India, currently shoulders a significant portion of global CO2 emissions-it is among the top six global CO2 emitters—also featuring China, the United States, the European Union, Russia, and Japan—which collectively account for approximately 67% of global CO2 emissions. Despite this, India’s remarkable ambition and potential to overhaul its energy sector to renewable energy (RE), is loud and clear.
Carbon credit (Shutterstock)
So much so, that recently, India became the world's third-largest player in RE by installed capacity. This is not merely a statistic; it's a powerful statement of intent, a clear signal that India is not just acknowledging the climate challenge, but actively leading the charge towards a sustainable future.
Formidable investments are needed to fuel this transition – a staggering ₹33 lakh crore. Yet, a bothering indicator remains India’s relatively low share of global climate finance; just 9.5% of the Official Development Assistance (ODA) allocated for climate initiatives between 2014 and 2021. A more equitable distribution of global climate finance is crucial to accelerate its transition and ensure its affordability.
India will also have to mobilise domestic resources. A few ways to unlock this is mandating a fixed % of AUM for pension and insurance funds into climate finance, tap into the vast potential of domestic capital markets by creating mechanisms that channel long-term savings into green investments and remedy the current under-representation of banks in RE lending. Eventually, the transition will impact not just environmental stewardship, but also economic growth and job creation.
FICCI’s new report Powering India’s Energy Transition: Strategies to Accelerate Renewable Integration and Decarbonisation provides a valuable roadmap. Divided into five key pillars, it talks about electrifying the economy and decarbonising crucial sectors like transport and industry, as well as creating an enabling environment for green power to thrive. Key action points include:
addressing the challenges in capacity addition of renewables
streamlining land acquisition
implementing consistent state-level policies including an online portal, tracking substation capacity and financial incentives for states participating in interstate transmission systems to optimise grid infrastructure.
establishing dedicated nodal agencies
establishing a uniform national RE tariff to de-risk investments and foster greater adoption.
Each of these requires further innovation; for eg. integrating the influx of renewable energy into the grid, as well as RE tender structures that reflect real-time demand variations. The creation of a national body for expediting pumped storage project approvals is also crucial for ensuring grid stability and reliability.
Finally, accelerating the pace of electrification and the shift towards Power-to-X technologies is vital for deep decarbonisation. Transport is a big area; electric vehicle adoption must be incentivised through priority sector lending. This will gradually reduce internal combustion engine usage, and promote the establishment of robust charging infrastructure for EVs. Similarly, driving electrification in industrial processes through R&D support, international collaboration, and clear standards will unlock significant reduction in emissions.
The urgency of this transition cannot be overstated. As the report reminds us, current global efforts are insufficient to meet the Paris Agreement goals. The recent COP29 underscored the need for ambitious Nationally Determined Contributions by 2025. India's proactive stance in renewable energy development must be complemented by a concerted effort to secure the necessary financial resources and implement the policy recommendations outlined in this timely report.
India’s aim to achieve its 500 GW non-fossil fuel target by 2030 and advance toward net-zero emissions by 2070 requires a collaborative spirit, bringing together policymakers, industry, and global partners.
This article is authored by Vishal Mehta, India leader, Energy Practise, and Umang Shah, managing director & partner, BCG.
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