India’s transition towards a net-zero economy can contribute over $1 trillion by 2030 and $15 trillion by 2070 in economic impact, the World Economic Forum (WEF) has said in a report. The transition will also provide over 50 million new jobs.
The report said that the transition to low-carbon energy provides the most significant economic opportunity and accounts for $5-$7 trillion of the overall $15 trillion worth of economic opportunity.
India aims to become a net-zero economy by 2070 and has set a target of installing a non-fossil energy capacity of 500 GW by 2030, Prime Minister Narendra Modi said at the COP26 Summit at Glasgow, Scotland.
India is the third-largest greenhouse gas emitter, following the United States and China. Sectors like energy, agriculture, industry, transportation, and infrastructure contribute over 96% of the country’s overall greenhouse gas emissions.
To achieve a net-zero economy, India must focus on low-carbon energy, green mobility, decarbonization of energy-intensive industries, green infrastructure and cities, and sustainable agriculture
India is the third-largest power-consuming nation. The energy sector represents 40% of India’s greenhouse gas emissions. Of this, the combustion of coals accounts for 65% of total carbon dioxide emissions. The WEF report said that the country’s power consumption would increase by 4%-5%, compounded annual growth rate over the upcoming decade.
The country’s green energy transition needs to enhance with more renewable solutions like hybrid plus thermal, storage, and bundled solutions. India needs to phase out its coal power by 2060 to become a net-zero economy. The country’s solar and wind capacity should be over 7,400 GW by 2070 from the existing 100 GW.
The green energy transition will require significant investment in new energy infrastructure. In addition, reducing energy wastage in the distribution network through digital means and of aggregate technical and commercial loss can be crucial for emissions reduction.
The WEF report said that the transportation sector contributes to around 10% of its greenhouse gas emissions. In 2020, around 60% of India’s overall energy use in transport was from passenger transport and 40% from freight transport.
Indian Railways is the most energy-efficient mode of transport as it accounts for only 3% energy share in passenger transport energy for a 25% share in passenger transport activity. It also has a high reliance on the power generated from renewables to eliminate greenhouse gas emissions.
Earlier this year, Railways Minister Piyush Goyal said that the Indian rail network would be fully electrified by 2023 and run on renewable energy by 2030.
The transport sector is significantly dependent on oil and accounts for India’s 50% oil demand. Oil demand has doubled in the past two decades due to increasing vehicle ownership and road transport usage.
For its shift towards green mobility, the report noted that India must continue evolving its fuel efficiency standards with global standards. The country should also increase the usage of sustainable fuels like biofuels, gas-based fuels, and sustainable aviation fuel based on hydrogen technology.
The electrification of the transport sector would require a coordinated effort from auto original equipment manufacturers (OEMs), charging infrastructure providers, and government policymakers over the coming decades. The share of electric cars and trucks may need to reach 84% and 79%, respectively, by 2070.
The green mobility transformation is expected to provide investment opportunities worth $2-$4 trillion in the upcoming decades.
Decarbonization of energy-intensive industries
India’s manufacturing industries are a significant contributor to its carbon dioxide emissions. Iron, steel, cement, chemicals, and fertilizers sectors have the highest emission footprints and increase with economic growth and urbanization.
For their decarbonization, the sectors must continue energy-efficiency improvements; use carbon capture, utilization, and storage technologies; deploy new technologies with non-fossil feedstock; use zero-carbon fuels like biomass and green hydrogen.
The sectors’ transition will require investment in research and development to make new technologies, including affordable hydrogen. The government should provide support and incentives to sectors to move towards sustainable technologies.
The report noted that the decarbonization of energy-intensive industries would offer India a $2-$3 trillion investment opportunity.
Green buildings, infrastructure, and cities
In India, the top 25 cities account for over 15% of the total greenhouse gas emissions. The design of carbon-efficient new buildings and the modification and enforcement of building energy codes to track the energy performance of new and existing buildings can help reduce urban carbon dioxide emissions.
Green buildings, infrastructure, and cities could offer India a $2-$3 trillion investment opportunity.
The agriculture sector and livestock account for 18% of overall greenhouse gas emissions. For India, the shift to sustainable agriculture will be one of the most complex transitions. It will require a campaign to educate and enable over 100 million farmers to adopt precision agriculture to reduce carbon emissions. Precision agriculture includes reducing the usage of nitrogen and urea, sustainable animal husbandry, and shifting to renewable energy from diesel pumps.
The report said that India needs a multifold growth in government and private capital flows to build new green infrastructure, develop new technologies, and encourage individuals to shift to greener consumption patterns. A mature green finance sector would be critical for India’s net-zero transition.
The country has an opportunity to tap into deep pools of international capacity by reducing frictions and challenges that raise the capital cost for Indian projects. The potential roadmap to tap international funds includes measures to reduce hedging costs, adapt external commercial borrowing guidelines, and pragmatic use of innovation and de-risking instruments to help more projects reach expected risk/return profiles.
India needs to have clear execution plans, long-term policy stability, and financial infrastructure to attract foreign investment at a much higher scale for rapid solar market expansion.