Accelerated deployment of clean technologies is essential if India is to reach its 2047 energy independence goal
India’s transition to a net-zero economy by 2050 presents an investment opportunity that amounts to at least $12.7 trillion, according to the New Energy Outlook: India report, published by research company BloombergNEF.
The report details two scenarios for India’s energy system and the implications of the country’s transition opportunities and challenges. The base case Economic Transition Scenario, or ETS, describes an economics-led transition, consistent with a global temperature rise of 2.6 degrees Celsius by 2050.
Under this scenario, the country makes significant progress toward energy independence and decarbonisation but does not achieve either goal by 2050.
The second, the Net Zero Scenario (NZS), envisages enhanced government support and private sector investment. It is consistent with net-zero emissions by 2050 with no reliance on unproven technologies. It also enables India to achieve its mid-century energy independence goal at the lowest cost.
Under the ETS, investment in energy supply and demand reaches $7.6 trillion over 2022-2050, an annual average of $262 billion. To stay on track for net zero, according to BNEF’s NZS, investment levels are 1.7 times higher, for an annual average of $438 billion (equal to about 5% of expected GDP) and a total of $12.7 trillion to 2050.
Total investment in fossil-fuel power drops from $317 billion in the ETS to $142 billion in the NZS. To abate emissions from the remaining use of fossil fuels in the NZS, India needs $870 billion in investment for carbon capture and storage (CCS).
Electric vehicle sales account for the largest share of investment for energy demand in both scenarios. In the NZS, $3.9 trillion is spent deploying electric vehicles.
“Transitioning to a zero-emission vehicle fleet by 2050 will require bold policy efforts by the state and national governments. Falling battery costs are set to accelerate EV adoption post-2030 which will also spur local manufacturing from automobile and battery makers,” said Komal Kareer, India Research Associate at BNEF.
Under the ETS, India’s industrial CO2 emissions are set to surpass the power sector by the early 2040s, driven by the growth of steel, aluminium, petrochemical and cement sectors.
Steel, which is India’s largest emitting industrial sub-sector, sees emissions almost triple between 2021 and 2050 from 351 million tons of carbon dioxide (MtCO2) to 948MtCO2.
Green hydrogen and CCS will be key in decarbonising the industrial sector and eliminating those emissions. BNEF NZS shows that 54% of cumulative emissions abatement can come from use of clean hydrogen in making steel between 2022 and 2050. Similarly, CCS helps eliminate 56% of the cumulative emissions from cement production.
“India can all but eliminate dependence on fossil fuel imports by 2047, its centennial,” said Shantanu Jaiswal, Head of India Research at BNEF.
“By accelerating deployment of mature clean technologies such as solar, wind and electric vehicles, India could create more domestic economic opportunities while reducing emissions and strengthening its energy security.”
Under the NZS, India’s industrial sector emissions peak in 2031 and begin a steep decline in the mid-2030s as the use of hydrogen and carbon capture increases to decarbonise steel, cement and petrochemical production.
India’s current Nationally Determined Contributions (NDC) implies energy related emissions in 2030 would be 31% higher than 2019 levels. Under BNEF’s ETS, India’s energy related emissions in 2030 would be 22% above 2019 levels, suggesting India may very well do better than its current NDC implies.
BNEF’s NZS requires India’s 2030 energy related emissions to be 9% below 2019 levels, hence the need for accelerated deployment of mature clean technologies.
BNEF’s analysis finds that maximising deployment of solar and wind, supplemented by additions of nuclear, energy storage and CCS for thermal power plants, is the cheapest way for India to increase electricity access while decarbonising its power supply.
