India

Our analysis shows that India can achieve its NDC target with currently implemented policies. Under current policy projections, greenhouse gas emissions (excluding LULUCF) are projected to reach a level of 2.8-2.9 GtCO₂e in 2020 and 3.8–4.1 GtCO₂e in 2030. This is a 27-35% increase in emissions from 2010 levels by 2020 and 76-87% of 2010 The CAT 2030 projection is 9-12% lower compared to the December 2019 projection, due to COVID-19’s impact on the economy, and assuming no change in projected emissions intensity, given no explicit green recovery policy has yet been adopted.

The growth in emissions is in line with both the 2020 and 2030 intensity pledges, the achievement of India’s targets depends on actual economic growth levels, which are expected to be considerably lower due to the COVID-19 pandemic.

The economic standstill brought about by COVID-19 in March and April this year has led to drastic reductions in production and demand. Crude steel production dropped by 22.7% in March 2020 compared to the previous month (Myllyvirta & Dahiya, 2020). Petrol and diesel demand was down 60 and 56% in April 2020 when lockdown was in force, and in June, was still 18 and 15% lower than in 2019. Power consumption was down 30% in March and April, and still 8% down in June compared to last year’s demand (Jain, 2020). Some estimates of energy-related CO₂ emissions growth already show these slowing down sharply in 2019 or even starting to reduce for the first time in four decades, due to reduced electricity demand and increased share of renewable energy (Myllyvirta & Dahiya, 2020).

There is no explicit focus on green recovery in the large post COVID-19 fiscal stimulus of 20 trillion rupees (US$266 billion, almost 10% of GDP) (Niti Aayog, 2020). There are calls for a green recovery focusing on opportunities in power, transport, and urban planning, and to use the recovery as an opportunity to address structural changes and reforms needed in the power sector, as well as build on the momentum created by the experience of clean air in otherwise polluted cities to increase air quality standards (Singh & Mohan, 2020).

An accelerated transition away from coal towards renewable energy in line with the Paris Agreement would come with large benefits for sustainable development, with increased employment, avoiding health impacts from air pollution, reducing imports from fossil fuels, and benefits for the environment avoiding impacts on water and biodiversity, and reducing climate change damages (Climate Analytics, 2019). India’s vulnerability to climate change has been highlighted with the impact of Cyclon Amphan hitting the country in the middle of the pandemic (Ellis-Petersen & Ratcliffe, 2020).

Apart from economic growth, population growth is another key drivers of India’s projected GHG emissions. By 2028, India is projected to overtake China as the largest country in terms of population. By 2030, India’s population is projected to grow to ~1.5 billion but the per capita emissions would still be far below the world average in 2013 (United Nations Department of Economic and Social Affairs; Population Division, 2019).

Ensuring Indian citizens have access to electricity and clean cooking has been at the top of the country’s political agenda. Around 750 million people in India gained access to electricity between 2000 and 2019 (IEA, 2020). The government announced that India had achieved its goal of providing electricity to every village in India in April 2018, and a year later, in March 2019, declared it had achieved the full electrification of almost all households (IEA, 2020).

With an increasing share of renewable energy (19% in 2018), the share of coal in power generation fell to 73% in 2018, with emission intensity falling to 708 gCO2/kWh down from 771g in 2015 (figure). On a Paris Agreement consistent pathway, emissions intensity needs to and, can be reduced much more drastically, with a fully decarbonised electricity generation by 2050 (Climate Action Tracker, 2020).

Fossil fuels

There is significant uncertainty over the future of coal power capacity in India. The NEP foresees coal-fired power capacity additions of 46 GW between 2022 and 2027 (CEA, 2018).

India has been reducing its share of global coal power development, from 17% of the world pipeline in mid-2018 to 12% in mid-2020. The country also had no new construction in the first half of 2020 and shrank its coal fleet by 0.3 GW. India still has over 200 GW of coal-fired capacity in operation (a share of 11% of global capacity). If all the currently planned capacity is built, this could still increase to almost 300 GW over the next few years (Shearer, 2020)

This planned increase is not consistent with the Paris Agreement. In Paris Agreement compatible pathways for India, coal power generation would need to be phased out before 2040 and reduced by to a share of 5-10% by 2030 (Climate Action Tracker, 2020).

There is a significant risk that these assets will be stranded. Expansion plans for coal-based generation have been found to be inconsistent with lower demand projections in independent studies (Shearer et al., 2017). This is likely to exacerbate the issue of low utilisation rates of coal power plants, impacting their profitability and threatening to compound the already perilous financial position of distribution companies (Dubash et al., 2018). Electricity demand growth has continued to slow down, and fell by 13.2% In October 2019 compared to the same month in 2018, and coal fired generation fell by 19% to the lowest level since 2014, with average utilisation rate below 58%, exasperating the ongoing coal overcapacity crisis (leading to a slowdown in emissions growth from energy related C02 (Myllyvirta et al., 2019) (Schlissel, 2019).

Other drivers of stranding risk include coal shortages, water scarcity and air pollution regulation (Worrall et al., 2019).

As a government think tank (NITI Aayog, 2017a, 2017b) has pointed out in two publications, both the government’s Draft National Energy Policy and the Three Year Action Agenda (2017–18 to 2019–20) include recommendations to increase domestic production and distribution of coal, oil and gas, which, if adopted by the government, will prove to be a significant threat to India’s climate goals.

India’s coal production is increasing and is on track to produce a record high 700 Mt of coal in 2020/21 (The Economic Times, 2020b). In a move to create a privatised, commercial coal sector in India, 40 new coalfields in some of India’s most ecologically-sensitive forests are to be opened up for commercial mining (Ellis-Petersen, 2020).

In 2017, India phased out the earmarking of revenues from the Clean Environment Cess (taxing coal) for environmental purposes, subsumed under the introduction of the centralised Goods and Services Tax (Brown to Green: The G20 Transition Towards a Net-Zero Emissions Economy: India , 2019). In 2017, India’s fossil fuel subsidies totalled US$10.8bn (compared to US$11bn in 2008 and the last decade’s peak of US$20.7 in 2013). Of the subsidies quantified, 97% were for the consumption of fossil fuels, with the remainder for production (Brown to Green: The G20 Transition Towards a Net-Zero Emissions Economy: India , 2019). In addition, 10.6 billion US$ public financing has been estimated to be provided for coal related projects in 2016/2017 (Brown to Green: The G20 Transition Towards a Net-Zero Emissions Economy: India , 2019).

The National Electricity Plan assumes that, while 0.4 GW of additional gas capacity will be added in the period 2017–2022, no additional gas-fired power plants will be deployed after 2022 as the availability of gas is uncertain in India. This trend is in line with a phase-out of unabated gas power as would be expected in a Paris Agreement-compatible global power sector. The NEP projects power sector emissions level of 1.0 and 1.2 GtCO2e in 2021/22 and 2026/27, respectively (CEA, 2018).

Renewables

The National Electricity Plan (NEP) (CEA, 2018) has a cumulative target of 175 GW renewable energy capacity by 2022, in line with the government’s renewable targets. Under current policies, the share of renewables in installed power capacity would be 29 – 40% (37% under the NEP) by 2022. By relying in part on hydroelectricity and nuclear power, India will reach its NDC target of 40% non-fossil generation capacity nearly a decade earlier than its target. Based on current policies, the share of non-fossil generation capacity will reach 60-65% in 2030, which corresponds to a 40-43% share of electricity generation. For a Paris Agreement compatible pathway, India would need to aim for a share of renewable energy of 65-80% by 2030 and 90-100% by 2040, with 100% Renewable energy achievable between 2040 and 2050 (Climate Action Tracker, 2020).

With growing consensus among utilities, mining companies and policymakers on the competitiveness of renewables, removing price distorting subsidies will be essential to facilitate a rapid transition to renewables (Coal India, 2018; Gordon-Harper, 2018). Redirecting subsidies away from fossil fuels to renewable energy sources could lead to cost savings, as well as significant co-benefits such as reduced indoor air pollution (Laan et al., 2019).

For three consecutive years, renewable energy investment topped that of fossil fuel-related power investments and in 2018, investments in solar exceeded those in coal (McKenna, 2019). This is an important development, as the Paris Agreement implies the need for a major shift in investments, with global annual investments in low-carbon energy technologies overtaking fossil investments already by around 2025 (IPCC, 2018).

India’s investments in solar PV surpassed those in in all fossil fuel sources combined in 2018. Large-scale auctions have contributed to swift renewable energy development at rapidly decreasing prices (Schlissel & Woods, 2019). Currently (as of March 2020) India has installed 87 GW of renewable energy capacity (CEA, 2020). This includes 34 GW of solar and 38 GW of wind energy (Joshi, 2019). Besides, around 36 GW of renewable energy is under installation and about 35 GW is under bidding stage (The Economic Times, 2020a). A recent auction secured 2 GW of new solar capacity at an average of $US34/MWh compared to the cost of coal-fired power generation of $US45/MWh in 2018/2019 – showing that solar is already cheaper than coal in the country.

The original targets of the ”National Solar Mission”, one of India’s major renewable energy-related policies launched in 2010, was scaled up in 2015 to 100 GW solar, 60 GW wind, 10 GW biomass, 5 GW small-scale hydro (MNRE, 2010, 2015). This amounts to a total of 175 GW (cumulative target by 2022), with the government signalling its intention to scale this up to 227.6 GW (Darby, 2018). The current installed capacity of solar PV stands at 35 GW and wind at 37.5 GW with net capacity additions of 7.7 GW of solar and 7.3 GW of onshore wind between 2018 and 2019 (IRENA, 2020).

Wind power is supported via a Generation Based Incentive, while state-level feed-in tariffs apply for all renewables. Renewable Energy Certificates (RECs) are in place that promote renewable energy and facilitate Renewable Purchase Obligations (RPOs), which legally mandate a percentage of electricity (8% by 2019) to be produced from renewable energy sources.

Competitive bidding is also used to promote wind power projects but has faced setbacks as the Solar Energy Corporation of India (SECI) cancelled 2 GW of wind tenders and reduced the upcoming tranche of bidding to 1.2 GW from the original proposal of 2.5 GW (Chatterjee, 2018). In May 2018, the Indian government announced a National Wind-Solar Hybrid Policy to promote large grid-connected wind-solar photovoltaic (PV) hybrid systems as well as new technologies and methods for combining wind and solar (Economic Times India, 2018).

The government is urging states to provide incentives for setting up designated manufacturing hubs for renewable energy in India and is providing support for renewable energy stressing the “must-run” status of wind and solar projects and extending the timelines for renewable energy projects affected by the lockdown (Mohanty, 2020).

The main instrument to increase energy efficiency in industry is the Perform, Achieve and Trade (PAT) Mechanism, which is implemented under the 'National Mission on Enhanced Energy Efficiency’. PAT resembles an emissions trading scheme (ETS) and has been in place since 2012. PAT differs from traditional cap-and-trade systems as it sets intensity-based energy targets.

Installations that exceed their targets can sell Energy Saving Certificates to installations that did not meet their target (EDF et al., 2015). The first cycle of the PAT scheme resulted in savings of 5.6 GW and 31 MtCO₂e between 2012 and 2015 (BEE, 2018).

In addition to the PAT mechanism, India seeks to launch a pilot carbon market mechanism for micro, small, and medium enterprises (MSMEs) and the waste sector. These sectors have been chosen because they are not covered by existing climate policies and currently rely on outdated technologies, meaning they have a large emissions reduction potential. The pilot carbon market mechanism was slated to go into effect in March 2019 (Reklev, 2018), but at the time of writing it remains unclear what steps have been taken in this direction.

However, the Government of Gujarat has introduced the world’s first emissions trading scheme for particulate matter that covers industry (Sharma, 2019). This novel system could provide valuable insights to guide India’s adoption of market-based mechanisms to target emission reductions. Also, 37 companies in India are in the process of adopting an internal carbon price, with leaders including major cement producer Dalmia Bharat Cement Ltd (Rastogi, 2019).

India is driving forward the ‘Leadership Group for Industry Transition’, a group including other countries such as Sweden, Argentina, France and Germany, and companies, which aims to engage in an ambitious public-private effort to ensure that heavy industries meet the goals of the Paris Agreement (Kosolapova, 2019). It remains to be seen whether this will facilitate India’s low carbon transition in the industry sector. Key needs in the cement sector, for instance, include clinker substitution to facilitate decarbonisation of the cement sector (Biswas et al., 2019).

India has a target of 30% share of electric vehicles (EV) in new sales for 2030, down from an originally announced much more ambitious target of 100%, consistent with the targets of the intergovernmental EV30@30 campaign, of which India is a member (Clean Energy Ministerial, 2019). In addition, the government is working on plans to require all two-wheelers to be electric by 2026 (Carpenter, 2019). Current estimates projects EV sales share of 7–40% in 2030 (TFE Consulting, 2018; Upadhyay, 2018).

A Paris Agreement-consistent target would be 80-95% in 2030 and 100% in 2040, including two- and three-Wheelers (Climate Action Tracker, 2020). The originally-proposed target would have been consistent with this.

The Faster Adoption and Manufacturing of Electric Vehicles in India (FAME – II) scheme is a key component of this mission. It came into effect in April 2019, and provides incentives to purchase electric vehicles, while also including provisions to ensure adequate charging infrastructure (Business Today, 2019).

These incentives include subsidies to reduce the upfront cost of electric vehicles, along with other incentives such as tax concessions (Ministry of Road Transport and Highways, 2018). The Ministry of Power recently released a notification which aims to ensure that there is at least one charging station available in a grid of 3 km², and ensure that the electricity tariffs paid by EV owners and charging station operators is affordable (Ministry of Power, 2019).

Despite conflicting reports regarding national plans and targets, Indian states are taking action to promote EVs. By June 2018, Andhra Pradesh, Karnataka and Maharashtra had already announced official policies on EVs, and other states like Telangana, Uttar Pradesh and Goa were in the drafting phase. Andhra Pradesh, for example, also established a target of one million electric vehicles on the road by 2024 and Maharashtra a production target of 500,000 electric vehicles in five years (Thakker, 2018). The state of Tamil Nadu recently released its EV strategy with a host of incentives, including land subsidies to set up EV charging stations, and other manufacturing infrastructure, and tax exemptions to EV owners among a host of other incentives.

India’s first light vehicle fuel efficiency standards came into force in April 2017, setting efficiency targets for new vehicles that weigh under 3,500 kg with no more than nine seats (The International Council on Clean Transportation, 2014; Transportpolicy.net, 2017). The efficiency targets start at the equivalent of 130 gCO₂/km in 2017 and fall to 113 gCO₂/km in 2022 (Transportpolicy.net, 2017). The standards are based on the average weight of the fleet that manufacturers will sell in a year. Currently there are no CO₂ emission standards for light commercial vehicles.

In July 2020, India railways announced plans to achieve net zero emissions by 2030. This follows a target to achieve complete electrification of its network by 2023 (Cuenca, 2020).

Given that well over half of India’s population generates an income from agriculture, this sector is particularly important. It is also intricately linked to the power sector as electricity is used for water pumping in modern irrigation. The heavily-subsidised power supply to agriculture in India has contributed to the use of inefficient pumps and a resulting excessive use of both water and power (Sagebiel et al., 2015).

The low quality of power distribution is evidenced by the large discrepancies in the average number of hours power is supplied to the agriculture sector between states: while West Bengal has an average of 23 hours a day, Karnataka only has six (Mallapur, 2018). To tackle some of the challenges facing the electricity-agriculture nexus, the Ministry of New and Renewable Energy recently notified the KUSUM scheme. The scheme provides for the installation of standalone off-grid solar water pumps for irrigation, and the solarisation of existing grid connected pumps to enable farmers to sell surplus solar power generated back to the DISCOMs (Government of India, 2019).

India’s National Bank for Agriculture and Development (NABARD) also has a number of initiatives facilitating climate change mitigation and adaptation, e.g. by educating farmers on the impacts of climate change. Programmes such as Rural Infrastructure Development Fund and the bank’s Infrastructure Development Assistance support, in part, projects with emission reduction potential including through biogas digesters, rural energy management, renewable energy, and improving energy efficiency (NABARD, 2019).

The National Mission for Sustainable Agriculture (NMSA), adopted in 2012, seeks to climate-proof and reduce emissions in the agriculture sector but is falling behind on implementation of planned schemes. The government has not been able to spend a large portion of the funding allocated to the Mission’s various components (e.g. soil health management, increasing tree cover, and enhancing productivity of crops) (Rattani et al., 2018).

The Indian Ministry of Environment Forest and Climate Change has recently released the draft National Forest Policy (in November 2019) for Cabinet to make a final decision on (Kukreti, 2019). The draft calls for a minimum of one-third of India’s total geographical area to be under forest or tree cover and supports the NDC target of creating an additional (cumulative) carbon sink of 2.5–3 GtCO₂e by 2030. The policy is set to guide forest management in India for the next 25 to 30 years. Corresponding regulation and rules will be amended or developed going forward.

The Green India Mission is expected to substantially enhance carbon sequestration, but in 2015–16, the Mission was 34% short of its plantations target. The Mission also has not been able to fulfil its goal of providing alternative fuel technologies to reduce emissions from burning of fuelwood. Only 30% of the Mission’s allocated funding was released for use in the next five years (Rattani et al., 2018).