Globally the speed of investment for energy transition is low, not only low, it is too much low. A clearer picture will come out after completion of the COP 29. However, the global scenario can be gauged from a recent comment of Natalie Jones, Policy Advisor at the International Institute for Sustainable Development (IISD).
According to Jones, “Claiming to lead on climate while continuing the expansion of oil, gas, and coal production is indefensible at this point, governments need a plan for reducing reliance on fossil fuel production. The bare minimum is ending new exploration licensing. This is the moment to get serious about the carbon budget.”
NATALIE JONES
Policy Advisor at the International Institute
for Sustainable Development (IISD)
Furthermore, according to the IISD communiqué, peer-reviewed science shows there is no room for new coal, oil, and gas development under the 1.5°C global warming limit agreed in Paris. In 1.5°C-aligned scenarios, coal production declines by 95% by 2050 and oil and gas production by at least 65%.
To align with 1.5°C, NDCs should include a commitment to no new coal, oil, and gas exploration licences, as well as target dates for ending public financial flows for fossil fuels and winding down production. To be credible, these targets should be coupled with plans to diversify fossil fuel-based economies and ease the transition for affected workers and communities.
Finance is key to unlocking ambition. Governments must agree on a robust climate finance package at the next UN climate summit in November, including support for transition in fossil fuel-producing countries in the Global South.
All countries, rich and poor, can stop sending public money in the wrong direction. Globally, governments spent at least USD 1.5 trillion on fossil fuel subsidies in 2022, worsening climate pollution and holding back the shift to clean energy. NDCs should, in line with existing commitments, include clear and ambitious target years to eliminate these subsidies and commit to developing national roadmaps that guide implementation. Doing so frees up the public budget for social priorities like education, health care, clean energy, and poverty alleviation. Developed countries can channel some of the money saved into climate finance.
CHRISTOPHER BEATON
Director with the IISD Energy Program
Commenting on the negligence in this regard, Chris Beaton, a Director with the IISD Energy Program, said, “Despite years of promises, progress on ending fossil fuel subsidies has been painfully slow. Governments must support people, not fuels. That means repurposing subsidies, public finance, and state companies’ investments for social protection and the clean energy transition.”
Current global apprehension
Meanwhile as in the US, Donald Trump has won the presidential election, there is no certainty about that the American climate-focused contributions to the World Bank and other multilateral development banks will continue.
Also, it is expected that Trump’s administration will boost fossil-fuel-based power production. His policies may add 4 billion tons to carbon emissions by 2030.
With over 70% energy supply, fossil fuels continue to dominate the energy mix in several of the biggest economies, the world’s largest CO2 emitters. To meet the 1.5°C target, the G20 countries must triple their installed renewable power capacity by 2030, reaching 9,400 gigawatts (GW), and expand it seven-fold by 2050 to 24,900 GW, compared to 2023 levels.
Russia’s invasion of Ukraine has directly created a potential for CO2 emission of more than 175 million tonnes into the atmosphere.
According to a recent report from Centre for Research on Energy and Clean Air (CREA), “As the world’s largest Greenhouse Gas (GHG) emitter, China’s new 2035 climate targets will determine whether global climate goals under the Paris Agreement can be met. To enable the achievement of these goals, China must set a strong but achievable target of reducing emissions by at least 30% by 2035.”
The report also states that in a period of global volatility, China has a vital opportunity to reaffirm its leadership in multilateralism and drive global climate action. Whilst there are currently no indications of what targets policymakers in Beijing are considering, they would benefit from capitalising on recent positive developments and establishing clear policies for China’s decarbonization pathway to ensure China’s credibility as a responsible major power.”
The country can achieve at least 30% CO2 emission reductions overall by 2035 compared to 2023. An absolute emission reduction target set by the central government would be critical to achieving this reduction.
A brief look at the current Indian RE growth scenario
According to the Ministry of New and Renewable Energy’s (MNRE’s) latest data, there is a substantial growth in our country’s renewable energy sector from October 2023 to October 2024.
India’s total renewable energy installed capacity has increased by a staggering 24.2 GW (13.5%) in a year, reaching 203.18 GW in October 2024 from 178.98 GW in October 2023. This significant rise aligns with India’s ambitious targets in the field of Renewable Energy (RE) sector.
The solar sector has seen a remarkable increase of 20.1 GW (27.9%), growing from 72.02 GW in October 2023 to 92.12 GW in October 2024. The combined total solar capacity, including projects under implementation and tendered, now stands at 250.57 GW, a significant rise from 166.49 GW last year.
Wind energy also demonstrated steady growth, with installed capacity increasing by 7.8%, from 44.29 GW in October 2023 to 47.72 GW in 2024. Total capacity in the pipeline for wind projects has now reached 72.35 GW.
Glimpses of the current investment proposals in India
According to the report titled “Synchronizing energy transitions towards possible Net-Zero for India: Affordable and clean energy for All,” prepared by IIM Ahmedabad and released in April this year, “Financial requirements during 2020-2070 would be to the tune of Rs 150-200 lakh Crore (about US$ 2-2.5 trillion, or US$ 40-50 billion/year). Considerable financial flows must be international.” Time will tell how much we will be able to achieve.
However, the current trend is positive. For example, the Asian Development Bank (ADB) has signed a $100 million equity investment with our leading independent power producer Fourth Partner Energy Private Limited to advance the decarbonization of India’s commercial and industrial sector through utility-scale solar, solar-wind hybrid and rooftop solar power projects and to provide cost-effective clean energy directly to users.
Final words
According to the International Energy Agency’s (IEA’s) observation, “With a GDP growth rate of 7.8%, India was the world’s fastest growing major economy in 2023. Its economy is now the world’s fifth largest, and is on track to become the third largest by 2030 behind the United States and China.”
Several initiatives (like: Scaling up solar and wind power investments, Production Linked Incentives scheme, Energy efficiency programme etc.) have led to a surge in Indian clean energy investment in recent years. Spending reached USD 68 billion in 2023, up by nearly 40% from the 2016-2020 average. Almost half of this was devoted to low-emissions power generation, which includes solar PV. Fossil fuel investment grew by 6% over the same period to reach USD 33 billion in 2023, in response to rising demand for fuel and coal-fired power generation. Clean energy investment is on track to double by 2030 under today’s policy settings, but would need to rise by a further 20% to get fully on track for the country’s energy and climate goals. Addressing risks that push up the cost of capital will be critical in this endeavour.
By P. K. Chatterjee (PK)
