OPEN APP
Home / Opinion / Views /  The green forays of Reliance and Adani should be celebrated

The green forays of Reliance and Adani should be celebrated

Adani’s recent tie-up with Korean steel major POSCO for a green steel project worth $5 billion is likely to benefit not just Reliance and Adani shareholders but also India and the world at large. (REUTERS)Premium
Adani’s recent tie-up with Korean steel major POSCO for a green steel project worth $5 billion is likely to benefit not just Reliance and Adani shareholders but also India and the world at large. (REUTERS)

  • Asia’s richest tycoon Mukesh Ambani and his closest competitor in the billionaire sweepstake Gautam Adani are in a race to build the greenest of large businesses

Mirror, mirror on the wall, who is the greenest of them all? Asia’s richest tycoon Mukesh Ambani and his closest competitor in the billionaire sweepstake Gautam Adani are in a race to build the greenest of large businesses. Adani’s recent tie-up with Korean steel major POSCO for a green steel project worth $5 billion is part of this rivalry that is likely to benefit not just Reliance and Adani shareholders but also India and the world at large.

Ambani derives his fortune from refining crude oil into petroleum products and converting some petroleum products into a range of chemicals. Adani has many projects, ranging from ports and grain silos to coal mines and power plants, both coal-fired and solar. Fossil fuels have built the billions of both men. Now, both want to become carbon-negative by creating massive capacities in renewable energy.

Last year, Ambani announced an investment of $10 billion in green hydrogen, solar panels, solar power generation, and electrolyzers to split water into hydrogen and oxygen. He promised to deliver green hydrogen (in the generation of which only renewable power has been used) at $1 per kg by 2030. This, at a time, US president Joe Biden’s infrastructure bill was offering a subsidy of $6 per kg for developing green hydrogen.

Gautam Adani upped the ante, announcing an investment of $20 billion in green projects. Adani later said he would invest $70 billion in going green and that his group would turn carbon neutral by 2025. Earlier this week, Ambani said he would make $76 billion worth of green investment and has asked the Gujarat government to allot him 450,000 acres of land in the arid Kutch plains for his solar energy and green hydrogen projects.

Making steel and cement are two areas that do not lend themselves easily to carbon-less production. That makes the Posco-Adani deal to make green steel especially commendable. Steel uses coal in two ways: to generate heat for reducing iron oxide, the ore, into iron; and to mix carbon into iron, to make it harder and more ductile and to enhance its tensile strength, that is, to make it steel. The latter use of coal, specifically coking coal, cannot be replaced in a hurry, but coal can be replaced as the heat source for reducing the iron oxide with hydrogen.

South Korea’s Posco (short for the Pohang Iron and Steel Co.) is a famous example of a dynamic comparative advantage built by state action. The World Bank had, in the 1960s, ruled steelmaking an activity ill-suited for industrially backward and raw-material-starved Korea. The Korean government went ahead and helped set up Posco in 1973, anyhow. It became one of the world’s most competitive and innovative producers of steel and specialized steel. If Korea had been guided by policy lessons that ignore the possibilities of policy-induced technological progress and changes in comparative advantage, Samsung would not have emerged as a contender for the world’s sophisticated semiconductor crown, and LG would not be the world’s best producer of large OLED screens.

The big difference between Indian and Korean industrial policies was in the degree to which policy forced producers to face international competition. India sheltered domestic producers from foreign competition through quantitative restrictions on imports and high import duties. Korea also resorted to the protection of the domestic market. But, unlike India, Korea withheld support from domestic companies that did not succeed in the export market. Making export success, a condition for state support, ensured that Korean companies strived for global competitiveness. Indian producers were content to feed off the relatively large and sheltered Indian market and never grew the ambition to become world-beaters, at least not until the economic reforms of 1991.

Today, Ambani and Adani want to become world leaders in green technologies and renewable energy. Adani’s tie-up with Posco is part of its strategy to go green and its ambition to become a global champion.

May the Indian billionaires go green, greener and greenest, while the world looks on and turns green, in envy or imitative carbon-reduction or both!

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Close
Recommended For You
×
Edit Profile
Get alerts on WhatsApp
Set Preferences My ReadsFeedbackRedeem a Gift CardLogout