Context

The World Economic Forum (WEP) published its report titled “Mission 2070: A Green New Deal for a Net-Zero India” to provide a roadmap for India’s energy transition.

Background

• At COP 26, India joined the other G20 countries in making a “net-zero” commitment, setting 2070 as its target year.
• For the more foreseeable future, it made some tangible commitments:
  • To bring non-fossil energy capacity of India to 500 GW by 2030,
  • To lower carbon intensity to 45 per cent by 2030
  • To reduce 1 billion tonnes of carbon emissions out of total projected emission by 2030.
  • To fulfil 50 percent of energy requirements using renewables by 2030.
• This is not just significant for the world, but we believe also a sizable economic opportunity for India.

Analysis

What does Net-Zero mean?

• Net zero refers to the balance between the amount of greenhouse gas produced and the amount removed from the atmosphere.
• We reach net zero when the amount we add is no more than the amount taken away.

Why was it important to sign up for net-zero?

• Vulnerability to Climate Change : India’s topography — its 7,000 km-long coastline, the Himalayan glaciers in the north, and its rich forest areas which house natural resources like coal and iron ore — make the country uniquely vulnerable to climate change.
  • Large parts of the population also remain unprotected.
• Impact on GDP : An IMF study suggests that if emissions continue to rise this century, India’s real GDP per capita could fall by 10 per cent by 2100.
• Third largest emitter : India’s traditional position has been that since its per capita energy use is only a third of the global average, and it needs to continue to grow to fight poverty, costly energy reduction targets should not be applied to it.
  • And yet, India is the third-largest emitter in the world and technological development is making it possible to decouple economic and emissions growth by switching to renewables.

Key Highlights of Report by WEF

• Economic Impact : Report highlights that India's transition towards a green economy could contribute about $1 trillion in economic impact by 2030. It will create more than 50 million jobs.
  • The economic impact would increase to $15 trillion by 2070.
• Achieving Climate Change targets : Report notes that India's commitments are a critical foundation for achieving the 1.5-degree Celsius global warming target.
• Reducing impact of Climate change on country : India is on the frontline of climate change. More Indians are exposed to negative effects of climate change and extreme weather events as compared to other nationalities.
• The report highlights why India’s green transformation is an attractive, vital and mandatory component of its overall economic transformation.
• A Green New Deal for India will necessarily implicate the five sectors that contribute to almost all its GHG emissions:
  • Pillar 1 – Energy:
    • The energy sector accounts for ~40% of India’s GHG emissions, with coal being the dominant source of total fossil CO2 emissions.
    • Decarbonizing the energy sector is a foundational priority for India’s energy sector and will require a three-pronged approach: replace fossil fuels with renewables; reduce fossil CO2 emissions from legacy infrastructure through enhanced efficiencies; and remove unavoidable carbon emissions through carbon sequestration.
  • Pillar 2 – Mobility:
    • The mobility sector is heavily reliant on oil and contributes to almost half of India’s oil demand.
    • A green transformation of mobility will need a shift in modal mix from road to rail, as well as a broad-based fuel diversification approach to encourage sustainable fuels (biofuels, CNG, LNG) in the immediate term, electrification in the medium term and hydrogen-based heavy mobility in the long term.
  • Pillar 3 – Industry:
    • Manufacturing is a key contributor to India’s GHG emissions, with the iron and steel, cement, and chemicals and fertilizers sectors having the highest CO2 footprint.
    • A radical decarbonization of these sectors will need demand-management measures such as circular economy acceleration; continued energy-efficiency improvements; electrification of heat; carbon capture, utilization and storage; low-carbon fuels such as biomass and hydrogen; and innovative technologies with non-fossil feedstock.
  • Pillar 4 – Green Buildings, Infrastructure and Cities:
    • India’s top 25 cities contribute more than 15% of its estimated GHG emissions.
    • India’s transition to greener cities, buildings and infrastructure will need a rethink of its approach to urban planning with a focus on transit-oriented urban development and an emphasis on low-carbon buildings and infrastructure construction.
  • Pillar 5 – Agriculture:
    • The agriculture sector is the largest contributor to nitrous oxide (N2O) and methane emissions.
    • To reduce agriculture emissions, India will need a national campaign to empower, educate and enable more than 100 million farmers in adopting precision agriculture, sustainable animal husbandry and green energy.
  • In addition to the five sectoral pillars, India will need four cross-sectoral enablers for its green transition.
    • An accelerated approach to green technology innovation,
    • an overarching framework to catalyse green finance,
    • an integrated approach to carbon, capture, utilization and storage, and
    • a plan for climate adaptation

Challenges India will face in achieving Net-zero targets:

• Poor financial condition of DISCOMs : The finances of power distribution companies need to be improved to fund the grid upgrades necessary for scaling up renewables.
  • This would require a host of reforms, including having a truly independent regulator who ensures market pricing of power tariffs, incentives that speed up smart metering and plug T&D losses, and policies that lead to the privatisation of discoms.
• Coordinated Institutional framework : India needs a coordinated institutional framework that can help overcome multiple levels of complexity like federalism, fiscal constraints and bureaucracy.
  • This is particularly important as the green transition will be a multi-stage process.
• High Energy Investment requirement : The energy investment requirement will be high, rising from about $70-80 billion per year now to $160 billion per year.
  • Alongside this, a similar amount will be needed for transportation and other infrastructure.
  • While the private sector will be required to fund much of this, the government can play a pivotal role, especially in the early days.

Conclusion

Across the world, efforts towards “green new deals” have intensified — policy packages that combine measures towards decarbonization and adaptation with those that would increase livelihoods and create wealth. There is a new expectation that the green transition will not be a drag on economic prosperity, but indeed the engine for an economic transformation that will increase inclusion and growth.