Many of us haven't considered climate change as an investment option and just doing businesses in the traditional way as it was going on, but as we are in the midst of pandemic lets first understand that some type of businesses wont come back to life or else wont have a reopening. Yes, people are going to need food, shelter, entertainment, healthcare and transportation facilities but with norms of physical distancing and the lockdown which is some what relaxed now has not left many businesses with cash, almost 50% of the businesses have run out of cash.
Lets take example of a restaurant, if it follows the norms of physical distancing it will be able to serve very less patrons as is used to serve and already falling demand has given it much damage making it difficult to revive properly till the vaccine is found.
This is the case with almost every retail business wherein the demand has fallen and there has been a change in consumer behaviour towards purchasing things, but in a country like India will it happen the same way as it happened across the globe or it will be a different scenario altogether because as Indians are not taking covid seriously and are returning to the jobs. While many are wearing masks only because there is a penalty on it, such scenarios are happening, only because India has a majority of population with middle income class and lower than that and all of them need money to feed themselves for that day.
Global Oil Demand
The pandemic has shown that oil is not the most important thing and have made it just like any other commodity, while companies are experimenting with work from home culture and accepting it, it would mean that there wont be similar demand for oil consumption as the world is changing according to the times and the governments have realised that investing in climate change is more necessary. So burning oil would definitely mean a permanent reduction in emission of green house gases to a certain level and also easing the way to meet the goals of Paris climate change agreement.
Paris Climate change agreement
The goal is to hold the rise in temperatures to below 2 degrees. This is the main goal of Paris Climate change agreement and economies have realised it. Even countries such as Russia now understands that it must adapt to green energy and make investments in climate change.
Investment in Climate change
If we talk about investment in climate change country such as Russia is facing problem in by not adapting to the changing global scenario. The economy of the world's biggest energy exporter is heading for its deepest slump in 10 years due to the fallout of corona virus so if Russia doesn't adapt, its budget receipts will decline drastically and the growth may be limited to 0.8% per year. The forecasters expect that the recession could accelerate the decline in global fossil fuel demand on which it has been banking on since many decades.
Europe has given out the world's most ambitious climate change package to earmark tens of billions of euros for hydrogen energy. The goal of net zero emissions by 2050 implies of full decarbonisation for the future of the economy and it's residents. Various countries such as France have also provided a fat stimulus of 8 billion Euros for the automobile sector to boost production of electric cars by 1 million cars per year. It is also estimated that in Europe it is going to create 850000 jobs because of investment in green energy.
Here the catch is the cost, most of the hydrogen used as fuel is derived by splitting it from molecule of natural gas but the countries are expecting the cost to reduce drastically because in some countries in the world it is still very costly to use green energy rather than using oil or other fossil fuels to generate power.
Opportunity in India
While I talked about different countries, let me talk about India. India has invested almost $57 billion dollars from 2014-2019 in green energy and have created jobs directly or indirectly. But as we are looking for future we must also look at the infrastructure requirements and challenges that are there. While investments are done to create infrastructure it is the best time now as even if we wish to have electric cars in India, we would be requiring charging stations for it. Now just imagine a situation wherein in cities such as Mumbai, the residents there have to park their vehicles on the road and have to pay for that, this is happened because of improper infrastructure. While we are paying so much for electricity investing in solar/hydrogen/wind farms can reduce the price or if price is not reduced the profits may rise because of investment in green energy and getting the energy at a cheaper price.
I am of the firm belief that for every developing country, investment in infrastructure would boost economic growth and drive demand upwards for consumption. We have seen that even government is pushing for infrastructure projects and from the reports I have read, Mckinsey says that every $10 million investment in green energy would generate 77 jobs as compared to investment made in fossil fuel which would generate approximately 25 jobs. Also in another report I read showcased that investing in green energy now would generate at-least 400% returns within next 20 years.
I am also of the opinion that we must look at climate change seriously and think of it as an investment for future.
Lets take example of a restaurant, if it follows the norms of physical distancing it will be able to serve very less patrons as is used to serve and already falling demand has given it much damage making it difficult to revive properly till the vaccine is found.
This is the case with almost every retail business wherein the demand has fallen and there has been a change in consumer behaviour towards purchasing things, but in a country like India will it happen the same way as it happened across the globe or it will be a different scenario altogether because as Indians are not taking covid seriously and are returning to the jobs. While many are wearing masks only because there is a penalty on it, such scenarios are happening, only because India has a majority of population with middle income class and lower than that and all of them need money to feed themselves for that day.
Global Oil Demand
The pandemic has shown that oil is not the most important thing and have made it just like any other commodity, while companies are experimenting with work from home culture and accepting it, it would mean that there wont be similar demand for oil consumption as the world is changing according to the times and the governments have realised that investing in climate change is more necessary. So burning oil would definitely mean a permanent reduction in emission of green house gases to a certain level and also easing the way to meet the goals of Paris climate change agreement.
Paris Climate change agreement
The goal is to hold the rise in temperatures to below 2 degrees. This is the main goal of Paris Climate change agreement and economies have realised it. Even countries such as Russia now understands that it must adapt to green energy and make investments in climate change.
Investment in Climate change
If we talk about investment in climate change country such as Russia is facing problem in by not adapting to the changing global scenario. The economy of the world's biggest energy exporter is heading for its deepest slump in 10 years due to the fallout of corona virus so if Russia doesn't adapt, its budget receipts will decline drastically and the growth may be limited to 0.8% per year. The forecasters expect that the recession could accelerate the decline in global fossil fuel demand on which it has been banking on since many decades.
Europe has given out the world's most ambitious climate change package to earmark tens of billions of euros for hydrogen energy. The goal of net zero emissions by 2050 implies of full decarbonisation for the future of the economy and it's residents. Various countries such as France have also provided a fat stimulus of 8 billion Euros for the automobile sector to boost production of electric cars by 1 million cars per year. It is also estimated that in Europe it is going to create 850000 jobs because of investment in green energy.
Here the catch is the cost, most of the hydrogen used as fuel is derived by splitting it from molecule of natural gas but the countries are expecting the cost to reduce drastically because in some countries in the world it is still very costly to use green energy rather than using oil or other fossil fuels to generate power.
Opportunity in India
While I talked about different countries, let me talk about India. India has invested almost $57 billion dollars from 2014-2019 in green energy and have created jobs directly or indirectly. But as we are looking for future we must also look at the infrastructure requirements and challenges that are there. While investments are done to create infrastructure it is the best time now as even if we wish to have electric cars in India, we would be requiring charging stations for it. Now just imagine a situation wherein in cities such as Mumbai, the residents there have to park their vehicles on the road and have to pay for that, this is happened because of improper infrastructure. While we are paying so much for electricity investing in solar/hydrogen/wind farms can reduce the price or if price is not reduced the profits may rise because of investment in green energy and getting the energy at a cheaper price.
I am of the firm belief that for every developing country, investment in infrastructure would boost economic growth and drive demand upwards for consumption. We have seen that even government is pushing for infrastructure projects and from the reports I have read, Mckinsey says that every $10 million investment in green energy would generate 77 jobs as compared to investment made in fossil fuel which would generate approximately 25 jobs. Also in another report I read showcased that investing in green energy now would generate at-least 400% returns within next 20 years.
I am also of the opinion that we must look at climate change seriously and think of it as an investment for future.
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