ECONOMY OF TOMORROW India and the global Green Energy Transformation Contact: Marc Saxer,

With labour intensive industries moving out if China… … India hopes to attract manufacturing investment to create millions of jobs Contact:

However, there is a second trend in global investment flows… … manufacturing is moving back to the old industrial centers Contact: North to South 2 trillion USD from South to North 1 trillion USD since July 2014

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

Manufacturing cost in emerging countries reach the level of the United States… … undermining their comparative advantage. Contact:

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

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

In the old industrial centers, the cost of energy starts to surpass the cost of labour … … as the biggest cost factor in manufacturing. Contact:

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

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

MARKET While in the short run, the energy transformation drives up energy cost… … in the long run, higher energy efficiency and lower cost for solar energy will significantly reduce the cost of energy Contact: Source: Fraunhofer ISE Historical price development of photovoltaic modules

GEOPOLITICS Renewables are a way to improve energy security… … by reducing dependency on geopolitical hotspots Contact:

LEGISLATION European governments have started to legislate the exit from the carbon economy… … calling into question trillions of subsidies for fossil fuels. Contact: National Targets for Energy from Renewables, as codified in national energy laws: Germany 2025: 45 % 2035: 55-60% Sweden % 2050 – 100% Finland 2020 – 38% Italy 2020 – 17%

CAPITAL The Bank of England warned institutional investors against a USD 28 trillion “carbon bubble”… … if resources in the books of fossil assets cannot be produced due to climate change legislation. Contact: 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.

If India wants to win the race for development... … it must not miss the bus of green growth Contact: 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?