India consolidated its position in climate geopolitics globally: Aarti Khosla

Hits included long-term strategy and (updated) Nationally Determined Contributions (NDCs), which reaffirm attention to climate policy.

India has made large strides last year to consolidate its position on climate geopolitics globally. Also, the inclusion of climate change as a determinant in policy making became further entrenched.  

As per the requirements of the Paris Agreement, India submitted its plan for net zero emissions by 2070 and also updated its NDCs.

This established India as a leading voice to highlight the much-needed reform of the global financing mechanism to facilitate energy transitions, as well as the need for space for growth for developing countries like India.

The long-term strategy was developed by involving several sectoral Ministries, which is commendable. The creation of a sectoral approach for emission reductions is important, as it places emphasis as well on future emitting sectors like transport, in addition to the power sector, which currently have a smaller share in the emissions but are projected to grow in the coming decades. 

India announced some big policy changes to upgrade for planned renewables expansion.

The draft NEP 2022 sets its eyes on a significant increase in installed solar power capacity by 2027 and a downward revision of installed coal capacity when compared to Central Electricity Authority’s optimum generation capacity mix report that was released in 2020.

The previous electricity plan released in 2018 had a target of 150 GW of installed solar capacity by 2027.

The draft new electricity plan increases this target by an additional 36GW to 186GW by 2027.

More than 606GW of coal-fired power projects have been cancelled or shelved, and 15.6GW retired in India during the 2010-2022 period.

The central government recently unveiled a $30billion plan to create a power transmission system to evacuate the renewables capacity, including committing to setting up transmission lines to evacuate 10GW of offshore wind from Gujarat and Tamil Nadu.

A new plan to install close to 51GW of battery energy storage system by 2030 has been announced.

The second phase of the PLI scheme, almost 4 times as big as the first one, and aimed to boost solar manufacturing annually by 65GW of module capacity was launched this year. 

Green Hydrogen Policy

With a $2.5 billion plan to boost hydrogen production, India’s hydrogen policy was finally out.

The much-awaited policy sets clarity to achieve a green Hydrogen based ecosystem in power, industry and transport sectors.

Among other things, oil refineries will have to replace a third of their fuel usage with green hydrogen by 2035.

By that year, fertiliser production should run on 70 per cent green hydrogen and urban gas distribution grids should supplant 15 per cent of gas with green hydrogen.

India also went ahead to commit 8GW of electrolyzer manufacturing capacity this year, out of a total of 26GW electrolyser capacity to come up in the world by 2026. 

Indian railways signals reform 

The government reaffirmed the announcement that Indian Railways will achieve net zero emissions by 2030. To achieve that it will have 100 per cent electrification of the broad-gauge railway network. 

The Railways have commissioned about 142 MW of solar plants (both on rooftops and on its vacant lands) and about 103 MW of wind power plants have been commissioned so far.

The Railways plans afforestation of railway land to increase carbon sink.

It is also issuing green certifications of various industrial units, railway stations and other railway establishments. It has decided to progressively procure renewable energy to reduce energy consumption through conventional sources. 

Misses 

Renewable energy targets committed for 2022 were met by less than three quarters. 

As per the targets, 175 GW of renewable energy capacity was to be installed by 2022, with 100 GW from solar, 60 GW from wind, 10 GW from biomass, and the remaining 5 GW from small hydropower. However, 57.71 GW of solar power and 40.71 GW of wind energy have been installed till June 2022. 

In solar, both rooftop solar and on-ground installations have struggled. The reasons run deep—ranging from poor discom health to absence of a favourable market for renewables. 

The costs of relying on imported energy became evident.

India, which wanted gas to account for 15% of its energy mix, bought LNG at double the price it paid around the previous year.

The surge in global gas prices, and the consequent scrambling for expensive gas by smaller-, lower- and middle-income countries, as the EU stocked up on gas, effectively brought home the imprudence of India chasing its gas dreams. 

Green bonds framework is good but overall energy policy pathway pitfalls will have to be avoided. 

India released the framework for its sovereign green bonds scheme last month.

The objective of the scheme is to fund public sector projects with climate action merits.

The scheme is meant to consolidate India’s international climate commitments and has been hailed as a commendable step.

However, the framework not only includes CNG-based public transport as a “green” project (there is a wide range of projects that are listed as eligible for green loans), but it was also not easy to establish their green credentials.

On the other hand, coal mines have been opened to private companies with a single-window clearance for commercial mining. There is an announcement to invest ₹40,000 crore in the coal sector in the coming decade. 

This was a critical COP, coming amidst polycrisis—food, energy, debt and disease.

The global north and the global south were jostling for space even before the negotiations began in Egypt in November. Finance’ and ‘Loss and Damage’ were the two key agenda items for this COP.

India was able to establish its position as a leading voice on both the issues.

The Indian position at the COP was clear in demanding better scale, predictability and transparency of climate finance.

It upped the ante on the demand for new, better sources of reasonable finance, de-risking projects and greater leverage of the multilateral development banks, which placed mitigation and adaptation actions within the discussion of resource mobilisation.

It also placed emphasis on the principle of burden sharing for climate finance.

These are important messages to ground in the international negotiation process where countries come foremost with their domestic policy agendas first and collaborative climate action later.

The first ministerial meeting on the new collective finance goal (NCQG) was held at the COP with the Indian Environment Minister as one of the co-chairs along with Australia.

The committee is meant to discuss crucial matters of how much climate finance will be available and who will foot the bill.

While the $100 billion per year, agreed in Copenhagen in 2009, has never been met. It is now estimated that the scale of funding to achieve economy wide transition in developing countries is between $6-11 billion per year.

After much wrangling, there was a deal on creating a loss and damage fund, to help poor countries which are being battered by climate impacts.

A face saver was the minimum agreement which is essential to retain the voice of the most vulnerable. Indian position was steadfast support for the vulnerable and most affected nations of the world.

Much early in the COP, India made a strong call for inclusion of a phase down of all fossil fuels in the COP text, which eventually wasn’t agreed to, due to the practical realities of the world’s reliance on gas and the inability to commit to a phase down globally, even by the West.

EU and the US were on the backfoot and largely unwilling to proceed with the agenda.   

With green growth as one of the key pillars of the G20 agenda, India is placed rightly to be the global soft power to draw attention to enabling conditions for such green growth, most importantly finance.

The G20 Finance track is the appropriate platform to discuss financial architecture and its reforms.

It also includes negotiations on the creation of overall improved sustainable finance systems such that countries can feel confident to transition their energy systems and other sectors of economy.

India should leverage its Presidency of G20 and include financing for climate action as part of this track.

Secondly, there has been a lot of emphasis on Just Energy Transition Partnerships (JTEPs) globally. These partnerships are being positioned as unique bespoke financial instruments to enable energy transition.

India can address the importance of JETPs but also demonstrate the need for economic, technical, and social transitions needed if coal mines or power plants will be shuttered.

There is a large body of research and technical capacity work underway, including estimation of alternative livelihoods and upskilling needed across States and analysis like this can offer a way to discuss

Shunning coal dependency is a key element of the JETPs.

Consequently, the government should prepare to negotiate a JETP that works for the country and is significant in solving the climate problem, given the country’s significant dependence on coal.

The troika of Indonesia (2022), India (2023) and Brazil (next year’s G20) also offers possibilities to align developing country priorities with the G20 agenda, especially on energy transition tracks and climate action. 

Recently, the Tamil Nadu government announced that the State will achieve its net zero goal before India’s proposed target (of 2070). This makes Tamil Nadu the second State, after Maharashtra’s 2050 deadline, to announce a more ambitious carbon neutrality target than that of the Centre.

Jharkhand, the State with over 16 per cent of India’s coal reserves and a key State for coal mining, recently established a taskforce on just transition keeping in mind that there will be an accelerated phase down of coal use and the resultant impact on its economy and people should be minimised.

Jharkhand is the first State in the country to recognise the concept of Just Transition.

Gujarat and Tamil Nadu have committed to a renewables-based future, and setting up 10GW of offshore wind.

In the transport sector, the cost parity on electric two and three wheelers has reached 50 per cent of new three-wheeler sales in the country.

Steadily, the Indian States are coming face to face with the country’s net zero emissions targets, transport decarbonisation goals, and electricity system reforms and undertaking policy level changes to reflect a low carbon growth trajectory as well.