Reflecting on India’s green energy transition, three thoughts come to the fore.
One, it is not a uniform national transition. There are several, varying state-led transitions. Two, there is tension between the drivers of this transition and our trade policy. Three, there is an imbalance between the realpolitik of governance and the ethical imperative of sustainable development. What should be the actions that flow from these thoughts is beyond the scope of this article.
The green energy transition is predominantly about green electrification. The pace, scope and size of the shift from fossil fuels to a clean, non-carbon energy system depend on the electrification of transport, industry, buildings and residential areas. As such, given that electricity generation, transmission and distribution is a Concurrent Subject, the design and effectiveness of the green energy transition is the joint responsibility of the Centre and states.
The Union Ministry of New and Renewable Energy (MNRE) has made impressive progress. There is a roadmap for meeting 50 per cent of India’s energy requirements from renewables by 2030. The objective is to create 500 GW of RE installed capacity by that year, and the MNRE is committed to bid out 50 GW of solar generation capacity every year. They exceeded this target by almost 25 per cent in 2023. More significant, perhaps, is that the silos that segregate the functioning of different government ministries have been perforated. MNRE and the Ministry of Power, along with the regulatory agencies under the latter’s umbrella (Central Electricity Authority (CEA); Central Electricity Regulatory Commission (CERC); Central Transmission Utility (CTU); and Power System Operation Corporation Ltd (POSCO)) are working in harmony.
More, of course, needs to be done. Transmission connectivity is inadequate. Scale-up requires grid-scale energy storage, and even as costs and technology move in the right direction, this remains a long-haul problem. Green finance is limited and of too short a duration. There is no dearth of interested investors in RE. There is, however, a dearth of “patient” green capital. The majority of the current investors are looking for a profitable exit within 6-7 years, whereas what is required is a 25-year time horizon.
On balance though, the central government deserves credit for going beyond atmospherics and for spelling out the specifics of the milestones to be crossed and how.
A less clear picture emerges when the energy transition is seen through the lens of state governments. Some states like Telangana, Tamil Nadu, Kerala, Odisha, and Delhi have moved further and faster because of a combination of a conducive policy environment, demographics, and OEMs. Others, like Haryana, have comparably supportive policies, but progress has slowed because of their failure to put in place the machinery for implementation. And then there are states like Rajasthan, which are financially stretched and have struggled to provide the incentives to propel the shift away from fossil fuels.
The fact is there is no uniformity in the pattern of the clean energy transition across the states. They are proceeding at varying speeds. Eventually though, given that this transition does not respect political and institutional boundaries, all entities — central government, state governments, public sector companies, private sector generators, and consumers — should align. This will, however, require major structural and institutional redesign.
Trade policy must subserve national interest. That is beyond debate. But what is not, is the weightage to be given to contributory facets of national interest. In the context of the energy transition, this surfaces a policy dilemma — one best exemplified by the outsized presence of China in the clean energy market.
The International Energy Agency (IEA) reported that in 2023, China accounted for 63 per cent of the incremental global addition in renewables ( 298 GW of the 473 GW added); that it has an abundance of components of the solar/wind value chain from polysilica, wafers, cells, and modules; and that it can produce world-class quality solar panels, wind turbines, and batteries at the cheapest price. Bloomberg has, for instance, reported that Chinese solar panels are 85 per cent cheaper than US panels and 55 per cent cheaper than those made in Southeast Asia.
The fact is, were Indian manufacturers allowed unconstrained access to cheap Chinese products, the competitiveness gap between clean energy and incumbent fossil fuels would narrow even further, and that would accelerate the transition. But this is, of course, a geopolitically unrealistic proposition. India cannot expose itself to the vulnerability of over-dependence on China. There would be national security implications.
A similar dilemma, although less obvious and not between the binary of sustainability and security but between sustainability and growth, may arise when contemplating the response to the carbon taxes that the US, EU, and UK propose to impose on the carbon embedded in imports into their country/region.
The challenge for our leaders is to find a balance between the compulsions of sustainability and the demands of national security and economic growth. It is to bring trade and climate policies into sync.
The world faces an ethical conundrum. Global warming is a fact. Every day we are reminded of this reality. Last month, I wrote about the forest fires in Uttarakhand. A few days back, we read about the disruption to air traffic because temperatures in Leh, the 11,000-feet high capital of Ladakh, had exceeded 36°C. Today, as I write, the country is reeling from the tragedy of the Wayanad landslides caused, inter alia, by heavy rains. The human and economic costs of climate change are palpable. And yet, the governance structures for dealing with this crisis are stuck in the mire of rigid, beggar-thy-neighbour, self-serving nationalisms.
Henry Kissinger once wrote, “National interests are seldom reconcilable in win-win outcomes.” True, if every problem is seen through the Westphalian lens of sovereign nation-states. But that should not be the lens through which to look at global warming. It should be one that sets the dynamics of narrow realpolitik within the broader frame of humanity, ethics, and cooperative governance.
The writer is chairman and distinguished fellow, CSEP
