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5 years of the Paris Agreement: Where the world and India stand

India’s journey under the Paris Agreement, 2015-2020

Briefing paper on Paris agreement and India specific climate action done so far.

Since the Paris Agreement was opened for signing on April 22, 2016, all signatory countries have submitted their plans to tackle climate change, called Nationally Determined Contributions (NDCs). Under its NDC until 2030, India offered to reduce emissions intensity of the GDP by 33-35% from 2005 levels, install 40% of power generation capacity from non-fossil fuel sources, and develop an additional carbon sink of 2.5-3 GtCO2e (gigatonnes of carbon dioxide equivalent).

India is on its way to overachieve on two targets — non-fossil fuel power generation and lowering its GDP emissions intensity — well before 2030. On the first, India reached 24% installed RE capacity in September 2020 and has reduced GDP emissions intensity by 21% over 2005 levels.

On its third target of generating an additional carbon sink by expanding its forest and tree cover, India has lots more to do as progress has been limited.

Recently, Indian government has set up a high-level inter-ministerial Apex Committee for Implementation of Paris Agreement (AIPA) to coordinate the country’s response to climate change, such that it is on track to meet its obligations under the Paris Agreement. AIPA has representatives from 14 ministries, including health, power, renewable energy, finance, science & technology, Jal Shakti, earth sciences, urban affairs, rural development and commerce & industry, apart from the government’s policy think-tank, the NITI Aayog. The committee is chaired by the Ministry of Environment, Forests and Climate Change (MoEF&CC).

India’s Climate Action Factsheet

Renewable Energy

  • RE capacity has grown by 226% since 2015
  • At the Climate Action Summit in New York in 2019, and once again at the recent G20, India committed to increase its renewable energy capacity from 175GW by 2022 to 450GW by 2030. At present, its total installed renewable energy capacity is 88,793.43 MW. This requires an addition of 35GW capacity per year till 2030, which is significantly higher than the 8-10% annual addition in 2018-19 and 2019-20.
  • India, along with France, set up the International Solar Alliance (ISA) in November 2015. Currently, it has membership from over 80 countries and facilitates cooperation in harnessing solar power amongst developing countries.
  • At the state-level, Rajasthan released its new Solar Policy 2019 with the aim of building 50 GW of solar capacity by 2025. Gujarat plans to develop renewable capacity to 30 GW by 2022.
  • Record low solar and wind tariffs of Rs. 2.44/kWh were discovered in February 2018. Tariffs have since stabilised around Rs. 2.8/kWh for both. However, under SECI’s latest round of auctions, the lowest solar tariff quote was Rs. 2/kWh. The figure is expected to drop even further going forward.
  • Floating solar tenders are gathering pace in the country, with the latest round of 75MW capacity being tendered by National Hydel Power Corporation (NHPC) and Narmada Hydroelectric Development Corporation (NHDC).
  • In January 2020 SECI concluded a 2GW tender for hybrid renewable energy capacity (solar and wind capacity) coupled with battery energy storage for round-the-clock supply of peak power using renewable energy alone. The tender was the world’s largest and the average tariff was awarded at Rs. 4.04/kWh. This is compared to spot market prices for power — mostly from coal — that at times exceed Rs. 12/kWh.
  • Tata Power’s 10MW grid-integrated battery storage system in New Delhi was unveiled in February 2019. It is India’s largest grid-connected battery-based energy storage system with the potential to smooth grid fluctuations and provide peak power backup for two million customers. Several such systems are being tested across India to integrate more renewable power into the grid.

No New Coal

  • In September 2019, Gujarat announced that it will not give fresh permission for setting up new coal plants in the state.
  • Chhattisgarh, a mining state with third-largest coal reserves in India, also announced to not build new coal plants.
  • Maharashtra, the most industrialised state with highest GDP in the country, announced in August 2020 to not set up any new coal plants.
  • The largest public and private sector power generation companies in India, NTPC and Tata Power, have announced a moratorium or complete stop to construction of greenfield coal power projects.
  • Between Jan-Nov 2020, coal power generation fell by 9.3% compared to 2019. Its overall share in power generation has fallen by 3% since 2019 to come down to 67% in 2020.
  • The annual rates of addition of conventional power capacity (largely coal) from 2015-2020 have been 5.64%, 4.72%, 3.98%, 3.57%, 0.12% and -6.72%, respectively. For RE the same has been 6.47%, 23.97%, 24.88%, 24.47%, 9.12% and 3.48%, respectively.

Coal vs RE Finance

Year-on-year coal financing decreased by 90% in 2018 and by 82% in 2019. In 2017, coal power plants received Rs. 60.767 cr (USD 9.35bn) which fell to Rs. 1,100 cr (USD 190mn) in 2019[1]. Primary finance (for new projects) fell by 67% y-o-y in 2019.

There was no government financing of coal power plants in 2019, except for one EXIM bank loan of Rs. 150 cr (USD 34mn)

Renewable energy spending, for the first time in 2017, exceeded the investments in fossil-fuel-based power generation as strong solar photovoltaics and onshore wind power more than compensated for the decrease in new coal plant installations.

Commercial banks provided the majority of loans to RE projects while state-owned financial institutions accounted for 24% of RE loans, an increase from 9% in 2018.

However, subsidies for coal continue to be strong. In 2019 it amounted to 15,456 cr (USD 2.3 bn). In contrast, RE subsidies fell from Rs. 15,313 cr in 2018 (USD 2.3 bn) to Rs. 9,930 cr (USD 1.3 bn) in 2019.

Climate Finance

The total green finance made available in India during 2016-18 was about $19 billion per annum on average, across sectors[2]

$170 billion per year is required in investments for India to finance its climate action ($2.5 trillion is needed from 2015 to 2030 as per the NDCs)

Green investments outpaced India’s GDP growth (during 2016-17 and 2017-18 period) – the GDP of India grew at an average rate of 7.2% between 2016-17 and 2017-18, while the tracked investments suggest an increase of 24%.

Sustainable Transport

Electric mobility is slowly gaining ground in India. The country disbursed Rs 359 cr in subsidies under its FAME-I scheme (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) from 2015-2019 for 285,000 electric vehicles. The subsidy coverage was increased to 10,000 crores under FAME II (an 11x increase over 2017) despite the target for electrifying transport resting at 30% of new vehicle sales by 2030.

14 states in India have either released draft EV policies or have formally adopted them. The focus has been on boosting local manufacturing capacity and subsidising the upfront cost of EVs across all categories. Telangana and Delhi were the latest states to formally adopt their policies, in August and October

In 2019-20 EVs posted a 20% jump in sales over 2018-19 due to the launch of several new models across all vehicle categories. Electric two-wheelers accounted for almost 90% of the sales of 1,56,000 units (excluding e-rickshaws). The cumulative sales of registered EVs from Jan-Oct 2020 is 91,474 units. In the region-wise category, Uttar Pradesh has the maximum registered EV sales (27%) in India among all the states/ UTs, followed by Bihar (11%) and Delhi (10%).

The monthly cost of running an electric car in India in 2018 was calculated to be significantly less when compared to petrol cars (Rs. 936 vs. Rs. 5,162). However, practical limitations with charging times and the cost of replacing a battery pack after 5 years have been cited as reasons that have kept customers away.

Indian Railways[3] is aiming to be net zero by 2030 and plans to install 20GW of solar capacity plants of 20 GW capacity on vacant lands. As per the NITI Aayog data, carbon dioxide emission from Indian Railway was around 6.84 million tons in 2014, consuming approx. 18 TWh per year, or approx. 2% of the country’s total power generation, with a peak demand of 4,000 MW approx. As of March 2019, electrification on Indian Railways has been extended to 34,319 RKMs[4], out of the total rail network of 67,415 RKMs – this constitutes approx. 50% of the total railway network. From the electrification of 610 RKM in 2013–14, the railways have completed electrification of 5,276 RKM in 2018–19; this is the highest ever electrification in a single year and 29% higher than the previous year.

Average annual finance directed to sustainable transport projects grew by 43% in 2017-18 from 2016-17 – mainly driven by capital expenditure on mass rapid transit systems projects by the central and state governments, and the sale of electric three-wheelers by the private residential and commercial segments.

Low Carbon Development

India and Sweden along with other partners launched in 2019 the “Industry Transition Group” to develop low-carbon pathways with the aim of achieving net-zero emissions by 2050 in hard-to-abate industries such as steel and cement.

India’s cooking energy program provides clean cooking gas connections to 150 million households.

India has a commitment to phase out single-use plastic completely by 2022.

Resilience

India is among the most vulnerable countries when it comes to climate change impacts with an average of 2,925 deaths annually due to extreme weather events. These events are estimated to cost the country $14bn in economic losses.

The country has expanded its meteorological observation network and updated its monsoon forecast methods over the past decade under the “Monsoon Mission”. Early warning systems for cyclones and floods have been operationalised by the IMD. The Ministry of Earth Sciences has spent INR 4.4 billion on two supercomputers to help with weather forecasting and climate research

One particular success has been the agricultural weather advisories for farmers under the Gramin Krishi Mausam Sewa implemented jointly by the India Meteorological Department and the Indian Council of Agricultural Research. District-level agromet advisories are sent to over 22 million farmers through a network of 130 agro-met field units.

A recent survey by the National Council of Applied Economic Research (NCAER) showed that investments of about INR 10 billion in the network had yielded 50-fold economic benefits through increases in small-holder agricultural and fisheries income.

India announced a Coalition for Disaster Resilient Infrastructure as an international organization in the making with over 30 countries. The coalition will work towards a common goal of establishing infrastructure which is resilient to pressures of climate change and environmental disasters. India has pledged INR 4.8 billion (Around USD 70 million) to the CDRI.

Despite progress in forecast and observation services, India still lags when it comes to adaptation readiness to climate change, and scores well below the G20 average.

To ensure complementarity in domestic action on water, the government launched a Jal Shakti Abhiyan (water mission) and also established a new Jal Shakti ministry to work on all water related issues ranging from supplying clean drinking water, inter-state and international shared water resources and disputes, to river cleaning projects.

[1] https://www.cenfa.org/publications/coal-vs-renewables-financial-analysis-india-2019/

[2]  Landscape of Green Finance India

[3] https://www.ibef.org/blogs/indian-railways-net-zero-carbon-emitter-by-2030

[4] RKM – Route Kilometer (RKM) is a unit of distance, measuring the distance by rail between two points on the railway network

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