India's climate journey: setting course for the 21st century

The past four decades have seen India journey through a complex developmental trajectory. A rapidly industrialising economic engine has driven the creation of immense wealth, and improved the quality of life for millions, but has also resulted in large-scale environmental degradation, wide-spread air pollution and an explosion of greenhouse gas (GHG) emissions.

In 1990, India emitted a little over one billion tonnes of carbon dioxide equivalents (CO2e; this unit includes emissions of CO2 as well as other GHGs like methane and nitrous oxide, normalised by their respective global warming potentials). By 2020, that number had reached over 3 billion tonnes, accounting for approximately 7% of global GHG emissions - a dramatic increase over the course of just 30 years. This upward trend is projected to continue, and India is expected to contribute to over 10% of global carbon emissions by 2030.

Given the dire consequences of unchecked climate change, these statistics underscore the importance of taking concrete steps to decarbonise the nation’s economy. With that in mind, it’s a useful exercise to systematically break down the primary drivers of GHG emissions and delve into the specific levers for carbon reduction.

The power sector: lighting up India, at a cost

India derives around half of its electricity from coal (over 70% from fossil fuel sources in total), consuming the better part of a billion tonnes of coal per year (~15% of the world’s consumption). Coal power is highly carbon intensive, and is one of the most polluting sources of energy (more so than other fossil fuels like natural gas). India’s outsized reliance on coal has resulted in the power sector alone contributing to approximately 36% of the nation’s total GHG emissions in a given year.

The past two decades have seen almost a four-fold increase in coal-based power plants in the country, resulting in a drastic increase in thermal-coal-related GHG emissions. While these statistics set context for the urgent need to decarbonise the power sector and reduce our reliance on coal, they also mask a meaningful shift in recent policy. In 2015, as part of the Paris Agreement, India set an ambitious pledge to reduce its reliance on coal power.

Then, in 2022, the nation announced an updated commitment to meet 50% of its electricity requirements from renewable energy sources by 2030 (the number currently hovers at about 20%). In accordance with this updated pledge, solar capacity has been growing at a tremendous rate, increasing by over 40% in 2022 alone. While India’s heavy reliance on coal and fossil fuels continues to present a challenge to its long-term net-zero ambitions, more targeted incentives around renewable energy expansion could meaningfully move the needle.

Transport: driving off a carbon cliff

In 1981, India had a little over 5 million registered motor vehicles. By 2021, that number had expanded to over 300 million. As vehicle ownership and commercial transport has soared, emissions have correspondingly exploded, contributing to a spike in GHG fluxes and severely degraded air quality. Air travel has similarly intensified, with Indian aviation emissions increasing by around 64% between 2012 and 2019 alone.

Recent years have witnessed a push to reduce transportation emissions via targeted government policies like the FAME (Faster Adoption and Manufacturing of Hybrid and EV) scheme, which aims to minimise ICE (internal combustion engine) vehicles and create indigenous EV and battery manufacturing capacity. The second phase of the scheme saw funding rise to approximately Rs 10,000 crore, with around 85% allocated to EV purchasing incentives and 10% allocated to charging infrastructure. Industry adoption of green-technologies, and the speed of the EV rollout over the next 5-10 years, will be crucial to determining how effectively the Indian economy as a whole can decarbonise.

Manufacturing: creation meets carbon

Indian industrial production has rocketed upwards over the past three decades, with GHG emissions from this sector more than tripling between 1990 to 2020. The cement and steel sectors, in particular, have played a significant role in the growth of emissions. Demand across these sectors is expected to grow aggressively over the coming decades, likely tripling by 2050, with serious implications for India’s GHG budget.

Given the carbon and energy intensive nature of core sectors like cement and steel, it is unlikely that we will see major reductions in GHG emissions without fundamental changes in the underlying processes, materials and technologies. This will require a delicate balance of targeted regulation, governmental incentives and innovative R&D efforts. The PAT (Perform, Achieve & Trade) scheme is a relatively recent effort to enable a cap-and-trade-based mechanism that might generate some of these incentives.

There has also been meaningful movement on the international stage. For instance, in 2021, India and the United Kingdom launched the Industrial Deep Decarbonisation Initiative (IDDI), a coalition to create a market for net-zero industrial products and decarbonise heavy industries like steel and cement. Despite these initiatives, there continues to be a large technology and resource gap in our ability to effectively decarbonise the manufacturing sector, and more targeted efforts are urgently required to achieve the necessary long-term emissions reductions.

Construction: foundations to climate fault lines

The post-liberalisation construction boom has led to dense urban jungles of concrete and steel that span India’s towns and cities. As a result, buildings alone account for around a quarter of the total energy use in the country (across heating, cooling, cooking and other activities). When viewed as a single category, they provide one of the largest consolidated opportunities to make long-term GHG reductions.

It is estimated that more than 50% of India’s 2030 urban infrastructure is yet to be built. Without targeted technology, policy and design interventions, Indian buildings as a whole are projected to emit seven times more CO2 by 2050 (compared with 2005 levels). Timely action towards decarbonising the construction sector (via energy efficient construction, improved operating practices, new building materials, etc.) could result in the vital reductions necessary to help India meet its decarbonisation goals. Inaction, on the other hand, could result in a costly legacy that saddles the country with carbon-intensive infrastructure for the rest of the century.

Agriculture: feeding nations, fostering emissions

In the 76 years since India’s independence, its population has ballooned from around 350 million to over 1.4 billion, emerging as the most populous country in the world earlier this year. Feeding this burgeoning population has required a precipitous rise in intensive agricultural practices. As a result, the agricultural sector now contributes to approximately a fifth of India’s total GHG emissions, a large portion of which is due to methane emissions from rice cultivation and enteric fermentation from ruminant livestock (cattle, buffalo, etc.).

Large-scale land-use change and heavy fertiliser use are also important contributors to GHG emissions from the sector. The growing demand for carbon-intensive foods over the coming decade will only further stress the food production system and exacerbate carbon emissions from the sector. Public and private sector investments into agroforestry, improved livestock management, alternative feedstocks and novel agricultural technologies will play a vital role in determining if the Indian agricultural sector can effectively decarbonise over the coming decades.

Pioneering a sustainable future

The sectoral narratives above make it clear that India has some major challenges associated with decarbonising its economy. However, they also provide some insight into the specific levers that need to be engaged in order to commit to a more sustainable future. The past few decades have been characterised by a meteoric rise in India’s GHG emissions, but more recent evidence over the past few years suggests a growing interest among both public and private sector stakeholders to prioritise sustainable economic growth.

For instance, the government has recently pledged to reduce the carbon intensity of the Indian economy by 45% (relative to 2005 levels) by 2030, and to achieve an economy-wide net-zero objective by 2070. While these pledges don’t go far enough towards effectively tackling all the risks of climate change, they have set the stage for concrete regulatory action in this space. For instance, in response to recent regulatory requirements (such as the Business Responsibility and Sustainability Reporting requirements), a number of large enterprises are starting to actively decarbonise their operations, with the goal of future-proofing their business models. As these decisions compound over the coming years, the hope is that they move the needle on decarbonising the Indian economy in time to prevent catastrophic levels of global warming.

Given the risks of climate change to the Indian population, the decision to decarbonise the country’s economy is difficult to argue against. However, it is also important to contextualise India's emissions within its broader developmental aspirations. The material needs of its enormous population and the growing aspirations of millions of young Indians, will inevitably lead to the large-scale industrialisation of the country over the coming decades.

The ethical framework that outlines a moral responsibility to tackle climate change also outlines a similar obligation to enable sustainable economic development. There is thus a need for a new school of thought that provides influential decision-makers in the country (across both the private and public sectors) with the tools, methods and skills to thoughtfully align both these objectives - encouraging the creation of long-term sustainable value instead of incentivising short-term financial benefits.

Only time will tell how well we end up striking this balance. We should remember, however, that the stakes have rarely been higher.

(Special thanks to Keshmina Chevli and Anisha Maini for their help researching the facts and figures in this article. The next instalment in this series will focus on understanding the science behind climate impacts.)