Corporates adopting cleantech, motivated by profitability

Corporates are adopting cleantech products and technologies largely motivated by the need to reduce cost and increase profitability and not because of environmental concerns, says a survey.

According to Grant Thornton International Business Report (IBR), the main drivers in the demand for cleantech products are increasingly commercial and is no longer about just being "green".

Over half of those who choose cleantech options do so to reduce their costs (52 per cent); with 45 per cent making the choice as a way to increase profitability, the survey said.

Though CSR requirements and environmental concerns remain important factors for corporates, they are not the main reason for adoption of cleantech products.

The survey further noted that 64 per cent of cleantech businesses expect revenue to increase this year - up from 54 per cent last year and the same percentage (64 per cent) expect higher profitability this year compared to last year (42 per cent).

At a time when key commodity prices are on the rise cleantech is starting to look like a real alternative source of energy and a means of reducing consumption of expensive resources, Grant Thornton said.

"After initial stirrings in 2005 and 2006 from research institutions, academia and policy makers, cleantech sectors in India took off in 2010," Grant Thornton India Associate Director Vivek Vikram Singh said.

Large industrial firms - Reliance, Tata, Punj Lloyd, Moser Baer, Thermax - are all focusing on entering the Indian cleantech sector, Vivek said, adding that regardless of the nature of the business conversation, it eventually turns to cleantech.

However, the proposed clean energy cess or coal tax that would be applied on imported and domestic coal could dramatically affect the Indian market.

"For every ton of coal that one uses, you will have to pay a dollar to the government. And in a country like India, where 70 per cent of the total energy produced is from coal, that would mean about USD 600 million every year, which the government plans to reinvest into the Cleantech sector through a Clean Technology Fund." Vivek said.

There also could be a requirement that 5 per cent of all new power generation be mandatorily from renewable energy sources, he added.