PremiumNEW DELHI : India needs thoughtful and urgent action in this decade to lay the foundation for an accelerated and orderly transition to a low carbon economy, McKinsey & Company said in a report on Thursday.
It has released a report, ‘Decarbonising India: Charting a pathway for sustainable growth,’ that presents an in-dept analysis of the opportunities and mechanisms to decarbonise the five sectors that contribute to around 70 percent of India’s overall emissions — power, steel, transportation, cement and agriculture.
“This will be a decisive decade. With intentional action, India can accelerate decarbonisation at scale while pursuing economic growth," the report stated.
Despite India’s low per capita emission, it is the third-largest emitter globally. “Though India’s emissions stand at 1.8 tonne carbon dioxide per capita, versus 14.7 for the US & 7.6 for China, it is still the world’s third largest emitter at 2.9 GtCO2e (4.9 percent of annual global emissions) and would need to play a critical role in the global war on climate change," McKinsey & Co said.
“Our ‘Decarbonising India’ report shows that the benefits of a well-planned, orderly, accelerated transition would outweigh the downsides, given India’s growth outlook. But it would require the nation to act within this decade, using its growth momentum to build India right for the decades thereafter. While actions needed are challenging, most of them are economically viable, and hence the journey is doable," said Rajat Gupta, Senior Partner and Asia leader of the Sustainability Practice, McKinsey & Company, and coauthor of the report.
“The risk of a disorderly transition is high, given the impact of global economic fluctuations. Achieving the necessary technological breakthroughs to reduce emissions in hard-to-abate sectors, and accelerating their progress to market, would require consistent public and private investment. It would also require greater willingness among business leaders and policy makers to adopt new technologies and business practices," said Naveen Unni, Partner and India leader of the Sustainability practice, McKinsey & Company, and co-author of the report.
Accelerating India’s decarbonisation: 10 actions for consideration
1) Lay out a detailed medium-term (5, 15, 25-year) decarbonisation plan with sector-specific priorities and policy frameworks that provide the demand signals and a steady hand, allowing corporates to invest with a clear path in sight.
2) Accelerate implementation of Compliance Carbon Markets (within three years) which would create demand signals to accelerate decarbonisation especially in hard-to-abate sectors and incentivise investments in NCS and newer technologies like CCUS.
3) Enable banks to support the transition catalysed by a green transition bank. Banks can be asked to come up with their investment glide paths and build the necessary capability to assess risks in the new spaces.
4) Accelerate adoption of renewables in the power sector to quadruple capacity addition and deepen market reforms with a 30-year outlook in a manner that ensures a stable grid fed predominantly by infirm power (from wind and solar).
5) Empower a nodal authority to define a national land-use plan, lay clear land-use guidelines for optimised use across urbanisation, industrial needs, carbon sinks, agriculture, and renewables.
6) Create resilient indigenous manufacturing capability and increase investment in cleantech R&D in areas like batteries, EVs, solar panels and electrolysers.
7) Evaluate five Carbon Capture and Storage (CCS) hubs in Gujarat (Jamnagar), Odisha (Paradeep), Rajasthan (Barmer), Maharashtra (Pune) and Andhra Pradesh (Vizag) potentially in public-private partnership to utilise and store captured carbon. These hub locations are within 500km of 70 percent of India’s point-source emissions. The captured carbon can be transported through pipelines to existing oil fields for storage.
8) Create a national circularity mission with recycling hubs in top 20 Indian cities (contributing 35% of municipal solid waste), mandated targets on recycling rates, recycled raw material use (e.g., blending norms) and landfill levies. This needs enforcement of existing and upcoming Extended Producer Responsibility (EPR) regulations along with demand signals for recycled products (e.g., through carbon pricing on emission-heavy virgin raw-material).
9) Enhance the National Hydrogen Mission by creating stronger demand signals and expanding the use of green hydrogen in hard-to-abate sectors like steel. India could also benefit from faster evolution of carbon prices in other geographies and become an exporter of green hydrogen embedded products in the short term.
10) Companies can aim to play on the front foot, evaluating investment opportunities that these green trends will unlock, aligned with India’s national plans or opportunities opened by decarbonisation of other countries (e.g., green hydrogen derivative exports). Companies would need to focus reallocate capital, reskill their people and engage with the government.