India’s Decade of Decarbonisation

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The decade to come will be pivotal for India achieving its ambitions on climate leadership with the world battling climate change and hotly pursuing sustainability ambitions, PM Modi made a momentous announcement at the 26th UN Climate Change Conference (COP26) in Glasgow. India, the world’s third-largest emitter despite low per-capita emissions, made a commitment to reach net-zero emissions by 2070. This is a huge fillip to global ambitions to tackle climate change, perhaps even more so in this decade where we strive to halve global emissions by 2030 to limit global warming to 1.5 °C.

However, with India projected to enjoy robust growth over the course of the next decade and more, it is essential to nip emissions issues in the bud through a concerted effort that plugs gaps across sectors of the Indian economy. The six sectors that are the biggest contributors to greenhouse gas (GHG) emissions (constituting approx. 70% of India’s overall emissions) are power, steel, transportation, cement, aviation and agriculture. To change course would involve some short-term pain, but this decarbonisation roadmap will be of benefit for all, laying out a blueprint for building the future and setting up success for decades to come.

The Pathway to Decarbonisation

As evidenced by the UNFCCC climate action tracker and pointed out in a McKinsey report, India has reduced its emissions intensity of GDP by 1.3 percent per annum over the last decade, somewhat decoupling emissions from GDP growth. But even if its current GDP emission intensity reduction were to continue at the same rate, India’s annual emissions would still rise to 11.8 GtCO2 e by 2070 (from 2.9 GtCO2 e in 2019), making current efforts insufficiently impactful.

Instead, the aforementioned McKinsey report takes into account two scenarios. In one, a Line-of-Sight (LoS) scenario, outcomes were modeled on current (and envisioned) policies as well as foreseeable technology adoption. A second view, more radical, foresees an Accelerated scenario with far-reaching polices like carbon pricing and accelerated technology adoption, including technologies like carbon capture, utilisation, and storage (CCUS).

The LoS pathway would reduce annual emissions to 1.9 GtCO2 e by 2070, leading to a 90% reduction in economic emissions intensity versus 2019. A more aggressive, Accelerated approach could further close the gap to net-zero and reduce annual emissions to 0.4 GtCO2 e, resulting in a 98% reduction in emissions intensity by 2070 versus 2019.

The LoS scenario would lead to cumulative carbon savings of 207 GtCO2 e by 2070, while the Accelerated scenario would create further savings of 80 GtCO2 e cumulatively by 2070. Tackling the 0.4 GtCO2 e of annual emissions in 2070, remaining in the Accelerated scenario predominantly from industry and agriculture, will require technological advancements, including improved capture technologies, newer recycling technologies, and ocean-based carbon sequestration.

While realising the projections of both scenarios are challenging, the Accelerated scenario calls for even more urgent action. While tailwinds exist in the form of falling costs of renewables and rising adoption of and reduction in prices of electrical vehicles (EVs), plus policy support by way of FAME, this is not enough. Experts estimate that the nation will need to add 40–50 GW of renewable energy capacity each year, as opposed to current increases of 10 GW per annum. And this is just one of myriad other factors that need to fall in place; battery costs have to decline by 80% by 2050, hydrogen by two-thirds by 2035, a nationwide creation of charging infrastructure needs to happen on a war footing, farmers have to adopt new practices for rice cultivation, and carbon taxes need to be instituted to make green steel price competitive.

The Time for Action is Now

India is a nation in a rapid stage of development, particularly so when looking to the future. And development has its own demands, which will fuel demand across key sectors mentioned earlier. In fact, studies estimate that demand will grow manifold across them; power (8x), steel (8x), cement (3x), automotive (3x), and food (2x).

With these demand signals clearly in place, the government too should put in places plans and policies that give an impetus to green investments across sectors, R&D, funding, and more. But the time for doing so is now, to achieve the goals of creating a better world for all by 2030, and for decades thereafter.

Take for example, a carbon tax that could lead to hundreds of metric tons of steel being built on the low carbon hydrogen route instead of the coal route by 2050. There are precedents for this as well. The policies of the early 2010s greatly spurred renewables capacity in the decade ahead, and will continue to drive capacity expansion in this regard.

The economic upside of this transition from thermal power to renewables is undeniable as well. It is expected to decrease the average cost of power supply from INR 6.15/kWh in FY20 to INR 5.25/kWh and INR 5.4/kWh by 2050 in the LoS and Accelerated scenarios, respectively. Sustainable farming, so often looked at with hesitance for its increased investment, could help generate additional farmer income of INR 3400/hectares (ha)/annum in the LoS scenario. The Accelerated scenario is even more bullish on this front, projecting an increase to INR 4800/ha/annum. Besides other positives, India stands to potentially save a cumulative $1.7 trillion till 2070 by way of forex that might have otherwise been budgeted for energy imports. There is, of course, also the fillip to Make in India to consider; manufacturing newer, greener technologies and inputs could make India a world leader in this space.

The time to look to and work towards creating a better future is now, making this decade of decarbonisation a vital one for India’s future prosperity.

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