PM Modi made a five-point pledge at COP26 and committed to net-zero emissions by 2070. However, India came back disappointed from Glasgow on the issue of climate financing. According to the latest report by Council for Environment, Energy and Water and Centre for Energy Finance, India will require investments worth over $10 trillion to achieve net-zero by 2070.
Indian officials have also said that it is unfair to blame India for the change in text from ‘phase out’ to ‘phase down’ of coal, as India did not originally initiate the idea.
Sources said, that developed nations were pushing for more measures on climate crisis mitigation with few commitments on climate finance. That is why the Prime Minister made a case for not $100 billion but $1.3 trillion annually in climate financing.
Indian officials have said that there’s need for a greater science-based approach towards new climate financing goals beyond 2025. According to the latest report by Council for Environment, Energy and Water and Centre for Energy Finance, India will require investments worth over $10 trillion to achieve net-zero by 2070.
The power sector alone would require investments worth over $8.4 trillion and setting up of green hydrogen capacity would require $1.5 trillion.
Arunabha Ghosh, CEO of CEEW, said, “We should understand that the net-zero commitment that the Prime Minister made on November 1 is the most bold statement India has made at climate negotiations. Today, we have 45 gigawatts (GW) of solar capacity and 101 GW of solar and wind capacity. Even by 2030 what was transformational was that the Prime Minister put forward very clear near-term targets for 2030 – 500 GW of non-fossil electricity capacity, and 50 percent of electricity capacity coming from renewables.
When compared to many other larger emitters, whether it’s China, the United States, European Union, we see that our ambitions are not just aggressive but are also aligned with the near term. So it is against this backdrop that we have to understand the coal ‘phase down’ or ‘phase out’ story.”
He further added, “For the last six years, investments in renewables have beaten investments in thermal power capacity, and that is the trend that will continue. And over time, coal will phase down and eventually phase out. So rather than blame India, just for a change of wording, we should actually understand the overall ambition and commitment that India has put forward.”
On funding required by India to phase down coal Ghosh said, “The funding we have as estimated at CEEW – Centre of Energy Finance is $10.1 trillion for the overall net-zero ambitions that is associated with the power sector, with industrial decarbonization, particularly with the investment in green hydrogen, and with the mobility transition towards electric mobility.”
He added, “But if you just look at the coal story, we have estimated here at CEEW that about 30 to 50 GW of existing coal capacity which is inefficient can be shut down fairly quickly, while the capacity that shifts to more efficient power plants without destabilizing the grid. Now to shut down this capacity, we estimate that there will be a requirement about $5.50 to$6 billion that includes the payout to the equity holders, the debt holders and of course, creating an insurance cushion and retirement plan for the workers.”
“For the remainder of the coal capacity about another 1GW gigawatts, that will still remain, we will need well, upwards of $50 to $60 billion. Of course, this is contingent on where the financing will come from? What is the deal that is struck with the workers?”
Ghosh said what India is asking for is not free money. “It is saying that the bulk of the investment will be generated from regular private-sector sources institutional capital and so forth. But there is still a gap that has to be met and that can only be met if there is international climate finance.”