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India requires US$ 2-2.25 trillion to achieve carbon neutrality by 2070: Study

06 Apr 2024 12:37 IST
India requires a huge sum of US$ 2-2.25 trillion, equivalent to Rs 150-200 lakh crore, during 2020-2070 to achieve carbon neutrality or net zero, as pledged by Prime Minister Modi in the United Nations’ 26th meeting of the Conference of Parties (COP26) in Glasgow in 2021. The financial requirement works out to US$40-50 billion per year for India, with considerable amount of sustainable financial flows from the overseas, as shown in a study conducted by the Indian Institute of Management – Ahmedabad and released by the Office of the Principle Scientific Adviser to the Government of India.

It is worth mentioning here that India’s Prime Minister Narendra Modi promised in the COP26 meeting to cut the country’s carbon emissions to net zero by 2070, while most developed countries and the United Nations pledged to reach that goal by 2050. Net Zero, or becoming carbon neutral, means not adding to the amount of greenhouse gases in the atmosphere, without disturbing economic growth through the adoption of CO2-efficient technologies in plant upgradation. China announced plans for carbon neutrality by 2060.

The study further finds that the mitigation strategies for achieving carbon dioxide removal from energy systems rely on early investments in the research and deployment (R&D) of new and upcoming technologies such as renewables with storage, low-carbon hydrogen, CCUS (carbon capture, use and storage), BECCS (bioenergy carbon capture and storage), and next-generation nuclear reactors. As the major net zero interventions happen in the electrification of end-use services and the subsequent de-carbonization of electricity generation, most of the R&Ds would be required in the electricity sector, the study finds. An assessment by the Indian Institute of Technology (IIT) Bombay and Vivekananda International Foundation (VIF) estimates that India’s energy transition to net zero 2070 would cost US$ 11.2 trillion in a nuclear-dominated scenario and US$ 15.5 trillion in a renewables-dominated scenario (VIF, 2022).

Funding R&D
One way to fund the R&D of net zero emission technologies is by introducing a carbon price. According to a report, the estimated carbon prices compatible with the Paris climate goals fall in the range of US$ 40–80/tCO2 (trillion carbon dioxide) by 2020 and US$ 50–100/tCO2 by 2050 (Stiglitz et al., 2017). In the Indian context, compared to the nitrogen-doped carbon material (NDCM) scenario, the net zero one scenario (NZ1) brings down the emission intensity of electricity generation close to zero. An average carbon price of around US$ 25/tCO2 (approximately Rs 1,700/tCO2) on the projected savings in the electricity sector when implementing NZ1 (vs. NDCM) would generate a revenue of around US$ 950 billion. This would be sufficient to finance the transition to net zero energy systems through the NZ1 scenario. The carbon price required for NZ2, NZ3, and NZ4 scenarios varies between USD 50 and 120/tCO2 .

However, for the net zero two (NZ2), higher cumulative emissions are estimated than for the NDCM scenario because of the high reliance on coal in NZ2 throughout the modeling horizon. For India, the carbon price for 2050 is INR 1,700/tCO2 or approximately USD 25/tCO2. The EU carbon price was Euro 92/tCO2 in March 2023, and the carbon price expectations around the world are Euro 45–100/tCO2 during 2026–2030 (IETA, 2022). Compared to China’s carbon price expectations at Euro 45 during 2026–2030, India’s price assumptions are much below that and are, therefore, conservative. A recent NITI Aayog report focuses only on CCUS from the power and industry sectors and the coal cess of Rs 400 a tonne and is expected to raise Rs 48,000 crore in 2030 and Rs 53,000 crore in 2050. These funds are expected to finance CCUS projects accounting for 2 percent and 31 percent of CO2 which can be captured in 2030 and 2050, respectively.

The third net zero scenario places emphasis on renewable energy expansion, with support from coal and natural gas as the base load, reducing emissions to 0.56 btCO2 (billion tonnes carbon dioxide) by 2070. India currently has the fastest rate of renewable electricity growth among major economies. With the cost of renewables decreasing in the last decade, the technology has become competitive with coal in many projects for generation costs, but the concerns about system costs remain. The scaling required for renewable technologies faces major obstacles because of the cost of storage, the investment required for grid flexibility, and land requirements. Decentralized renewables are beneficial. However, they may not be cost-efficient if not connected to a centralized grid.

Conclusions
The study finds that there is no silver bullet to achieve net-zero. The transition needs multiple pathways to be adopted with co-existence of myriad technologies in the Indian energy basket. Furthermore, coal is projected to continue until the next two decades as the backbone of the Indian energy system. Net-zero is not possible without substantial nuclear power and Renewable Energy (RE) generation by 2070. To achieve net-zero energy systems by 2070, the electricity sector will need to decarbonize well before that. India’s emissions would range between 0.56 btCO2 and 1 btCO2 in 2070. It is expected that the remaining gap in emissions will be offset through sequestration in forestry and tree cover as envisaged in the Nationally Determined Contributions (NDCs). Additionally, the coal phase-down will require active policies on critical minerals and carbon dioxide removal technologies. Additionally, clean, affordable electricity at low level cost of electricity (for consumers) can be achieved in net-zero pathways, especially with a focus on nuclear power and renewable power.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com