India’s climate targets require us to move away from coal to renewables
Prime minister Modi has just announced India’s net-zero commitment at the Glasgow COP. Simply put India will reduce its net emissions — gross emissions minus carbon removal — to zero by the year 2070. While this will require complete decarbonization of all energy related sectors, a significant short-to-medium-term component of India’s climate commitment is the 500GW renewable energy capacity target by 2030.
India has already made significant progress on installing renewable energy capacity. For example, India has now crossed 100GW of non-large-hydro renewable energy capacity, with equal capacities of wind and solar energy, supported by biomass and small-hydro, and this capacity now generates about 1/10th of the power in India. However, coal power has remained a mainstay of the Indian power sector. Coal still generates more than 2/3rd of the power.
This is not to say that the coal power sector is not witnessing headwinds in India. Coal power plant load factor has been steadily falling, many coal-power plants have become stranded assets, and now we are witnessing a shortage in coal itself to power these coal power plants. The reasons behind these are manifold, including cost-competitiveness of renewable power, lack of demand, and changing market conditions in an environment that is not conducive to investments in coal mines and coal power.
While there are many in India who believe that coal is here to stay, given reasons such as energy independence, baseload power, and low-cost, this is the time for India to move aggressively on renewable energy and show climate leadership, via not only renewable power but also battery storage and green hydrogen. The reasons for doing so are well documented, and I have reproduced many of them below.
First, the cost of producing renewable power is way down in the last decade. Solar power auctions are consistently produced tariffs around 2 INR/kWh or even below. Analysis after analysis has shown that coal power is no long cost-competitive with solar power, whether one looks at imported coal or domestic, except for coal power plants that are at mine mouth. As solar power cost continues its downward journey in this decade, like the last decade, it will simply make coal power less cost-competitive over time.
Second, contrary to what the opponents may say, a renewables heavy system can be balanced appropriately, using available flexible resources. For example, analysis by various research institutions, including TERI, NREL, and LBL, have shown that high penetrations of renewable power, matching India’s current climate commitments to 2030, can be balanced cost-effectively using available coal, gas, and hydro power, while deploying moderate amount of battery storage. However, doing so will require supportive policies for these flexible sources of power.
Third, while there are significant concerns are energy independence and just transitions, they can be addressed via appropriate policies. For example, India has already started to move aggressively on domestic production of solar and battery storage hardware, and it has plans for becoming superpower in green hydrogen. Furthermore, not only significant research has been made in addressing just transition issues in coal mines as well as coal power but also the international community is aligning behind the climate investment funds to provide the much-needed technical assistance and concessional finance.
Let’s make India’s climate ambitions a reality, by moving away from fossil-fuels to a green future that shows India’s leadership globally! While this is not going to be easy, given known barriers to investment in the power sector, India can make the transition happen by creating the appropriate enabling policy environment, which provides confidence to domestic and foreign investors alike.
