Embed Size (px)
DESCRIPTION
However, there is a second trend in global investment flows… … manufacturing is moving back to the old industrial centers Contact: North to South 2 trillion USD from South to North 1 trillion USD since July 2014
Citation preview
ECONOMY OF TOMORROW
India and the global Green Energy Transformation
Contact: Marc Saxer, [email protected]
With labour intensive industries moving out if China…
… India hopes to attract manufacturing investment to create millions of jobs
Cont
act:
mar
c.sa
xer@
fesin
dia.
org
However, there is a second trend in global investment flows…
… manufacturing is moving back to the old industrial centersContact: [email protected]
North to South2 trillion USD from 2009-2014
South to North 1 trillion USD since July 2014
Digital automation reduces labor cost, making old industrial centers competitive again…
… while creating less jobs than hoped for in emerging economies.Contact: [email protected]
Manufacturing cost in emerging countries reach the level of the United States…
… undermining their comparative advantage.Contact: [email protected]
The window for export driven industrialization is closing…
…turning development into a gigantic race against time.
Development
Shrinking manufacturing cost undercut competitive advantage
Higher labor productivity creates less employment
Contact: [email protected]
ECONOMY OF TOMORROW
If labour cost advantages are levelled, other factors become more important…
…not at least the cost of ENERGY.
Cont
act:
mar
c.sa
xer@
fesin
dia.
org
• Long transport distances
• Supply chains
• Rule of Law
• Political Stability
• Skilled workforce
• Quality
In the old industrial centers, the cost of energy starts to surpass the cost of labour …
… as the biggest cost factor in manufacturing.
Cont
act:
mar
c.sa
xer@
fesin
dia.
org
Germany Manufacturing Cost
Labour Energy & Raw Materials Other
The energy transformation is driven by interests beyond climate change…
… but is a strategic project to restore the competitiveness of the old industrial centers
Cont
act:
mar
c.sa
xer@
fesin
dia.
org
Industry: Competitiveness
Capital: Carbon Bubble
Civil Society: Climate Change
Security Sector: Geopolitical Risk
TECHNOLOGYThe green energy revolution is made possible by
technological breakthroughs…
… reducing the cost of solar power as well as new solutions for storage and distribution
Cont
act:
mar
c.sa
xer@
fesin
dia.
org
MARKETWhile in the short run, the energy transformation drives
up energy cost…
… in the long run, higher energy efficiency and lower cost for solar energy will significantly reduce the cost of energy
Cont
act:
mar
c.sa
xer@
fesin
dia.
org
Source: Fraunhofer ISE
Historical price development of photovoltaic modules
GEOPOLITICSRenewables are a way to improve energy security…
… by reducing dependency on geopolitical hotspots
Cont
act:
mar
c.sa
xer@
fesin
dia.
org
LEGISLATIONEuropean governments have started to legislate the exit
from the carbon economy…
… calling into question trillions of subsidies for fossil fuels.
Cont
act:
mar
c.sa
xer@
fesin
dia.
org
National Targets for Energy from Renewables, as codified in national energy laws:
Germany 2025: 45 %2035: 55-60%
Sweden2020 - 50% 2050 – 100%
Finland2020 – 38%
Italy2020 – 17%
CAPITALThe Bank of England warned institutional investors
against a USD 28 trillion “carbon bubble”…
… if resources in the books of fossil assets cannot be produced due to climate change legislation.
Cont
act:
mar
c.sa
xer@
fesin
dia.
org
Pension funds, required by Law to invest only in assets rated secure, need to hedge their exposure to “carbon risk”...
….Major utilities corporations (Eon, Enel) have started to sell off their entire conventional power plant fleet….
…. „Peak Oil“ may have already happened in financial terms.
If India wants to win the race for development...
… it must not miss the bus of green growth
Cont
act:
mar
c.sa
xer@
fesin
dia.
org
With the comparative advantage of cheap labour eroding….
….and energy cost slowly becoming a disadvantage ...
… India will find it increasingly difficult to attract manufacturing.
Will India become a world leader in renewable energy (PM Modi, February 2015)….
… or will the biggest infrastructure build-up in history lead into a technological dead end?
