R&D, such as in clean energy, needs stepping up
Given that it was Microsoft co-founder and philanthropist Bill Gates who first pointed out to the absurdity of the US spending $30 billion on medical research annually versus just $5 billion on clean energy, it is not surprising that it was he who pulled together a Breakthrough Energy Coalition Fund to invest in clean-energy research—the fund was announced in Paris as part of the ongoing climate talks. While no figure has been put out on the size of the eventual fund, other members of the coalition include Virgin’s Richard Branson, Facebook’s Mark Zuckerberg, SoftBank’s Masayoshi Son, Alibaba’s Jack Ma and Amazon’s Jeff Bezos—given how India will also be hit badly if global temperatures rise beyond 2°C, fortunately both Ratan Tata and Mukesh Ambani are also part of the initiative.
To put the spending and what it can achieve in perspective, Tesla, which is one of the biggest pioneers in electric cars/batteries, had an R&D budget of $93 million in 2010 and this was scaled up to $465 million in 2014. Though Tesla does not have a solution as yet, Prime MinisterNarendra Modi visited its headquarters when he was in the US only because he was looking for a solution for storing solar power—India has a 175GW plan for renewable energy by 2022, but given how solar/wind are not reliable sources of energy and the time-mismatch between demand and supply, a battery solution is vital to fully utilise this potential; serious work also needs to be done to increase the energy-generation efficiency of solar power plants which, today, remains a fraction of coal-fired ones. The lack of research on how to make low-cost clean-coal technologies is also a big problem area for countries like India that will remain dependent upon coal for decades. Similarly, given the havoc global warming—both the extreme heat as well as flooding—will wreak on Indian agricultural produce, it is critical to step up research in genetically-modified (GM) and other seeds to include heat- and flood-resistant varieties, even those that can work in very saline conditions of the type India has in major production areas like Punjab due to excessive irrigation. Monsanto, the leader in the GM business, has an annual R&D budget of $1.7 billion, which is roughly double that of India’s premier agriculture research body ICAR—and of this budget, just around 5% is allocated for GM. The number of such areas of climate-change research can be multiplied manifold, but the short point is that too few of India’s rich are investing enough money or time in finding innovative solutions that can be scaled up to what the country needs.
While India’s rich will hopefully take their cue from the likes of Bill Gates who are spending billions on trying to solve the world’s problems—in the case of providing the internet to the under-served, companies like Facebook and Google are not spending billions, but have put some of their best brains at work to find solutions—the government too needs to do its bit on the policy front. Chief economic advisor Arvind Subramanian gave a nice ‘carbon-tax’ spin to finance ministerArun Jaitley’s tax on oil to get more revenues, but the fact is that huge subsidies such as on kerosene—LPG subsidies could go up once oil prices rise—distort usage patterns. Free or vastly-subsidised electricity and water to farmers and households has encouraged excessive use of both resources, and despite gas being a cleaner fuel, not allowing free-market pricing discourages exploration. While greater investments are one part of any development story, the right price incentives are critical.