India’s Climate Dilemma Will Hang Over Modi’s Next Five Years

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(Bloomberg) — Prime Minister Narendra Modi, heading into his third term with a weakened mandate, wants India to embrace a new “green age” at the forefront of climate diplomacy and clean technology.

To succeed, he will need to balance these ambitions with the need to sustain growth and meet accelerating electricity demand, relying on a crumbling energy system that remains heavily dependent on coal.

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Modi, who has portrayed himself as a climate champion for much of the past decade, will be under pressure to make faster progress on existing green goals, including pledges to reach net zero by 2070 and create 500 gigawatts of non-fossil energy by 2070. End of the decade, and mobilization A global solar alliance aims to secure $1 trillion in investments.

But the dramatic expansion of clean energy — India has added more than 100 gigawatts of renewable capacity during the past 10 years of the Modi government — has not been enough to meet the sharp growth in demand and constraints on the country's transmission and distribution networks.

While prioritizing energy security, coal still accounts for nearly three-quarters of production today, and its use continues to rise. India plans to add nearly 90 GW of coal projects by 2032 — about 63% more than the current plan, published in May 2023.

New Delhi has expanded coal mining to a record level, extended the life of power plants, and pushed to tone down fossil fuels in international climate talks. State mining company Coal India Ltd., which until the pandemic was planning to diversify into solar energy, is now prioritizing spending record sums to expand fossil fuel production.

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This is unlikely to abate under a new government.

According to Ashwini Swain, a fellow at the New Delhi-based research organization Sustainable Futures Collaborative, a more fragile and divided coalition could be pushed to push for projects that spread generosity and win political support. “Protecting the fossil ecosystem might seem consistent with the goal,” he said.

There is no doubt that India's green ambition is real. It is among the most climate-vulnerable countries in the world and has experienced frequent instances of extreme heat and drought.

A pro-poor, pro-growth agenda does not need to rely on coal, which has proven more expensive and less reliable than clean alternatives, said independent energy analyst Alexander Rutter, based in Bengaluru. He said: “There is a real opportunity for the new government to radically rethink its strategy by doubling down on renewable energy and storage instead of investments in new, uneconomical and unreliable coal plants.”

But the investment requirements are steep, especially when it comes to infrastructure changes that will fuel the transformation, from fixing mobility in sprawling cities to power grids. In 2022, India's electricity planners estimate that to meet India's renewable energy goals, the cost of laying new cables alone would be about 2.4 trillion rupees ($29 billion).

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Renewable energy projects are still often built in arid areas, far from the centers of demand in cities and industrial centers, where energy is consumed.

At the same time, the fragile financial position of distribution companies that connect homes or factories regularly deprives them of reliable supplies. A Rs3 trillion project led by the Ministry of Energy will go some way to determining profitability, thanks to initiatives such as smart metering, but progress is slow.

Climate analysts and researchers said one likely change over the next five years will be the role of local parties, which may ease centralization and put regional interests at the top of the agenda – this includes spreading green manufacturing and the benefits of clean energy.

“The coalition government must allow more states to stake a claim on India's growing green economy,” said Rohit Chandra, assistant professor at the Delhi School of Public Policy at the Indian Institute of Technology. “The last decade has seen most of this activity in four or five states, including Gujarat and Rajasthan.”

These two states – also strongholds of support for Modi's party – have the lowest cost of power generation, but poorer regions will now have a greater political role, which could attract investment to less affluent regions.

“If we see more decentralization and more state-led growth, you could see some of these transitional policies intertwined with basic economic aspirations, including health and education,” said Shayak Sengupta, an energy and climate fellow in the Climate Program at Observer Research. America Foundation.

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