needs to understand that this is an important argument. The capacity to fight and adapt to climate change is dependent on the ability of nations to develop economically. And to develop economically, we need to have cheap and abundant energy.

There is another argument too. The IPCC predictions for future increases in CO2 emissions have already considered the growth of transport, energy and other emissions in their calculations. This growth would mean the building up of coal powered plants and small cars like Nano. If the cuts suggested by IPCC are to be followed by the world, then there should be no opposition to the current growth of power and CO2 for developing countries.

Well, the point is simple. Coal power or no power. Which is better?

Over the past year or so I have been covering the green industry to understand it better. Over the course, it became apparent that the biggest stories are about the people behind these initiatives.

In the course of being in this industry and writing on the blog I have come across some interesting people who are trying to make it big in this industry in their own way. In order to tell their story, I have decided to conduct an interview with them. The idea is to understand the stories at a more personal and knowledgable level.

I have no specific publishing schedule, but would try to do about 3 interviews a month.

Our guest today is Sreenivas Ghatty. Sreenivas is the founder and CEO of Tree Oils India. With all the interest in Biofuels Sreenivas believes that there is a great future for using them as an alternate fuel of choice.

Thank you for giving me this opportunity. I have a Masters in Agriculture and was a corporate banker in India and Dubai for 18 years until I entered the Biodiesel industry in 2003. I live in Melbourne with my wife and two daughters and keep travelling to India and other countries regularly.What is your company about?

Tree Oils India Limited was established in 2003 to produce Biodiesel from non-edible oils. Please visit our web site (www.treeoilsindia.com) to learn more about this company. Bear with me if some of the information is obsolete as the contents have not been updated during the last five years. As non-edible feedstocks were not available in sufficient quantities and at reasonable pricen at the time, we started with plantation activity. As there were no tested varities of these tree species and knowledge of agronomy was limited, we started an R&D farm to begin with. So, as of now, we are a technical-know-how company, trying to develop non-edible oil-bearing trees such as Pongamia, Jatropha etc.

The BBC reports on a new report from Greenpeace on the challenge faced by India, Bangladesh and Pakistan.

It estimates that 75 million people from Bangladesh will lose their homes.It predicts that about 45 million people in India will also become “climate migrants”.

[...]

“Most of these people will be forced to leave their homes because of the sea-level rise and drought associated with shrinking water supplies and monsoon variability. The bulk of them will come from Bangladesh as most of the parts of that country will be inundated,” Dr Sudhir Chella Rajan, a climate expert and author of the study, told the BBC.

[...]

Several large cities within the low elevation coastal zone like Bombay (Mumbai) and Madras will go under the sea if the present growth rate of greenhouse emissions continue.

Greenpeace could well be right in the estimate. The solution for this is however, what Schelling proposes. He says, “The sooner Malaysia can become like Singapore, the sooner it can worry less about the impact of climate change on health, comfort, and productivity.”

In this sense, the sooner Bangladesh can grow economically, build better infrastructure and create new cities inland to support this migration the lower the impact will be. This is the same for India and Pakistan too.

Rediff has an interview with Joseph Massey, Deputy Managing Director, MCX in India which recently started trading in Carbon credits.

India and China are likely to emerge as the biggest sellers and Europe is going to be the biggest buyers of carbon credits.

Last year global carbon credit trading was estimated at $5 billion, with India’s contribution at around $1 billion. India is one of the countries that have ‘credits’ for emitting less carbon. India and China have surplus credit to offer to countries that have a deficit.

India has generated some 30 million carbon credits and has roughly another 140 million to push into the world market. Waste disposal units, plantation companies, chemical plants and municipal corporations can sell the carbon credits and make money.

Carbon, like any other commodity, has begun to be traded on India’s Multi Commodity Exchange since last the fortnight. MCX has become first exchange in Asia to trade carbon credits.

Few people have influenced me like Atanu Dey and Rajesh Jain when I worked with them at Deeshaa Ventures. I consider the 1+ year that I have spent with them as  a “black swan” moment.

According to the Wikipedia:

In Nassim Nicholas Taleb’s definition, a black swan is a large-impact, hard-to-predict, and rare event beyond the realm of normal expectations.

Rajesh writes in his blog on Turning 40 and his goals for India and Atanu’s influence on him. An inspiring read.

Three Goals

Here are three things I’d like to do in the rest of my life and which will require investments of hundreds of millions of dollars. This is not about philanthropy, but about building the right systems and foundation - in a sort-of self-generating way. Ideally, the Indian government should have been the enabler - but I don’t see that happening with the politicians we have. Indian business has started taking the lead but is not doing this fast enough - and in some cases, is not even doing it right.

First, ensuring access to quality education for hundreds of millions of Indians. Education is a life-enhancer - and nothing comes close. My father was helped by his education to get out of the village he grew up in and created opportunities for himself. How can we do the same for millions in India who are otherwise resigned to a life devoid of opportunity? This is not about trying to build the world’s best school or college, but ensuring that a sustainable and scalable system to provide quality education for everyone in India. For more, read Atanu Dey’s series on Doing Education Right.

Second, we need to build hundreds of new cities to house the hundreds of millions of people who we need to get out from the villages. Our current cities are bursting at the seams. Creating urban slums in not the answer. We need 600 new cities of a million each or 6,000 towns of 100,000 each - or a mix of both. But there is no way we can provide any reasonable future to pockets of 1,000 people living in 600,000 villages. In other words, India cannot afford its villages - and needs to urbanise fast. Else, the demographic dividend will turn out to a big nightmare. Creating these new cities right - in a clean, green, and self-sustainable way - is what I’d like to see us do. For more, read Atanu Dey’s series on Creating India’s New Cities.

Finally, I want to create a Santa Fe-like institution in India. It should be a place where multi-disciplinary thinking is the norm. It should be a magnet for smart people to spend time interacting with the best in different areas so they can forge multiple mental models which can then go out and solve problems right. We go wrong in solutions because we have partial knowledge and so we do not understand the real problem. This leads to what I call brain-dead decisions. An institution like this will ensure that we make the right decisions for the future. It will create a platform for the innovations we will continue to need.

The day after we had sold IndiaWorld for $115 million in November 1999, my wife, Bhavana, told me: “We are custodians of God’s money. If God has given us money at such an early age, there must be something He has in mind for us. We have to utilise this wealth for the greater good.” These are words which have formed the bedrock of my life since then. Till then, I was an entrepreneur trying to prove that I could, even after repeated failures, be successful at least once. Since then, I have come to believe that what good we need to do, we have to do in our present life - while we still have the physical and mental energies.

Apart from his vision, his and Bhavana’s belief that whatever good that needs to be done is now, when they are at their prime of their life is the most inspiring and the right thing to do.

The Financial Times business education section has a small video lecture series from the Indian School of Business on the “base of the pyramid“. Reuben Abraham, a friend of mine, is a Professor at ISB and Director of the Base of the Pyramid Learning Lab. He provides the introduction and has some interesting ideas.