- September 28, 2023
Six measures India should implement for a credible and effective climate action
G20 nations are committed to climate goals, including tripling renewable energy capacity and achieving net-zero emissions by 2050.
In New Delhi, the Group of 20 nations (G20) committed to tripling the worldwide renewable energy capacity by 2030, cutting greenhouse gas (GHG) emissions by 43% by 2030, and reaching a ‘net zero’ emissions status by 2050. These climate goals are ambitious but stem from the determination of leaders of countries that collectively contribute to approximately 85% of the global economic output, represent two-thirds of the world’s population, and account for three-quarters of international trade.
This year’s G20 Summit has placed the critical climate change agenda in the spotlight, but there are several challenges to overcome before we can accomplish these goals, major among them being sustainable energy. The path to a sustainable energy future is based on six determinates of green finance, smart global grids, diversified supply chain, fast-tracked clean energy adoption, biofuels and technology transfer and an inclusive and just transition.
Creating avenues for green financing
At the Summit, the head of the IMF said that they have currently obtained US$40 billion to assist susceptible nations in enhancing their climate resilience through the Resilience and Sustainability Trust. But G20 nations should set the precedent by fulfilling their commitment of providing US$100 billion annually for climate finance, while bolstering the Multilateral Development Banks (MDBs).
Though various funds have been created to invest in green projects, countries should mobilize their own internal resources for financing and overseeing the transition to a green economy. Countries can also explore other solutions to address the funding gap such as tax reforms, prudent and effective allocation of public funds, and the establishment of robust fiscal institutions.
India has recently approved a INR3,760 crore viability gap funding (VGF) for setting up a battery energy storage system in the country. The entire funding, which the central government will bear, will help in creation of 4,000 MW hours storage. In India, we are also experiencing a policy push for green hydrogen including production linked incentive (PLI) schemes and VGF for green hydrogen projects, and offshore wind and coal gasification projects to deploy clean coal technologies.
The Ministry of New and Renewable Energy (MNRE) has launched the National Green Hydrogen Mission, allocating an initial budget of INR 19,744 crore. Within this budget, INR 17,490 crore is earmarked for providing incentives for the production of green hydrogen (INR 13,050 crore) and the manufacturing of electrolysers (INR 4,440 crore).
Building better and smarter global power grids
India aims to reach 500 GW of non-fossil fuel energy capacity by 2030 and meet 50% of its energy requirements through renewable energy and non-fossil energy sources. But finding reliable and largescale grid storage solutions has been a cause of concern. Other countries are facing similar issues.
Connecting global power grids could be a solution to leverage the demand-supply scenario between countries with excess renewable energy generation and those that have lower local generation capacity. This resource diversity will help maintain a more stable and reliable power supply. India and Saudi Arabia are considering building an undersea interlink between their electricity grids. Such initiatives augur well for India’s One-Sun-One-World-One Grid (OSOWOG) philosophy.
Global power grids have an added economic advantage. Investments can be directed towards regions with the most favorable renewable resources, reducing overall infrastructure costs and increasing energy efficiency. Furthermore, facilitating the use of clean energy sources on a global scale, interconnected grids can significantly reduce GHG emissions. However, this would require regional grid operators to agree on funding, trading rules, and technical standards for safe and reliable operation.
De-risking the supply chain for crucial materials
The global efforts in renewable energy are at present dependent on a few regions for supply of critical material. China, for instance, has become a dominant player in the production and supply of crucial materials for renewable energy technologies. This means that any disruption in the supply chain from China, owing to trade disputes, geopolitical tensions, or other factors, could lead to shortages and delays in renewable energy projects worldwide. The control also gives it an upper hand in pricing, potentially making renewable energy projects less economically viable for other countries.
To overcome the issue of overdependence on any country or region, we need to foster international collaboration and create a more resilient and cooperative supply chain for renewable energy materials. In fact, the US, Japan, India, and Australia, which have deposits of lithium and other rare earth elements, are nearing an agreement to establish a public-private body for discussing joint investments in strategic goods such as advanced semiconductors and critical minerals.
Diverse solutions to fast-track adoption of clean energy
While renewable energy sources such as wind and solar are the most common, their conventional usage may not be sufficient to fast-track the clean energy agenda. It is, therefore, essential to not only find newer ways of maximizing the potential of these existing technologies, such as roof top find turbines, building integrated solar PV, and floating solar, but also enhancing their impact.
It is essential to develop more energy storage solutions for storing excess renewable energy for use during periods of low generation.
In battery technology, while lithium-ion batteries have proven to be a reliable choice for short-duration energy storage, they are often considered impractical and costly when addressing energy storage needs extending beyond a 24-hour period. Integrating solid-state batteries, flow batteries, zinc-air batteries, gravity-based systems, pumped hydroelectric storage, compressed and air energy storage can help provide round-the-clock clean electricity.
Even green hydrogen is being considered as potential sources of energy storage. Green hydrogen presents a significant opportunity for India to reduce its reliance on imported fossil fuels, which currently dominate the nation’s oil and gas demand. Transition to green hydrogen can help India in achieving energy self-sufficiency.
Thrust on biofuels, technology transfer and achieving higher energy efficiency
A significant initiative was launched at the Summit called the Global Biofuels Alliance (GBA) dedicated to promoting the use and production of sustainable biofuels, facilitating their global trade, and offering technical assistance for national biofuel programs. India has achieved notable success with its own biofuel program, producing 4.08 billion litters of ethanol in the fiscal year 2021, with a blending rate of 10.02%. This accomplishment has led to a reduction of 2.7 million tonnes of CO2 emissions and substantial savings in foreign exchange amounting to INR41,500 crore.
However, the true potential of the GBA will not be fully realized by solely promoting first and second-generation biofuels. It will be achieved by investing in third and fourth-generation technologies, such as algae fuel and genetically engineered plant feedstock. Hence, the GBA must allocate resources to research and development and facilitate the transfer of advanced biofuel technologies. With India now in a position to offer its bio-ethanol manufacturing technology to countries such as Brazil and the USA, we are also ready to share our expertise in green hydrogen production. We need more such collaborative efforts to foster innovation and enhance energy efficiency among countries to meet the global sustainability goals.
An inclusive and just transition
Worldwide, a key aspect to addressing climate change related challenges is the impact on the population which has its livelihood directly or indirectly from traditional, climate impacting businesses such as mining, thermal electricity generation etc. Sustaining any climate initiative would require a planned approach to ensure minimum socio-economic impact on such strata. These may need focused skilling/reskilling programs, creating new business opportunities in the impacted geographies etc. The consideration for just transition would be higher in developing nations which are on an upward economic trajectory while relying significantly on conventional energy sources. Similarly, it is critical to make the transition inclusive and ensure all segments of the population are impacted positively by the changes.
Vision for the future
The G20 Delhi Declaration has brought a sense of urgency towards climate action from the world’s major emitters responsible for 85% of emissions. Countries are recognizing the need to invest in innovation and creating more balanced supply chains to regain control over the sourcing of critical materials and mitigate escalating costs. We must take advantage of this momentum and foster international collaboration conducive to the development of solutions along with innovation, and resolute determination to create a sustainable, greener, and cleaner tomorrow
Written by Gaurav Moda, Partner and Leader of Energy Sector, EY India