India’s Climate Goals: Can the Private Sector Help Push Clean Energy Use?

India possesses all the resources it needs to take advantage of the opportunities that a net-zero transition will create, state the findings of a recent McKinsey research report. We have reserves of the minerals, patents and even appropriate human resources that are required to develop the necessary climate technologies. Perhaps this is why the ‘power players’ are pledging massive investments in the renewable energy sector.Fiscal pundits have forecasted that India’s current 50 per cent capital spending on low-emission assets, such as solar farms and electric vehicles, will rise to 80 per cent over the next three decades if the world remains on the path of the collective 2050 net-zero emissions goal. India Inc understands this and is very well working to utilise that potential.Clean energy investments are no longer seen as a CSR spend but as a business strategy.In July 2021, Tata Power announced that it would not build new coal-fired generation projects. Similarly, JSW, too, has announced an investment of Rs 750 billion (USD 10 billion) for the development of 20GW of solar, wind and hydropower plants by March 2030.Recently, French giant TotalEnergies agreed to acquire a 25 per cent interest in Adani New Industries Limited (ANIL), which will focus on the production and commercialisation of green hydrogen in India.Until now, public companies have been the driving force behind India’s evolving energy market. However, the tide is now turning.Recently, French giant TotalEnergies agreed to acquire a 25 per cent interest in Adani New Industries Limited (ANIL), which will focus on the production and commercialisation of green hydrogen in India. The exclusive platform, which is part of Adani Enterprises Limited (AEL), will aim to produce one million metric tonnes of green hydrogen per year (Mtpa) by 2030, underpinned by around 30 gigawatts (GW) of new renewable power generation capacity.Other giants are following suit and clean energy investments are no longer seen as a CSR spend but as a business strategy. This found a push especially after Prime Minister Narendra Modi’s two big pledges at the COP26 summit in Glasgow – India will derive 50 per cent of its energy requirements from renewable sources and 500 gigawatts of non-fossil fuel capacity by 2030, along with a net-zero target of 2070.The response to this announcement is pragmatic, especially from India Inc, even as the country reels under the financial repercussions of the COVID-19 pandemic.COP26: PM Modi's 5 Big Climate Goals for IndiaThe ongoing economic recovery also puts a special focus on how private players have an increased potential of driving the global economy, due to their quick decision-making on additional budgets, changing tack and turning their attention to solutions that could adapt to a fast-paced environment.India is the world’s second-largest producer and consumer of coal. But despite the domestic production, the country is facing its second coal crisis within a year, leading to power supply issues across the region. Shortage of stockpiles, a surge in international coal prices and the poor financial health of power distribution companies, all contribute to the ongoing coal conundrum.Though the Centre is resorting to emergency action plans, such as restarting import-based coal plants, experts are advocating immediate actions, including expediting the growth of renewable energy. However, these necessary interventions come at a hefty cost.In the last few years, globally, there has been significant capital momentum to urge companies to move away from thermal coal and coal-fired power generation. According to the Institute of Energy Economics and Financial Analysis, since 2013, about 193 globally significant banks, insurers, and asset managers/owners have implemented substantial formal coal exit policies. In 2021 alone, 51 such new policies were put in place.This capital, which was introduced due to the rapidly diminishing economic merits of thermal coal and in light of a global climate crisis, is well within our reach. Though the cash flow has not been sizeable due to lack of trust, greenwashing and legacy dependency on thermal assets of big public sector firms, India Inc is working fervently to change this trajectory by making renewable energy a crucial part of their businesses operations.As per a recent Moody's Investors Service report, “India's (Baa3 stable) 2070 net-zero target and intermediate goals through 2030 present significant policy implementation challenges for the government, carving a more central role for private companies and investors to drive the transition.”Reiterating the focus of the country’s biggest private power players on carbon neutrality by 2050, in July 2021, Tata Power announced that it would not build new coal-fired generation projects. Similarly, JSW, too, has announced an investment of Rs 750 billion (USD 10 billion) for the development of 20GW of solar, wind and hydropower plants by March 2030.This serves a dual purpose – it pushes India closer to its goal and reduces our reliance on imports by building a domestic ecosystem of renewable energy sources.Until now, public companies have been the driving force behind India’s evolving energy market. However, the tide is now turning.Decarbonising top carbon-emitting industries rests on the shoulders of private players that have recognised a new and healthier net-zero future and are pumping substantial resources for its construction.If this could be captured in a frame, it was at the recently-concluded World Economic Forum (WEF) Annual Meeting 2022 in Davos, where India’s growth outlook found itself in the bright glare of the world spotlight and was given the deserved recognition for its ambitious plans for clean solutions and technological advancements.The Solar Solution: How Solar Energy Resolved a Remote Village's Water WoesBusiness leaders and big players such as Gautam Adani, Sunil Bharti Mittal, Shobana Kamineni and Kumar M Birla also highlighted the role of India Inc and its contribution to global power transition goals.Chief executives from India’s leading businesses are now a part of the WEF’s new “Alliance of CEO Climate Action Leaders India”, which will work towards fast-tracking decarbonisation pathways during the country’s net-zero journey.India is also dipping into a collective market cap of $8.5 trillion by joining the First Movers Coalition, a US and WEF-led global initiative aimed at decarbonising these sectors.Also, India’s corporates are being heavily backed by the government that is committed to boosting the use of clean energy sources and is already undertaking various large-scale sustainable power projects and promoting green energy immensely.Speaking at a recently held summit on clean energy, Leena Nandan, Secretary, Ministry of Environment, Forests & Climate Change, said that the ongoing conversation around the adverse impact of fossil fuel “could not have come at a more appropriate time”.“How major players in the energy sector are going to align their programmes and policies to enable India to achieve its goals has to be at the centre of all such discussions,” said Nandan, adding that the consumer can play an equally important role via their choices.Net-Zero: India's Target Is 2070 but Where Does the Rest of the World Stand?Long considered the climate crisis’s problem child, there is no denying that India is now undergoing a green transition. With our costs already among the lowest in the world, it is at the cusp of an age of truly competitive, unsubsidised clean energy. And as the world makes great strides in finally turning away from fossil fuels, India, powered by the private sector, will play an important global role in transitioning the planet to a cleaner, safer, more sustainable future.(Vaibhav Maloo is MD at Enso Group. This is an opinion article and the views expressed are the author's own. The Quint neither endorses nor is responsible for them.)

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India’s Climate Goals: Can the Private Sector Help Push Clean Energy Use?

Until now, public companies were the driving force behind India’s evolving energy market. But the tide is turning.

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Topics: Climate Change India Inc