- A recent working paper advocates for India to set more ambitious mid-term emissions reduction targets by 2035, aligning with global mandates and building on its current nationally determined contributions.
- The paper highlights the need for nuanced strategies in decarbonising the industry and agriculture sectors. It suggests prioritising larger industries like cement and steelmaking for early decarbonisation efforts and addressing politically sensitive issues in agriculture gradually.
- Successful implementation of the proposed strategies requires coordinated action across multiple ministries and state governments, it suggests.
A recent working paper suggests that India’s net zero transition plan to mitigate global warming over the next decade (2025-2035), as required by global mandates, should be more ambitious and include quantitative medium-term targets for total emissions.
At the 2023 UN climate conference, COP28, the Global Stocktake, which assesses country progress on climate change, called on countries to submit new Nationally Determined Contributions (NDCs) well ahead of the COP30 in 2025. NDCs are commitments by countries to reduce their greenhouse gas emissions and in this next round, countries are expected to update their 2030 targets and set new targets for 2035.
The paper, written by Montek Singh Ahluwalia, former Deputy Chairman of the erstwhile Planning Commission and currently Distinguished Fellow at Centre for Social and Economic Progress (CSEP) and Utkarsh Patel, Visiting Associate Fellow at CSEP, says this presents an opportunity for India to go beyond the existing NDCs and propose stronger targets as its contribution to building a global consensus on a “just transition.” The paper has been published by CSEP, a New Delhi-based think tank.
Currently, India’s NDC includes selected aggregate targets up to 2030 but does not specify commitments on total expected emissions, says the paper. These targets aim to reduce the emissions intensity of India’s GDP by 45% by 2030 compared to the 2005 level. Additionally, India plans to increase the share of non-fossil fuels-based installed capacity of electricity to 50% of the total capacity, or 500 GW, by 2030. India has set a net zero target for 2070, but experts believe this timeline is too distant and challenging to monitor progress effectively.
Talking to Mongabay India, Montek Singh Ahluwalia says, “We must go beyond our previous position of committing to a few targets such as increasing renewable energy to a certain percentage by 2030. We should establish eight or nine critical indicators that can be monitored over the next ten-year period. Many of these possible indicators are discussed in our report. The horizon over which we have to achieve net zero is several decades and there are many areas which are at present not viable but may become viable as new technologies evolve. So, our strategy has to be flexible. But there are many areas where we can be reasonably certain and set clear targets.”
Ahluwalia lists the key areas where targets can be set for the next ten years including the expansion of renewable energy capacity, ending the addition of new thermal plants, addressing the challenges of developing electricity markets that can deal with an increased dependence on intermittent supplies, acceptance of a much greater variation in electricity prices intraday, pushing the shift towards EVs and also taking steps to stimulate public transport.
Some short-term milestones are required, says Labanya Prakash Jena, head of the Center for Sustainable Finance (CSF) at Climate Policy Initiative, adding that the government is hesitant to set short-term emission reduction goals because they will be accountable if they fail to meet them.
A pathway to 2035
The paper discusses the crucial subject and strategies that can be part of India’s mid-term mitigation plan, including carbon pricing and decarbonising the electricity sector, transport, industry, agriculture and finance. It suggests market-driven approaches to discourage the use of fossil fuels such as emission trading systems (ETS) and emission allowances along the lines of European Union.
In the electricity sector, the paper notes, India has experienced one of the fastest growths of solar and wind energy capacity, in the last two decades, from about 4.5 gigawatts (GW) in 2005 to around 134 GW in 2023. However, it also highlights that this growth is similar to other developing countries. For example, ASEAN countries have seen renewable capacity increase by 3.9 times between 2014 and 2022, while India’s capacity increased by 3.7 times.
The report emphasises meeting the 2030 target and maintaining momentum in the future and lists a few of the hindrances, such as the financial viability of the power distribution companies, the need for storage, and the transmission capacity for renewable energy.
Given that phasing out coal generation is an important part of meeting net zero targets, the paper recommends that India announce a target year within this decade, after which no new coal power plants will be approved for construction. It also discusses the fiscal impact of declining coal production on coal-producing states that earn on coal sales. It recommends that additional transfers from the Centre to the states may need to be considered to compensate for the loss of revenue. It suggests that future finance commissions can address the issue.
The paper also discusses a major geographical shift in electricity generation toward the western and southern regions of the country, where solar and wind potential is high. Surplus electricity from these regions will need to be transmitted to other regions, necessitating new high-power interstate transmission lines. As per the paper, the central government, through the Power Grid Corporation of India, can plan for grid expansion, and the infrastructure built for transmission capacity could later be privatised to pay off debt or fund new infrastructure.
Similarly, the paper discusses privatising the Container Corporation of India (CONCOR) to make the transport sector greener and shift freight movement from road to rail. In a conversation with Mongabay India, Ahluwalia states that the railways need to recover their share of freight traffic, which has been falling over time. This requires encouraging private players in logistics to enter more aggressively in freight movement, using railways for longer-distance travels. For this, it is essential that logistics players are encouraged to invest with the assurance of having a level playing field with CONCOR.
For decarbonising the transport sector, the paper recommends a rapid shift to electric vehicles (EVs), including the establishment of adequate standardised fast-charging infrastructure in cities and major highways. To facilitate this transition, the paper suggests implementing a statutory ban on the sale of internal combustion engine (ICE) vehicles after a certain date.
The paper also highlights that the afforestation target set in 2015 has not been updated. A more ambitious target for expanding forest cover, with a realistic assessment of cost, should be part of India’s climate change management planning.
Co-author Utkarsh Patel says, “The next step should be to measure how much of the target has been achieved since 2015, which would allow us to assess whether we are on track to meet the 2030 target. This will also help set a new target for afforestation, which should be part of our next NDCs.”
Sectoral nuance
The paper discusses industry and agriculture as sectors that require a nuanced approach in their decarbonisation efforts.
Regarding decarbonising industry, the paper notes that the industry accounts for 21% of total emissions, and decarbonising this sector has to be a part of any long-term strategy to achieve net zero. However, it lists several sectors like brick kilns, textiles, dyeing and other chemicals, pulp and paper, mining, and metalworking, which contribute to around half of the industrial emissions but should be prioritised after achieving some success in larger industries.
While it is technically possible to switch to electricity in many of these cases, the switch would be costly, and many of the production units are relatively small or, at most, medium-sized, the paper states.
“Emissions from industry are generally ‘hard to abate,’ but there are promising technological advances that suggest the industrial sector can eventually wean itself off fossil fuels. These technologies are still developing and are currently too expensive for small and medium-sized enterprises to afford. We, therefore, think that decarbonisation targets can initially be limited to larger industries,” Patel says.
The larger industries include cement, steelmaking, fertiliser, and petroleum refining. The government is taking certain steps, such as considering issuing regulatory directives to mandate fertiliser producers and oil refiners to meet 20% and 25% of their respective hydrogen demands through green hydrogen by 2028. The paper suggests this may be unnecessary if a carbon tax is introduced.
Similarly, the paper highlights that some of the necessary changes in agriculture are politically sensitive, such as free or near-free electricity for farmers and massive under-pricing of urea. The paper states that correcting these distortions is both technically and economically desirable, but the political groundwork for making these changes has to be carefully prepared, with both the Centre and the states on the same side. Setting credible targets for emission reduction in the sector may not be feasible. This is perhaps best deferred to the period 2035-45.
The paper suggests that the additional investment required to transition will be about 2% of India’s GDP by 2030. It also indicates that some form of carbon pricing would be beneficial in generating additional revenue.
Labanya Prakash Jena from Climate Policy Initiative, says, “I don’t believe the Indian government will implement the right carbon pricing as suggested by international agencies. For instance, the IMF has recommended starting with $25 per tonne by 2030. Given that the majority of Indian industries are medium and small-scale, it will be challenging to impose a significant carbon price in the short term, such as over the next four to five years. If the carbon price is not significant, it might face the same fate as previous schemes like the PAT (Perform, Achieve, and Trade) scheme.”
Patel acknowledges the concern, stating, “It is true, but such a price will have adverse effects if imposed immediately. For example, the price of electricity will double. So, the carbon price should gradually increase as renewable capacity increases.”
Need for coordinated action
An important challenge in implementing the strategy advocated in this paper is that it requires action by several different ministries and state governments. While several initiatives are being considered, the national strategy cannot merely be the sum of proposals from different ministries or states acting in isolation. It is necessary to ensure that these initiatives are internally consistent and reflect a cost-effective approach, it says.
A major challenge in devising a national strategy for managing climate change is that several areas for intervention fall under the domain of state governments. These include electricity distribution, agriculture, urban transport, and building codes. Several state governments are developing state-level climate action plans covering these areas. Each state must ensure its plans are internally consistent, align with its resource constraints and also consistent with the national decarbonisation target. The paper says there is a need for an effective mechanism for consultation between the Centre and the states on these issues.
When asked about the current practice of setting targets with a top-down approach and how to bring states together for action on climate change, Ahluwalia said, “Coordination of different actors will indeed be a major problem. There are different Ministries involved and also much of the action is at the state level. That is why we have recommended creation of a national body that the Prime Minister will chair with key central ministers and all state chief ministers as members. In a lot of these matters, active involvement of the states’ with target setting will be necessary. If you’re addressing an issue that a state cares about, you need to ensure the chief minister is part of the process. This way, they can’t dismiss the decisions later.”
Banner image: Portable Solar Irrigation System in Jharkhand, India. Image by Sakshi Saini (CCAFS) via Flickr (CC BY-NC-SA 2.0 Deed)
