India’s decarbonization pathway presents a multitude of opportunities in terms of job creation and economic growth
India’s clear commitment and action to reduce carbon emissions have always been the major highlights of the many editions of the UN Climate Change Conference of the Parties.
Considering the economic transformation India has embarked upon, it is necessary to focus on sectors that contribute to most of the GHG emissions in the country. As per a previous report by the World Economic Forum, India’s “green transformation” will be driven by sustainable growth and reforms in five key sectors – Energy, Industry, Transport, Buildings and Agriculture.
Energy Sector: The energy sector in India contributes approximately 40% to GHG emissions, with coal being the dominant source of total carbon emissions. The share of coal, oil and solid biomass in India’s energy supply has been steadily increasing, with 80% of energy needs being met by the three fuels. This implies that decarbonization of India’s energy sector will require a multi-pronged approach involving all the country’s fossil fuel sources.
Decarbonization of the country’s energy sector needs to be accompanied by reforms in the power sector, and renewable energy expansion. Unconventional technologies such as Floating Solar PV, Wind-Solar Hybrid Systems, and Geothermal Energy could be explored further. Considering that coal firing power plants are major contributors to emissions, it is critical to take measures to reduce their GHG footprint via adoption of best-in-class technology. Government policy support will be an important factor in the reformation of DISCOMs, attracting investments in clean energy, raising additional financing, and driving electricity market reforms.
Manufacturing Sector: The manufacturing sector in India, being a hard to abate sector, contributes approximately 20% to India’s GHG emissions. Within the sector, iron and steel, and cement, are major sources of emissions, thus making it imperative to decarbonize these industries for helping achieve India’s net-zero goal.
Decarbonization of this sector could be explored via interventions around the usage of green hydrogen. Green hydrogen utilization in the iron and steel industry has the potential to reduce global CO2 emissions by 2.3 Gt per year. With the government’s announcement of a National Hydrogen Mission, the country needs a defined framework focused on production and technological advancement of green hydrogen. Besides this, a Circular Economy approach in the form of Eco-Industrial Parks could also be explored. Investment in R&D to make emerging technologies accessible, government policy support and incentives to guide businesses and industries towards sustainable technologies and increasing global collaboration will be imperative in enabling the transition.
Transport Sector: India’s transport sector accounts for 10% of the country’s total GHG emissions. Passenger transport accounted for 60% of India’s energy use in transportation in 2020, while freight transport accounted for 40%. Like how Indian Railways has set a target of achieving net-zero by 2030, it will be a good idea for other sectors to follow this target-oriented approach. There is also a need to significantly focus on road transport emissions, particularly heavy-duty vehicles, that contribute to over 60% of road freight emissions.
When we turn to the Indian roads of today, we see that about 1 in 125 vehicles are electric, most being three-wheelers and two-wheelers.
EV adoption in India, though, is increasing but at a slow pace and more needs to be done for encouraging the value conscious Indian consumer. For two-wheelers and four-wheelers, EVs are sold at a 20% and 50% premium respectively, as compared to Internal Combustion (IC) vehicles. There is a need to carry out product innovation at a faster pace to reduce the cost of EVs and make them more attractive to the Indian market. Another deterrent to
EV adoption is the lack of charging Infrastructure. There is a need for centre and states to work together and prepare an action plan for decentralized charging infrastructure. While the policy for battery swapping has been announced in this year’s budget, the implementation plan for this should ideally be rolled out immediately after consultation with states and private sector organizations.
Buildings and Infrastructure: The rapidly increasing urbanization in India has led to the emergence of unplanned cities and urban spaces. India’s top 25 cities are responsible for more than 15% of the country’s estimated GHG emissions. This provides an opportunity for developing and adopting low-carbon technologies in buildings and infrastructure to promote energy efficiency and contribute to India’s net-zero target.
The green building sector in India presents significant opportunities for investment and expansion, since only 5% of buildings in India are green. However, certain factors pertaining to the sector, such as the need for strengthening the regulatory framework, the need for feasible and attractive financial models for developers and investors, promoting the uptake of green products via friendly tax structures, and enhancing the capacity-building programs are required to be considered, to provide the much-needed boost to this sector. Corporates in India should also be encouraged to play an active role in the promotion of green buildings as part of their CSR activities, which would lead to an increase in demand for green materials and equipment.
Agriculture Sector: The agriculture sector plays a vital role in the Indian economy, but is also a major emitter of GHGs, accounting for 18% of total emissions in India. The majority of agricultural GHG emissions in the country occur during the primary production stage and hence adopting sustainable practices in agriculture can be an essential climate change mitigation approach because of its direct contribution to GHG emissions.
Population growth and the need to enhance food production to meet the growing demands, may, however, prove to be a challenge while reducing GHG emissions. Hence, the shift to sustainable agricultural practices is envisaged to be one of the most complex transitions for India, requiring the empowerment of farmers as well as the adoption of climate-smart crops and clean technologies. This transition could be complemented by focusing on natural farming and “digital agriculture”, highlighted in the recent budget, for a holistic reduction in sectoral emissions.
India’s decarbonization pathway presents a multitude of opportunities in terms of job creation and economic growth. A mature climate finance market and clear execution strategies will be crucial factors in India’s decarbonization journey. It is therefore essential for all stakeholders, including the public and private sector, policymakers, investors, and civil society, to come together in enabling the country’s transition to a net-zero economy.
(This article is authored By Sameer Jain, Managing Director, Primus Partners)
