Net Zero By 2050 Possible In India With Radical Rethink And Matching Investments

By Outlook Planet Desk January 20, 2024

India has the potential to produce the second-cheapest green hydrogen in Asia by 2030, setting an example for the rest of the world as it moves to transform itself into a low-carbon economic powerhouse

Net Zero By 2050 Possible In India With Radical Rethink And Matching Investments
The Net Zero 2050 scenario sets out an entirely different outcome, requiring a complete economic rethink. Shutterstock

India, already the world's most populous country, will become the fastest-growing major economy over the next few decades. It is expected to become the world's third-largest economy by 2032, up from fifth place today, according to a report by Wood Mackenzie. 

However, such growth will be challenging with a massive increase in carbon emissions, which may be unsustainable given that the fossil fuel-dominated country is already the world's third-largest emitter.  

Here, the country has a unique opportunity to transform itself into a low-carbon economic powerhouse and avoid the mistakes of others. This will take more than investment in clean energy; it will require a radical redesign of India's economy and its relationship with energy as both its population and manufacturing capacity expand.  

According to the report, India can achieve net zero emissions by 2050, two decades earlier than its pledge. However, it will be highly challenging, requiring trillions of dollars in clean energy investments. But achieving net zero emissions by 2050 would enhance India's climate and global leadership credentials and ultimately benefit everyone. 

How India can reach net zero by 2050?

India is committed to reach net zero by 2070 at the COP26 climate conference in Glasgow in 2021, but its current emissions pathway is wildly off target. Base cases show emissions will almost double by 2040 and fall only marginally by 2070; India's strong economic growth depends on fossil fuels. 

The Net Zero 2050 scenario sets out an entirely different outcome, requiring a complete economic rethink. This scenario is built around massive investment in clean energy, decarbonising India's rapidly expanding industrial and infrastructure sectors, and maximising its unique human talent. 

Given India's rising population, the Net Zero 2050 scenario mustn't come at the expense of economic growth. Indeed, India should view it as a $13 trillion investment opportunity.  

Electrifying India: policymakers hold the key 

India's future economy requires rapid growth in renewables. Globally, the country now ranks fourth in installed renewable capacity, with a fourfold increase since 2014. This means renewables currently account for around 43 percent of the country's total power generation capacity, including hydro. 

The Panchamrit initiative, first set out at COP26 in 2021, lays the foundations for rapid growth in renewables. If successful, it will require India to almost triple its non-fossil fuel capacity within six years. This could lead to a cumulative reduction of 1 billion tonnes of carbon emissions by 2030, resulting in a carbon intensity of GDP of less than 45 percent and net zero emissions by 2070. 

The initiative aims to position India as a growing economy committed to reducing carbon emissions in its power sector and promoting a new industrial era powered by massive investments in renewable energy projects, both domestically and internationally. India's efforts in this regard can serve as a blueprint for other developing economies to follow. 

Although India has made impressive strides so far, it must continue improving if it hopes to boost its non-fossil fuel-based electricity to nearly 80 percent of its total output by 2050. By doing so, India can enhance its domestic supply chains, improve energy security, control costs, and create job opportunities. 

The country's lack of solar wafer production capacity hinders India's manufacturing ambitions and net zero goals. Policy initiatives have been implemented to promote growth in the domestic photovoltaic (PV) supply chain. However, the sector still relies heavily on imports, especially polysilicon, ingots and wafers, ancillaries, and PV machinery. 

India needs to significantly increase its renewable energy capacity to achieve its net-zero ambition, which requires extensive grid and storage capacity additions. The government provides incentives for capital investment projects and mandates the installation of battery storage in variable renewable energy projects over 5 MW.  

However, despite the increasing renewable capacity, investment in storage still needs to catch up. India will need gigawatt-scale battery manufacturing to reduce production costs and ensure energy security. Access to the critical minerals required to build domestic battery capacity poses another challenge. Government support through the production-linked incentive scheme to develop a battery manufacturing capacity of around 50 GWh of production units falls far short of the 208 GWh battery energy storage system capacity target required by the end of this decade. 

Taking emerging technologies mainstream, the Indian way 

Achieving net zero emissions by 2050 depends on India's success in integrating emerging technologies by the end of this decade. India will experience rapid growth in energy-intensive industries. This implies it will need to decarbonise more new and early-life production units than other major economies. However, this challenge also offers an opportunity to promote industrial growth through low-carbon technology manufacturing and supply-chain development earlier in the investment cycle. 

India has vast potential for decarbonisation due to its scale, population, and level of economic development. With around 750 million tonnes of biomass residue per annum (Mtpa), its bioenergy potential remains largely untapped. Shifting bioenergy usage from residential to industrial and transport sectors would help reduce both oil imports and air pollution from stubble burning. 

India is already the global leader in compressed biogas, biomass pelleting, and bioenergy use in road transport and thermal power plants. Its potential in sustainable aviation fuel (SAF) is significant, thanks to its abundant bio-feedstocks and progress on in-house solutions. Approval for an indigenous SAF production process is expected this year, and the Mangalore Refinery's SAF plant is set to be operational by early 2025.

For India to continue progressing in this field, it needs to expand regulations that ensure biomass supply-chain development and provide federal funding support for modern biofuel production units that use local resources. Biofuels displace 0.5 million barrels of oil demand daily under the Net Zero 2050 scenario.

India can potentially become a leader in small modular reactors (SMRs) that generate 300 MW or less. This is due to their scientific capabilities and experience in building indigenously pressurised heavy water and submarine reactors.

The Nuclear Power Corporation of India and the National Thermal Power Corporation have partnered to accelerate nuclear deployment. However, private-sector investment is also needed, which is why the Atomic Energy Act of 1962 is being reviewed to enable broader participation. 

Despite these efforts, India faces a massive challenge in realising its nuclear potential. According to our Net Zero 2050 scenario, 120 GW of nuclear energy is required, significantly higher than the 50 GW estimated in the base case. 

Low-carbon hydrogen is crucial in India's efforts to decarbonise its most challenging sectors. With India having a relatively high solar irradiance of 1,200–2,300 KWh/m2/year and wind speeds of 4-6 m/s, it is estimated that the country's levelised cost of hydrogen (LCOH) produced from renewables offers a cost-effective, round-the-clock option when combined with battery storage.  

By 2030, hybrid onshore wind and solar could cut the LCOH to $4.3/kg H2, making it the second-lowest in Asia after China. To encourage this, the Indian government has allocated $2.1 billion through a three-year incentive scheme to reduce electrolytic hydrogen production costs by 10 percent. Furthermore, India's hydrogen policy allows developers to purchase renewable power from the grid with no transmission costs for 25 years. 

India needs to increase its wind and solar power delivery to meet its goal of producing 5 million tonnes of green hydrogen by 2030. The country will require 125 gigawatts of clean power from renewable sources to achieve this. Approximately 4 million tonnes of low-carbon hydrogen is expected to be produced by 2030, constituting around 5 percent of global production. 

To reach a net-zero emission status by 2050, India must produce 55 metric tonnes of hydrogen. The country has the potential to make up to 35 Mtpa domestically, with the remaining supply being met through imports. 

India is well-positioned in the low-carbon hydrogen market due to policy support and cost efficiency. However, it is crucial that the government also focus on stimulating other sectors like carbon capture, utilisation, and storage (CCUS). While the government acknowledges the importance of CCUS, its approach remains cautious.

NITI Aayog, the Indian government's influential think tank, has identified significant potential in CCUS, but the country lacks a defined timeline and financial support. India's upcoming carbon pricing regime, set to be operational by 2026, will aid in this regard, but more initiatives are necessary. Encouragements such as using captured CO2 to produce urea for India's vast fertiliser sector and methanol for India's road fleet, diesel generators, and tractors should serve as incentives. 

With more than 1 gigatonne of CCUS capacity required in our Net Zero 2050 scenario, the lack of progress is a concern. 

India's approach to development is unique among the world's major economies. It combines a service-led economy with a growing manufacturing sector. This shift in policy-making towards industrial growth has been supported by programmes such as production-linked incentives (PLI) and policies to encourage the purchase of locally made products. However, while this strategy has been successful, it risks exacerbating India's already worsening emissions profile. 

A sustainable approach to economic growth is needed to address this issue, particularly in hard-to-abate manufacturing sectors such as cement, iron, and steel. These sectors are responsible for three-quarters of India's total industrial emissions, with cement production alone accounting for nearly a quarter. 

Major cement players are investing in low-carbon value chains to mitigate carbon emissions from cement production. For instance, JSW Cement plans to use agricultural waste as biomass fuel at its manufacturing plants to reduce its carbon footprint.

In the long term, newer technologies such as using waste heat from industry and agriculture, electrifying kilns, and co-firing hydrogen and CCUS can support decarbonisation initiatives for Indian cement producers. Projects can also draw on India's bioenergy supply to reduce carbon emissions further. 

Iron and steel 

India's steel production is growing rapidly but is also the largest contributor to industrial emissions. To reduce pollution, steelmakers must shift away from coal-fired direct-reduction furnaces and induction furnaces. They can move towards low-carbon electric arc furnaces and increase the use of green metallics like scrap and gas- or hydrogen-based direct reduced iron (DRI) to decarbonise. 

By 2050, India's steel production capacity is expected to triple to 510 million tonnes. To achieve net-zero emissions by 2050, India's EAF steel production should account for 60 percent of total output, compared to 35 percent in the base case. Unlike cement, process emissions in the steel industry make up a lower proportion of total emissions, so steelmakers can focus on energy-efficient processes and cleaner steelmaking technologies. 

Decarbonisation investments should support India's demand growth for petrochemicals. Ethylene production is energy- and emissions-intensive, so it's crucial to decarbonise this sector. Key steps to achieve net-zero emissions by 2050 include expanding the circular economy for plastics to reduce demand by 10 percent, electrifying crackers, and a shift to low-carbon feedstocks and hydrogen co-firing furnaces. 

India has one of the lowest per capita emitters globally, and it's essential to maintain this to achieve net-zero emissions by 2050. To reach this target, final energy consumption must fall by more than 30 percent by 2050 compared to the base case. Although it's a challenging goal, India can use a range of uniquely Indian approaches to achieve it. 

India is currently a compliant carbon market and plans to introduce a voluntary mechanism simultaneously. To achieve net-zero emissions by 2050, India's carbon price needs to reach US$154 per tonne of CO2. This is a significant challenge for a country known for being price-sensitive. Carbon market development should encourage companies to monetise their investments in CCUS, green hydrogen, renewables, and bioenergy, which might seem unviable due to high upfront capital costs. 

National policies with local impact 

The Unnat Jeevan by Affordable LEDs and Appliances for All (UJALA) programme is the world's largest zero-subsidy LED bulb initiative for residential consumers and an example of the type of national policy with local impact at which India excels. Beyond reducing energy consumption by 35 TWh annually (an impressive 3 percent of India's total electricity demand), UJALA sparked substantial investments in LED bulb manufacturing, slashing retail prices. 

The Perform, Achieve, and Trade scheme has been instrumental in promoting energy efficiency in energy-intensive industries. This scheme enables companies to earn certificates by exceeding energy-saving targets, which can be traded to designated consumers. This provides a unique incentive for implementing energy efficiency measures. 

Addressing energy efficiency in the building sector, particularly cooling, is an urgent area for action. Full implementation of national building codes and better appliance standards and labelling are pivotal. 

Can India sustain the political will needed for Net Zero 2050? 

The India Net Zero 2050 scenario needs consistent political leadership for several decades. Prime Minister Narendra Modi has a lot of political power within India and supports the fast deployment strategy of low-carbon technologies. However, the demand for fossil fuels is still on the rise. 

Future leaders must support Prime Minister Modi's vision and work even harder to gain support for clean energy and the economic benefits it can bring. As India considers introducing a domestic carbon price, politicians must ensure that consumers understand the reasons behind it. 

India should also use its diplomatic and soft power to its advantage. India has long argued that it's unfair to expect developing countries to make the same commitments to decarbonisation as countries that have historically been responsible for emissions.

While this is a valid point, it's inconsistent with the India Net Zero 2050 scenario. Nevertheless, a clear and compelling argument exists for richer countries to actively support India in its efforts to decarbonise by providing financial and technological support. India should exploit its growing political and trade relationships with the West.