Managing climate change: A strategy for India

Abstract

In this working paper, Ahluwalia and Patel describe how India could make progress towards meeting its climate change mitigation commitments which involve achieving net zero emissions by 2070. This will require action on several fronts, notably: transforming the electricity sector to rely increasingly on renewable energy (RE), electrification of transport, decarbonisation of hard-to-abate industrial sectors like steel and fertiliser using green hydrogen, etc. All this must be accompanied by improvements in energy efficiency which in turn depend upon rational energy pricing and suitable regulation. The shift to RE will present problems of intermittent supply which has to be balanced through grid-scale batteries or pumped-hydro storage. The working paper shows that the government is aware that action will be needed in several areas and some movement in these directions has already begun. However, the pace of progress has to be greatly accelerated. The multiplicity of interventions needed require coordination not only across ministries but also across different levels of government. The transformation will also involve significant additional investment, and this will call for substantial international financial support. Ahluwalia and Patel emphasise that although there has to be a large role for international finance, much of the additional investment would need to come from domestic sources, both public and private. Private investment in the power sector in particular calls for urgent reforms of the distribution sector which is currently financially unviable because of unsustainably low tariffs and persistent nonpayment of electricity dues. The overall picture presented by the authors is that the transition is feasible, but it calls for determined action in many areas, some of which are politically sensitive. As a practical matter, the long term decarbonisation strategy needs to be decomposed into a strategy for the next ten years, with granular detail on what needs to be done in each sector over the ten-year period.