Data trends: 🟠 COP26 Progress: 🟢 2022 Momentum: 🟠
India’s announcements at COP26 surprised many. For years, India has maintained that coal was king, yet COP26 saw India announce a 2070 net-zero target; dramatically propose ground-breaking “coal phase down” language in the Glasgow Climate Pact; and launch the ‘Green Grids Initiative – One Sun One World One Grid.’
These are all positive signals that the reign of coal is approaching an end, but further actions will be needed this decade to ensure the transition from dirty coal to clean energy is not protracted or painful.
Domestic conditions ripening for India’s coal transition
Arguments for new coal in India are increasingly weak, despite repeated calls for investment in the sector. CREA, Ember, and IEEFA analyses show that building new coal is not just unnecessary, but also represents a costly mistake. This is especially true given power generating companies such as Tata Power plan to phase out coal by dramatically increase renewable investments. Addressing air pollution, strengthening energy security, bolstering competitiveness, and ensuring future jobs all require a rapid exit. The sooner policy and political clarity is provided, the more cost effective and advantageous India’s transition will be.
PM Modi’s elixirs: the magic ingredients accelerating India’s coal exit
Prime Minister Modi announced India’s five elixirs at COP26. Collectively and individually, they send clear high-level political signals that Indian electricity generation is heading towards rapid decarbonisation. Reducing reliance on coal will be a key first step in achieving these five objectives:
- Non-fossil energy capacity to reach 500GW by 2030
This ambitious target is more than three times India’s current non-fossil fuel capacity, and more than India’s total grid size. While the government is still to provide a sector breakdown, the Central Electricity Authority (CEA)’s 2020 study projects that the share of non-fossil fuel capacity would increase from current 40% to 64% by 2030, while gas would remain at current levels. India would also need at least 27GW of battery and 10GW of pumped hydro storage capacity to achieve this goal. While these projections showed an increase in net coal capacity (57GW), most is unlikely to materialise.
- 50% of “energy” from renewable energy by 2030
This somewhat ambiguous announcement, clarified to indicate share in installed electricity capacity, again demonstrates India’s ambitious renewables targets, implicitly pushing expensive and inefficient coal off the grid.
- Total projected carbon emissions reduction by one billion tonnes by 2030
Explicitly referring to emissions reduction language (which India had not done previously) will have economy-wide impacts. India now needs to develop a baseline and methodology, which includes the delivery of huge potential emissions reductions associated with closing coal units.
- Carbon intensity of economy reduced to less than 45% (likely from 2005 levels) by 2030
This could be strengthened in future through, amongst other things, the accelerated retirement of India’s existing inefficient and polluting coal power plants and avoiding construction of new coal plants. India’s 2015 NDC already commits to reduce its carbon intensity by 33% to 35% from 2005 levels. Studies estimate that India had already reduced emissions 28% by 2019, and could deliver a 50% reduction.
- Net zero emissions by 2070
Going into COP26, India had resisted net-zero, demanding greater support and action from developed economies. PM Modi’s announcement of a target was unexpected. Although setting a target was expedient, as India was the only G20 country without one, it was politically impossible to match the US and China net zero targets of 2050 and 2060 respectively. Whether 2070 or earlier, this announcement implicitly means an end to coal expansion and a negligible share in electricity generation by the 2040s.
What next for India?
With ever-clearer and increasingly ambitious energy transition targets, India’s shift away from coal is accelerating. Recent reports indicate government experts’ recommendation to stop building new coal power plants and retire inefficient coal power units by March 2023. As India looks to meet its future demand, translating commitments such as those made at COP26 into a clear policy focus on green energy, and removing pro-coal signals, will be essential. This will avoid stranded assets, provide investors with clarity, and ensure a managed just transition for workers and communities dependent on coal.
Achieving these goals and delivering coal phase-out will also require affordable finance and technology development. Meeting 450GW of renewables by 2030 could require nearly $500bn investments in India’s electricity sector, for example. India’s participation as a pilot country under the Climate Investment Fund’s Accelerating Coal Transition programme, could be key in financing just transitions away from coal, and delivering PM Modi’s elixirs.
A decade ago, few predicted that India would bet on renewables over coal to meet its future energy needs. India’s announcements at COP26 give us hope that in this decade, new policies, increased international collaboration and careful planning, could accelerate a just coal-to-clean transition.
