Is India’s clean energy transition happening fast enough?

Tue, 05/04/2022 - 16:18
January - March 2022

In the battle against climate change, India's pledge at the 26th Conference of Parties (COP26), mainly revolved around phasing down fossil fuels and embracing renewable energy. The five climate-related ambitious goals that were set by India in stipulation to the 2015, Paris agreement, which is also coined “the Panchamrita” basically are; 

  • To become carbon neutral and achieve net-zero emissions by 2070
  • By 2030, 50% of the country’s energy requirements would be met using renewable energy sources 
  • To reduce total projected carbon emissions by one billion tonnes by 2030
  • To reduce carbon intensity by 45% by 2030 
  • To raise the non-fossil fuel-based energy capacity of India to 500 GW by 2030.

Where does India stand at present:

India is now in  the 4th position worldwide for overall installed renewable energy capacity. Currently, 26.53% of the total installed generation capacity comes from the renewable energy sector. Just in the last 8 years, our solar capacity has increased from around 2.6 GW to more than 46 GW. To date the renewable energy installed capacity in India is 175 GW, making it the world's largest renewable energy expansion programme. India was ranked fourth in wind power, and fifth in solar power, as of 2020. India has made a headstart in attaining the seventh sustainable development goal (SDG 7) which is one of the seventeen major goals established by the United Nations General Assembly in 2015. SDG 7 includes ensuring access to affordable, reliable, sustainable and modern energy for all.

According to the report “ Mission 2070: A Green New Deal for a Net-Zero India”  by the World Economic Forum, India’s transition to a net-zero economy could create over 50 million jobs and contribute more than $1 trillion in economic impact by 2030 and around $15 trillion by 2070. All these are promising signs for India. India could emerge to be a global leader in the clean energy transition scenario. However swift and concrete efforts are required in the actual execution and implementation phase for the net-zero target set to come to fruition.

Hurdles that could hinder India's clean energy transition: 

A study by the International Energy Agency (2021) showed that by 2040, the demand for coal will need to be halved. But going by the current trend, almost none of the world's largest polluters have enacted policies compatible with the Paris Agreement’s target of limiting global warming to within 2 degrees Celsius, threshold past which spells doom and is projected to cause more severe, frequent and unpredictable climate calamities. 

Moreover, as the global markets recover from the pandemic, there is a rapid surge in power demand. Despite all the capacity additions in the renewable energy sector, the power generated by these sources will still not be enough to meet the increased demand. According to Matthew Boyle, Manager, S&P Global Platts, the global supply of renewables will grow by 35 gigawatts from 2021 to 2022, but global power demand growth will go up by 100 gigawatts over the same period. Furthermore, the multi-billion dollar investments in existing and upcoming oil, gas and transport infrastructure are sure to slam the brakes on India's clean energy transition. To add to this, Climate Action Tracker has ranked India’s current decarbonisation policies and actions as “highly insufficient.” All this evidence substantiates the fact that our reliance on fossil fuels is here to stay for at least a couple of decades. 

Another major stumbling block is the poor financial condition of the power distribution companies (discoms) most of which are owned by state governments. Almost all renewable energy is purchased by such discoms, resulting in very long and unsustainable payment cycles. These  companies often fail to honour their contracts by struggling to make payments to energy generators. The deployment and dispatch of renewable energy generation will be at risk if proper steps are not undertaken to reform the distribution sector. As per a report by India’s Central Electricity Authority, it was noted that as of 2020, around 39.4 GW of renewable power projects were delayed mainly due to belated execution or delay in the approval of power purchase agreements (PPA). To add to it, there are persistent challenges in procuring land and securing grid connections because of its environmental impacts like biodiversity loss, water use and land use change emissions. .

Furthermore, the green and inclusive transition requires a tremendous amount of public and private capital. Therefore,  if we are looking for sustainable development,  it is vital that environmental projects are linked to capital markets and investors. Investing in green bonds is one way to do this. However, the large investments needed to build back better are often beyond the means of the national public and private sector alone. To add to the burden, the global north has consistently fallen short of its 100 billion dollar climate finance promise to the developing countries. This mismatch  between the scale of the energy transition envisaged by policymakers and the limited finance available to do so will pose a major challenge for India.

As India embarks its net-zero path and aggressively shifts to clean energy in an attempt to wean off its coal dependency, it is estimated that in the next two decades at least 2.5 crore people who are employed in the fossil fuel and allied sectors will be rendered unemployed. This will cause major social and economic distress.

India's way forward: 

Despite all the hurdles, the saving grace here is India has shown intent and commitment to meet its Nationally Determined Contributions (NDC). Going forward, there needs to be a total economic and industrial restructuring. Reskilling of the workforce, repurposing of abandoned and contaminated mining and industrial lands, revenue substitution, investments and the guarantee of responsible social and environmental practices are required for an inclusive, clean and just transition as highlighted in a report by the International Forum for Environment, Sustainability and Technology.

Apart from this, as India is a developing country, there will continue to be high growth in industrial sectors in the next few decades. Particularly industries like steel and cement are difficult to abate because fossil fuels are required for the production process. In such instances, green hydrogen can be used as a sustainable alternative. This would also require expanding the solar grid capacity. The constraint of land requirements can be tackled by improving the efficiency of solar panels and venturing more into rooftop solar projects. Also, a stronger network of battery storage options to ensure full utilisation of captured solar energy is required. A smooth clean energy transition would only be effectively possible if private research and development (R & D), engineering institutes and the solar panel manufacturing industry are encouraged and incentivised.

How India continues to deliver growth and energy security to its citizens from here on and at the same time ensure the transition to a net-zero and green economy is for us to wait and watch. This will define our collective success in the global fight against climate change. 

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