Tech Transformations: Vivek Agarwal on Economic Growth and Sustainability

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In an exclusive interview with TimesTech, Mr Vivek Agarwal, Global Policy Expert and Country Director at the Tony Blair Institute for Global Change, explores how technology is revolutionizing economic outcomes in developing regions through inclusion, human capital enhancement, and sustainability. Agarwal emphasizes the critical role of policy changes and partnerships in advancing renewable energy and achieving climate goals.

Read the full interview here:

TimesTech: Can you share success stories where technology improved economic outcomes in developing regions?

Mr Vivek: Technology has had an outsized impact on transforming lives and boosting economic outcomes. If we look at this from the lens of developing regions, then there are three core mechanisms through which it had a positive economic impact – inclusion, enhancement, and sustainability.

First, technology is helping include those that were traditionally left out. Consider India’s Aadhar, undeniably the world’s largest and arguably the most sophisticated global ID system, that has brought millions into the formal banking system. When you achieve inclusion at such a scale you allow marginalized individuals and micro-enterprises to benefit from the ease of receiving payments and accessing loans. This empowerment fuels entrepreneurship and economic growth.

Next, technology is helping enhance the quality of human capital – the sine qua non of enduring economic growth. Consider the World Economic Forum’s Medicine from the Sky initiative, which enabled drone delivery of COVID vaccines in Telangana. When coupled with the capabilities of artificial intelligence in imaging diagnostics to personalized medicine, the spectrum of possibilities to improve quality of life are enormous. Gains in human capital ultimately enhance workforce productivity leading to economic progress.

That said, perhaps technology’s most compelling impact is in helping developing regions balance their economic ambitions with environmental responsibilities. Emerging but promising examples of precision farming – which deploys GPS and IoT sensors – have dramatically enhanced crop yield with fewer resources. These smart agriculture technologies have also optimized water usage and reduced chemical inputs – promoting environmental sustainability. This demonstrates technology impact isn’t just in momentarily increasing economic gains but also helping sustain these gains. 

TimesTech: How have digital health systems in government contributed to sustainable and renewable objectives?

Mr Vivek: We are in the nascent stages of the positive implications of digital health systems for a sustainable future. Digital health systems have helped streamline services, reducing the need for physical infrastructure and curtailing energy consumption. The shift towards electronic health records and telemedicine will help decrease carbon footprint traditionally associated with patient transportation and facility operations.

As more advances are made in digital health and more importantly as uptake of digital health increases, we will start seeing non-obvious second and third order effects of digital health technologies on the renewable objectives.

That said, we shouldn’t lose sight of digital health’s own carbon footprint. It is incumbent upon us to critically evaluate these impacts and find ways to mitigate the ecological costs incurred.

TimesTech: What critical policy changes are needed to accelerate renewable energy adoption?

Mr Vivek: Accelerating renewable energy adoption requires policy changes that address 5 I’s – Infrastructure, Innovation, Intent, Investments, and Incentives.

First, Infrastructure. Governments are used to building infrastructure but there is a difference between building a road versus a solar farm. They span from conceptualization to ownership and from development (linear path versus exponential paths like digital equivalents) to operation. Let me just take one aspect of it, which is ownership. The days when public finance was the natural first choice is becoming harder. Even with roads more and more governments are entering public private partnerships and finding ways to leverage their capital. This is like what is happening in the renewables sector. Unlike before when the government used to own an entire thermal power plant, they are starting to use public capital as leverage to usher in private capital. What is different is that there have been several runs when it comes to more traditional, run of the mill infrastructure like roads. So the private sector knows what to expect. With renewables, since the technology is often untested, or markets are nascent, there is a greater need for governments and other partners such as multilateral banks to lean into these partnerships.

Second, Innovation. This extends beyond research and development in renewable technologies that can drive innovation and cost reductions. It is about hyper scaling – i.e. take something from ‘things that work in prototypes’ to ‘things that work at scale in the real world’. Additionally, it is about developing innovative models to finance the net-zero goals. This will also require innovation in policy and exploring traditional tools like low-interest loans to controversial tools like voluntary carbon credits, or even subsidies.

Next, just as we are talking about policy, it is important to also highlight the need for governments to clarify their policy Intent. Which is my third I, i.e. intention. Clarifying Intent will help foster societal support for difficult reforms needed to faster renewable adoption. Further, if there is one thing that the markets love, it is predictability. Governments need to create a predictable policy and regulatory platform – whether it is feed-in-tariffs or offtake agreements – that can then start attracting market players and reduce regulatory delays.

That leads me to my fourth I – Investments. There is a need to look at investments both from the supply and demand side. From the supply side, if we just talk about renewables – construction of solar and wind farms, energy storage facilities, and grid upgrades – are all large and long-term investments. These are not easy to come by, especially in the current environment. On top of that, governments need to come up with innovative ways to deploy their capital – public finance needs to be used as leverage to expand the pie. From the demand side, there is also a need for a robust pipeline of bankable projects that are mature for markets. This is particularly pronounced in developing countries. There is a need to match ideas and solutions in the global south with the capital from global north.

Finally, the fifth I is Incentives. Aligning incentives stakeholders across public, private and social sectors is not a straightforward task. Complex challenges around building externalities into individual stakeholder objective functions remain.

TimesTech: What are effective strategies for fostering partnerships between public, private, and social sectors to drive technological innovation in renewables?

Mr Vivek: Concerted approach between the public, private, and social sectors requires creating an ecosystem that allows each stakeholder to play to their strengths.

For instance, private players’ technical expertise and market-driven approaches allows them to innovate. Governments should look to create incentives like it has done with Production Linked Incentives (PLIs) in the renewables market to support private players to innovate more.

On the other hand, social sectors bring varied perspectives that are crucial to address community needs and inclusive development. Governments should champion multi-stakeholder platforms that facilitate dialogue and joint planning from the very early stages of projects.

Several organizations within the social sector have also pioneered grassroots solutions that often get termed jugaad(flexible and frugal innovations). Private sector and impact investors can play a crucial role by funding these jugaadu solutions into scaled solutions.

TimesTech: How is the global political landscape evolving in response to climate goals and battery technology development?

Mr Vivek: Global political landscape is increasingly prioritizing climate goals, as was visible with the progress made in COP28 last year.

We’ve made extraordinary strides in boosting our ability to harness energy responsibly, affordably, efficiently, and reliably. On responsibility, the world, especially after COP28, is on a definite march towards renewable domination. We have now set ourselves the ambitious goal of tripling renewable energy capacity and doubling energy efficiency by 2030. When it comes to affordability, globally we have achieved cost parity in solar and wind. When it comes to efficiency, we’ve made remarkable progress in improving conversion rates of PVs.

However, one of the last frontiers in realizing the full potential of renewables – is reliability. It is primarily about tackling the intermittent character of the underlying sources of renewable energy. This lack of reliability has resulted in a reliance on non-renewables, peak shaving, and self-consumption optimization. The answer to addressing the last frontier of reliability is very simple – energy storage.

There is a lot that countries can and should do to come together on addressing this last frontier. First, governments can learn from policy examples from other countries. For example, the US Inflation Reduction Act that provides for 30% investment tax credit for standalone storage systems. Second, come together with the spending mix on research. Not just invest in use cases across utility, commercial, and residential scale but also focus on moonshots such as gravitational storage. Third, work towards responsible use of the scarce raw materials needed for batteries. In the absence of alternatives, it is critical to start diversifying supply chains, investing in domestic production wherever possible, and collaborating with other industry players to share trends.

TimesTech: How do political leader office management contribute to effective governance and renewable energy project implementation?

Mr Vivek: The transition to renewable energy, as we navigate it, underscores a daunting complexity. It demands a nuanced, multifaceted policy approach that evolves dynamically to address the sector’s needs. We are racing against time, not merely to avert the existential threat of climate change but to do so within a constricted economic and geopolitical landscape. Success in these times hinges on the caliber of political leadership – leadership that must be clear, decisive, and swift.

The efficacy of any political leader is tied to the robustness of their support system. Behind every decisive leader is an adept team that helps with efficient resourcing, clear communication, and timely decision-making. Such teams are not mere functionaries but powerhouses of governance, endowed with the authority to challenge and refine the decisions of those they serve. This architecture has historically proven its mettle, steering complex and critical projects to fruition.