Guest: Aditya Ramji, Director, India Zero Emission Vehicle (ZEV) Research Centre, at the Institute of Transportation Studies (ITS)
Host: Sandeep Pai
Producer: Tejas Dayananda Sagar
[Podcast intro]
Welcome to Season 3 of The India Energy Hour podcast! The India Energy Hour podcast explores the most pressing hurdles and promising opportunities of India's energy transition through an in-depth discussion on policies, financial markets, social movements and science. The podcast is hosted by energy transition researcher and author Dr. Sandeep Pai and senior energy and climate journalist Shreya Jai. The show is produced by multimedia journalist Tejas Dayananda Sagar and is presented by 101Reporters, a pan-India network of grassroots reporters that produces original stories from Rural India.
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[Guest intro]
India’s energy transition is central to global climate action. But where does India’s energy transition stand? What are the key challenges and opportunities in areas such as energy access, clean transportation and critical minerals.
To understand the intricate dynamics of India's energy transition journey, we interviewed Aditya Ramji, Director of the India Zero Emission Vehicle Research Centre at the Institute of Transportation Studies, University of California, Davis. Aditya is a leading expert in areas of clean transportation, energy systems, and electric mobility.
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[Podcast interview]
Sandeep Pai: Welcome to The India Energy Hour podcast. I have been meaning to have you on the podcast for such a long time. You've been such a leader in this field, looking at the whole issue of clean energy transition. You've worked in policy, you've worked in think tanks, you've worked with companies. So you have this, and now you are an academic or pracademic. So you have this 360-degree view of the sector. Really looking forward to having a great conversation with you and just wanted to welcome you on the podcast.
Aditya Ramji: No, thanks a lot, Sandeep. Much appreciated. I've heard a lot about this and I actually must say I did some binge listening to the podcast after I heard about it earlier this year. So you had some very distinguished guests. So I should consider myself honored to be part of that cohort.
Sandeep Pai: Thank you. So let's get started.
We have this tradition, we have a norm, we spend some time on the journey of the person who joins before diving into the topic. Also because we have lots of students from around the world and like this climate and energy is one of those topics you can come from sociology lens, you can come from like economist, you can be an economist and you can be like a natural science. Everybody has an interesting journey and it's something that really inspires a lot of students and at least gives them a flavor of even though you are studying biology today, you could definitely get into energy space and that kind of stuff.
So why don't you start by telling us like where you are from, what did you study, how did you like, I'm sure you didn't plan that one day I'll work in the energy space. How did you get into this space? And even provide a flavor of what you're working on right now.
Aditya Ramji: No, absolutely. So I was born in Delhi. So I grew up there. My parents were there. So, but originally from Chennai, so, you know, all, as always, all summer vacations were spent there at the grandparents. And, so I did my schooling there. And then I moved out for my undergrad. So I went to boarding school for 11th and 12th, down South, and then I finished my undergrad there in economics. And then I came back to Delhi for my master's, also ended up doing econ. But that was the time when I think, so Delhi University had just started this master's in energy and resource economics. So one of the interests I always had even in my undergrad was development econ. And so, you know, well, I guess by then, you know, almost everybody was working on eradicating poverty. So this idea of using my DevEcon interest, but applying it in a different lens from an energy and resource perspective was appealing. And so I decided to take the plunge. So that was kind of the beginning of, you know, how I got into the energy space.
And then I worked in the think tank ecosystem in Delhi for a few years. I started my career working though on energy access. So that was more about rural electrification, lighting, cooking fuels, all of that. And then I think it was 2014, when I got the opportunity to think about transport, where I was involved in helping then draft what is now the railway energy policy for India. And that was what threw me into the deep end on transport and there was also the time I actually got the first time the opportunity to go to COP with the Ministry of Railways. And, you know, then I learned more about shipping and aviation and all this discussion on EVs and vehicle electrification. It was, it was fairly still evolving back then, right? Just pre-Paris and around that time. And so I think that started becoming a huge element of interest for me.
And then I made a shift to the industry. And that was, I must say, was, was a very steep learning curve for me as well. I joined Mahindra, you know, as an economist and then got very involved in my role as kind of developing and working around the EV strategy. And that kind of then really, really took me into, you know, how you look at EV strategies, how you, you know, look at regulation, how you worry about, you know, things around supply chains. How do you actually make an affordable EV? I mean, that's the biggest question I think we're still struggling with, not just in India, but around the world.
So that's been it right and I'm and then Then anyway, so then all of that happened, but somewhere I think the part academic in me wanted to finish my PhD So I came to the University of California, Davis, where I joined the Institute of Transportation Studies to complete my PhD but in that time I basically help set up, what is now their India Zero Mission Vehicle Research Program, and then their Minerals and Supply Chain Program in 2022. So I've been leading that, but that's my world today.
So now today I work a lot on transport or rather road transport regulation around vehicle regulation, et cetera, and then also look fairly closely at the supply side ecosystem around critical minerals and battery manufacturing and policies around that.
Sandeep Pai: Yeah, and not every PhD student just goes and sets up a new unit within a large public university. So don't just mention that and just escape to the next slide.
Explain to me your struggle in trying to even come up with that idea, moving the huge bureaucracy. I mean, I can say having studied in a similar kind of university in Canada, it's not so easy to just go and set up something. The last thousands of questions, like how did you manage to set up something like that? And I mean, now people are seeing the fruits of your idea and the labor, the reports of your organization or your unit is everywhere, like in different forums.
So like, Was this an idea you came to UC Davis with? Was it, you attended a class and you were inspired or you were like born entrepreneurial? Give me more there.
Aditya Ramji: I don't know if I was born entrepreneurial, but no, I would just say, no, I did not come with any plans of doing this. You know, the plan was very clear, move from India, finish your PhD, and then go back to, you know, work life. And that was it. Right. But when I got here, I should say one of the reasons I picked this program rather was it was among the few interdisciplinary transportation programs that was not an urban planning and transportation degree, which is often the case in many universities here in the US and elsewhere. And so that's what kind of brought me here. And they have a huge industry engagement with the automotive industry as part of a research cycle program, et cetera. When I came here, I actually realized that they, since 2009 had a China program and a China center. And then similarly, they were doing work in Mexico and they were doing work in Australia. And so, you know, I was like, well, there's China, then why not India?
And, you know, but I think one of the things that helped me was I came here with having worked for about 10 years, you know, and so I guess the PhD bug got me a little late in life. So I should say that, you know, I would definitely give credit to all my professional experience in the past that's helped me think through and, you know, I was able to kind of say, okay, you know, there is a gap and there is an opportunity. I, you know, so, so that was kind of the early stages and beginnings and, and of this, and initially it was just supposed to be, you know, a small research, you know, project, which focused on India and did some academic work.
But around that time, I should say, I was on a project at the IEA in 2022. And it was just about a couple of months before the Clean Energy Ministerial that was being hosted by the US back then. And I, so some folks at the IEA kind of then were like, listen, if you're doing all this, like, why don't you use the Clean Energy Ministerial platform to, you know, amplify and maybe this would be an opportunity to bring a much larger partnership in place. So that was then the genesis of, you know, kind of us thinking around, okay, you know, we were in California, California is often seen as a prime example of clean transportation policies. So is there an opportunity to leverage, you know, the position that we are in? So that was the, I guess the launch of the initially the California India, you know, clean transport zero emission vehicle partnership program where we had, you know, agencies like the California Resources Board, the Energy Commission and others from here, as well as the U.S. DOE from the federal government. And then we had, you know, the Bureau of Energy Efficiency from India and others being kind of slowly getting involved in this. And I think that really then catapulted this into a larger India program.
But it comes with its challenges, right? It's not easy in university ecosystems to set up a think tank version of policy research and so it's been an interesting experience. I'll say it's been also a very big learning curve in how to set up a program, what makes a good research and policy program, how do you define impact, you know, we talk about a lot of this, you know, even when I was in the policy world back then, but, you know, when you're really at the center of it and responsible for ensuring that there is, you know, credibility and there is good quality work that's being done, then you really start to understand, you know, the nuances and kind of, you know, think differently about a lot of this. So I would say it's been a fairly enjoyable experience. I don't think I regret this situation.
And yeah, so it's been good. And there are some benefits, right? Having a university ecosystem, there's a lot of research capacity that you can actually leverage on to, you know, build off and kind of add value to the kind of, you know. So often we talk about the need for good evidence-based credible analysis and analytical frameworks for policymaking. I think that's been a definite valuable part of running something like this out of a university ecosystem.
Sandeep Pai: Great. And how's your PhD going? Is that done or are you close?
Aditya Ramji: As far as my advisor is concerned, I am seven weeks away. I think I might be about eight or eight and a half. You know, it's always, you always want, but yes, I'm fairly very close to getting, getting done. So looking forward to that.
Sandeep Pai: Well, really congratulations on both. This is no small feat, balancing grad school requirements with trying to set up something of your own. It's not an easy thing. So congratulations on that. I hope that many people find your story inspiring.
Okay, let's move on to the topic because I have so many questions for you. I mean, you touched upon energy access and you've looked at transportation and critical minerals. Let's go in that order. When you started out, I think energy access was the topic of that time, if I'm not wrong, like 2014. Almost every researcher that I know, it used to be one of those topics, so many billion people without electricity, so many billion people without cooking.
What were some of the key questions you were tackling and how has that sector evolved because I'm sure you're still looking at even, I don't know if you're actively working, but you know what, how the literature has evolved, how the policy has evolved.
So walk me through the journey when you entered to, have we solved the energy access problem in India? Like what's the gap, what's happening?
Aditya Ramji: The early days, you know, back then, I'll say 2010-11, when I got into this was still about, you know, a lot of people not even having basic access to electricity. And, you know, there was obviously far more limited grid infrastructure rollout happening at that time in India. And, you know, there was, and then there was this whole other dimension on cooking fuels where there was, you know, significant dependency on kerosene and firewood for cooking in rural India. So I think, then there was this question of, you know, if one to really start understanding what drives households to choose a certain basket of fuels or, you know, energy choices that they make. And I think during that time, you know, there were some very interesting insights, right?
I mean, you really start understanding, you know, as economists, you can say, oh, you know, if I impute the cost of time that X person puts in, then actually it's cheaper to use, you know, LPG.
But people don't function like that in the real world, right? They are okay to walk, let's say three kilometers to collect firewood because that walking is zero cost in terms of actual cashflow, right? And that is where I think the economist in me had to kind of unlearn and relearn and you really start rethinking about how you frame a lot of this analysis.
But anyway, I think back then it was a lot of focus on household electrification and household energy choices on cooking and lighting. Then, you know, then we slowly evolved, we worked on issues around decentralized energy solutions, there was, you know, microgrids and then I remember when I was at TERI in those days, we ran one of the, I think it was one of the first and largest household surveys as one project where we covered about 6 states and about 8,000 - 9,000 households in rural India and we did a primary survey and that really started to throw a lot of insights into how this dynamics on energy access works and its implications for policy.
And then, you know, I moved to CEEW where again, there was a lot of work and they've been doing, in fact, a lot more now, you know, doing regular surveys and cohorts and things like that. But I think then we moved, I remember one of the most interesting elements for us in evolution on energy access was moving from household electrification to saying, There were definitional constraints. We realized that when India was defining what a village is considered electrified, back then it used to be if all the households or rather it used to be 10% of all households in a village got electricity, then it's considered part of the electrified network. But then we started realizing when we went to the field that, you know, the electrification ecosystem does not connect, let's say the primary health center in the village or this look or the government school in the village.
Now, what's the point of electrifying households, and then we do all these studies where we say, Oh, it improves educational outcomes, et cetera, but you're not connecting some of the most essential basic services that exist in the village. Then it impacts the overall quality of life and whatever else that you're trying to achieve out of this. Right.
And so then we started this interesting program with the Ministry of Health and Family Welfare back then in, I think it was 2016, which is called the Initiative on Solar for Healthcare, where we actually worked with the health ministry to identify, you know, what is a good rooftop off-grid solar design that can help power primary health centers and basic necessary services, right? Like ensuring the labor room functions, ensuring cold chain systems of vaccination function. And so we went about doing that. And then in fact, did a very detailed study for the state of Chhattisgarh back then.
And we covered and we, I think that led to a lot of states then taking up initiative and along with the health ministry, then doing a lot of this. So that for me was a big, you know, pivot in terms of being expanding.
And then I have not been involved, but I know my former colleagues from then are now, you know, have taken it much further into talking about, you know, how do you use energy access for livelihoods? How do you look at, you know, running micro-small enterprises? How do you, you know, to really kind of changing the narrative from basic household electrification to community services to act and then to kind of productive applications of energy access, where you really start creating value out of the units and out of the investment that you're doing on the supply side.
So, and then there is now that I'm in the transport world, it's not any different. You still need energy to run transportation systems and the access framework, you know, principally is the same logic. But when you apply here, you start realizing that there are, you know, a whole different dimension and set of issues that one has to deal with on the transport side as well.
Sandeep Pai: Right. Great. Let's move on to the transportation story. I mean, this is something like I think very few people can have both policy and industry experience. First, let's start with a big picture of what is going on in India's decarbonization of transport story. You can break it down segment by segment.
And if you can also explain what does the industry think? What do you think? Give us some juicy material here. What is the industry thinking? Are they saying, yeah, yeah, we'll decarbonize, but internally they know that we love internal combustion?
So provide us a big picture segment by segment and then let's go into like what are collective stands of different stakeholder categories in this space.
Aditya Ramji: Sure. So, clean transportation, I think, like I said, right, if I take a step back, you know, my, my first intro to this was rail, and I actually think, you know, we often get when we say clean transportation, I think almost everyone defaults to road transport. But, and I'm not saying that it's not. the right way or whatever, but we have to be cognizant of the different modes in firstly, just that, you know, often we do a lot of analysis or inputs that focus on a specific mode, but we forget that sometimes there can be a lot of interplay between modes, et cetera. So I think first and foremost, I think for me on a clean transportation narrative, I think it's worthwhile for us to always remind ourselves of the fact that there is railroad, you know, shipping and aviation.
But, India took a lot of serious commitment to rail decarbonization back in the day. And, you know, that was the story. In fact, India also pushed heavily around the Paris Agreement signing and post that, where we had Mission 41K, which was basically moving towards 100% electrification of rail. And when I had worked on that policy ecosystem back then, we had talked about actually setting up, using railway land to set up large utility scale solar power plants that can feed directly. So in India, railways has its own transmission grid, et cetera. So you could actually, without disrupting the regular electricity ecosystem, you could create isolated infrastructure that fed directly into the railway network. And so we, we actually did a lot of that.
And I remember in 2017, the railways took out a tender for five, you know, first for one gigawatt and then for five. And, and I believe, I've been monitoring it on and off, but I believe that they've, they've kind of well achieved that and kind of moving ahead in that game.
But all of this began with the motivation that the single largest expenditure line item on the railway expense budget was actually energy costs. And that led to this question of what can we do? But if you think about it like that and now apply that to road transport, which is the hot topic today, I think we haven't really yet in road come at it from that perspective.
So let's get the easy part out and this is blame, is blame governance. Right. But, but in the sense that I think in railways, the advantage of having one single nodal ministry that does everything. Is effective, right? Because you can go to one single decision-maker and get the ball rolling and get the job done.
In road transport, it's not that simple, right? In India, we have the Ministry of Road Transport and Highways. We have the Bureau of Energy Efficiency, which is housed under the Ministry of Power. You have the Department of Heavy Industries, which actually regulates the automotive industry. So you have, you know, three or four different players in the ecosystem already directly impacting road transport policy. And then road transport also has its own nuances in terms of if you move from the national to the subnational, I think there is, States have a fair amount of jurisdiction on how they define certain regulations, taxation, all of that and permitting. So I think there are those nuances on road transport that have been a little challenging to navigate, if I may put it that way.
But if you look at the clean transportation, road transport piece in India, we did. I mean, it's not like India hasn't thought this through or hasn't given it due attention. We, I mean, on paper, all the way going back to the old NAPCC days, you know, of 2008-09, whatever, we have always, we had a national electric mobility plan back then that, that had a vision for 2020. Then everything was revised. We had the fame scheme come out in 2015.
I mean, So, on paper, we've had the right policy choices, just that they're not designed to interplay with each other, right? So, for example, more recently, India announced this production-linked incentive program for batteries and for EV components a couple of years ago. Now, India does not have a clear target, right? Does not have a clear vision. Okay. In 2035, you know, we want to be able to have, you know, X percentage of EVs and two wheelers, X percentage in three wheelers, X percentage in, you know, cars, trucks, whatever, because if you don't have that vision, this policy is mean less because don't know what you're gaming for you you're not you then there is nothing that you're working towards you you're not able to plan how you efficiently allocate resources right and regulatory design to get to that level so I think that's been some of the challenge and like any industry right if you talk about industry I mean… A few years ago, I'll say now that I'm out, but like, you know, there is always like, till the time it does push doesn't come to shove, you know, I don't necessarily need to do something. And that's been the general attitude or was rather the general, you know, approach to a lot of this.
And I think, Now, there is a change in the sense that I think the industry has, at least some of the players have, you know, have slightly evolved into acknowledging a lot of the importance of investments in the vehicle electrification space and more so because many of them started becoming global players. I think what has happened is the moment you start playing in the global market, you realize that you are lagging.
And then to build competitiveness, you have to do it because there is no choice whether India has regulation or not, you will lose out in global value chains.
And I think now increasingly, India just, you know, became the third largest automotive manufacturer, light-duty automotive manufacturer this year surpassing Japan.
So if we want to retain that, if we really want to be able to build that global competitiveness that we talk about, I think, you know, that's where I think there has been the change in approach in the industry.
But, you know, whatever said and done, I think we are at that inflection point where India has had enough of a learning curve on policy design and what needs to be done. And, you know, there is no more that, oh, we need to test this out and figure this out. So I think it's now we're at that point where, we know from experience within our country and from global lessons that nothing moves the market as much as good strong regulation.
So leaving it to consumer behavior does not move the needle the fastest way possible. And so regulation will change everybody. It will change industry behavior. It will change consumer behavior. It will force the ecosystem to evolve. So I think we're now at that phase where India should strongly consider a more coordinated regulatory response to clean road transport.
And if that means that we need to effect certain institutional changes in the way we look at governance around this, et cetera, I think it's worth looking into it.
And there is like, even like, for example, South Korea have recently in the last four or five years, you know, reorg their transport ministries to, you know, reflect this nuance. So I think there are good lessons, not just from the Global North, but actually even from our own peers in the developing country world to take a leaf or so out of that book.
Sandeep Pai: One question that I always think about and I think I know some answer but I would love to hear your thoughts on like why is it that in India the three-wheeler segment has like or two-wheeler segment rather has really like taken off but the four wheeler segment and you know and the heavy you know trucking segment has been slow and is it only a price question or is it also a charging question and a range question. If you can double click on that and explain a bit.
Aditya Ramji: Yeah so I look at this differently. So I actually should say in my opinion it's the reverse the two-wheeler market, all the three-wheeler market has not really taken off. And I'll say why.
If you look at the numbers today, let's take three-wheelers, for example, if you look at the Vahan database, which is the Ministry of Road Transport's, you know, public information on vehicle registrations, you will find that technically electric three-wheeler new sales share this year has crossed 50%. But a significant portion of that is actually the e-rickshaws, right? Which is the informal market and mostly lead acid batteries. So they're not really advanced or whatever. And then if you really bring it down to the comparable e-auto world, then you are talking, you know, only about 10 or 12%.
The same problem in electric two-wheelers, right? You had your low-speed electric two-wheelers that have flooded the market and then you have more higher quality models. But think about this, what has led both in the electric three-wheeler and two-wheeler story, what has happened is, we have increased sales, yes, over the last few years, but of people who are not your conventional IC engine buyers of the old-time conventional vehicles, right? They are not the ones in the majority substituting. It's the people on the margins who have just basically taken advantage of the subsidy program, whatever, and bought these additional vehicles.
What you really want, for example, in India, Honda Activa is the brand ambassador for the two-wheeler story. But we don't have an equivalent two-wheeler model in electric to the Activa from a performance perspective, whatever. So I think there are lessons that India needs to learn on how to tweak regulation to actually create good quality models available in the market that really makes a conventional IC engine model buyer actually substitute with an electric alternative.
I think, because I was trying to do some math actually, interestingly just recently, and, you know, to kind of pseudo-account for a multiplier effect of the fame subsidy program, right. Saying that, you know, how many electric vehicles in a particular segment were sold and what share of it was, got was basically sold because of the fame subsidy and what share of it was sold outside of the fame ecosystem. actually the multiplier effect is far stronger for cars as opposed to two-wheelers or three-wheelers just because of the way the ecosystem has been right and I mean not to say that that that ecosystem doesn't need subsidies it does need but we need to find a balance and we need to be able to move. So yeah, I think, we need to be able to now think about you know. Maybe the question is not about whether we need subsidies or not. I still think we do. And many countries still provide them. I think the question is, how do you make the system more efficient and more targeted in achieving the outcomes that you really want to achieve for in terms of the electrification path?
And maybe and this probably also goes to the point of, we don't have a sectoral plan right for transport in India. We don't have a clear, you know, trajectory mapped out saying, okay, if road transport needs to decarbonize or even get to this net zero 2070 that we announced a couple of years ago. What does it mean for the transport sector? We don't have that kind of analysis out there, at least in a big way. And we've done this for energy. I mean, you, you know, this right over the last decade, we've done this so well for energy.
So, I guess. It's just a matter of time and maybe, maybe this is my opportunity to call for action to anyone who's listening to that, that this is a big gap in the transport ecosystem. So maybe to even setting this base. might actually help move the narrative and needle in the right direction.
Sandeep Pai: One last question on transportation and I have to ask this because we're like a week away from COP.
What are one or two or three key transport-related issues that you think might be discussed at COP or around COP? I mean, there's an outer ring and an inner ring at COP. So what do you think should be or would be a few issues that might be at the center of discussions there?
Aditya Ramji: Yeah, I think one, there is definitely, you know, momentum around building off on what was called the breakthrough agenda at COP26 under the UK presidency, where they had, you know, different sectoral breakthrough agendas and road transport being one of them. And there was a push to kind of, you know, get more and more countries to not just, you know, sign up, but actually commit to electrification targets for different segments, et cetera. And, but you know, and so, I think there will be a lot of discussion around how you, how we frame some of this. One big piece that will be a COP this year is of course, the whole relook at, you know, from the global stock take perspective which is going, you know, which will now be a review of all the country NDCs and really trying to understand where, you know, country's action stands.
And I was, in fact, just saying, I think, so if you look at the latest synthesis report from UNFCCC, which has just been released recently in the run-up to COP, it's fairly clear that not all sectoral actions are actually leading to the event the two-degree pathway, I mean, leave aside the 1.5. So I think there needs to be far more concerted like sectoral action and transport needs to start finding a much stronger space.
I think what we did with energy in the last 10 years, and I keep saying this, but I really think that, you know, the way ecosystems within countries and internationally in terms of, you know, countries coming together to kind of have a call to action on renewables and whatever else. If we can do the same for road transport, I think we can achieve. And there is enough learning from there on not committing the same mistakes or whatever, but doing that faster.
The last piece I think on transportation, or maybe the last two pieces, one of course, and then there is this whole finance piece on transport. And I think there are many geographies that will need financial assistance, but not necessarily for running subsidy program, but I think more for technical capacity and technical assistance where they need to be either be able to build capacity around policy design and implementation, or actually around technology development or Indian accessing technology, not every country has the capability, which then brings us to, you know, the more the bigger issue this year that's been on the hot plate, which is, you know, supply chains and vulnerabilities and risks and critical minerals. And, you know, do we have enough? Can we scale up battery manufacturing at the rate at which we want to? But, you know, at the same time, it needs to be affordable, accessible to other countries, you know, and all of that.
So I think those will become the big pieces, not everything may get addressed at COP per se in that sense. But I think there will definitely be a mention of it in some form or the other. And then it will require, of course, some significant follow-ups over the course of the year. And, and, you know, efforts between countries to actually find solutions.
Sandeep Pai: That's a great segue to get into the last and you know the flavor of the season topic which is about transition minerals or critical minerals something that is starting to become your labor of love so you know I wanted to go deeper into that topic and try and understand the different efforts and especially from the lens of what could a country like India do.
So just as a background to the listeners, obviously, we have to move away from fossil fuels and get into the clean energy transition. But as we do that, we need a lot of these, what is called critical minerals. They range from lithium to rare earths. And we need to scale that up because it's not just a requirement in the energy sector. These minerals are required across a range of sectors, including defense, pharma, et cetera. So this has almost become a race between different nations.
So let's start, Aditya, by understanding the big picture. Who controls this today? like who is trying to catch up, where a country like India or like-minded countries like India stand in this race. You can provide some examples and like starting with the big picture that would be great.
Aditya Ramji: Yeah, I mean, like you rightly said, you know, this whole critical mineral space has obviously found center stage with the recognition that, you know, we need a lot of these raw materials for clean energy technologies. I think the fear more so is, so let's, actually take a step back in theory. There is enough in the ground to meet the requirements. But when you start imposing constraints on the timeline within which you need these minerals to be available and the timeline within which, like you rightly said, it's not just generally economic growth and other sectors that will grow for a lot of countries, but you're also now badly ramping up this new clean energy technology space. Then the pressure on the system becomes that much more. And that's really what's led to this whole discussion on securing critical minerals and resources for countries. And obviously, everybody is trying to figure out their own strategy to ensure that they are secure or at least buffered from any risk on supply.
But in terms of – I think if we really break it down, there are about five or six big minerals that we worry about today. There is lithium, of course, nickel, cobalt, manganese, copper, and graphite. And these are important inputs in EV batteries. But also in, for example, graphite is a key input in hydrogen electrolyzers. So, you know, and so differently in energy technologies, copper is a big deal in electricity grids. So, things like that.
The challenge is that the availability of these resources is geographically diverse and constrained in many ways. It's available in certain countries. And it's the other issue is unlike, I mean, just the same concept like oil and gas happened, you know, 40-50 years ago, it's the same story. But kind of inverse in the sense now you have actually global south countries that are resource-rich but many of them, so the other thing is the quality of the resource so the grade of the ore what form it exists all of those are important to understand because that has implications on how easy it is to extract how much it will cost to actually refine it, process it, before you actually you know send it to a cell manufacturing facility, and so there is this value chain, right? And we need to kind of be cognizant about how some of this flows. And I think that's the other added element of constraint.
But if you look at the big players, I think as far as lithium is concerned, you know, right now you have Australia and Chile who are leading from the front in terms of almost all majority of the global production. And then if you look at nickel, there is Indonesia, there's the Philippines, and then there is Russia that was playing a key role with some disruptions in the last year, year and a half, but generally, you know, another resource endowed country. Then you have, you know, on graphite, for example, you have countries in Africa, for example, Mozambique, Madagascar. But one interesting piece, and I think this is, I mean, I guess the elephant in the room is the China element.
But, you know, due credit, they saw through this, they've gone through their foreign policy strategy. And it's not, China itself has, is endowed in minerals within their own country. But then there is also, you know, a lot of investment that Chinese companies have made outside of China to, you know, either on the upstream side, on the actual mineral extraction side, or in setting up refining and processing facilities. And I think actually, if you look at it, you know, there are enough countries.
I mean, at the moment, actually, last week I was at this intergovernmental forum on mining and I really learned that of all the, you know, the usual narrative of, you know, there are only four or five countries that actually have the resources and reserves. There are, there are far more countries. Yes. The quantum of reserves and resources differ, but there are far more countries that actually have, you know some of these critical minerals, but a lot of them struggle with not even knowing, like they don't have good geological surveys. They don't know what they have, you know, they don't know how to go about it. Or many of them are seeing this as a quick opportunity for industrial policy and economic growth and development. So, you know, just willing to auction things and allowing, you know, fairly unregulated investments and whatever else. I think there are those challenges, but effectively even if you were to diversify extraction theoretically and move away from only getting it from China or whatever the midstream, which is the actual processing of these minerals is largely controlled by China or Chinese entities around the world and so you know you're still going to send this important piece of the ecosystem is still going as value-add there before it comes out. So yeah, I think that's been the rather geopolitical theory around, you know, around why we're all trying to create parallel value-add ecosystems.
But I do think that at some point there is, yes, there is merit in supply diversification generally as a risk mitigation strategy, but I'm not sure if it necessarily has to be an anti-country approach, because I don't think we, can create as much of a parallel robust ecosystem in the next 7-8 or 10 years, right? And so then it will start becoming a trade-off of saying, you know, if I don't buy any of this stuff, then I wait for new infrastructure to come online, then you're almost kind of slowing down the transition pace. So we don't want that to happen. So I think, I think that they're eventually the international trade and, finance and climate architecture needs to kind of figure out a nominal solution to some of this.
So yeah, I think that's really some of the key dimensions, but I'll just say one thing that, and like you rightly pointed out initially, barring lithium, which for the most part, I think we all agree among institutions that almost 85-90, or maybe even more percent of demand for lithium over the next, you know, 15-20 years is solely going to come from clean energy or clean energy technologies. But that issue is less is more complex rather in other minerals. So for example, nickel, only about 40 to 60 percent depending on what your scenarios are will actually you know be clean energy technology driven. There's still going to be 40 percent that will come from non-energy sectors like you know infrastructure sectors like steel and whatever else and similarly for copper and whatever else.
So we must remember that many of these countries that are in the global south have not yet reached their economic growth potential in many ways and will grow very rapidly. And you will likely see a lot of competing demand for mineral resources in the same time for some of these other sectors. So these could lead to some very interesting, you know, market dynamics and distortions and price, you know, games, et cetera, that I just think that it's worth thinking about and considering. I mean, we could talk about this for another whole 5 hours, you know just scenario building but but it's there are some interesting dimensions.
Sandeep Pai: Great. Thank you for explaining the big picture, but also the China story in this, but there is a evolving US-EU story here as well, right? Like with all the Inflation Reduction Act subsidies in the US or the, I think it's the Mineral Act in, you know, Raw Material Act or something, I forget the name, in EU, like they're trying to drive the ship you know, back to the OECD or the West from the China story. I mean, if this plays out the way they want, like, I worry if there is a scenario where the developing countries, including countries like India, will be squeezed out in this race.
Because if I compare that, it's a ladder, right? One is actually way ahead. Other is trying to catch up with all the money. And the third is just starting to even think about, like, we've just come up with like a strategy for, oh, we have 30 critical minerals in India. Like, who will mine? Who will put in the money?
So speak to me about, how can countries like India, actually have something meaningful in this race, right? Like, and not just say things or come up with like frameworks and policies that kind of just like, I mean, it looks good on paper, but like, how do you actually compete with China and US in this race, if I could put it bluntly?
Aditya Ramji: Yeah, no, I think the reason why policies like the Inflation Reduction Act and its intended regulations that are leading to a lot of restructuring of supply chains, or the EU response with the Critical Raw Materials Act, or the more recently announced Mineral Security Partnership that this US-led which pretty much includes all of the EU and or at least major economies from the EU, France, Germany and others and then Australia, Canada and a few and UK. You know is a reminder of almost what OPEC was, right, for oil and, and kind of now becoming that for minerals.
But just very simply put the reason why the EU or the US is able to go ahead and disrupt supply chain is because they also have parallel regulations and clear market demand certainty, you know, created saying, Like EU has already passed an order, the fuel economy, light duty has to be zero grams per kilometer by 2034 or 2035. And there is no option for automakers to, you know, dabble with this. It's done. It's a set deal. And so they have to figure out a way to sell more and more EVs in the next 8 years, which means that they have, they're already thinking, okay, if I need to do X volumes in the next 10 years, then I need so much. And so they are engaging with their counterparts in the EU commission and parliament whatever else to really, you know, be able to strategize this thinking, right?
And what that means is now, because you have created this market certainty and you have this supporting supply-side regulation, the ecosystem is responding to it and investing and moving things and restructuring, right?
It's not that India doesn't have this, by the way, the PLI, if you go back and see, you know, our PLI actually predates the US IRA. And we have roughly similar requirements. I mean, in the sense we're not gone as, I guess, stringent as the, as the U S in terms of friendly countries, whatever, but we are still requiring value add. We're still requiring minimum investment in India, all of that stuff. Like the fundamental principle is the same.
The reason why we are not able to dent the supply ecosystem is because, People are like, okay, you have a supply regulation, but I'm not seeing the market certainty part of it, where I should then say, okay, I know that India will demand X million tons of this in the next 10 years. So I can actually go and, you know, take this supply side regulation seriously. I think that is the big difference between what I guess some of the developed countries are, especially the U S and you are able to do right now, and effect as opposed to, developing countries.
I think what is needed now is this is an opportunity for developing countries like India. Of course, India, by the way, is the unique addition to the mineral security partnership at this point, and actually the only developing country in that cohort. So, it will be interesting to see, you know, I don't think everyone has a full view yet on how India actually leverages that. But remember that India itself is not necessarily as mineral endowed as some of the other Global South countries on at least on the clean energy transition side. So, India is still going to be a consumer country to a large extent. To that extent, it makes sense why India is in that ecosystem.
But also remember that what the MSP has done is created this MSP investment network countries in Africa and elsewhere, where they're basically saying, okay, we will bring capital and invest in Mozambique or in Tanzania or wherever and then, you know, get into deals on mineral offtake, all of that.
So it's in a way an international cooperation element but involves nuances around trade and all that makes the whole thing fairly complex. But I think it's a lot of, you know, each country still wanted to figure out its own resource security.
But I think this is where Global South countries probably need to rethink, including India is you, you have resources, you, you are, you don't want to be the supplier of resources and not benefit from the end development of all this clean technology development that's happening around the world. So there has to be a mechanism. But I think for what countries, you know, can easily start thinking about linking supply and demand, like developing countries like India, South Africa, Brazil, all of them can really say, okay, you know, this is what we have as an ambition or vision towards clean energy technology deployment across vehicle electrification renewables in the next 10 years. This is how much we will need for our own needs. And then you really think about how you want to set up your mineral or mining industry and ecosystem. And then it also gives them a lot more strategic leverage in the global play, right? To say, okay, I, you know, this is fair price, or this is how I will do it or engage. And I think, I think that level of thinking,
But we are seeing some interesting things. Like for example, DRC and Zambia have recently created a SEZ, a Special Economic Zone for battery value chains between themselves as an idea to find some scale of economies because both countries, you know, neighboring and have a fair amount of some of these resources. So saying, okay, how do we kind of figure out an opportunity to kind of reduce costs of extraction, kind of help, you know, build out more, a slightly more reformed ecosystem and ensure that there is some value-added attention, etc. So I think that's a good example of regional cooperation already that we can see.
There is no reason why, for example, India and Brazil or India and South Africa or India and Indonesia cannot sign or get into some of these partnerships, right? I mean, the most interesting thing is, On the demand side, you actually have countries like India or Brazil or South Africa as major suppliers of vehicles to these markets who are resource rich. So there is a lot of interdependency that exists between the Global South.
In my mind, provides an actually interesting element of competitive advantage for energy transitions that these countries can look at and secure for themselves as well in the process. And I'm not to say that it has to be restricted to others, but it becomes a much more fair play in the global value chain for developing countries.
Sandeep Pai: Great. So you're essentially saying call for a South-South collaboration on critical minerals. I mean, what should three things, like you did explain, but give me three bullet points on like, could they invest jointly in things? Like, tell me three things that should be on the agenda of a potential South-South collaboration on critical minerals.
Aditya Ramji: Yeah, I think, one, take advantage of each other's, competitive advantage and interdependency, largely because it's built on similar economic principles and equity theory in my mind on how we deal with our social constructs and climate change and climate risk.
The second is, you know, I think there is an element of what I would call fair financial benefits sharing in the energy transition ecosystem that these countries can actually work out. And we can actually see some interesting regional cooperation agreements in my mind. I mean, and, you know, we've done this in general trade. We can do this for clean energy as well. And it doesn't have to be all Global South countries, but you know, you could have something within Latin America. You could have something Africa, South Asia, you could have Africa, India, you could have India within South Asia ecosystem. There can be different layers in which I think this can, this can work out.
And so, yeah, I think this was the South cooperation for me is for me is one of the most unique opportunities to, I think one flip the geopolitical narrative. what it was when we had an oil economy versus what it can be under this new, you know, critical minerals and energy transition story for the Global South.
The other is, you know, really be able to kind of help then all of them build out, not just upstream or downstream, but be able to actually create far more value chain response and play in, in the way they all kind of engage with each other. And, yeah, I mean, for me, I think that's, that's the most, that's the most unique thing.
And I, I think there is then also an opportunity for, there is an inherent opportunity for a lot of scale of economies. You know, you can come up with some common minimum policy frameworks or whatever else, and especially now, which when we're going into this global stock tick and revision of NDCs for the next 5-7 years, I think this could be, you know, this could almost be an interesting play where countries can jointly think about some of the outcomes and, and kind of pre, you know, set their ability to play and achieve a lot of this.
One other last thing I will say is, I do think that the Global South cooperation with this can be, and no one is saying that industrial policy should not be the motivator. I actually think it's fine. It doesn't matter which way, what is the trigger, but industrial policy for energy transitions with this kind of thought process around demand and supply and bringing the whole ecosystem together among countries can actually become the motivation for a lot of countries who are currently hesitant or on the margins of enhanced climate action, to actually see greater value in really, you know, saying, all right, you know, if there isn't a clear industrial policy case and we can actually gain the same level of growth and jobs and all of that, then why not? Right. And then, you know, you can really help pivot some of these countries away from, narratives around fossil fuels and biofuels and all of that.
Sandeep Pai: Fantastic, Aditya. This has been a really great discussion and I'm really grateful for your time.
We're already almost at an hour, so I'm mindful of your time as well. So I really wanted to thank you for being here and sharing your almost 360-degree perspective on a range of topics.
But also a very inspiring story of how you started, you know, a center while doing your graduate school, which is really remarkable. So thank you.
Aditya Ramji: Thanks a lot Sandeep.
It was an absolute pleasure and hopefully, we can keep these conversations flowing!
And it was really, really interesting. Thanks so much again.
Sandeep Pai: Thank you.
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