India would require $15 trillion to achieve net-zero by 2070: FICCI-Deloitte report

India has emerged as a leader in energy transition: Union Power Minister R K Singh

India’s energy transition will be expensive and the country would require $15 trillion to achieve net-zero between 2022 and 2070, according to a report released by FICCI and Deloitte on September 25.

The report - 'India's energy transition pathways: A net-zero perspective' - was launched by Minister for power and new and renewable energy RK Singh.

On a yearly basis, the report states that India would need an average annual spend of $300 billion. "It would also require unprecedented amounts of new technology innovations and deployment and given the scale of investments required, government and concessional funding alone would not be sufficient. Innovative financing models need to be adopted for attracting private investment into the market and bridging the funding gap," said Anish Mandal, partner, Deloitte India.

The report notes that India’s final energy demand is expected to double 1200 million or mega tonnes of oil equivalent (Mtoe) by 2070 from the 2020 level. Aggressive energy efficiency measures are projected that can result in a relatively modest growth in energy demand than the business-as-usual scenario.

The report estimates that the industrial sector will contribute 65-70 percent to the total energy demand. In the transport sector, passenger and freight demand is expected to increase by 3−5x by 2070. However, energy demand will remain moderate due to a high uptake of electric vehicles (EVs) with higher energy conversion efficiency.

SK Pathak, Secretary General, FICCI, said each industry sector will require tailored decarbonisation strategies, based on technical feasibility, economics, and scalability. "Domestic renewable energy (RE) manufacturing capacity must be expanded significantly in critical areas, such as solar photovoltaic, battery storage, electrolysers, and green hydrogen," he said.

The report said India's energy transition is built on three fundamental pillars - Grid decarbonization; Industrial decarbonization; and Transport transition. These pillars collectively address around 90 percent of India's current emissions, it stated.

The study suggested that to facilitate renewable energy growth, restrictions on solar energy imports should be relaxed, allowing for more flexibility in sourcing solar components. It further recommended that India should focus on increasing its hydropower and nuclear energy capacities to diversify its energy mix and reduce reliance on fossil fuels.

It stated that India faces challenges related to the availability of resource-rich sites and land for deploying more than 2,000 GW of grid-scale renewable energy and an additional 1,000 GW for green hydrogen, raising concerns about land acquisition.

"Efficient land acquisition and clearance processes are necessary to expedite the development of renewable energy projects. To accomplish this, increased yearly capacity expansions are required, necessitating cooperation between the public sector, state utilities, and the private sector," read the report.

The report noted that achieving full-blown industrial decarbonisation, without large-scale adoption of green hydrogen (GH2), is difficult. GH2 development is still in the nascent stage and is largely limited to feasibility studies and proposed pilot projects.

Also, the report suggests that in a net-zero scenario, India may require 400–500 million tons of annual Carbon Capture, Utilisation, and Storage (CCUS) capacity by 2070. A majority of this is likely to be deployed to capture process emissions from the cement industry.

"The cost gap between GH2 and other alternatives (such as grey hydrogen, natural gas, and coal) can be bridged through policy initiatives, ecosystem development, and innovative financing. Creating the market through demand mandate or aggregation at a cluster level could be an important enabler to kickstart the GH2 economy in the initial year," it said.

Among the other challenges, the report said that India is yet to establish a clear roadmap for phasing out coal-based power stations and adding renewable energy at a rate of 30-35 GW per year, which is a crucial step towards achieving the net-zero target.

It added that the absence of a carbon tax slows down energy transition as many end-use sectors still rely on subsidies for fossil-based energy sources.

The Narendra Modi government aspires to hit net zero by 2070, and almost triple the share of non-fossil fuel power generation capacity by the end of this decade.