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News : At Glasgow COP26 summit, one of the key announcements made by India was a target for achieving net-zero. India committed to a 2070 net zero target.
This is not just significant for the world, but also a sizeable economic opportunity for India. The challenge now is to overcome the obstacles along the way.
The new net-zero approach will require dramatic changes in the power mix and industrial processes.
It will need the share of fossil fuel to fall from 85% now to 20% by 2070, assuming a high use of hydrogen technology and carbon capture strategies.
What are some potential benefits of a net-zero approach? A net-zero approach could bring more benefits over time:
India will be spared from re-fitting obligations : Much of India’s wealth is yet to be created. 60% of India’s capital stock — factories and buildings that will exist in 2040 — is yet to be built. The country can potentially leapfrog into new green technology, rather than being overburdened with “re-fitting” obligations, like developed countries.
Better market access : Despite India’s large domestic market, exports are a critical driver of overall GDP growth. They open up new markets, bring in international competition, forcing the domestic industry to become more efficient. Further, they push up FDI inflows and technical know-how. All high-growth periods in India have had the support of fast-growing exports. If India’s exports achieve a green stamp, they’ll find better market access.
Employment opportunities : 2-2.5 million additional jobs can be created in the renewables sector by 2050, as the renewable energy technologies tend to be more labour intensive than conventional energy technologies. In fact, distributed renewables such as small-scale hydro, rooftop solar and biomass create most jobs per unit of installed capacity.
What measures need to be implemented? Sorting discom issues : 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.
India needs a coordinated institutional framework that can help overcome multiple levels of complexity like federalism, fiscal constraints and bureaucracy.
Funding the transition to clean energy : 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.
Source : This post is based on the article “Net-zero presents many opportunities for India — and challenges ” published in The Indian Express on 10th Nov 2021 .
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