Council on Energy, Environment and Water Integrated | International | Independent
Suggested citation: Chaturvedi, Vaibhav, Anurag Dey, and Ritik Anand. 2024. ‘Impact of Select Climate Policies on India’s Emissions Pathway’. New Delhi: Council on Energy, Environment and Water.
The study assesses the impact of India’s climate policies across the power, residential, and transport sectors, focusing on their role in reducing emissions and supporting the country's 2070 net-zero target. This has been carried out using Global Change Assessment Model (GCAM) which is an Integrated Assessment Model. India’s current climate policies are already helping reduce its long-term emissions curve and are projected to reduce CO2 emissions by almost 4 billion tonnes between 2020 and 2030.
This policy brief highlights how policies promoting renewable energy, particularly solar and wind, have transformed India's power generation mix, reducing dependency on coal. In the transport sector, policies like the FAME scheme and Bharat Stage norms are accelerating the adoption of electric vehicles and improving the efficiencies of conventional vehicles, while energy efficiency measures in the residential sector, such as the Standards & Labelling scheme, are improving the efficiency of household appliances like air conditioners and lighting. Despite these advances, challenges remain, such as the rebound effect in energy consumption, where efficiency improvements lead to higher overall usage. The study also underscores the need for further policy innovation to address areas like heavy-duty transport and industrial emissions, which remain less decarbonized.
The study concludes that while India's current policies are bending the emissions curve, achieving the ambitious 2070 net-zero target will require continuous and vigorous policy development, particularly in energy-intensive sectors, and greater integration of new technologies like green hydrogen and new market-based instruments like Carbon Credit and Trading Scheme.
In this study, we assess the impact of a selection of policies adopted by the Government of India, within the framework of the Global Change Analysis Model (GCAM, CEEW version). However, instead of evaluating the impact of each policy separately, we assess the combined impact of key policies in the power (central grid-connected solar and wind-related), residential (lighting and air-conditioning efficiency related) and transport (private electric mobility and energy efficiency related) sectors. Our methodological approach has been designed for the same.
As per prior assessments, the incremental impact of the Government of India’s Perform, Achieve and Trade (PAT) scheme on the country’s industrial energy efficiency use has been marginal at best. Hence, for now, we have not considered its impact in our analysis. We find that the selected policies assessed in this study for the power, transport, and residential sectors have a significant impact on the electricity generation, energy demand, and emission pathway for India.
Policies focussing on solar and wind in the power sector have managed to propel the electricity generation mix towards these segments in a big way, instead of being dependent on coal as the only mainstay. India’s push on solar and wind has managed to avoid 80 GW of coal-based power plants that would have otherwise been installed before 2030 to meet India’s burgeoning power demand. The policy push towards electrification of two- and four-wheelers is on path to significantly reduce the dependence of passenger road transport on oil and gas. In the residential sector, however, while there is significant energy efficiency improvement in air-conditioning, the consumption of electricity to meet air-conditioning demand increases due to the rebound effect (i.e., higher consumption of a fuel as its effective price declines due to energy efficiency improvements). This essentially leads to a higher amount of electricity use, but it delivers even higher social welfare gains.
Finally, in terms of emissions savings, we find that India’s current policies are decisively able to lower India’s long-term emissions curve. In terms of cumulative carbon dioxide emissions saved, India’s current policies in the three sectors have already saved 440 million tonnes of carbon dioxide (MtCO2) between 2015 and 2020, and are on track to save 3950 MtCO2 emissions between 2020 and 2030, 22,670 MtCO2 emissions between 2030 and 2050, and 44,700 MtCO2 emissions between 2050 and 2070, amounting to 23 per cent of India’s cumulative emissions between 2015 and 2070, compared to the no policy scenario.
Future research would expand the ambit of policies to include other important, recently introduced policies related to the National Green Hydrogen Mission, Carbon Credit Trading Scheme (CCTS), PM Suryaghar Yojna (focussing on rooftop solar) and PM-eBus Sewa Scheme.
This study highlights that the adoption of the 2070 net-zero target has been a watershed moment in India’s climate policy. While policies without an end goal in terms of a quantitative target are successful in pushing low-carbon technologies to a good extent, they still would not deliver on the climate ambition needed to achieve the goals of the Paris Agreement. India’s recently announced domestic CCTS, in our view, would be instrumental in decisively bending the country’s emissions curve on the path towards the 2070 net-zero target.
The study considers climate policies across power, residential, and transport sectors. In power, initiatives like the Jawahar Lal Nehru National Solar Mission and SECI auctions promote solar and wind energy. The residential sector includes UJALA and MEPS for ACs to boost energy efficiency. Transport policies such as CAFE norms, FAME I and II, the National E-Mobility Programme, and BS VI standards focus on fuel economy, emissions reduction, and low-carbon technology adoption. Together, these policies enhance energy efficiency and support a shift toward renewable and low-carbon solutions.
India's renewable energy policies balance energy security, affordability, and emissions reduction by promoting large-scale deployment of solar and wind power through fiscal incentives and competitive bidding, which lowers costs and reduces reliance on coal. These policies aim to diversify the energy mix, improve energy affordability, and reduce carbon emissions without compromising the country's energy needs.
The increasing share of solar and wind energy introduces grid stability challenges due to their intermittent nature. However, current policies are addressing these through improved grid infrastructure, energy storage systems, and policy support for hybrid renewable energy systems to maintain reliability and minimize disruptions.
India's transport policies focus primarily on electrifying passenger vehicles, while the decarbonisation of freight and heavy-duty vehicles remains slower. Additional policies, such as dedicated incentives for electric freight vehicles, the development of green hydrogen fuel for heavy transport, and expanded infrastructure for electric trucks, are needed to accelerate this transition.
Energy efficiency policies, such as the Standards & Labelling scheme and the UJALA program, have improved the efficiency of appliances like air conditioners and lighting, reducing overall electricity consumption in the residential sector. However, the rebound effect, where increased efficiency lowers costs and drives higher usage, has mitigated some of these savings, particularly in air conditioning.
India’s domestic climate policies, including its push for renewable energy and electric vehicles, align with its international commitments under the Paris Agreement. As a major emerging economy, these policies help reduce emissions intensity, enhance its global climate leadership, and contribute to global mitigation efforts while balancing development goals.
The National Green Hydrogen Mission is expected to play a pivotal role in decarbonising hard-to-abate sectors, such as heavy industry and transport, by introducing green hydrogen as a clean energy alternative. This initiative will contribute significantly to India's long-term energy transition and is a crucial step toward achieving its 2070 net-zero target.
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