Roadmap to Decarbonization in India

Photo: Chris LeBoutillier/Unsplash

Intergovernmental Panel on Climate Change (IPCC) has issued a ‘code red’ for the world where they have stated that this is the time to take the urgent action to avoid the worst impacts of the increasing climate crisis. According to IPCC, there is only 67% chance of limiting the warming to 1.5°C and the world has the remaining budget of 400 GtCO2 – or 10 years of emissions at 2020 level. As per the report of the climate watch, , G20 countries are responsible for around 75% of the global greenhouse gases (GHGs) including land use change and forestry. To limit the global temperature, rise to 1.5°C, the G20, therefore, has an important leadership role to play by committing to emissions reduction targets and implementing policies that align with 1.5°C pathways. The combined announcement of Nationally Determined Contribution (NDC) targets by countries is not sufficient and will lead to global warming of 2.4°C by the end of the century. This underlines the urgent need of strengthening current climate policies and actions by G20 countries and submit more ambitious targets that align with net zero targets. For developed countries, this includes providing climate finance to assist developing countries’ mitigation and adaptation actions.

As a group of world leading countries, G20 countries should work on the following models suggested by different stakeholders:

1. Take a lead on enabling and facilitating the transition towards decarbonisation of consumer lifestyles.
2. Frame policy for the carbon pricing and promote the same.
3. Prepare a consistent pathway for finance flow towards low greenhouse gas emissions and climate resilient development
4. Support through knowledge sharing, technology and funds
5. Preparation of statistics for activities for all country to address climate change mitigation

Emerging economies like India however, face enormous developmental challenges as they attempt to grow in a climate-constrained world. Climate change represents a significant threat to the Indian economy due to heat stress, reductions in freshwater supply, soil drying, more intensive tropical cyclones, monsoons, and sea-level rise, amongst other impacts. At the same time, global warming creates economic opportunities for India as new technologies and industries which are required to decarbonize at large scale. The threats of global warming have provided Indian market to excel and execute the opportunities for manufacturing of cross-country technologies in India, innovation of new technologies and development of successful innovative technology market, etc.  In order to achieve the current targets by the world of reducing to 1.5 degree Celsius which were set during the Paris Agreement and United Nations Climate Change Conference (COP26) in Glasgow, the role and contribution of India will be critical. India’s socioeconomic system depends basically on the five sectoral pillars and four cross sectoral enablers. The five pillars – energy, mobility, industry, infrastructure & cities, and agriculture – contribute to over 90% of India’s greenhouse gas emissions and four cross-sectoral enablers are: increasing innovation in green technology, building framework to catalyze green finance, a combined approach to carbon, capture, utilization and storage, and planning for climate adaptation by the society. India require to address these pillars, along with four cross-sectoral enablers, as part of its green transition.

These sectoral pillars and cross sectoral enablers are dependent on the continued economic growth of India, which are driven by strong government leadership, technological & financial innovation and development. The creation of the low-carbon pathway for decarbonization have the potential to create more than 50 million net new jobs and over $15 trillion in economic value by 2070. India’s climate policy challenge is situated in respect to urgent need for creating millions of new jobs, increasing incomes, and improving public health in the next few decades. Taking stand against the climate change, Indian Government has put climate commitments at various international forums. We cannot just sit and wait for future innovations if we want to achieve the goal of decarbonization. Existing decarbonization technologies, such powering the future with renewable energy, accelerating electric vehicles, fostering international cooperation and by financing the energy transition from conventional sources to green technologies. Over the past few years, decarbonization pathways have emerged for sectors such as transport, power and buildings. These pathways have been driven by technological breakthroughs and cost reductions, whereas pathways for industrial decarbonization have proven to be challenging for various reasons, as shown below in the figure.

Industrial sector is the second largest sector in terms of the energy consumption after the power sector in India, and as a developing country, the industrial activities are expected to surge in the near future. As per the IBEF 2020, the manufacturing sector has seen a 5% growth in CAGR between FY16 to FY20 in GVA at basic current prices. Also, by introducing the “Make in India” and “Atma Nirbhar Bharat” by the Hon’ble Prime Minister of India, India has started the becoming a manufacturing hub, which will provide the boost to the Indian economy. The success of these programmes will also increase the industrial value add and there will be significant impact on country’s energy trajectory and GHG emissions. Also, as per the report of the India Energy Outlook, the energy demand of the country has been tripled in the last three decades, with dominant use of Coal and Oil.

In the case of Policy intervention, related to decarbonization of Industrial sector, is Perform, Achieve and Trade (PAT) Scheme, which is regulated by Bureau of Energy Efficiency (BEE) which has been successful, encouraging and widely accepted. But we need to shift our focus to carbon neutral measures from energy efficiency as it is just one part of the decarbonization, to meet the Paris Agreement target. Under the National Mission for Enhanced Energy Efficiency (NMEEE), BEE is aiming to strengthen the market for energy efficiency in energy intensive sectors. The next few years leading will be decisive in our efforts to achieve carbon neutrality by 2070. In respect of Indian industries for advancing them towards decarbonization, following efforts can be outlined:

1. India’s roadmap for the decarbonization: Preparation of a roadmap to decarbonize the industrial sector specially for hard to abate sectors with specific targets for industries which will help in preparing strategy for decarbonizing the sectors.
2. Creating policy and legal framework: Innovative sector-specific policies are the key role players on the way to prepare strategy in exploring the technologies for the industries. It is the time to cover the complete industrial sector including MSMEs, under the umbrella of the decarbonisation through policy intervention including energy intensive sectors. Policies should ensure the availability of low-cost financing for investing in new technologies and innovative financing model for sharing of investment risks for innovative technology which is a vital support that industries will look forward as a motivation to move forward for decarbonization.
3. Public and private sector collaboration: This point relates to the initiatives led by local governments and private sectors. In order to realize the zero carbon commitments with the help of state governments, local stakeholders, etc in project development and building capacity by providing hard and soft incentives for decarbonization. A joint R&D team for industrial decarbonization with other countries, private sectors, etc. will help in knowledge sharing and the technology transfer. The decarbonization in corporate management is need to be spread with the introduction of internal carbon pricing system to promote investments and measure progress toward decarbonization by setting a monetary value on carbon emissions. The government can support such corporate efforts and promote ESG financing by including the regional financial institutions. Promoting circular economy by the state governments will help in limiting the waste by increasing the material use efficiency, recycling to make new materials from used ones and reusing of the products by creating a secondary market. In this regard, BEE and other government agencies are exploring possibilities to collaborate for creating policies for increased reuse and recycling in manufacturing industries to reduce raw material demand which therefore result in reducing energy intensity.
4. Enabling society to make positive changes: In order to achieve carbon neutrality, systematic socioeconomic changes are needed, such lifestyle changes in clothing, food, housing and transportation. Efforts are already under way to make renewable energy and electric vehicles the mainstream.

This year, India is going to celebrate its 75^th year of Independence and the country has remarkably transformed in the last few years with essential growth in major economic sectors. India has also fulfilled the global standards and competence, by timely introducing of policies and strategies and at the same time acceptance by the stakeholders. Industries will continue to work towards carbon neutrality. Decarbonization is a major effort and is only possible with proper awareness and importance will inculcate for behavioral change at the individual and institutional level. Industrial decarbonization will transform India towards sustainable future.

(Views expressed are the author’s own and don’t necessarily reflect those of ICRIER.)