Identifier
Created
Classification
Origin
09MUMBAI320
2009-08-05 07:38:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Mumbai
Cable title:  

SPECIAL ENVOY STERN HEARS THAT INDIAN INDUSTRY IS READY TO

Tags:  SENV ENRG ECON TSPL TRGY ETRD IN 
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RUEHBI/AMCONSUL MUMBAI 2589
UNCLAS SECTION 01 OF 05 MUMBAI 000320 

SENSITIVE
SIPDIS

STATE FOR OES/PCI, OES/EGC, AND SCA/INS
STATE FOR SECC TODD STERN
DEPT OF ENERGY FOR TCUTLER, CGILLESPIE, MGINZBERG

E.O. 12958: N/A
TAGS: SENV ENRG ECON TSPL TRGY ETRD IN
SUBJECT: SPECIAL ENVOY STERN HEARS THAT INDIAN INDUSTRY IS READY TO
COOPERATE ON CLIMATE CHANGE

MUMBAI 00000320 001.2 OF 005


UNCLAS SECTION 01 OF 05 MUMBAI 000320

SENSITIVE
SIPDIS

STATE FOR OES/PCI, OES/EGC, AND SCA/INS
STATE FOR SECC TODD STERN
DEPT OF ENERGY FOR TCUTLER, CGILLESPIE, MGINZBERG

E.O. 12958: N/A
TAGS: SENV ENRG ECON TSPL TRGY ETRD IN
SUBJECT: SPECIAL ENVOY STERN HEARS THAT INDIAN INDUSTRY IS READY TO
COOPERATE ON CLIMATE CHANGE

MUMBAI 00000320 001.2 OF 005



1. (SBU) Summary. Special Envoy for Climate Change Todd Stern
met with several leading private Indian businessmen to ascertain
their views on mitigating climate change. He found that India's
private sector is actively engaged in clean technology
investment, particularly for renewable energy. In contrast to
the conventional rhetoric of the Indian government, the
corporate sector is looking for pragmatic cooperation with U.S.
industry and government, particularly in regard to accessing the
latest technology and training to use that technology. Indian
business leaders also believe that nuclear energy is a viable
clean technology option to meet India's energy needs and are
waiting for legislation from the Government of India (GoI) that
would allow private section entry into this arena. The Special
Envoy (S/E) came away believing that the Indian private sector
is eager to move forward on clean energy. End Summary.



Indian Business Leaders Certain That Government of India Wants a
Positive Outcome at Copenhagen

--------------




2. (SBU) On July 18, S/E Stern met Jamshyd Godrej, the Chairman
of consumer durables manufacturer Godrej and Boyce, senior
executives of the $60 billion Tata Group, and Mukesh Ambani,
Chairman of Reliance Industries, India's largest privately
sector corporation. Throughout the three meetings, these
business leaders shared their opinions about potential USG
cooperation with the Indian government and the likelihood and
desire for a deal at Copenhagen. Both Jamshyd Godrej, and
senior officials from the $60 billion Tata group of companies
believe that the Indian government ultimately wants a successful
round of negotiations at Copenhagen. They acknowledge that the
GOI's public rhetoric is at times bellicose, but believe that
the GOI is much more willing in private to pursue a deal. Dr.
Jamshed Irani, the Director of the Tata Sons group, pointed out
that in a vibrant democracy like India, it is difficult for

politicians to publicly focus on an issue like climate change
that will not win them votes. As a result, Irani noted, there is
a questionable commitment to renewable energy and climate change
at the ministerial level in India. When asked by S/E Stern, the
businessmen gave very different answers to his question about
who in the GoI is influential in making climate change policy
besides the Prime Minister and his special envoy Shyam Saran.
Godrej singled out Jairam Ramesh, the Minister for the
Environment and Forests as being very important. In contrast,
Mukesh Ambani disagreed and stated that Ramesh was not very
influential. Ambani thought that Finance Minister Pranab
Mukherjee, Power Minister Sushilkumar Shinde, and Oil and
Natural Gas Minister Murli Deora were far more important than
the Environment Minister. Ambani also told Stern that the U.S.
should ask India to open up the country's nuclear industry to
private investment; he believes that nuclear power was a clean,
cost-effective and proven alternative to the high carbon
emitting coal-fired plants that India is currently building.



Godrej Stresses that Indian Government Is Serious About Climate
Change Despite Public Posturing

--------------




3. (SBU) Godrej expanded that, from Copenhagen, the Indian
government wanted two deliverables: access to clean technology
being developed in the West through partnerships with Indian
companies, and access to the funding necessary to utilize that
technology at home. S/E Stern said that the U.S. is ready to
enthusiastically encourage partnerships in technology

MUMBAI 00000320 002.2 OF 005


development, but unwilling to compromise on intellectual
property. S/E Stern also stated that he agreed with U.K. Prime
Minister Gordon Brown's statement that significant financial
assistance should be provided to the developing world, stating
that the U.S. would be a major contributor to this effort.
Godrej pointed out that funding is the bigger deliverable
because it can be used to bring in technology, training, and
resources. Godrej also highlighted that the Indian public
sector was already playing a part in mitigating climate change,
notwithstanding the government of India's (GOI) reluctance to
accept binding emission reductions. For example, the government
put labels on appliance products which informed consumers about
the energy saving potential of purchasing this product; this
successful program was modeled after the U.S. EnergyStar program.



Godrej Emphasizes Need For Clean Technology To Be Economically
Viable

--------------




4. (SBU) Jamshyd Godrej also explained his personal
involvement in the development of the Godrej-CII Green building
in Hyderabad, which at the time of its completion in 2004 was
the most energy efficient building in the world and the first
building in India to receive a platinum rating under the U.S.
Green Building Council's (USGBC) LEED Green Building Rating
System. Godrej highlighted the economic potential of green
buildings; he claimed that such buildings cost five percent more
to build but save 30 to 40 percent in annual operating costs due
to energy savings. Godrej emphasized that he did not believe in
government subsidies for clean technology, and that green
projects must be commercially viable without government
subsidies. However, he agreed that commercializing renewable
energy sources like solar may need government assistance to
kick-start development, but ultimately must stand on their own.
Consumers will only "go green" based on cost, and not because of
altruistic motives, he continued.



Adoption of an Increasing Share of Renewable Energy Sources
Challenging -- But Not Impossible

--------------




5. (SBU) In a meeting with Dr. Jamshed Irani and other senior
Tata executives, Irani emphasized that equitable and inclusive
growth is still a challenge for India despite the country's over
7 percent growth rate over the past five years. Prasad Menon,
the Managing Director of Tata Power, acknowledged that India's
development must take a different -- and more sustainable --
path from the one taken by developed nations. Although India's
per capita energy consumption is extremely low, using
non-renewable energy sources to provide electricity to the 400
million Indians who currently have no access to electricity
would have disastrous consequences both for India and the world,
he continued. Menon stated that sustainability is a core
strategy for Tata Power, which is India's largest private sector
power utility company. Currently, the company draws 17 percent
of its power capacity from hydroelectric and wind power, with a
goal of increasing this to 25 percent by 2017 and 35 percent by

2030. The company is focusing on solar, wind and geo-thermal
energy sources to achieve this goal. However, Menon emphasized
that coal, which due to its abundance in India currently
accounts for over 60 percent of India's energy mix, continues -
and will continue - to be the primary source of fuel for power
generation both for Tata and within India. Unfortunately, he
added, Indian coal tends to be dirtier and less efficient than

MUMBAI 00000320 003.2 OF 005


coal used in the developed world. Development of clean coal
technology is therefore extremely important, he said. Irani
remarked that he sees the potential for Tata to draw perhaps 5-7
percent of their electricity from nuclear power by 2030, and
remarked that current Indian law does not permit privately
operated nuclear facilities. In short, the Tata group believes
that there is the potential for approximately 40 percent of
India's power to be drawn from renewable sources (including
hydroelectricity) or nuclear sources if the GOI pursues an
aggressive renewable energy strategy and provided private
participation in nuclear power generation is allowed. However,
they pointed out that renewable energy alone (excluding
hydroelectricity) can at best account for only 14-20 percent of
India's energy basket.




6. (SBU) Both Irani and Menon had several suggestions for
encouraging the adoption of renewable energy sources within
India. Irani pointed out that India had already leapfrogged
technologies in the telecommunications realm; he noted that
currently 600 million people use mobile phones today even in
small villages; this is a stark contrast to even a decade ago
when only India's urban elite had access to landline phones
operated by government-owned companies. Similarly, a renewable
or clean energy revolution could take place in India if
awareness about the benefits of this technology spread to rural
India's population of over 700 million. Knowledge of the
benefits of this technology would cause rapid adoption, even in
villages, if it were seen to be in the interest of the people,
Irani explained. Menon agreed and added that a large push needs
to be made for the promotion of clean technology and renewable
energy in rural areas of India and to convert rural villages to
green villages. Solar, agri-mass and wind can be packaged as a
total energy solution to the rural population and they can be
encouraged to grow crops which capture carbon dioxide.



Assistance and Partnership with the West is Key to Clean
Technology R&D

--------------




7. (SBU) Menon elaborated on Tata Power's ongoing research and
development in renewable technology. Tata is currently
developing an enhanced geothermal power project in Australia
after acquiring a stake in Australian firm Geodynamics, with the
ultimate aim of using this technology in India for similar
renewable energy projects. Menon believes that this technology
is still many years away from being put into use, both from a
technical and from a cost point of view but has the potential to
generate 5000 MW of power. The company is also working with the
state-owned Oil & Natural Gas Corporation on carbon capture and
sequestration for an enhanced oil recovery project that captures
carbon dioxide from the plant, compresses it and transports it
to depleted oil wells.




8. (SBU) Menon noted that the technology for carbon
gasification and storage, like most other renewable energy
technologies, is expensive. U.S. technological and financial
assistance is needed to commercialize this technology as a
source of income. Similar cooperation on solar technology,
storage, and batteries would also help India develop more
renewable energy sources. Banmali Agrawala, Executive Director
of Tata Power, pointed out the need for technologies to be
suited to Indian conditions; he gave the example of wind
turbines being developed for wind speeds in India rather than
those in the U.S. Menon also suggested the formation of a
consortium of countries working to develop key renewable energy

MUMBAI 00000320 004.2 OF 005


or clean energy technologies. Such a consortium, in Menon's
view, could initially work on the development of three critical
technologies with soft loans provided by international funding
agencies. Soft loans and grants are needed to encourage R&D in
clean energy, he added.




9. (SBU) Menon expressed concern about language in the U.S.
climate change legislation that was recently passed by the House
which appears to be directed towards countries like India who do
not accept binding emission reductions. He suggested that a
Congressional delegation of eight or nine senators that are
particularly opposed to concessions or compromise with India on
emission caps come to India and see what private industry is
already doing to reduce carbon emissions, which he believes
would alleviate some of their concerns. Irani questioned the
ministerial commitment from the GOI towards a concerted effort
regarding climate change; he notably called the Prime Minister's
plan on emissions "bulky" and believes that the private sector
is the better avenue for results on the issue. Irani and Menon
both believe, however, that the GOI wants a deal on climate
change. They both also believe that the GOI is putting on the
table much less than what is actually being done in India at
this point.



Mukesh Ambani Sees Nuclear Power As Part Of The Solution To The
Climate Change Problem

--------------




10. (SBU) In another meeting, Mukesh Ambani of Reliance
Industries Limited echoed Irani's remarks about the mobile phone
technology revolution in India, and further emphasized the role
of the private sector as well as his personal role in this
dramatic shift. Ambani pointed to the emergence of nuclear
energy as a significant source of power in India; S/E Stern
agreed that nuclear is becoming part of the solution to climate
change, causing many opponents of nuclear power to reassess
their views. Ambani told S/E Stern that the key to the
transformation of nuclear energy in India would be for the
Indian Government to allow private companies to participate in
this sector. Ambani gave the example that 75,000 MW of nuclear
power is superior to 75,000 MW of coal, but that India is
currently building 75,000 MW of coal using inexpensive Chinese
technology that is difficult to retrofit. Ambani believes that
nuclear power will be cheaper than coal in the long run due to
low labor costs in India and if the cost of pollution is
factored. (Note: Anil Ambani, the estranged brother of Mukesh
Ambani, owns the company Reliance Power which is building
several of the coal-fired plants that Mukesh Ambani described.
Anil Ambani is also planning to move into the nuclear power
arena. Past experience shows that when the Ambani brothers
compete against each other, the competition is fierce and often
ends with legal action. End Note).




11. (SBU) Ambani predicted that solar energy would also be an
economical solution to climate change. He explained that at a
research facility in Thane, near Mumbai, Reliance was
experimenting on developing a "solar cold chain." In order to
ensure that pharmaceutical products that require refrigeration
reach their rural destinations safely, his engineers are
developing solar powered refrigeration units. Ambani expanded
that the answer to meeting the needs of the hundreds of millions
without electricity is decentralized electrification, which can
best be provided by solar energy. The key he noted was to make
any solution affordable to the masses in India because then it
can be affordable anywhere in the world.

MUMBAI 00000320 005.2 OF 005






12. (SBU) Comment: All interlocutors seemed to recognize the
need for further action on the issue of climate change, and in
fact are already working on a variety of renewable energy
projects. These individuals are all from the highest echelon of
Indian industry, and hold a great deal of influence within
India. They are motivated by the fact that developing renewable
energy is economically expedient and not because of government
support or subsidies. They all recognize that the GoI has taken
a hard line in negotiations on the issues of emission caps and
renewable energy, but insist that India is willing to do more on
renewable energy than they are willing to offer. It may useful
to continue to further engage with Indian industry in the run up
to Copenhagen to ascertain India's true commitment to mitigating
climate change.
FOLMSBEE