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Economy of Tomorrow: Challenges and Trends in the Global Green Energy Transformation

Explore the shifting dynamics of global investment flows, the impact of digital automation on labor-intensive industries, and the crucial role of energy costs in the future economy. Discover how the green energy revolution is reshaping markets, geopolitics, and legislation, while presenting both opportunities and challenges for emerging economies like India. Contact marc.saxer@fesindia.org for insights on navigating this transformative landscape.

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Economy of Tomorrow: Challenges and Trends in the Global Green Energy Transformation

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  1. ECONOMY OF TOMORROW India and the global Green Energy Transformation Contact: Marc Saxer, marc.saxer@fesindia.org

  2. With labour intensive industries moving out if China… Contact: marc.saxer@fesindia.org … India hopes to attract manufacturing investment to create millions of jobs

  3. 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: marc.saxer@fesindia.org

  4. Digital automation reduces labor cost, making old industrial centers competitive again… … while creating less jobs than hoped for in emerging economies. Contact: marc.saxer@fesindia.org

  5. Manufacturing cost in emerging countries reach the level of the United States… … undermining their comparative advantage. Contact: marc.saxer@fesindia.org

  6. The window for export driven industrialization is closing… ECONOMY OF TOMORROW Shrinking manufacturing cost undercut competitive advantage Development • Higher labor productivity creates less employment …turning development into a gigantic race against time. Contact: marc.saxer@fesindia.org

  7. If labour cost advantages are levelled, other factors become more important… • Long transport distances • Supply chains • Rule of Law • Political Stability • Skilled workforce • Quality Contact: marc.saxer@fesindia.org …not at least the cost of ENERGY.

  8. In the old industrial centers, the cost of energy starts to surpass the cost of labour … Contact: marc.saxer@fesindia.org … as the biggest cost factor in manufacturing.

  9. The energy transformation is driven by interests beyond climate change… Industry: Competitiveness Capital: Carbon Bubble Civil Society: Climate Change Security Sector: Geopolitical Risk Contact: marc.saxer@fesindia.org … but is a strategic project to restore the competitiveness of the old industrial centers

  10. TECHNOLOGY The green energy revolution is made possible by technological breakthroughs… Contact: marc.saxer@fesindia.org … reducing the cost of solar power as well as new solutions for storage and distribution

  11. MARKET While in the short run, the energy transformation drives up energy cost… Historical pricedevelopment of photovoltaicmodules Contact: marc.saxer@fesindia.org Source: Fraunhofer ISE … in the long run, higher energy efficiency and lower cost for solar energy will significantly reduce the cost of energy

  12. GEOPOLITICS Renewables are a way to improve energy security… Contact: marc.saxer@fesindia.org … by reducing dependency on geopolitical hotspots

  13. LEGISLATION European governments have started to legislate the exit from the carbon economy… National Targets forEnergyfromRenewables, ascodified in national energylaws: Germany 2025: 45 % 2035: 55-60% Sweden 2020 - 50% 2050 – 100% Finland 2020 – 38% Italy 2020 – 17% Contact: marc.saxer@fesindia.org … calling into question trillions of subsidies for fossil fuels.

  14. 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…. …. „Peak Oil“ may have already happened in financial terms. Contact: marc.saxer@fesindia.org … if resources in the books of fossil assets cannot be produced due to climate change legislation.

  15. 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. Will India become a world leader in renewable energy (PM Modi, February 2015)…. … or will the biggest infrastructure build-up in history lead into a technological dead end? Contact: marc.saxer@fesindia.org … it must not miss the bus of green growth

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