COP27: To decarbonise by 2050, India needs investments of at least $7 trn

Source: The post is based on an article “COP27: To decarbonise by 2050, India needs investments of at least $7 trn” published in Business Standard on 18^th November 2022.

Syllabus: GS 3- Climate Change

Relevance: concerns associated with transition from fuel-based economy to green economy.

News: India’s transition from fuel-based economy to a green economy and achieving net zero by 2070 is based on multiple factors and challenges.

What are the climate targets set by India?

India announced its goal to become a net-zero emitter by 2070 last year at COP26. It will be the last major economy to get there.

India has committed to reduce its power generation by half from fossil fuel-based plants by 2030. Thus, achieving a 45 per cent reduction in emissions intensity from 2005 levels. However, there are challenges in achieving these.

What are the challenges with India?

Investment: Power, industry and agriculture are the three major sectors that emit around 80 percent of the carbon emission. India is also currently the world’s third largest emitter of CO2 even though its emission per capita is less than the US and China.

Further, India has the second highest emissions intensity or volume of emissions per unit of GDP after Russia. The US and Japan by comparison are lower.

Therefore, decarbonizing the economy will require investments of $7-12 trillion until 2050 which is around 6 percent of GDP.

Economic growth: India’s economy is expected to grow further by 2070 and this will increase demand across power and steel sectors which would ultimately increase the greenhouse gas emission.

About 70 percent of India’s emissions are driven by six sectors: power, steel, automotive, aviation, cement and agriculture. Out of these electricity generation contributes 34 per cent, industry at 28 per cent and agriculture at 18 per cent.

Therefore, India would need to create 500 Gw of non-fossil fuel-based plants to achieve net zero.

Changing Priorities: Electric vehicles (EVs) are effective only if they are powered by renewables and not coal. Vehicular emission in India only accounts for 9 per cent of total greenhouse gas emissions.

Therefore, there is a need to look at bigger emitters of greenhouse gas such as power, agriculture, etc.

Moreover, India has reduced the emissions intensity by 1.3 percent of GDP per year over the last decade. However, this speed of reduction is not enough.

What is the way forward?

First, India needs proper implementation of the existing policies because climate action must match with the intensity of the climate crisis.

Second, India needs to increase its renewable capacity by five times to 50 Gw per year in 2030 and nine times a year in 2040 to achieve net zero by 2070.

Third, all two-wheelers, three-wheelers and light truck sales may need to be electric early in the next decade and all car sales electric by 2035.

• The cost of the battery needs to decline by 40 percent in 2030 and charging stations would need to increase 40 times by 2040 to boost the sales of EVs.

Fourth, the government should provide subsidies to green hydrogen along with carbon pricing.

However, there will be challenges with this transition as employment, tax revenues from the automotive fuel would decline with increased issues on land acquisition for renewable plants.