India among five major global economies in race to reach net-zero

INTERNATIONAL DESK: India’s starting position in the race to reach ‘Net-Zero’ is not comparable to the fiscal space of four economies including the US, EU, China and Japan, but it stands out in its ability to position itself well in the new industrial era, according to a report.

The new report, ‘Competing in the new zero-carbon industrial era’ by think tank, Strategic Perspectives, compares the performance of five major economies – US, China, EU, India and Japan on zero carbon technologies.

It shows that the net-zero transition policies have significantly strengthened competitiveness, energy security and future economic prosperity.

The report also points out a few positive development points that show that India is on the right track in the race to zero-carbon technologies.

According to the report, the first point is that “India is among few countries which are on track to meet its Nationally Determined Contributions target, however, it will need to invest USD 12.7 trillion to reach net zero emission by 2050. India remains one of the fastest-growing major economies, especially as China’s post-pandemic recovery has slowed and India has become the fifth-largest economy in the world.”

“India is making progress in incorporating solar and wind into its electricity generation, almost doubling its share from 2017 figures (5 per cent to 9 per cent),” it added.

Thirdly, the electric vehicle industry is expected to grow at a compound annual growth rate of 49 per cent between 2022 and 2030 creating 50 million jobs by 2030. Fourthly, the pro-transition policies like the Energy Conservation Act are giving the impetus to investors and industry.

Regarding international public financial flows, for 2020-21, India was the top recipient for the past two years (USD 2.9 billion, with 66 per cent for solar energy), as per the report.

“While China and the EU continue to lead in the wind sector, the US and India are following each other closely in terms of manufacturing capacities and could continue gaining market shares as their respective domestic policies are implemented,” the report read.

The report further says that it is clear that India cannot be compared on equal footing with the other economies given its different entry position on economic development.

As India has strong ambitions to become an integral part of the global net-zero supply chain, the foundations are there for it to benefit from the transition in the near future.

This G20, India is likely to push for the global green development agreement which will include climate finance, LIFE, circular economy, accelerating progress on SDGs, energy transitions & energy security.

G20 is a moment where India with its strong presidency can set a chance to seize the demographic dividend and herald its emergence as an economic powerhouse of the future. India will be a USD 3.7 trillion economy in 2023, maintaining its edge over the UK as the fifth largest economy in the world.

Talking about India moving towards its green goals, Aarti Khosla, Director of Climate Trends said, “Coming ahead of the G20 the analysis is a comprehensive assessment of policies and sentiments towards sustainable and zero carbon technologies. The significant progress in India towards green goals shows commitment to scaling up renewable energy, implementation across several state EV policies, and wins in energy efficiency.”

“As a country that will witness massive industrial growth over the next few decades, it must focus on innovation, research and development, as well as creating an enabling environment that draws in faster investments whilst reducing dependence on China. Breaking down the sectors where clean technology can be game-changing and ensuring upskilling of the systems and workforce is what will ensure real energy transition. As the G20 presidency, it has a responsibility to balance its role to lead this growth and transition agenda amidst the tough geopolitics to ensure that it can claim its leadership and be the voice of the global south,” Khosla added.

Vibhuti Garg, Director of South Asia in the Institute for Energy Economics and Financial Analysis (IEEFA), said that India is looking at massive requirements of deployment of renewable energy for decarbonisation of not only the power sector but the government has big plans for adding electric vehicles and also promoting green hydrogen as a clean energy solution for transport and other industries.

“Traditionally India has been relying on imports of fossil fuels and now with a renewable energy growth story, relying on imports for downstream supply chains. The focus is shifting and we as a country are building a big base for domestic manufacturing of modules, cells, wafers, battery storage, electrolysers etc. and further looking at exploration and mining of critical minerals. India would need access to the best in technology for building the supply chain to improve the efficiency of the products and more importantly access to low-cost financing. The investments need to more than triple from the current levels if we have to achieve our 2030 targets,” Garg said.
Linda Kalcher, Executive Director of Strategic Perspectives said that the new industrial era based on zero-carbon technologies has emerged. China, the EU and the US are competing to seize the biggest shares in the growing global markets and secure supplies for their domestic demand.

In a world where one lead or risk being left behind, manufacturing zero-carbon technologies turns into a precondition for industrial growth, innovation and competitiveness. Zero-carbon technologies have the potential to replace fossil fuels faster than some might realise. This means that setting ambitious phase-out dates at COP28, as well as domestically, is not something merely aspirational but rather a reflection of the direction in which major economies are going. Targeted financial support or new economic partnerships are crucial to ensure all countries can join the technology race and afford a just energy transition, he added.

Neil Makaroff, Director of Strategic Perspectives, said, “The net-zero industrial race between major economies is on. China’s industrial leadership has proven successful in driving growth and job creation, prompting the US to launch the IRA. Countries that miss the train on the net-zero transition will likely lag behind in industrial development, remaining heavily dependent on costly gas, oil and coal. While Europe is rapidly deploying renewables, heat pumps and electric vehicles, it cannot rest on its laurels.”

“To maintain its position in the global race to net zero, it is time to turn the European Green Deal into a major reindustrialisation plan. Building factories for solar panels, batteries and heat pumps will not only secure Europe’s net-zero transition, it will also create quality jobs,” he added. (ANI)