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ECONOMY OF TOMORROW India and the global Green Energy Transformation Contact: Marc Saxer, [email protected] Contact: [email protected] With labour intensive industries moving out if China… … India hopes to attract manufacturing investment to create millions of jobs However, there is a second trend in global investment flows… South to North 1 trillion USD since July 2014 North to South 2 trillion USD from 2009-2014 … manufacturing is moving back to the old industrial centers Contact: [email protected] 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… ECONOMY OF TOMORROW Development …turning development into a gigantic race against time. Contact: [email protected] If labour cost advantages are levelled, other factors become more important… • Long transport distances • Supply chains • Rule of Law • Political Stability • Quality …not at least the cost of ENERGY. Contact: [email protected] • Skilled workforce In the old industrial centers, the cost of energy starts to surpass the cost of labour … Labour Energy & Raw Materials Other … as the biggest cost factor in manufacturing. Contact: [email protected] Germany Manufacturing Cost The energy transformation is driven by interests beyond climate change… Capital: Carbon Bubble Civil Society: Climate Change Security Sector: Geopolitical Risk Contact: [email protected] Industry: Competitiveness … but is a strategic project to restore the competitiveness of the old industrial centers Contact: [email protected] TECHNOLOGY The green energy revolution is made possible by technological breakthroughs… … reducing the cost of solar power as well as new solutions for storage and distribution MARKET While in the short run, the energy transformation drives up energy cost… Source: Fraunhofer ISE … in the long run, higher energy efficiency and lower cost for solar energy will significantly reduce the cost of energy Contact: [email protected] Historical price development of photovoltaic modules Contact: [email protected] GEOPOLITICS Renewables are a way to improve energy security… … by reducing dependency on geopolitical hotspots LEGISLATION European governments have started to legislate the exit from the carbon economy… National Targets for Energy from Renewables, as codified in national energy laws: Germany 2025: 45 % 2035: 55-60% Sweden Finland 2020 – 38% Italy 2020 – 17% … calling into question trillions of subsidies for fossil fuels. Contact: [email protected] 2020 - 50% 2050 – 100% CAPITAL The Bank of England warned institutional investors against a USD 28 trillion “carbon bubble”… 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…. Contact: [email protected] …. „Peak Oil“ may have already happened in financial terms. … if resources in the books of fossil assets cannot be produced due to climate change legislation. If India wants to win the race for development... With the comparative advantage of cheap labour eroding…. ….and energy cost slowly becoming a disadvantage ... … India will find it increasingly difficult to attract manufacturing. … or will the biggest infrastructure build-up in history lead into a technological dead end? … it must not miss the bus of green growth Contact: [email protected] Will India become a world leader in renewable energy (PM Modi, February 2015)….