Most of this money will be needed to scale up generation from renewable energy: think tank
To meet its goals of net zero, or being able to effectively eliminate carbon dioxide emissions by 2070, India will need close to $10 trillion (₹700 lakh crore), according to an analysis by climate and energy research firm, CEEW Centre for Energy Finance (CEEW-CEF). CEEW is the Council for Energy, Environment and Water Research, a think tank in New Dellhi.
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Most of this money, around $8.4 trillion, would be needed to significantly scale up generation from renewable energy and bringing together the necessary integration, distribution and transmission infrastructure. Another $1.5 trillion would have to be invested in the industrial sector for setting up green hydrogen production capacity to advance the sector’s decarbonisation. Green hydrogen is hydrogen gas made from renewable energy and can be used for many things, from heating to powering batteries as well fuelling vehicles.
The study estimates that India would fall short by $3.5 trillion to achieve net-zero emissions by 2070 and hence, investment support of $1.4 trillion, in the form of concessional finance, would be required from developed economies to mobilise foreign capital that bridges the gap. Concessional finance refers to loans at below-market interest rates.
At the recently concluded summit in Glasgow, Scotland, Prime Minister Narendra Modi announced India’s national goals to significantly improve the proportion of renewable energy in its installed capacity and be net zero by 2070. Reaching net zero by 2050 is earth’s best chance, scientists say, to keep the globe’s average temperature from exceeding 1.5C by the end of the century.
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Arunabha Ghosh, CEO, CEEW, said: “At COP26, India announced bold near-term and long-term climate targets. Our analysis finds that a transition to net zero emissions would require mammoth investment support from developed countries. Developed countries must ramp up hard targets for climate finance over the coming years. Also, on the domestic front, financial regulators such as the RBI and SEBI need to create an enabling ecosystem for financing India’s transition to a green economy. Finally, given the size of the investments required, private capital, from both domestic and international institutions, should form the bulk of investment, while public funds should play a catalytic role by de-risking investments in existing and emerging clean technologies.”
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The CEEW-CEF study underlined that India’s $1.4 trillion concessional finance requirement would not be uniformly spread across the five decades till 2070. The average annual concessional finance requirement would vary from $8 billion in the first decade to $42 billion in the fifth decade.
Last month, the CEEW in another study had computed that for achieving net zero by 2070, India’s total installed solar power capacity would need to increase to 5,630 gigawatts by 2070. The usage of coal, especially for power generation, would need to peak by 2040 and drop by 99% between 2040 and 2060.
Further, crude oil consumption across sectors would need to peak by 2050 and fall substantially by 90% between 2050 and 2070. Green hydrogen could contribute 19% of the total energy needs of the industrial sector.