COP26: can billionaire fossil-fuel tycoons Mukesh Ambani and Gautam Adani bring the Midas touch to India's net-zero ambitions?

India's renewables sector looks set to become a battleground between the fossil-fuel tycoons Mukesh Ambani and Gautam Adani, who are going head-to-head in an ambitious pivot to green energy that aligns with Prime Minister Narendra Modi's aggressive climate targets.

For six years, Adani, Asia's second-richest person who heads coal-to-ports giant Adani Enterprises, was the only powerhouse player in India's renewables space. But now Ambani, Asia's wealthiest magnate who leads oil-to-retail juggernaut Reliance Industries, is making a determined push into clean energy with his firm Reliance New Energy.

Reliance has been engaged in a frenzy of deal-making ever since Ambani announced a US$10-billion, three-year investment in June to build an end-to-end renewable energy ecosystem through solar, batteries and hydrogen.

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For Ambani, whose Reliance Industries gets 60 per cent of its revenues from petroleum products, the move to renewables is inevitable given the doomsday climate writing on the wall. "The world is entering a new energy era," he told shareholders. "The age of fossil fuels ... cannot continue much longer. The huge quantities of carbon emitted into the environment have endangered life on Earth."

Underscoring the reputed rivalry between the low-profile billionaires, who both come from Modi's western home state of Gujarat, Adani quickly upped his game after Ambani unveiled his plans. Adani, who reinvented himself as a "green-and-clean" energy tsar after his ports-and-power assets looked to be struggling, said he would invest US$20 billion over 10 years in renewables and vowed to be the world's biggest clean-energy producer by 2030.

"Our actions clearly indicate we're putting our money where our mouth is: over 75 per cent of our planned [capital expenditure] until 2025 will be in green technologies," said Adani, who often hosted Modi on his private plane before he became prime minister.

Adani said the US$20 billion would go on producing electrolysers to make green hydrogen, backward integration to secure solar-and-wind generation supply chains and AI-based industrial cloud platforms. In total, the conglomerate would invest US$50-US$70 billion across its energy value chain over a decade, he said. It also wants to tap into booming demand for data centres and run them on clean power.

Ambani, while committing less money, is branching out widely, setting up a "giga-complex" in Jamnagar in Gujarat, home to his oil refinery, the world's largest. He is establishing one plant for solar modules to create 100 gigawatts of solar energy by 2030, representing a third of India's projected solar market; another to make batteries to store electricity; a third for fuel cells; and a fourth for building hydrogen electrolysers.

Reliance has also been on an acquisitions spree. Last month, it bought Norway-based solar panel-maker REC Solar Holdings for US$771 million from China National Bluestar Group. Innovation-driven REC has 446 patents. Then, it signed a pact to acquire 40 per cent of Sterling & Wilson, an Indian solar-engineering firm valued at US$372 million. It also plans to invest US$29 million in Germany's NexWafe and use its technology to build large-scale photovoltaic solar-wafer plants in India and it is tying up with a Danish company to make hydrogen electrolysers in India.

"The manufacturing aspect of Ambani's solar investments is particularly important" as India "right now is almost entirely [dependent] on Chinese suppliers," said Alok Brara, editor of infrastructure magazine PowerLine. "The Ambanis are well used to doing all sorts of large-scale plants. They'll also be going into green hydrogen. These are significant steps."

For his part, Adani said Adani Green Energy, already the world's largest solar generator, would triple its solar power generation capacity over the next four years. "This is a rate of growth currently unmatched by any other company anywhere on the planet. Our renewables portfolio has reached the initial target of 25 gigawatts a full four years ahead of schedule," he said. That achievement is thanks to Adani's purchase last month of Japanese multinational Softbank's Indian solar unit for US$3.5 billion, one of the biggest renewables acquisitions globally.

Many hundreds of billions of dollars more in investments will be needed to meet the 2070 net-zero carbon emission target set by Modi at Glasgow's COP26 climate summit. But the financial commitments by the billionaires, known for their Midas touch, have given a fillip to India's renewables sector by sending a clear message to investors locally and globally that they're betting big on green energy and expect a payback.

Investors see that Ambani, "a businessman, who has a lot of capital, considers renewables to be the best way forward. That gives a very good signal about the business sustainability of renewables ... it's become mainstream," said Samrat Sengupta, who heads the renewable energy programme at New Delhi's Centre for Science and Environment, a think-tank.

That signal, in fact, is crucial if India is to attract the private investment required to meet its climate targets. India's energy demands will triple over the next three decades as its economy grows and the country will need a staggering US$1.4 trillion over the next 20 years to get on a sustainable energy path, according to International Energy Association calculations.

Modi told the Glasgow summit on November 2 that rich countries should provide as much as US$1 trillion in climate finance.

On November 10, Indian officials clarified their demands. They want US$1 trillion in funds just for India by 2030 - 10 times more than the unmet US$100 billion a year for all poor countries sought under previous deals. Over a decade, that would mean advanced economies have to give India the same amount of funds they have promised for all poor countries.

India was asking for such a large sum because it was also taking into account loss and damage, Environment Secretary Rameshwar Prasad Gupta said, referring to what poor countries see as a debt owed by nations who are responsible for the bulk of greenhouse gases accumulated in the atmosphere. Rich countries' current US$100 billion a year target is only meant to fund decarbonisation measures and infrastructure that helps protect against more extreme weather events.

India also pushed back on proposed language in the final Glasgow agreement that countries would "accelerate the phasing-out of coal and subsidies for fossil fuels". Gupta said the nation would only move away from the dirtiest fossil fuel if it received the financial support it was asking for.

US climate envoy John Kerry said after a meeting with the Indian delegation in Glasgow that he "wouldn't promise" US$1 trillion for India, and still needed to look at the details. In the meeting, Kerry committed Washington to joining the International Solar Alliance which is headquartered in the Indian city of Gurugram.

Given broken promises by the developed world to help poorer nations mitigate further temperature rises, "we can't say anything will be given as charity. It will always be a business transaction," Samrat said.

Adani has already shown through Adani Green Energy, established in 2015 and now the conglomerate's most valuable company, that investors have an appetite for renewables. "This sustainable investment route has certainly paid off for our stakeholders," said Adani, whose Adani Enterprises runs the company's ports, special economic zones, power, gas and transmission lines. Since a stock split in January 2020, the value of Adani Green Energy shares have multiplied 6.3 times, "thereby yielding one of the best returns across all stock markets," he said. Adani Green Energy shares were trading at 1,292 rupees (US$17.36) on Friday.

Until their clean energy forays, the two billionaires' activities didn't overlap in any major way. Some analysts reckon Adani, worth US$74.8 billion according to Forbes, enjoys a first-mover advantage that will help him compete against Ambani's New Energy vertical.

But while Ambani is late to renewables, when he decides on a strategy, he is known for going all-out to achieve it, such as with his 4G telecoms firm he launched in 2016. Ambani, whose fortune Forbes pegs at US$93 billion, ruthlessly built scale, undercutting rivals on prices. Reliance Jio has won 450 million subscribers and bankrupted competitors to become India's largest mobile firm. Brokerage Jeffries said it saw Reliance Industries "emerging as India's most credible RE [renewable energy] player".

Ambani calls his clean energy push his "most challenging" mission. If Reliance aggressively ramps up its renewables play - and it has room to do it with a debt-free balance sheet of US$183 billion - other potential entrants might hesitate.

Some observers worry too that the low-profile billionaires, whose conglomerates span vast tracts of India's economy and who are skilled at navigating the country's tricky political and commercial landscape, might carve up the green energy market for themselves, resulting in a duopoly. "There should be sufficient competition in the market so it doesn't consolidate ... We need other players to jump in for market efficiency and cost optimisation," Samrat said.

India's greenhouse-gas emissions will peak only after the 2035-2040 period, experts say. (India's 2070 net-zero target is a decade later than China's and 20 years beyond conference organisers' 2050 goal, seen as the climate-change tipping point). India with its 1.4 billion people, nearly a fifth of the global population, is already the third-biggest greenhouse-gas contributor after China and the United States. Coal remains the king of India's energy mix, supplying 72 per cent of electricity.

Modi at the Glasgow summit pledged India would hike its renewable energy capacity to 500 Gigawatts by 2030 and satisfy 50 per cent of its power needs by then from non-fossil fuel sources. It was a big promise as renewables right now only have a 12 per cent share of the energy mix. Alarmingly, making the goal even more challenging, by 2030, India will be guzzling almost twice the electricity annually it was consuming at the start of the decade as more of the country's poor clamber out of poverty and into the middle class.

Additional reporting by Bloomberg

This article originally appeared on the South China Morning Post (SCMP).

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