COP26: India's 2030 goals pose challenge on long haul to 2070 net-zero

India's new climate goals of reducing carbon intensity and boosting renewables by 2030 pose stiff challenges to an economy dominated by coal, commentators told S&P Global Platts.

Addressing the UN's Climate Change Conference in Glasgow Nov. 1, India's Prime Minister Narendra Modi announced a 2070 net-zero emissions target, the least ambitious deadline of the world's top 10 emitters.

Nearer-term goals, however, were more ambitious with Modi upping India's 2030 renewables target to 500 GW from 450 GW and pledging to reduce the carbon intensity of its economy by 45% within the decade.

A spokesperson from the Ministry of Environment, Forest and Climate Change told S&P Global Platts that by 2030, 50% of India's installed power generation capacity would likely be from renewable sources.

Following Modi's statement at Glasgow, a revised Nationally Determined Contribution plan would be released soon offering further detail, the spokesperson said.

"The difficulty in achieving the reduced emissions target in itself is not so much of an ask. The difficulty is in actually doing this [and meeting near-term goals] in the nine years to 2030," said Manas Majumdar, partner at KPMG India.

Majumdar believes 50% installed capacity from renewables in the power sector by 2030 was achievable, but reducing carbon intensity by 45% by then would be much harder.

In its previous NDC to the UN Framework Convention on Climate Change, India committed to reduce the emissions intensity of GDP by 33%-35% from 2005 levels and achieve about 40% electric power capacity from non-fossil fuels by 2030.

In the six years since the Paris Agreement, India has added 65.06 GW of renewable capacity, according to the Central Electricity Authority. As of end-September 2021, wind capacity stood at 39.87 GW, while solar capacity was at 46.28 GW.

Emissions cuts

Cuts in climate emissions would not be "an absolute reduction in numbers but a reduction from business as usual scenarios," said Ajay Shankar, distinguished fellow at the New Delhi-based Energy and Resources Institute.

India will "take a low carbon intensive growth trajectory... we will decarbonize our economy but also continue to grow."

Shankar expects an existing "broad range of instruments" for emissions reductions to be continued and enhanced. Sector specific programs by the Bureau of Energy Efficiency, high taxes on petrol and diesel, the railways and private sector companies' net-zero targets are all seen contributing to abatement efforts.

Use of grid storage and feed-in tariffs could be among the new measures to cut emissions, Shankar said, noting that delivery of the plans would hinge on renewable power additions.

Mixed message on coal

While India has spoken about reducing the use of coal, the actions it has taken have sent mixed messages.

NTPC, India's largest coal-based power generator with 66.9 GW of capacity, has said it would not develop any new greenfield coal plant projects, but Coal India, the country's largest miner, approved 32 coal mining projects on March 8. Most of these are expansions of existing assets, but eight are greenfield coal projects.

Incremental production by 2023-24 from these projects would be around 81 million metric tons a year, Coal India said, with the aim of reducing imports.

"Coal retirement is not foreseen in the current scenario beyond normal end of life for some units," said Shubhranshu Patnaik, partner at Deloitte India.

"The utilization of the coal fleet will however inevitably reduce and several of the units will need to cycle more frequently," he said, adding emissions were seen peaking in the 2040-50 decade.

Under S&P Global Platts Analytics' Reference Case, India's power generation emissions of CO2 increase from 1.05 billion mt in 2020 to 1.49 billion mt in 2040.

Under a 2 degree Celsius global temperature increase scenario putting India on course to meet Paris Agreement goals, the country's CO2 emissions from power generation would need to peak at 1.08 billion mt in 2022, before falling to 898.79 million mt by 2030 and 725.19 million mt by 2040.

Coal makes up 71% of India's power generation capacity.

"Phasing out coal in China and India even over the next two decades is simply not feasible due to their reliance on coal to meet demand," said Dan Klein, Head of Scenario Planning, Future Energy Outlooks, S&P Global Platts Analytics.

INDIA'S POWER GENERATION CAPACITY, SEPT 2021 (MW)

Source: Ministry of New and Renewable Energy