Narendra Modi's Net-Zero Emissions Commitment Will Shake Indian and Global Energy Markets: Economist
11:53 GMT 03.11.2021 (Updated: 08:57 GMT 15.11.2022)
Days before the start of the COP26 conference in Glasgow, Indian officials rejected a demand by western nations to commit to net-zero carbon emissions in the near term. At least 70% of all power in India is generated by coal, although some effort is being made to promote sustainable technologies in country's energy grid.
In a surprise announcement, India has committed to meeting a target of net-zero emissions by 2070. Speaking at the world leaders' summit at the UN conference in Glasgow on Monday, Indian Prime Minister Narendra Modi made five key pledges for decarbonizing the country of more than 1.3 billion people.
India is the world's third-largest emitter of carbon dioxide after China and the US. Alongside the net-zero emissions target, Modi also pledged to reduce the nation's dependency on fossil fuels by 2030, promising a 45% reduction in the economy's carbon intensity. Modi referred to his five pledges at the COP26 as 'Panchamrit', a concoction of five substances representing the five elements, considered a holy nectar by those of the Hindu faith.
Modi additionally asserted that India will increase its non-fossil energy capacity to 500 gigawatts
and reduce its projected carbon emissions by one billion tonnes between now and 2030. The Indian prime minister also stated that his country will have 50% of its power generated by renewable energy by 2030.
Sputnik spoke with Dr. Vaibhav Chaturvedi, an economist who leads The Council on Energy, Environment and Water work (CEEW) on low-carbon pathways, about Modi's commitment and its implications for the Indian economy and energy sector.
Sputnik: Can India achieve a net-zero emissions target by 2070? If yes, then what kind of efforts will be made?
Vaibhav Chaturvedi: This is an unprecedented, bold announcement from the prime minister. This is more ambitious than either the EU and Chinese announcements. For an economy expected to grow fast for the next two decades, even peaking in the next 20 years is not an easy feat. This announcement will shake Indian and global energy markets and give a sense of much-needed long-term certainty to investors in the energy domain. The enhanced ambition of 2030 targets makes the net-zero announcement even more credible. The prime minister has stamped India's leadership in the climate discourse.
Any ambitious target would have its share of challenges. The biggest near-term challenge is in electricity market design and distribution sector reforms. For the longer term, it would be managing human resources in the coal sector
. Skilled human resources for the new shape of energy markets would be critical. So challenges galore, but strategic planning would help see us through.
Sputnik: Can you elaborate on the implications for Indian industry and the nation's economy to achieve the five pledges made by Prime Minister Narendra Modi?
Vaibhav Chaturvedi: Long-term policy certainty is always positive for investors. 2070 is almost 50 years from now. With enhancing ambition on the NDC targets, the ball has been set rolling for the near term as well. Investors and developers associated with the power sector will be the first to witness massive change. Then will come the players dealing with the mobility sector, and the decision-makers in the non-mobility-related manufacturing industry will see the implications of this shortly after. Industries that are better placed in terms of technology availability would have to go first as this minimizes these sectors' economic costs. However, the political economy of the transition would need to be understood and managed strategically.
Sputnik: Job losses are a significant concern. Can renewable energy (RE) provide jobs to those who will lose their earnings in the wake of the transformation?
Vaibhav Chaturvedi: The transition is across two generations. If the transition is planned well, the impact will be minimal. Still, it has to be ensured that workers in the coal sector and their families are adequately supported. The RE sector requires a different skill set. We should not assume that a coal miner can work in the renewable energy sector with just some minor training. The massive increase in the RE penetration clearly implies that the sector will have millions of job opportunities. The Indian ecosystem has to be prepared to provide skills to the potential employees for harnessing this opportunity.
Sputnik: Do you think the developed world will be able to provide one trillion dollars in funding to developing countries, as demanded by the Indian Prime Minister during his speech at COP26, as well as the technology to achieve the stated climate goals?
Vaibhav Chaturvedi: I don't think, at least in the next few years, they will provide anything more than the $100 billion, as promised. This, I think, could be a major flashpoint in the negotiations.