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UN Secretary General implores India to abandon coal; calls latest push counterintuitive

While support for climate action has gained traction among the business community and general public, the Indian government seems out of step in its ambiguous approach to solving India’s energy needs.

The United Nations General Secretary Antonio Guterres today brought attention to India’s role in tackling climate change, stating that the country must find its place at the “helm” of  leading efforts. Guterres, while delivering the 19th Darbari Seth Memorial Lecture organised by The Energy and Resources Institute (TERI), advocated strongly for environmental sustainability to be at the core of economic recovery from the current global recession triggered by the COVID-19 pandemic. The UNSG took the opportunity to urge the Indian government to move away from coal and other fossil fuels, and further accelerate the clean energy transition in the country. 

The recent public health crisis and its deep economic implications have come on top of snowballing climate change impacts affecting practically every region of the world. With governments scrambling to devise plans to climb out of the current recession, the strong interconnections between the pandemic, economic recovery and climate impacts have become increasingly difficult to look past.

Guterres flagged fossil fuel support that has persisted in government stimulus packages as a major concern and called for an end to fossil fuel subsidies, and a commitment to ending coal operations post-2020. The recent coal auctions in India elicited an oblique warning from the Secretary General who asserted that efforts to push coal would ultimately be counterproductive since the commodity offers little in terms of future economic viability.

“Investing in fossil fuels means more deaths and illness and rising healthcare costs. It is, simply put, a human disaster and bad economics. Not least, because the cost of renewables has fallen so much that it is already cheaper to build new renewable energy capacity than to continue operating 39 per cent of the world’s existing coal capacity. This share of uncompetitive coal plants will rapidly increase to 60 per cent in 2022,” said Guterres in his address. “In India, 50 per cent of coal will be uncompetitive in 2022, reaching 85 per cent by 2025. This is why the world’s largest investors are increasingly abandoning coal. They see the writing on the wall. It spells stranded assets and makes no commercial sense. The coal business is going up in smoke,” he added. 

This is true. Gujarat was the first state in India to announce a no new coal policy last year. The coal bearing state of Chattisgarh hinted to move in that direction. Maharashtra, Karnataka, Tamil Nadu and Rajasthan have also announced intentions to distance themselves from coal power.  This shift coming from the ground, reflects the sentiments of investors, as well as the industry.

There were also words of praise for the country’s efforts towards increasing its share of renewable energy and its leadership of International Solar Alliance. “I commend India’s plans for a World Solar Bank that will mobilize $1 trillion of investments in solar projects over the coming decade. India itself now has 37 gigawatts of installed solar electricity. And this is only the beginning. I am inspired by the Indian government’s decision to raise its target of renewable energy capacity from the initial 2015 goal of 175 gigawatts to 500 gigawatts by 2030,” said Guterres.

The UNSG alluded to the fact that the success of climate action will depend heavily on how attractive it is to investors. The bright side however is that rationale for climate action is rapidly making business sense, and no longer has to solely rest on environmental consciousness. There is now much greater public recognition of climate change as a genuine threat, and some corporations and communities also understand its criticality to the global financial system.

The pandemic has exposed the frailties of the contemporary global supply chain, and devastated parts of the global economy. For investors and corporations, the public health crises has served a renewed reminder of the potential costs of persisting with unsustainable practices which magnify the impacts of environmental and public health disruptions. The movement towards sustainable investment in the world of business has now become palpable- and Indian businesses too are slowly joining the bandwagon.

In the run-up to the UNSG’s address, 20 Indian businesses signed a “call to action” on a green economic recovery- outlining priorities to stimulate green growth and create a more resilient economy for the country. Signatories including large emitters such as TATA Steel, BPCL(Bharat petroleum corporation Ltd), Dalmia Cement, Godrej Industries, and Delhi International Airport-GMR Group, have committed to improving coverage of energy, water and transport, and to do so through means which minimise energy consumption, pioneer green industrialisation and utilise the principles of circular economy. The eight-point statement includes calls for investment in new clean energy sources, access to green finance to mitigate emissions, new standards and regulations for green materials in Indian manufacturing, accelerating power sector transition to RE and protecting ecosystems and arresting land degradation.

After a slow start in incorporating climate risks, Indian businesses have moved steadily towards decarbonisation in recent years. Earlier this year, the Carbon Disclosure Project revealed that 98% of 59 Indian firms surveyed directly monitor climate risks while two-thirds of these firms have incorporated climate analysis tools into their business strategies. The key focus area for Indian firms, the report showed, is renewable energy with 23% of the companies reporting RE targets-an increase of 44% over 2018 numbers. Following the increase in interest in analysing and incorporating climate risks, India is now among the top five countries in terms of companies that have signed on to the science-based targets initiative which aims to standardise the practice of setting ambitious targets for greenhouse gas emission reductions based on the latest available science.

The readiness of business to look to a cleaner future only makes the Indian government’s persistent enthusiasm for fossil fuels, particularly coal, all the more puzzling. Despite mounting costs of climate impacts and associated public health issues, there has been little clarity in the government’s intentions, especially when it comes to immediate action. A slew of counterintuitive measures including the push for continued use of coal, extension of deadlines for emission norms for thermal power plants, and pursuing widely criticised amendments to the Environmental Impact Assessment laws muddy any good work that has been achieved through a combination of progressive policy, investor interest and public participation when it comes to India’s clean energy transition. 

The contradictory nature of India’s energy targets- simultaneously pushing for coal and renewables could cause a delay in the transition to a decarbonised economy. Recent experiences during the pandemic when renewable sources saw significant increases in their share of power in the grid show that integration of RE in the grid can be achieved at reasonable costs, and that the country might not need new green field coal projects. Even so, India’s coal push for the prospect of more jobs isn’t founded on the principle of sustainable development. 

The pandemic itself has brought down energy demand. While this is slated for a slow recovery, experts expect a definite drop in demand over the next five years. The centre must create a healthy competition for new technology like storage and solar, and not a competition for coal, oil and gas. 

In order for India’s ambitious renewable energy plans to facilitate any tangible effect on the climate front, it must be aligned with industry’s appetite long term sustainability and profitability, and the public’s needs. Unfortunately, as it stands, India’s energy plans betray a dangerous ambiguity that threatens to leave both business and public stranded in the middle with neither opportunity nor access.

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