Issues that India’s green energy transition must address to create a roadmap for industry to play a constructive and enabling role.
Climate change is setting the world on fire, and we are staring at an inferno with no escape routes. Given the consequences India faces, it is imperative we pursue a sustainable and green energy policy, even while servicing our citizens’ needs as acknowledged by the United Nations’ ‘Common but Differentiated Responsibilities and Respective Capabilities’ principle.
Mukesh Ambani’s Rs 75,000 crore, three-year investment plan for Reliance Industries Ltd. in several key components of green energy—from photovoltaic modules and batteries to electrolysers and fuel cells—shows that the private sector’s participation in the transitional process has already started. This is a beginning that other industrial players will follow in the future. The challenge is how to sustain this engagement with the private sector by ensuring speed, skill, and scale so that India not only performs and reforms but also transforms its energy sector to become a role model for the world.
To ensure and enable more intensive private sector participation, India’s green energy transition must address a few issues that will create a sustainable roadmap for industry to play a very constructive and enabling role.
On the resources needed to power economic growth, India needs to aim at matching the global average of per-capita energy consumption, as there is a positive correlation between energy consumption and national growth. Currently, there is a big gap. In 2018-19, India’s per capita power consumption was 1,181 kWh as against the world average at 3,260 kWh. Secondly, India needs to make its agriculture climate-resilient without losing productivity. Hong Kong has the highest fertiliser consumption per hectare in the world, at 3,573.9 kilograms as of 2018. The top five also include Malaysia, Bahrain, New Zealand, and Ireland. In 2018, fertiliser consumption for India was 175 kilograms per hectare. The story is not very much different for coal and petroleum products. Green energy will play an important role in this transformation.
Further, India’s green and sustainable energy policy must take into account the interconnections between global warming on the one hand and India’s climate vulnerabilities on the other, keeping in mind the polar interconnections with the Himalayas, the Indian monsoon, predominantly rainfed-agriculture, the inadequacy of health infrastructure, the location of cities, towns, and villages along the long Indian coastline, and India’s 1,382 offshore islands.
The Covid-19 pandemic has had an asymmetric impact on green investments. For example, during the year 2020, solar deployment went up 142% in Vietnam, 99% in the United States, 66% in China, 22% in Germany and South Korea. Meanwhile, it dropped 47% in India, 33% in Spain, 9% in Japan, 5% in Australia, and 4% in Italy. This asymmetry will play out again in future climate-related disasters, and India’s green energy transition policy needs to take note of what happened last year to be better prepared for the future. Mitigation and adaptation efforts, as well as resilience, will differ from country to country as well.
The policy framework must accommodate innovative ways to help industry and make capital cheaper. India’s support for the International Solar Alliance’s initiatives such as the ‘One Sun One World and One Grid’ plan to build a trans-national electricity grid, and a World Solar Bank for financing, are steps in the right direction.
The hybridisation of wind and solar is a good move, as it can drastically reduce the cost of 24×7 power supply at scale.
A national administrative mechanism to address and respond to industry needs at a lightning speed is critical. These issues may be related to land, labour, capital, technology, or even administrative challenges at different levels.
Importantly, a National Hydrogen Energy Mission document, aiming at the promotion of green hydrogen as a raw material for green fertiliser and fuels, as well as an energy carrier, has been circulated for consultation. This plan will make a big difference, the way the Solar Mission of 2010 did. Green hydrogen will boost the generation and utilisation of renewable energy and substitution of the inputs and processes that result in global warming. This will also help increase per capita energy consumption in India as well as save precious foreign exchange by cutting down on imports. More industries will step in with their future investment plans in areas of renewable energy generation, storage, and green hydrogen.
To achieve all this, India’s green energy transition must be comprehensive, holistic, and inclusive, taking account of all aspects of likely change in industry, agriculture, health, transport, communication, and in society at large. The policy should emphasise the positive effects of the transition for our future generations in terms of the environment, technological advances, a better quality of life for all. The use of best practices needs to be pioneered by all elements of society – cities and regions, business and industry, agriculture, and civil society. Similarly, the ecosystem of incentives (tax breaks, subsidies, accelerated depreciation, etc.) and disincentives (carbon tax), and carbon pricing as well as carbon trading – should be developed in total collaboration with industry as very often such policy measures do not address real industrial concerns and get washed out in bureaucratic quagmire.
Upendra Tripathy is former Director-General of the International Solar Alliance, and was Secretary – Ministry of New and Renewable Energy, Government of India. He is currently pro-chancellor, Kalinga Institute of Social Sciences (Deemed University), and the Sir Ashutosh Mukherjee Chair Visiting Professor at NIAS, Bengaluru. Views are personal.
The views expressed here are those of the author and do not necessarily represent the views of BloombergQuint or its editorial team.