Economic Survey: Balance climate action with fossil fuel investments

India's climate goals: More adaptation, less Chinese dependence

For the second consecutive year, the Economic Survey has made climate action a key metric for policymaking across all socioeconomic sectors. While the Survey once again lauded India for performing better in mitigation efforts than developed nations, it cautioned against reliance on China to fuel India’s energy transition ambitions. The Survey also stressed the need to rely on fossil fuels to ensure India’s energy security.

 

Burn coal, but bet on low-emission tech as well

 

Tabled in Parliament on Friday, the Survey reiterated the government’s position that continuing investments in hydrocarbons are necessary to meet India’s energy requirements.

 

“There is no valid economic rationale for shutting down coal plants in India, leaving huge investments underutilised and stranded without a dependable alternative in place,” the Survey said.

 

 

The Survey cited the experiences of developed economies to caution against shutting down thermal energy without adequate technological alternatives that allow for a stable energy supply.

 

The curbing of further investments in traditional fossil fuels has remained a major issue in the past few years. In May 2022, the Group of Seven countries agreed to end taxpayer funding for oil, gas, and coal projects overseas. But India has argued against any move to curb investments into expanding or exploring new pools of hydrocarbon resources at the Group of Twenty and Conference of the Parties (COP).

 

Investment in advanced ultra supercritical power plants and battery storage are top suggestions by the Survey for ensuring a reliable renewable energy supply. It has also pushed for a mission-mode approach to developing the nascent carbon capture, utilisation, and storage technology.

 

India is the third-largest emitter of carbon dioxide emissions, after China and the US. India has always been cautious to point out that its emissions are minimal compared to China and the US, which are responsible for 28 per cent and 15 per cent of all emissions, respectively. 

 

Reliance on China for energy transition not healthy

 

Looking at another downside of investment in renewable energy sources is the rising dependence on China-made essential raw and finished materials for the green energy sectors.

 

“India has ambitious goals for energy transition despite being one of the lowest per capita emitters of greenhouse gases. Dependence on China-made goods to achieve that transition enhances the complexity of the challenge for India,” the Survey noted.

 

Energy transition plans must be mindful of geopolitical vulnerabilities and avoid deepening India’s dependence on external sources for critical imports, the Survey emphasised. On a macro note, the Survey said, “As the world navigates the challenges of climate change, the road to energy transition runs through China.”

 

“The dominance of China in the environmental goods sector deserves serious consideration. China’s share of solar panels (polysilicon, ingots, wafers, cells, and modules) exceeds 80 per cent in all the manufacturing stages. Interestingly, this is more than double China's share of global photovoltaic (PV) demand. While this has been a major contributing factor in bringing down the costs of solar PV equipment worldwide, the level of geographical concentration in global supply chains also creates supply disruption risks that must be kept in mind,” it said.

 

The Survey urged India to leverage its best resources, advanced technologies, and expertise to accelerate its journey toward “becoming a developed nation by 2047 while ensuring a low-carbon pathway”.

 

On the climate action front, the Survey, like every year in recent times, has reiterated the Panchamrit of India’s climate commitments made at COP26 in the UK.

 

“Given the backdrop of decreasing global financial commitments to support climate action in developing countries, India must increasingly prioritise building resilience to safeguard the benefits of its rapid economic growth against climate-induced setbacks,” it said.