Current trajectories, policy measures and big investments makes it clear that both countries are set to overachieve their renewables targets, but can they get out of their conservative moulds to up them?
Last year, this time around, India committed to achieving net zero by 2070. In the past 12 months since COP26, the world has turned turtle. Just when countries were beginning to pick things up post pandemic, the Ukraine-Russia war has caused the world to shift. Food and energy systems fault lines have been completely exposed. Supply chains have been completely disrupted. A post-Covid surge in demand caused a spike in energy demands that outpaced solar deployment. Within months, another black swan event and a series of climate disasters derailed decarbonisation plans that were just beginning to be spelt out and set in motion. India and China, two critical voices at the negotiating table have continued consistent progress on the deployment of renewables notwithstanding.
In 2021, both countries committed to long-term net-zero climate targets, China before 2060 and India in 2070. A look at their short-term and long-term plans indicates that both the economies might be well on track to overachieve their UN climate targets. This includes domestic policy interventions and record green investments that will inform their longer-term trajectories. In terms of their domestic NDCs, both India and China have submitted their official and increased targets to the UNFCCC earlier this year and according to an assessment by the Climate Action Tracker—an independent consultancy—are well placed to announce deeper cuts and might quite possibly even overachieve.
Fossil fuels continue to dominate
At the moment though, there is no doubt that coal dominates the power mix of both India and China. As a leading clean energy analyst BloombergNEF (BNEF) explains, “global coal-fired power generation surged 750 Terawatt-hour (TWh) in 2021 from the year prior as the global economy began to recover from the effects of the Covid-19 pandemic.” In China, the net change in coal-fired generation was +395TWh. Demand for coal-fired power also increased in India by +153TWh.
As one of the fastest growing economies in the world, India has seen a 172% increase in its emissions between 1990-2018 emissions (excluding land use). Fossil fuels continue to dominate its energy mix: coal (44%) and oil (22%) are out in front, with just 12% rated low carbon. The 2022 IEA WEO predicts energy demand in India will rise at over 3% per year through 2030, with coal meeting a third of this demand.
China’s emissions (excluding land use) have spiked 269% since 1990 making it the world’s largest emitter of greenhouse gases at present. However, China’s demand, too, is expected to be depressed, in part owing to its slow-paced real estate sector and long-term zero Covid policy, both of which might enable it to achieve its objectives in advance.
According to the IEA, “This surge is not a long‐term one in any of our scenarios… coal demand remains near its historical peak for the first half of the decade, but returns to structural decline in the second half of this decade.”
Record installations of renewable energy
India, on the other hand, expanded its installed renewable energy capacity by 19% between 2016-2021, with a record addition of 13 GW in just the first three-quarters of 2022. This is 26% more than what was installed in the same period in 2021.
China is set to install a record 156 gigawatts of wind turbines and solar panels this year, which would be a 25% jump from the record set last year. In fact, according to CREA’s analysis of announcements made at the central and provincial levels, it might reach 1,100 GW by 2025 making it possible to achieve 1,200 GW much ahead of its 2030 target. Moreover, China’s EV sales are projected to double, with the possibility of reaching a record six million this year.
In terms of charting a longer-term path, India’s draft National Electricity Plan, 2022, sees an 18 GW downward revision of installed coal capacity in 2030 when compared with estimates set out five years ago and is in line with its coal phasedown commitment at COP26. Moreover, solar capacity is expected to increase to 333 GW by 2032, up from 300 GW in 2030 estimated in the OGCM report (Optimal Generation Capacity Mix Report).
Other policies, plans and market trends that have been laid out and will facilitate the rapid uptake of renewables include government programmes such as the Gati Shakti National Master Plan, Atmanirbhar Bharat, green energy open access, the Energy Conservation Bill, 2022, which not only look at energy efficiency, but the rapid uptake of renewables. Recent policy reforms are all key market signals and speak to the direction India is steering towards. Policy shifts include a production-linked incentive (PLI) programme of Rs420 billion (US$5.3 billion) to manufacture solar modules and batteries for electric vehicles and energy storage.
Some large public-sector companies have also committed to achieving net-zero carbon emissions, like Indian Railways by 2030, Indian Oil Corporation by 2046, GAIL by 2040 and Chhattisgarh Health Department by 2050. In addition, the Ministry of New and Renewable Energy recently revived India’s offshore wind power plans with an announcement of a mega 4GW tender for offshore wind power off Tamil Nadu and Gujarat coasts in the next few months.
Moreover, thermal power giants, including NTPC, Tata Power and JSW Energy, are committing to green energy as are independent power producers (IPPs), such as Adani Green Energy, ReNew Power and Azure Power, which are keen on tapping into both domestic and increasingly global capital markets.
The green investments by thermal giants, especially PSUs like Coal India reflect a transition, which might be unacknowledged and unplanned for, but definitely underway and will impact an estimated 13 million people across the value chain.
Likewise, decarbonisation policies are being systematically being planned and rolled out in China with the most critical being the 1+N framework that provides an overall guidance to policy measures and actions in various economic sectors. A policy framework on carbon peaking with clear modelling, was rolled out by the country’s central government in 2020. Sectors that are responsible for 97% of China’s GHG emissions now have specific emission-peaking plans. More recently, in July and August 2022, China released its carbon-peaking plans for urban and rural development and an industry carbon-peaking plan respectively. While the former focuses on the construction sector, the latter has set a top-line target to peak the sector’s emissions before 2030.
All of these measures are reflected in the investments flooding into the clean energy sector and sharply bringing down the per unit costs, which in turn is accelerating the necessary transition.
All of this is expected to reflect lower emissions. According to the latest IEA World Energy Outlook, projected emissions in 2050 in this year’s APS (Announced Pledges Scenario) are 8 Gt CO2 lower than last year’s assessment, “mainly due to the net zero emissions pledges made by India and in Southeast Asia.”
Looking at the current trajectories, policy measures and big investments makes it clear that both India and China are well poised to achieve their set targets. Perhaps even overachieve them. The question is can they get out of their conservative moulds and up their targets? Ultimately what they say matters and drives negotiations and ultimately climate action that much further.
Authors: Hozefa Merchant is an energy analyst specialising in energy transition and carbon mitigation. His work focuses on fossil fuel to clean energy transition in key fossil-fuel-dependent countries. He holds a master’s degree in international journalism and developmental communications from Cardiff University, UK.
Yao Zhe is the Senior Officer at China Dialogue. Zhe previously worked on communications and policy analysis in both the private and public sectors. She holds a bachelor’s degree in Journalism from Tsinghua University and a Master’s in International Development from Sciences Po Paris.