Infrastructural challenges could derail India’s aggressive renewable energy efficiency policies, says a new report

India has aggressive renewable energy targets and industry energy efficiency policies, but faces significant infrastructure challenges which may derail the otherwise good policy, according to a new report by Climate Policy Initiative (CPI), a U.S.-based global policy effectiveness analysis and advisory organisation.

The report titled ‘The Policy Climate’, which was released recently, says that despite growing rapidly, India represented eight per cent of the increase in global energy-related CO2 emissions between 2000 and 2010, while China’s percentage in the same period stands at 68 per cent.

The report finds that in China, closure of inefficient coal-fired power plants saved the equivalent of more than 100 million tonnes of coal, while renewable electricity grew 661 per cent between 2000 and 2010. Still, renewable electricity sources in China only produced the equivalent of 0.68 per cent of the electricity from conventional sources by the end of 2010.

In India, as with China, most new energy generation since 2000 came from conventional sources (particularly coal), though the past decade saw exponential growth in renewable energy generation (especially wind, which grew 1,250 per cent from 2000-2010). The report says that implementation of policy relevant to climate change and its impact accelerated markedly over the last decade, despite the slow pace of international climate negotiations. The study presented three decades of evidence from five key economies — India, China, Brazil, the European Union (EU) and the U.S. which together contain slightly more than half of the world’s population and account for nearly two-thirds of global greenhouse gas emissions.

In the U.S. and India, renewable energy targets have been given to the States, even as the national governments develop policies to incentivise it while China experiments with special economic zones, incentives, and regulation for its low carbon cities and low carbon provinces, according to the report. In India, both emissions and power generation have increased dramatically, more than doubling in 15 years, the report points out.

From 2005-2010, Indian States phased in Renewable Portfolio Obligations for their electricity markets. As of 2010, these State-wide targets translated to an approximate 5.5 per cent nationwide target for renewable energy.

Since the early 1990s, industrial productivity has tripled, but emissions have gone up by about 70 per cent and while the Indian industry largely improved its efficiency, performance at a sectoral level was mixed. The steel industry emissions intensity increased due to an increase in primary steel production v/s scrap, the report notes.

The good news is that in 2012, India was the world’s fourth-largest market for new wind power projects, it has ambitious solar energy targets, and it has significant government programmes focused on energy efficiency (Global Wind Energy Council 2012). On the flip side, the report says that because it is also about improving energy security, reducing energy imports, improving the nation’s balance of payments, creating new and profitable industries, India also pursues the largest build-out of coal-fired power plants, coal mining, and related infrastructure anywhere outside of China.

The report says that India’s climate policy challenge, and one shared by the other rapidly developing countries in this study, is to ensure that it can realise the full long-term economic benefits of low-carbon development, without sacrificing short-term growth. However, the policy change is confounded by the state of the Indian economy and the immature financial markets in India, by differences between the Indian states, by the democratic imperative to develop policy that is fair to all, while limiting opportunities for corruption.

Outlining the challenges of low-carbon development in India, the report says that the particulars of the Indian economy and financial markets change the way policy will act and this could make low carbon investment more difficult.

The key sectors driving emissions in India are power, industry, and agriculture, the report says. Rapid growth in electricity demand mirrored rapid economic growth in China and India. In both countries, the most readily available source of indigenous fuel was coal. China was better at exploiting its coal resources, while India had to rely on imports.

However, agricultural emissions have increased, driven mainly by an increase in fertiliser use. For India as well as Brazil, exports might have driven increased cropland expansion or agricultural intensification. Despite rising fertiliser use, nitrous oxide emissions didn’t rise dramatically, the report adds. Regrettably, while agriculture and forestry are important emission sources in India, there is little policy focus on these sectors.