Climate finance key to India’s energy transformation, says report

To meet the goal of limiting temperature rise to 1.5 degrees C, India’s wind and solar power generation needs to increase five- to six-fold by 2030, generating 900-1,200 terawatt-hours (TWh) of wind and solar power, a new report predicts.

At the current rate of deployment, India would not achieve the required capacity in 2030 to meet the 1.5 degree C requirement, with a shortfall of about 140 GW of solar and 70 GW of wind. 1.5 degrees C refers to one of the goals of the Paris climate agreement, keeping global warming below 1.5 degrees C above pre-industrial levels.

India will need massive investment to help phase out coal-fired power, accelerate the deployment of renewables and speed up the expansion of power grids. International support will be crucial to support the energy transition through climate finance, according to a report by Climate Analytics and the Germany-based New Climate Institute.

India’s energy sector remains heavily dependent on coal, which accounted for 75% of electricity generation in 2023.

At COP28, the climate conference in Dubai last year, governments agreed to triple global renewable capacity by 2030 worldwide. The report highlights the potential implications of this COP28 decision at the national level, including for India.

“High-income countries will need to provide significantly increased climate finance to support emissions reductions abroad, in line with their ‘fair share of climate action.’ Achieving these benchmarks in lower-income countries is therefore a global responsibility, not a national responsibility,” the report states.

It also assumes that if India is to meet its target of limiting temperature rise to 1.5 degrees Celsius, fossil fuels must be phased out of India’s power sector by 2045. Fossil fuel production must fall by 20-44% between 2022 and 2030, it added.

India’s current Nationally Determined Contribution (NDC) aims to reduce its emissions intensity by 45% from 2005 levels by 2030. India has also committed to achieving net-zero emissions by 2070.

The country’s current renewable energy targets are to reach 319 GW of solar and 110 GW of wind by 2030, according to India’s National Energy Plan 2022. The International Energy Agency estimates that, under current policies and market conditions, solar capacity will reach 238 GW in 2028, up from 83 GW of solar in 2022. Wind capacity is projected to reach 69 GW in 2028, up from 42 GW in 2022.

Importantly, the report highlights that developing countries will not meet their renewable energy targets without action on climate finance, which is crucial to driving the clean energy transition.

HT reported on September 17 that no consensus has yet been reached on the most important negotiated agenda of COP29 (the upcoming climate conference in Baku), which involves agreeing on a fair and ambitious New Common Quantitative Target for Climate Finance (NCQG).

The new financial target is to be set at $100 billion (per year) for the period after 2025. Sources said the two major outstanding issues in the NCQG are the amount of the fund and the list of “contributors”.

Developed countries are pushing to expand the fund’s contributor base by including emerging economies (not necessarily historical polluters) on the payer list. “They are not prepared to make concessions,” the official said on Monday.

Developing countries are clear that they will stick to the Paris Agreement and the United Nations Framework Convention on Climate Change (UNFCCC), which stipulate that finance must flow from developed to developing countries. Developing countries expect contributions of trillions per year from developed countries to mitigate climate change, in line with their Nationally Determined Contributions.

Apart from the climate finance needed for the transition, land conflicts, lack of access to land to set up solar and hydroelectric projects, and population density are likely to pose significant challenges to India’s goal of achieving net-zero emissions by 2070, the Energy, Environment and Water Council said in a study earlier this month. While the country has a renewable energy (RE) potential of over 24,000 GW, even achieving the 7,000 GW required to achieve net-zero emissions by 2070 will require a holistic approach to address issues such as access to land, climate risks, land conflicts, and population density, the study added.