India green spending could reach $150b by 2017 - report
by David Fogarty - Climate Change Correspondent, Asia

Reuters    Translate This Article
28 November 2008

SINGAPORE, Nov 28 (Reuters) - Biofuels, wind and clean coal are among the top climate change investment themes for India, global bank HSBC says in a report, highlighting sectors expected to attract spending of $150 billion between 2008 and 2017.

The report, 'India's climate investment opportunities revealed', also named seven companies given an overweight rating as likely to benefit from green speeding.

The report said India's National Action Plan on Climate Change, launched in June, plus a range of existing policies, had kick-started investment in climate-friendly projects.

'Against the backdrop of the current weak macro situation, we believe that responding to climate change presents long-term growth opportunities for investors in India,' said the report, dated Nov. 27.

India is the world's fourth largest emitter of greenhouse gases after China, the United States and Russia. Per capita emissions are about two tonnes, compared with 20 tonnes in the United States and 28 in Australia.

The report forecast total investment of 7.6 trillion rupees (about $150 billion) in 11 themes, with clean coal technology top of the list at 1.7 trillion rupees, followed by wind at 1.34 trillion and biofuels at 1.47 trillion.

It estimated the total annual emissions saving of these investments at 480 million tonnes of carbon dioxide from financial year 2018 onwards.

RISKS

But the report also highlighted risks from the global financial crisis to investment, which it said had thrown into question the durability of climate change as an investment theme.

'Set against this, we are confident that the political momentum behind action to boost clean energy, energy security and a low-carbon economy remains strong—and has actually been improved with the recent election of Barack Obama,' it said.

This pointed to better chances of a broader global climate deal at the end of next year.

The report recommended power equipment supplier BHEL; diversified engineering and builder Larsen & Toubro; oil and gas firm ONGC; pipeline maker PSL Ltd; refiner and gas producer Reliance Industries; ethanol maker Shree Renuka Sugars; and pipe maker Welspun Gujarat .

It highlighted India's insatiable appetite for electricity.

'Although power capacity increased only 21,180 MW under the last Five Year Plan, this is set to grow four-fold in the current planning period to more than 80,000 MW.'

India has the fourth-highest installed wind power capacity in the world. Despite strong annual growth, HSBC estimated installed capacity by March 31 this year amounted to just 6.2 percent of India's gross wind potential of 45,000 MW.

Biofuels also had large potential, the report said.

'The shift from 5 percent blending to 10 percent across the country will require an additional 600 million litres of ethanol, thus benefiting sugar companies, as well as biofuel equipment manufacturers and technology suppliers,' it estimated.

The report also pointed to the government's backing of more efficient coal generation, such as supercritical and ultra supercritical technologies that make use of higher pressures and temperatures to boost efficiency and cut emissions.

'Assuming a benchmark cost of 45 million rupees per MW, we estimate a capital investment of 1.7 trillion rupees in supercritical technology over FY 2008-17. These investments are likely to result in annual emission savings of 28 million tonnes from 2017,' it said.

($1=50.67 Indian rupees)

(Editing by Clarence Fernandez)

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