How India Can Unlock $12.7 Trillion in Investment Opportunities by Pursuing Net-Zero Emissions

How India Can Unlock $12.7 Trillion in Investment Opportunities by Pursuing Net-Zero Emissions

New Delhi: According to the New Energy Outlook: India study by BloombergNEF, India’s ambitious route towards a net-zero economy by 2050 promises an unheard-of investment opportunity estimated at a stunning $12.7 trillion.

The paper underlines both the obstacles and opportunities that lie ahead as it presents two contrasting scenarios for India’s energy transition. The first scenario, referred to as the Economic Transition Scenario (ETS), is distinguished by an economic transformation that is in line with an increase in the global temperature of 2.6 degrees Celsius by 2050. In this scenario, India makes great gains toward decarbonization and energy independence but falls short of reaching both objectives by 2050.

Under the second scenario, known as the Net Zero Scenario (NZS), the public and private sectors collaborate with increased assistance to create a net-zero emissions economy by 2050 without relying on experimental technology. This route also enables India to achieve its goal of energy independence by the middle of the century at the least expensive cost.

53 gigawatts of new solar and wind energy were added in India between 2018 and 2022, with an incredible 16 gigawatts of utility-scale solar installed in that year alone, demonstrating the country’s commitment to renewable energy. Yet, coal continues to dominate the nation’s energy-producing capacity, making little less than a quarter of it. The main cause of India’s greenhouse gas emissions continues to be its reliance on coal.

According to BloombergNEF’s analysis, increasing the use of solar and wind energy is the most cost-effective way for India to increase electricity access and decarbonize its power supply at the same time. This strategy offers a sustainable option when combined with nuclear energy, energy storage, and carbon capture and storage (CCS) for thermal power plants.

In the NZS, it is anticipated that wind and solar power capacity will rise thirty-fold by 2050, reaching 2,998 gigawatts, with wind and solar power accounting for 80% of the electricity supply. 9% of energy is generated by nuclear power, with the remaining energy coming from hydro, biomass, thermal power plants with CCS, and hydrogen-fired thermal plants. Solar and wind power are anticipated to account for 67% of all electricity output in 2050, even with the ETS.

Improving the grid’s adaptability to variable wind and solar electricity is essential for achieving these goals. Rohit Gadre, India Research Senior Associate at BNEF, lists batteries, pumped hydro storage, and peaker gas plants as potential solutions.

From 2022 through 2050, an investment in energy supply and demand totaling $7.6 trillion, or $262 billion a year, is expected under the ETS. By 2050, investment levels will need to have increased by 1.7 times to reach an average of $438 billion yearly, or about 5% of the projected gross domestic product, in order to be in line with the NZS and achieve net-zero emissions.

Investment in fossil fuel electricity is significantly down from $317 billion in the ETS to $142 billion in the NZS. India would need to invest $870 billion in CCS to reduce emissions from the NZS’s remaining fossil fuel use. Under both scenarios, sales of electric vehicles account for a sizeable amount of energy demand investment, with the NZS allocating $3.9 trillion for EV deployment.

In order to transition to a fleet of zero-emission vehicles by 2050, Komal Kareer, an India research associate at BNEF, underlined the necessity for strong legislative efforts. She also claimed that declining battery costs will speed up the adoption of EVs and promote local manufacturing.

According to Shantanu Jaiswal, head of India research at BNEF, India has the ability to cease its reliance on foreign imports of fossil fuels by the year 2047 through implementing clean technologies, expanding economic opportunities, lowering emissions, and boosting energy security.

The paper also highlights the growing issue of industrial CO2 emissions, which by the early 2040s are expected to surpass those from the electricity sector due to industries including steel, aluminum, petrochemicals, and cement. Green hydrogen and CCS will be essential in the fight against this.

According to the NZS, when carbon capture and hydrogen technologies are applied in the manufacturing of steel, cement, and petrochemicals, India’s industrial emissions would reach their peak in 2031 and begin to decline in the middle of the decade. The introduction of hydrogen-fired direct-reduction furnaces in the steel industry is anticipated to drive a tenfold rise in domestic hydrogen demand by 2050.