How clean can two Indian billionaires really be?

United Nations climate change conference The Scottish city is being hailed as our last best chance at keeping global warming at 1.5°C below pre-industrial revolution levels. But this is already unrealistic. With temperatures 1.1 degrees higher than in the late 19th century and greenhouse gas emissions still rising, the ambitious target adopted by 196 countries in Paris six years ago is an almost certain lapse.

This will undoubtedly open a new round of finger-pointing between rich and poor countries about how unfair and unfair each side is. For a clue as to how this hopeless impasse will ever be resolved, take your look at Gujarat on India’s northwest coast, where there’s no feeling of defeat, or even those on a low-emission diet There is also religious outcry about being forced to leave. To industrialize

Instead, two of the world’s richest businessmen are furiously writing billion-dollar checks in their race to shape our climate future. Mukesh Ambani And gautam adani Their luck owes to carbon, and yet it is in hydrogen – the simplest known element – ​​where a complex competition between them could open the way to decarbonized economic growth. India’s official position is that net zero emissions by 2050 is an unjustified demand. Nevertheless, the optimism of the Gujarat tycoon offers a way out of the impasse. Betting on one or both to succeed, Prime Minister Narendra Modi may promise to do more for the climate, though the real work for his team will begin only after he returns from Glasgow. That’s when Ambani, 64, and Adani, 59, want supportive policies.

The Ambanis attribute their top spot in Asia’s rich list to Jamnagar in Gujarat, which hosts the world’s largest oil-refining complex. This takes out the extra cash to invest in retail and the Internet. Moving away from fossil fuels, Ambani is setting up four new factories in the district, each for solar panels, batteries, green hydrogen and fuel cells. Their flagship Reliance Industries Ltd. has spent $1.2 billion on acquisitions and partnerships so far, and already Bernstein analysts estimate the new venture to be $36 billion, compared to $30 billion for the decades-old refining business. of will be

Before joining the green-energy race in June, Adani was winning it. For years, the Adani Group mined coal, produced coal-fired power at large plants such as Mundra in Gujarat, and erected coal ships at its vast network of ports. When Adani made news on the environmental issue, it was usually for the wrong reason. But over the past three years, the second-richest Asian has rapidly assembled a 20 gigawatt solar, wind and hybrid power portfolio. Shares of Adani Green Energy Limited have risen 13 times in the past 24 months, fueling Magnet’s ambition to become the world’s largest renewable energy producer by 2030.

It won’t be easy now. The Ambanis are on the move to capture 100 gigawatts of solar manufacturing, or a third of India’s market, by the end of the decade. Reliance has bought Norwegian solar panel maker REC Solar Holdings AS for $771 million. According to brokerage Jefferies, the deal comes with 446 patents and a technology that consumes 75% less power than Chinese rivals. Add to that the 40% purchase of Sterling & Wilson Solar Ltd., a contractor with 3,000 engineering teams that is setting up renewable-energy farms globally, and you know the Ambanis are going to be building REC’s panels in Jamnagar and wherever. The sun shines, they’re going to set. Shiny.

But sunlight will not power large parts of the Indian industrial hinterland. An all-weather, all-purpose alternative to fossil fuels may require harnessing the most abundant nuclear in the universe – not by extracting hydrogen from methane or coal, but by some form of renewable energy such as solar or wind. To break, using. water molecules. At the same time, the two Titans will clash.

With blockbuster commitments, the two billionaires are promising India’s renewed interest in hydrogen, which was articulated in August under the obscure National Hydrogen Mission. However, each practitioner controls only a few pieces of the puzzle.

Ambani wants a large generator of gray hydrogen – the dirty, cheap type used by refineries to power their own operations and often by other industrial firms – to go green. It is looking for partners to bring viable technology to India. It is an expensive undertaking. Currently, the price of green hydrogen ranges from $4 to $6 per kilogram. The cost of production mainly includes capital expenditure on electrolyzers – industrial-scale facilities for breaking down water or other electrolytes into hydrogen molecules – and electricity, which ranges from about 30% to 65%. All told, green hydrogen is two to seven times more expensive than the carbon-intensive gray variety.

For hydrogen to become a real alternative, affordability is key. Fortunately, India is a testing ground for everything cheap. World-beating pricing is at the heart of the smartphone data empire, which Ambani has built from scratch over six years. According to a BloombergNEF analysis, the country could make the cost of green hydrogen competitive with gray by the end of this decade, one of the fastest deadlines globally. In a speech in September, Ambani spoke of a “new green revolution”, saying he was sure India could produce hydrogen at “less than $1 per 1 kg” within a decade. He called it a 1-1-1 target.

Ambani’s efforts towards making electrolysers would serve the Reliance empire internally. But it will need renewable energy to run those electrolysers and make the way for hydrogen green. The power supply is where rival Adani is strong. As one of the world’s biggest solar power players, they will have plenty of green electricity. And when the time comes to move hydrogen, Adani’s dominance of transportation may come into play. Late last year, the Adani Group established a collaboration with Italy’s natural-gas distribution network, Snam SpA.

Adani has also touted green hydrogen as a game-changer and wants to make electrolysers. However, any plan to capture the entire hydrogen supply chain would be misleading. Producing, processing, storing and distributing gas, and then putting it to use, requires diverse expertise. It also requires special handling given its flammability. Rather than trying to do it all – as Adani and Ambani have said they want – it would be more productive to focus on separate parts of the value chain, where each billionaire has an advantage.

After Ambani’s $10 billion investment in the renewable energy sector in June, Adani went ahead, saying he would invest twice that. But as India’s experience with solar shows, producing electricity cheaply is not enough. Even with a strong policy push by the federal government, this near-bankrupt state distribution utilities struggle to honor their long-term power purchase agreements or make payments on time.

What is needed is a hydrogen policy that capitalizes on the two tycoons’ eagerness to invest, but with strong competition to lay the ground for an open network that demands whey. Still, it’s unlikely that two Gujarati entrepreneurs who have so far avoided going face-to-face would be willing to coordinate putting their jigsaw pieces together.

For all its potential uses and cost benefits, how Ambani and Adani duke it out on hydrogen will decide whether a relatively poor, populous country can contribute to saving the planet without surrendering its shot at a better standard of living. . Just a question that Glasgow, like the other 25 climate summits before it, will probably fail to answer.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.