Future-proofing infrastructure is not just a philosophical requirement, it is a pathway to sustainability. Today, even for investors, sustainability is a bigger priority over economic returns, notes Sharat Goyal.
India is all geared up to invest around $2.5 trillion by 2032 to scale up its infrastructure. This includes investment towards increasing non-fossil fuel generation by 300 GW, adding 65,000 km of national highways and expanding airport capacity to support 10x increase in passenger traffic. While our infrastructure building programme trails the developed countries by a few decades, this offers a unique opportunity– we can design such builds to be future-proof given a much better understanding of the impact of climate change and the need for sustainable infrastructure.
The criticality of being future prepared can be underscored by the increasing instances of extreme climate events that the world witnessed in recent years. As per an Oxfam study, the number of climate-related disasters has tripled over the last 30 years. In the Indian context as well, extreme weather events are becoming common place, August 2023 was the hottest August in nearly two decades. The United Nations Environment Programme estimates that adapting to climate change and coping with damages will cost developing countries $140-300 billion annually by 2030. By investing in sustainable solutions now, we can lower these costs significantly. Further, such solutions would also significantly mitigate risks to human life and habitat, a need which cannot be measured by numbers.
Leveraging sustainable alternatives can not only reduce risks, lower or avoid such costs, but also ensure fewer stranded assets and offer new market opportunities. Having recognized this, policy makers have started taking active steps:
Transportation: Use of waste plastic in construction of highways,adoption of EV and hybrid vehicles and use of e-fuels
Airports: 66 Indian airports to run entirely on renewable energy and use of e-fuels
Railways: Target to achieve net zero and 20 per cent water use efficiency by 2030
Energy: Ensure non-fossil fuel generation of at least 40 per cent by 2030
In addition to these laudable initiatives, a holistic approach needs to be adopted wherein we look at the entire value chain through the lens of sustainability. Principles of sustainability to be applied in future-proofing infrastructure are captured in the graphic below:
Future-proofing infrastructure is not merely a philosophical requirement today – investors are also very focused on sustainability in addition to seeking economic returns. As evidence, most global investors have stopped investing in thermal energy and prioritized renewable generation. Further, most global investors regularly publish data from their portfolio companies on their performance against sustainability goals. Given that India’s infrastructure creation is significantly reliant on foreign capital, sustainability becomes a necessity rather than a good-to-have.
India is also looking to make a mark on the global stage and in that quest, has proactively adopted global treaties and made responsible commitments under those treaties. This has provided significant heft to India among investors and allowed Rs.66.7 lakh crore investment in infrastructure between 2017-2023 which as per CRISIL shall more than double to Rs.142.9 lakh crore in the period 2024-2030.
In a nutshell, by adopting sustainability as the underlying principle in infrastructure building, we would achieve the goal of Viksit Bharat while ensuring the well-being of future generations.
About the author: Sharat Goyal is CEO of Impact Infracap
