Climate change is one of the world's biggest challenges. Issues such as rising sea levels, drought and managing green house gas emissions have forced themselves to the top of government agendas. Finding solutions has become a matter of necessity as people and communities suffer the consequences of our planet heating up.
Nowhere is this truer than India. India is a relatively low-carbon economy but primary energy demand is expected to more than double by 2030. India's huge rural population is directly dependent on climate sensitive resources — the forests, agricultural land and grasslands — which are increasingly under threat from that paradox: water shortage and flooding.
The Indian government has undertaken significant steps to try and mitigate these problems by outlining new regulations and developing 'green' business codes. Renewable energy and energy efficient incentives are being actively promoted. Adaptation strategies, which aim to make agriculture more resilient to the impact of climate change, have also been proposed. But, despite these measures and public acknowledgement that climate change is a real and pressing problem for India, policy makers face an uphill battle to find the necessary expertise and resources to address the issues and find workable solutions.
Ultimately, it is too big a challenge for governments alone. Like other global economies, India's path to future growth and prosperity and a low-carbon economy will require the active involvement of business and financial institutions. It is only by harnessing private sector capital and unleashing the power of the markets to boost investment in 'green' technology and pollution-reducing projects that the challenges of climate change can be met.
India has the potential to position itself as a world leader in this drive to leverage the expertise and resources of businesses and private investors. It is already the third largest market in low-carbon and 'green' goods and the sector is expanding rapidly.
Recent estimates indicate that green spending in India could reach $150 billion by 2017 and technological advances will offer exciting solutions that could bring huge opportunities for businesses. India aims to increase its share of grid-connected renewable energy to 10% by 2012. It plans 20GW of solar power generation by 2022. Its 2010-11 Budget includes a new National Clean Energy Fund.
It is reasonable to expect that such measures will be maintained and strengthened in the future. They offer growth potential in many sectors. Companies that manage climate-change risks and exploit these new opportunities will gain a competitive advantage.
Now that clean technology is an investment category in its own right, public financial institutions and banks, private equity and venture capital funds are emerging as significant investors in Indian clean technology companies.
To exploit this potential role for the private sector and enable it to fuel low-carbon growth, a clear and consistent regulatory environment around all aspects of climate change mitigation is required. Investors have a strong appetite to fund clean technology — but only if they can be sure that they are basing investment decisions within a secure regulatory framework.
Companies must know where to look for funding if they are seeking to reduce their carbon emissions or expand in the low-carbon area.
India may have been shielded from much of the global financial crisis, it will not escape the impact of climate change. But if action is taken now, there is reason to be optimistic. Climate change could be one of this century's greatest business opportunities. India could drive forward its economy on the principles of sustainability.