India’s climate leadership and action during the Covid-19 crisis

Blog Post Covid-19India
Published October 26, 2021

Siddarthan Balasubramania

Principal Strategist & Senior Director, International Engagement

Kanchi Gupta

Program Manager

India is among the countries worst impacted by Covid-19 in terms of lost lives and livelihoods. A steep fall in economic growth, jobs, investments, and government revenue coincided with the impact of runaway climate change. Thus, for India, a country with 16% of the world’s population (1.3 billion), recovering from the impact of Covid-19 is several times more challenging in comparison to other countries.

Despite the challenge, the Indian government has continued to focus on the invisible threat of climate change alongside strengthening the country’s health and social infrastructure and initiating the world’s biggest vaccination program. India’s vaccination drive is deploying more than 20 million doses a day, an unprecedented scale that led to the milestone achievement of 1 billion doses administered by October 21, 2021. As one of the largest developing economies, India faces the challenge of balancing its development goals with climate imperatives, and this article seeks to highlight the country’s efforts and commitment towards clean energy transitions even during the pandemic. The global community has a vital role to play in strengthening these and the last section makes some suggestions.

Climate action at the center of Covid-19 recovery

India has placed sustainable development at the center of its recovery strategy, taking several steps toward building a sustainable economic future. New Delhi’s climate ambition and leadership provide a ready springboard for “building back better.” The milestone achievement of 100 GW of installed renewable energy capacity in Aug 2021 embodies this approach. India now stands fourth in the world in terms of installed renewable energy capacity — fifth in solar and fourth in wind.

Marking the occasion, PM Modi pledged India’s energy transitions to be ambitious and inspirational by enabling “new opportunities from green growth to green jobs…for start-ups and youth”. Additionally, on India’s 75th Independence Day, he called for energy independence by 2047 and announced a National Hydrogen Mission aimed at making India a global leader in green hydrogen production and export. Thus, spurring domestic innovation and manufacturing, attracting international investments, and enhancing employment opportunities form the bedrock of the government’s recent clean energy policy and regulatory and diplomatic initiatives.

The central government has also catalyzed state-level action. For instance, Gujarat released an assessment of the dramatic drop in the proportion of thermal power in the state’s energy generation (63% to 16% by 2030), as it aligns its strategy with the 450 GW national target. It is also setting up the world’s largest grid-scale battery storage plant. Bihar and Ladakh too have decided to become carbon neutral. Ladakh is working towards 10 GW of renewable energy capacity through wind and solar and is setting up India’s largest battery storage capacity of 50MWh.

In August 2021, the Indian government announced that it would ratify the Kigali Amendment enabling the phasing out of hydrofluorocarbons (HFCs). This decision is of global significance because HFCs — a set of greenhouse gases primarily used in cooling and refrigeration — are significantly more damaging to the climate than carbon dioxide and their phase-out could help avoid 0.5° Celsius in global temperature rise by the end of the century. The ratification will spur demand for more sustainable refrigerants, boost domestic manufacturing and local innovation, and create green jobs. This decision followed another marker in India’s leadership, the launch of the India Cooling Action Plan in 2019 — the first by any country— which laid the roadmap for improved energy efficiency and the transition to clean technologies.

Prime Minister Modi’s visit to the U.S. in September 2021 was marked by the announcement of significant ambitious climate targets. The cementing of the goal of 450 GW of renewable energy capacity by 2030 signaled a huge undertaking and commitment from the government, requiring a 350% increase from current levels over 10 years. India’s Energy Minister RK Singh further reinforced this by unveiling India’s Energy Compact at the High-Level Dialogue on Energy that was convened by the U.N.

The compact also commits to developing and implementing a National Hydrogen Energy Mission to scale up annual green hydrogen production to 1 MT by 2030 and a Production-Linked Incentive Scheme to add 10 GW of solar panel manufacturing capacity by 2025. It also emphasizes the role of the International Solar Alliance (ISA) in supporting other countries develop and scale solar power, create new jobs, and usher in investments. Other important commitments include achieving 15 million metric tonnes (MMT) capacity of compressed biogas by 2024, 20% ethanol blending in petrol by 2025-26, and enhancing energy efficiency in the agriculture, buildings, industry, and transport sectors, and promoting energy-efficient appliances and equipment.

Milestone policies and regulations supporting clean technologies

In addition to the significant policy announcements in August and September, the government took several other progressive steps. India approved a National Programme on Advanced Chemistry Cell Battery Storage with an outlay of nearly $2.6 billion over five years. This is an integral step toward transforming the country’s mobility and energy systems by creating a competitive battery manufacturing industry, given the estimations that the battery market could exceed $125 billion annually by 2030. Important amendments to the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) program such as hiking incentives for electric two- and three-wheelers also promote the uptake of clean mobility.

India also introduced the Electricity Amendment Bill 2021 that includes far reaching reforms like offering consumers the choice of their electricity provider by de-licensing distribution, thereby removing barriers to entry of private players in the space. This will bring competition in the retail electricity sector. The bill also proposes a penalty for non-compliance with the Renewable Purchase Obligation.

Moreover, in an effort to boost the flow and quantum of green finance, India’s central bank joined the Central Banks and Supervisors Network for Greening the Financial System to share and learn best practices on climate risk assessment.

Augmenting the government’s efforts, Indian entrepreneurs and civil society followed suit. Outlining industry-specific measures, 24 private companies including the Tata Group, Reliance Industries, Mahindra and Mahindra, Dalmia Cement, and Adani Group committed to move toward carbon neutrality through energy efficiency, promoting renewables, green mobility, waste management, and recycling, among others. Some companies are investing heavily in developing green hydrogen projects in India.

Climate action through diplomacy and green partnerships

Two key initiatives, ISA and the Coalition for Disaster-Resilient Infrastructure (CDRI), are instrumental in mobilizing climate action, especially in developing countries. Climate diplomacy is increasingly central to India’s foreign policy agenda and has served as the basis for new and strengthened partnerships. The U.S.-India Climate and Clean Energy Agenda 2030 Partnership, launched in April 2021, and further detailed in the September meeting between Prime Minister Modi and President Biden, reaffirms the priorities of green and low-carbon development. India and the U.K., too, jointly launched the Climate Finance Leadership Initiative partnership entailing a $1.2 billion package of public and private investments in sustainable projects and renewable energy in India. While in the U.S., Prime Minister Modi had also forged a partnership with Australian Prime Minister Scott Morrison on low-emissions technology, with a focus on hydrogen and ultra-low-cost solar programs.

The role of the global community

As the 26th U.N. Climate Change Conference of the Parties (COP26) nears, there is growing consensus that the impact of climate change should be matched with an elevated pace of clean technology deployment, sustainable finance, and other decarbonization efforts. India’s clean energy transition is central to collective progress and therefore India’s sustainable growth is a shared goal of the international community. India is building the infrastructure and systems to support further action, domestically and internationally. These efforts could be enhanced through greater collaboration with, and ambition from the global community, in areas including:

  1. Explicitly recognizing India’s complex development needs, acute climate vulnerability, severe impacts of Covid-19, and competing priorities of scarce resources. These underscore the government’s imperatives of balancing several socio-political considerations with climate action
  2. Facilitating technological and financial support so that India achieves its ambitious Energy Compact goals. India’s target of 450 GW of renewable energy requires a cumulative investment of $221 billion (including associated transmission and storage systems) and presents a significant business opportunity. U.S. assurance to India in this regard is a welcome development.
  3. Sharing India’s imperatives of just transition and equitable development as central to partnerships on technology, finance, and research and development (such as in hydrogen, low-cost solar panels, electric vehicles, batteries).
  4. Fostering greater collaboration between Indian and global businesses on best practices as well as commercial engagement on clean technology and investment.
  5. Establishing greater financial and institutional support for ISA, CDRI and similar global initiatives. India’s leadership in positioning ISA as a global climate solution warrants more recognition, given its pivotal role catalyzing technology and financial flow for scaling green transitions in other developing countries.
  6. Supporting India’s access to critical supply chains for its ambitious energy transition goals through flexibility in trade, logistics. and flow of expertise.

Philanthropy (both domestic and international) has a critical role to play in all the above and its contribution, made in concert with the government efforts, has led to significant advances in building local institutional and technical capacity, providing technical assistance and research support to national, state and city governments in areas such as electric mobility, clean energy and cooling. However, while philanthropic funding in India has increased over the years and was estimated to be an annual average of $55 million between 2015 and 2020, it is grossly inadequate compared to the magnitude of the challenge.

This trend of increased yet inadequate philanthropic funding is mirrored at the global level. For instance, according to a recent report by ClimateWorks Foundation, despite an annual growth of 14% (2019-2020) in philanthropic giving to climate change mitigation, it still accounts for less than 2% of the total contributions. Therefore, there is an urgent need to scale overall financial flows including philanthropic funding, particularly to India, to implement the ambitious goals set for clean energy transitions.