Can India truly be a global climate leader when it comes to renewable energy?

24 January 2019

COP24 sent clear signals to emerging markets to lead the clean energy transition. For this to happen in India, the momentum on ambitious policy actions will need to be sustained – regardless of who triumphs in this year’s general elections. Here, Jarnail Singh, India Director at The Climate Group shares his thoughts on the country’s next steps.

Emerging economies have a pivotal role to play in the transition to clean energy globally. Rapid shifts in energy generation, deployment and consumption trends can be complex, and these complexities are exacerbated by unparalleled diversity, business cultures and internal issues. Yet, they offer an unprecedented opportunity for India to strengthen its global position.

India is set for big things. Our population (currently accounting for 18% of people globally) will rapidly increase, overtaking China as the world’s most populous country in 2024. Most are going to be young professionals who will need jobs, while also creating them. We are well-positioned to become the fifth largest economy in 2019, overtaking the UK, propelling increasing demand for manufacturing, infrastructural development, trained employment, and a better quality of public health and education.

In all this lies a large opportunity to lock-in investments in low-carbon development, allowing India to lead the world in limiting global warming to below 1.5 degrees Celsius by 2050.

"In all this lies a large opportunity to lock-in investments in low-carbon development, allowing India to lead the world in limiting global warming"
Jarnail Singh, India Director, The Climate Group

Early signs of success

The recent IPCC report and COP24 negotiations drove home the importance of realigning emissions reduction efforts with no more than 1.5 degree Celsius of warming, while building trust that all parties of the Paris Agreement are on the same page when it comes to finance and transparency mechanisms.

India’s position as an emerging economy makes closing these two loops somewhat volatile. The rising demand for better standards of living, combined with a growing population, will mean more energy produced and consumed. That energy will have to be low-carbon, efficiently and equitably distributed across regions and economic groups.

This is a massive challenge for any nation and for India, an ever-important task. However, the challenge doubles up as an opportunity to drive systemic re-organization, with the help of strong political will, market building efforts and cutting-edge innovation.

The country has had a jump start with estimates showing that India could achieve 40% of its non-fossil based power capacity by 2020 – a decade earlier than targeted. Riding on this, the government has upped its ambition of renewable energy capacity to 227 GW by 2022, from its earlier target of 175 GW.

The supply side, too, is responding quickly, bringing down the cost of solar PV and making it accessible to a larger consumer base. Investment in renewable power topped fossil fuels for the first time in 2017, according to the International Energy Agency. These trajectories are gradually helping India to reduce the emissions intensity of its gross domestic product by 33-35% from 2005 levels by 2030.

Despite this, India is still a long way from holding climate action at the heart of its development strategy. National and state governments are still clarifying their policies when it comes to power sector reforms. For industry, key bottlenecks that deter scale and access to renewables are in manufacturing capacity and distribution mechanisms. To mitigate this, strong and effective governance, including a clear channel for adequate finances and resources, is crucial.

Ensuring an integrated and inclusive transition

The national electricity grid, although impressive in its reach, is seemingly unable to accommodate enough renewable electricity. A paper by Brookings India said that, “instead of having a reasonable reserve margin (for renewables) – typically 15-20% in the west, there is a shortfall in the grid, officially in the range of 5% or so.” On top of that, the grid is unstable, and reliant on massive ‘load shedding’ – a technique used to manage excess demand at peak hours.

On the other hand, decentralized renewables are providing solutions for many of the 230 million Indians, mainly residing in rural areas, who do not have access to reliable electricity. For scattered and remote villages, decentralized renewables are well suited to power lighting and livelihood activities and enable the functioning of small businesses. In villages that are grid connected but have inadequate power supply, hybrid grid-compatible models of electrification are being tried.

It is therefore evident that integrating renewable electricity in the current grid and including decentralized or small-scale renewables in the mix can go a long way in helping the country meet the aspirational electricity needs of its people.

"With rising aspirations and a vibrant youth population, 2019 will be India’s opportunity to lead its people towards bolder climate action."
Jarnail Singh, India Director, The Climate Group

Catalytic role of businesses

The Climate Group’s work in India has thrown light on the role of non-state actors in the clean energy transition. We have found that many of these systemic challenges – from increasing demand for renewables to clear policymaking – can be tackled with ambitious leadership of decisionmakers in board rooms and the government corridors.   

The recent release of the RE100 Progress and Insights Annual Report 2018 revealed interesting insights on India’s contribution to the adoption of renewable electricity globally. It showed that 32% of all electricity sourced by RE100 member businesses in India was from renewable energy sources in 2017, compared to 21% in 2016. This growth may reflect improvements in renewable energy infrastructure, but it is also a clear sign of growing demand.

The RE100 report also shows a notable trend of companies going off grid to source renewables in India, rather than relying on utilities. India alone represented 35% of the total electricity self-generated and consumed by RE100 members globally in 2017. This trend sends an important signal to the current utilities to improve their mechanisms, and also implicitly suggests regulators should bring in guidelines for higher levels of freedom in moving electrons across sites and state borders.

India 2.0: Towards a greener and cleaner economy

With rising aspirations and a vibrant youth population, 2019 will be India’s opportunity to lead its people towards bolder climate action. With general elections around the corner, the future of India is in the hands of voters who would prioritize a cleaner environment over short term economic benefits.

At the same time, consumers will decide on what to buy, based on how it was produced or sourced. It is therefore in long term benefit of the country to drive large scale corporate climate action through enabling policies and regulations.

Positive steps like these will help India shine globally as a leader and enable 1.2 billion Indians to access a better quality of life through employment, health, resilience and prosperity.

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