India Needs To Change It's Energy Mix To Meet Its Climate Goal

India has 200 GW of non-fossil fuel capacity and needs to meet the goal of 500 GW by 2030. However, there are opportunities and challenges. Energy is at an inflection point at the moment. The BNEF Summit held in New Delhi brought together minds to discuss on global energy transition, India’s net-zero journey, scaling up clean power to meet India’s growing climate energy demand and the future of green hydrogen in India. The report New Energy Outlook: India was also released at the event.

India’s window to curb its carbon emissions in line with the major goal of the Paris Agreement – holding global warming to well below two degrees Celsius and avoiding the worst impacts of climate change – is still possible, however, it looks increasingly hard to achieve the report states.

Nitin Gadkari, Minister of Road Transport and Highways of India said at the event, “We have an import of 22 lakh crore of fossil fuels, we need to reduce our import.”

India must rapidly decarbonise its power sector – the largest emitter in the country – to stay on track, more than tripling its solar and wind capacity by 2030 to 494 gigawatts in BNEF’s Net Zero Scenario. BNEF’s analysis shows that India’s energy mix needs to transform over the next two decades, with all unabated fossil-fuel-based power generation exiting the grid by 2045. 

The report builds and expands on the results of the New Energy Outlook 2024, presenting two updated climate scenarios, the Net Zero Scenario (NZS) and a base-case Economic Transition Scenario (ETS), designed to inform public policymaking, country climate ambition and low-carbon transition strategies for corporations and financial institutions. 

On the role of coal, Debasish Nanda, Director of Business Development, Coal India said, “By 2030, coal is going to be 60 percent.”

The report’s NZS, which is consistent with a 67 percent chance of holding global warming to 1.75 degrees Celsius, shows there is limited room for further carbon emissions growth and that the peak needs to be accelerated across all sectors within the next ten years.

India’s emissions from power, transport and buildings sectors must peak in this decade, followed by industrial emissions by the early 2030s, and then rapidly decline using a mix of mature and nascent technology pathways. The alternative scenario, the ETS, which assumes no new policies are implemented, breaches the Paris Agreement with a global warming result of 2.6 degrees Celsius and demonstrates how far the energy transition can go based on economical and commercially ready technologies.

On the future landscape Hisham Mundol, Chief Advisor, Environmental Defense Fund said, “We need economic growth but mix it with environment protection. Eventually, fossil fuel energy is going to be 60 percent.”

India is one of the few countries that would achieve its updated Nationally Determined Contribution (NDC), even under BNEF’s base-case economics-led pathway. However, the NZS results imply that for India to remain aligned with the Paris Agreement, the country’s emissions increase from energy-related sectors needs to be limited to only 106 percent by 2030 relative to its 2005 baseline—far below the 175 percent increase in the ETS and the 192 percent jump implied by its NDC.

“India’s 4 terawatts of wind and solar build from now through mid-century represents a $2.1 trillion investment opportunity for the industry, said BNEF India analyst Siddharth Shetty, the lead author of the report. “A renewables-heavy system also poses severe grid-balancing challenges. We need flexibility in the system not just in the form of batteries and pumped hydro on the supply side but also in the form of electrolysers and smart vehicles charging on the demand side.”

The technologies and clean fuels needed to abate the remaining two-fifths of emissions are among the most challenging to scale: biofuels for shipping and aviation; clean hydrogen as well as carbon capture and storage for use by heavy industry and power. By 2050, India’s annual hydrogen consumption jumps more than 10-fold to 64 million tonnes relative to 2023, and carbon capture increases to 1.4 billion metric tonnes per year under the Net Zero Scenario.

India’s energy sector investment and spending under the Net Zero Scenario, at $12.4 trillion over 2024-50, is 34 percent (or about $3 trillion) higher than in the Economic Transition Scenario. The report sheds light on the need to scale up key technologies in order to get on track for net zero: renewable power, electric vehicles, battery energy storage, nuclear energy, carbon capture and storage, hydrogen, sustainable aviation fuels and power networks.