Climate change

India and climate change: implications of setting a net zero target


The 1.5C report of the Intergovernmental Panel on Climate Change (IPCC) highlights the importance of achieving a net future with zero greenhouse gases. Many countries have announced their commitment to achieve a net zero future for their economies. India, while doing far more than its “fair share” of mitigation, has yet to announce a net zero year target, likely due to the lack of a India on this issue.

This study attempts to fill this gap by modeling alternative peak and zero years net scenarios for India, and highlighting its implications for the transition in energy intensive sectors. We model four combinations of peak and zero year net scenarios for India (2030-2050, 2030-2060, 2040-2070 and 2050-2080) and a combination of technology availability scenarios related to the capture and storage of carbon (CCS) and hydrogen in each of the policy scenarios. We also present sectoral pathways based on the 16 combinations of policy-technology scenarios to provide actionable policy information. We present the implications of these alternative scenarios for the required sector transitions in the power, transport, construction and industrial sectors in India and provide an overview of India’s climate policy. Specifically, for the 2040 to 2070 net zero peak scenario with no commercial availability of CCS but hydrogen being commercially available, we determine that the following 12 steps in all sectors would be critical:

Energy sector

1. Coal-based electricity generation is expected to peak by 2040 and decrease by 99% between 2040 and 2060.

2. Solar power generation capacity to increase to 1,689 GW by 2050 and 5,630 GW by 2070

3. Wind power generation capacity increases dramatically to reach 557 GW by 2050 and 1792 GW by 2070

4. Nuclear power generation capacity to increase to 68 GW by 2050 and 225 GW by 2070

Transport sector

5. The share of electric cars in car sales to reach 84% by 2070

6. The share of electric trucks in freight trucks to reach 79% by 2070, the rest being powered by hydrogen

7. The share of biofuel blend in petroleum for cars, trucks and airlines to reach 84% by 2070

Industrial sector

8. The use of coal in the industrial sector should peak by 2040 and decrease by 97% between 2040 and 2065

9. The share of hydrogen in total industrial energy consumption (heat and raw materials) must increase to 15% by 2050 and to 19% by 2070

10. Industrial energy intensity of total GDP is expected to decline by 54% between 2015 and 2050, and an additional 32% between 2050 and 2070.

Building sector

11. The intensity of electricity use in the building sector in relation to total GDP is to fall by 45% between 2015 and 2050, and an additional 2.5% between 2050 and 2070.

Refinery sector

12. Consumption of crude oil in the economy is expected to peak by 2050 and decrease by 90% between 2050 and 2070.

The country is expected to bear the economic losses due to changes in investment patterns in the sectors necessary to achieve peak and net zero targets. The investment shift that is expected to occur due to strict decarbonization policies implies that investment that was otherwise profitable in the absence of climate change mitigation policies should be abandoned in favor of more expensive, low-emission choices. carbon. The cumulative discounted economic cost for India (discounted to 2015 at a real discount rate of 4% between 2015 and 2050, and at 2% for years beyond 2050) in the peak 2030 scenarios – 2050 net-zero ranges from 1353 to 1872 billion USD (2015 prices) between 2030 and 2050, and 12 562 to 19 318 billion USD, between 2050 and 2100. If the net zero year is carried over to 2080 with 2050 as the year of peak, there would be no economic costs before 2050 (because no additional effort beyond the status quo, progress would be made before 2050), and the economic costs between 2050 and 2100 would be between 6,555 and 9,691 billion of dollars. Thus, the earlier the net zero year, the higher the cost. The availability of CCS reduces economic losses by 23% between 2030 and 2050, and by 32% between 2050 and 2100.

Understanding the economic costs is essential not to avoid or delay deep decarbonization, but to deploy smart strategies to minimize costs and create a future economy in the process. The key to reducing economic losses is to minimize the cost of the mitigation technology suite. International financial support in the form of low cost finance has the potential to reduce overall economic costs. The importance of low-cost financing and co-development of technologies cannot be overstated for a faster reduction in the cost of the mitigation technology suite.

It is essential to stress that the cost of the mitigation policy should not be the deciding factor when choosing a net zero year. India is one of the countries most vulnerable to climate risks, and delaying India’s Net Zero Year would result in additional global warming and associated climate change impacts that the country is expected to face. India suffered an economic loss of $ 37 billion in 2018 due to climate change (Global Climate Risk Index, 2021).

Major Indian companies estimate a loss of nearly $ 100 billion between 2021 and 2025 due to the risks posed by the climate crisis (CDP, 2020). According to the World Bank, the impacts of climate change could reduce India’s GDP by 2.8% per year by 2050, depressing the standards of nearly half of the country’s population. While taking a call on choosing a net zero year, Indian policymakers should be aware of the non-linear risks that climate change poses for India.

The study is accessible by clicking here

(The study was written by Vaibhav Chaturvedi and Ankur Malyan)


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