Why an economy-wide net-zero emission target won't work for India

India will not only meet its climate commitments but is also set to overachieve, Prime Minister Narendra Modi said on November 22, 2020, speaking at a side event at the 15th summit of the G20 countries.

The announcement came just days after the United States, the world’s second largest emitter, elected Joe Biden as its next President, who has avowed net-zero carbon emissions by 2050. Biden promptly appointed John Kerry--a former diplomat instrumental in getting the US to sign on the Paris Agreement back in 2015--as his climate envoy. Just weeks ago, China, the world's largest emitter, had announced that it would achieve net-zero emissions by 2060. [What is net-zero carbon emissions? See box]

This has turned the spotlight on India--the world’s third largest emitter of climate change-inducing carbon dioxide (CO2).

PM Modi's speech was underwhelming for some climate researchers, who saw it as yet another proof of India’s hesitation to aim high. India’s global climate strategy has always been about under-promising and over-delivering, said Vaibhav Chaturvedi, fellow with the think-tank Council on Energy, Environment and Water (CEEW). “We knew back in 2017-2018 that India is going to overperform on its climate commitment of reaching 40% renewable energy in its electricity mix by 2030,” he said.

Other experts point out that India is in no position to set an economy-wide net-zero target if it wants to sustain economic growth, pull millions out of poverty and provide power to the millions still underserved. At best, it can aim for net-zero emissions in select sectors such as power and transport, in which it has access to effective technological solutions.

Declaring net-zero targets in sectors that are ready would, in fact, be a good move, experts believe--it would send out strong policy signals to businesses to act against pollution.

What is ‘net-zero’?

Being ‘net-zero’ or ‘climate neutral’ on GHG emissions means taking out of the atmosphere the GHGs that are put in. A country would have to reduce its emissions across sectors and remove the remaining emissions from the atmosphere through various strategies such as creating carbon-sinks (by increasing forest cover, e.g.) or using technological solutions. Some countries, however, limit this neutrality to just carbon emissions, not other harmful GHGs. The ideal scenario is ‘zero emissions’ when all GHGs have been reduced.

Look at the chart below for other climate terms:

Source: Bloomberg NEF

Global efforts, and India’s

In all, more than 120 countries have announced plans for net-zero emissions by 2050, including China, Japan, South Korea, South Africa and Canada.

To cap global warming between 1.5°C-2°C, more than 200 countries had signed the Paris Agreement in 2015 that requires them to voluntarily and aggressively cut their carbon emissions. The world will have to cut human-caused CO2 emissions by 45% by 2030 from 2010 levels, and reach net zero by 2050 if it wants to cap the global heating at 1.5°C, the United Nations’ Intergovernmental Panel on Climate Change (IPCC), the world’s authoritative body on climate science, declared in October 2018.

This means that countries have a decade until 2030 to stop irreversible damage that rising global temperatures are already causing. Yet, GHG emissions that should be starting to reduce have instead soared.

Between just China and the US, aggressive climate measures can help the world limit end-of-century global warming to 2.3-2.4°C, compared to the earlier prediction of 2.7°C, according to an assessment by Climate Action Tracker’s (CAT), an independent body of climate scientists and experts. If other large CO2 emitters such as India make similar cuts by mid-century, the Paris Agreement goal of limiting global warming to 1.5°C-2.0°C becomes more real, CAT’s analysis showed.

Reaching net zero has imminent benefits: India is highly vulnerable to disasters caused by climate change--exceptional heat waves scorched northern India while intense cyclones battered its coastal areas between January and June 2020. In the same period, the rest of the world too has dealt with the fallouts of global temperatures of 1°C above pre-industrial levels: In Siberia, temperatures have been 5°C above average between January and June; Australia and the state of California in the United States have seen massive wildfires in 2020.

“I don't see the alternative [to a net-zero pathway] for India, which has so much to lose from climate change,” said Ulka Kelkar, director of the climate programme at the World Resources Institute, India (WRI). Ambitious targets can become self-fulfilling prophecies, she said, because they send out a signal to society, different sectors and government departments to work towards policies and measures to reach these targets. They also indicate the state’s intent to regulate polluting businesses, catalysing them into planning and implementing practices for a cleaner trajectory, she added.

India, Kelkar believes, is in a better position than developed economies to work toward net-zero emissions. “We are talking about cleaner trajectories for the infrastructure that has not yet been built; houses and buildings that have not yet been constructed; industrial growth that has not yet come into effect; power generation that is still ahead in the future,” she explained. “I would argue that a cleaner trajectory and an ambitious target would be less painful for a country like India than for other countries, which are already locked into a path of high fossil fuel use in the infrastructure sector and need to, in fact, phase it out.”

India’s climate actions are critical to the global climate campaign. But unlike the US and China, India is still working on building the wherewithal for rapid economic growth--for example, it plans to build houses for every citizen by 2022 and its per capita power consumption has considerable room to grow despite government claims of 100% electrification--and much of its polluting and carbon emitting work lies ahead. This partly explains why India’s environment minister, Prakash Javadekar, said in an October interview that India would resist pressure to promise more ambitious climate targets than what it aims to achieve through actions it has already committed to. Although India is a high emitter, its per capita emissions are still nearly a tenth of the US’ a fourth of China’s.

An economy-wide net-zero emission target would not work for India, said Thomas Spencer, an expert on energy transition in India's electricity and industry sectors and a fellow at Delhi-based think tank, The Energy and Resources Institute (TERI), at a webinar on November 18.

China waited to strong growth trajectory before pledging to reach net-zero emissions but India is about 15-20 years behind China in terms of development--India is still a developing country with high levels of poverty, its gross domestic product (GDP) is almost a third of China’s and its level of infrastructure development is far lower, Spencer pointed out. For example, trade, aviation and industrial production are growth sectors where India will be uncertain about its potential to reduce emissions.

If China is targeting to go net zero by 2060, India which has a long journey of development ahead, is unlikely to promise net zero any earlier than 2060, though that would be too late to help the world meet the under-1.5°C warming target, said Parth Bhatia, senior research associate at Centre for Policy Research (CPR) Initiative on Climate Energy and Environment (ICEE).

However, we should be careful not to get too focused on the long-term target and take our eye away from implementation in the present, he added.

Ideal sectors for emissions cuts

Here are the sectors that experts say India should focus its efforts on:

Power:

It is feasible for India to peak its electricity sector emissions within the next 15 years, Spencer said. This would allow India to keep emissions margins for the sectors that still experience a very strong demand: industry, aviation and freight transport, he said.

Led by large-scale solar plants, India’s transition towards clean electricity has been rapid ever since the country promised the world, in 2015, to quadruple its installed renewables capacity for electricity generation to 175 gigawatt (GW) in five years. Renewables now account for nearly a quarter of India’s total installed power generation capacity, up from 13% in 2014, IndiaSpend reported on May 5.

Much of the movement away from coal is because renewables grew to become highly competitive in terms of prices and sustainability, largely in the past five years. Current solar tariffs in India are hovering at Rs 2 per kilowatt-hour (1 unit of electricity). IndiaSpend had earlier reported that solar tariffs have stabilised at rates about 20-30% below the cost of thermal power in India, and up to half the price of new coal-fired power.

“There is a tremendous potential in rooftop solar that is untapped,” said Kelkar of WRI. “In India, land is always scarce [large-scale solar requires swathes] and also ecologically rich and supports livelihoods.”

Of 175 GW of renewables in India’s climate pledge, 40 GW was to come from rooftop solar. But the rooftop sector has been unable to build pace--subsidies were offered then rolled back because of high demand, IndiaSpend reported in August 2018. To give rooftop solar a big push, India needs to make a few changes in its approach: first, stabilise incentives for rooftop solar, Kelkar said, and second, create awareness among the public about its financial benefits.

India’s entire renewable energy transition is dependent on technology imports from other countries. For example, its annual domestic solar module manufacturing capacity is only about 15% of the country’s requirement of 20 GW--the rest it imported, as IndiaSpend reported on July 29. The primary reasons are India’s late entry into the manufacturing space for these inputs as well as the tough competition to reduce prices (and thereby tariffs), which impedes domestic manufacturing, Apurba Mitra, head, climate programme, WRI-India, told IndiaSpend.

Prime Minister Narendra Modi had declared in July that as part of India’s Aatmanirbhar Bharat campaign, a movement towards self-reliance, India will aim to end dependence on solar equipment imports including panels. Directed procurement or safeguarding duties for reducing import could move India towards self-reliance in manufacture of solar equipment, Mitra said, adding that India's research and development spending on solar technologies is picking up after decades of stagnation but must move faster in segments such as battery technologies to avoid long-term dependencies.

Battery or storage technologies could be breakthroughs for India’s renewables revolution by allowing renewable energy to overcome its ultimate draw-back over coal: intermittence, or the erratic nature of the electricity it produces dependant on when the sun shines or the wind blows, e.g. Yet, despite the progress in renewables, India is still trying to push for more coal, as part of its recovery measure from the economic slump caused by the COVID-19 pandemic, IndiaSpend reported on June 5.

Central to this discussion on net-zero balance in the power sector is an assessment of when this sector is likely to peak its emissions--it requires the country to retire its coal power plants--which are young with an average age of 12 years and their usual working age is 40-45 years, argued Bhatia of ICEE. Retiring the oldest and most inefficient plants would still leave about 100 GW of plants that have just been built in the last decade. “It will be very challenging to retire them anytime soon,” he said.

Chaturvedi of CEEW, however, is of the view that India’s political economy is the biggest hurdle to decarbonising the power sector: Cheap electricity for residential consumers (cross-subsidised by industrial and commercial consumers) remains an electoral issue, debt-ridden electricity distribution companies believe that renewables will disrupt their business; and coal provides millions of jobs and revenues in coal-bearing states.

Transport:

To decarbonise its transport sector, India must improve its cars’ energy efficiency and eventually stop using fossil fuels to run them. This is an ambitious goal that India has been tip-toeing around for the first few years with several changes in its policies related to electric vehicles.

“International projections show that India will remain one of the biggest off-takers of oil for at least another decade and a half,” said Bhatia. India’s policy U-turns on the electrification of its passenger vehicles have been closely watched by the world and the country cannot now make a promise it cannot follow through, he added.

India being in the early stages of planning its transportation infrastructure has the opportunity to lock in green pathways, Kelkar said: “It can promote non-motorised vehicles, make cities bicycle-friendly, invest in pedestrian infrastructure, increase and electrify public transport and personal vehicles, etc.”

These changes--especially electric vehicles--will immediately impact the air quality of Indian cities and have good health impacts, Kelkar said. Electric vehicles powered by green electricity will cut the sector’s emissions further, she added. But if there is no rapid transitioning from coal-power plants to renewable sources, electric vehicles will only end up changing the source of emissions.

A lot of emission savings can also come from transitioning back to railway freight and avoiding road cargo that relies on diesel-fed trucks, she said.

Manufacturing:

Historically, most climate actions to cut carbon emissions focussed on the electricity sector by increasing the share of renewables, said Spencer of TERI. But the three Asian countries that have recently promised a net-zero trajectory--China, South Korea and Japan--are industrial powerhouses, he pointed, together accounting for almost a third of the global production of industrial value added. For them, net-zero targets had to mean transformation of the industrial sector to low-carbon modes.

Manufacturing industries,construction and industrial processes account for about 25% of India’s total carbon emissions in 2014, according to India’s Second Biennial Update Report submitted to the UNFCCC in December 2018.

Although modern steel and cement plants in India are highly energy efficient, and others are attempting to be efficient through retrofitting, new technologies and fuel options have become imminent for India’s industrial sector to reach net zero in the long run, wrote Shubhasis Dey, programme lead, energy efficiency, Shakti Sustainable Energy Foundation, a think-tank. The examples he cited include the use of hydrogen as a new fuel, electrification of processes and re-use of materials.

Decarbonising India’s manufacturing sector would be tough, experts agreed--it would not only need technologies that increase energy efficiency but also policies that promote electrification, as per Chaturvedi of CEEW.

For energy, Indian industries’ reliance on electricity is less than 20%; most of it comes from fossil fuels, such as coal, which are cheaper than electricity, according to Chaturvedi of CEEW. This is because energy policies have kept electricity rates for industries high to cross-subsidise residential consumers, said Chaturvedi. “Why would an industry pay Rs 10 for each unit of electricity, when it can get coal at much cheaper prices?” he said, adding that India must prioritise electrification of industries by offering affordable power.