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 debate around climate change has evolved into one of the most defining debates of current times. Increasing impacts of global warming have pushed countries to accord this issue one of the highest priorities in global negotiations. The Paris Agreement in 2015 set an ambitious emissions mitigation target for the world. Assessments by the Intergovernmental Panel on Climate Change (IPCC) have highlighted potential global mitigation pathways (IPCC 2022). Essentially, mitigation policies will have to be adopted across sectors to achieve the goals of the Paris Agreement.
India has been playing a critical role in the global climate discourse. While it is the third largest greenhouse gas emitter, its per capita emissions are much lower than the global average (Arora, Das and Chaturvedi 2023). Given its growing economy and development concerns, modelling assessments have unequivocally shown that India’s emissions curve would continue to rise in the next few decades in the absence of climate policy (Chaturvedi and Malyan 2022; Tibrewal and Venkataraman 2022), unlike the emissions curves of many countries in the developed world, which have peaked and are on a declining path.
India’s updated Nationally Determined Contribution (NDC) aims to reduce its emissions intensity of GDP— the amount of greenhouse gases emitted for every unit of GDP—by 45 per cent between 2005 and 2030, and increase the share of non-fossil sources in electricity generation capacity to 50 per cent by 2030. It has unveiled its official Long-Term Strategy (LTS) that unveils the key elements of India’s long-term low carbon development strategy on the path to net-zero by 2070 (MoEFCC 2022). Mitigation policies and actions have been adopted across sectors.
Within the energy production and use sectors, there have been policies aimed at pushing higher quantities of renewable energy in India’s electricity generation mix, higher share of electric vehicles on the roads, higher share of biofuels, and higher industrial, building envelope and appliance efficiency, among other policies, to achieve the country’s mitigation targets.
While the Government of India (GoI) has adopted a set of important policies, how effective have these been in bending the emissions curve, and how much emissions savings (if any) have they led to? This has not been assessed till now through an India-specific analysis. A recent Science study by Stechemesser et al. (2024) assesses the impact of climate policies across countries within a quantitative assessment framework.1 For India, it argues that the policies adopted have not really bent the emissions curve, and there has been little emissions reduction impact. The policies studied by that assessment include Generation-Based Incentives, Competitive Bidding and Renewable Purchase Obligations in the power sector, Faster Adoption and Manufacturing of Electric Vehicles (FAME), as well as energy efficiency-related schemes and Bharat Stage VI in the transport sector, and Standards and Labelling (S&L) and the PM UJALA scheme in the residential sector.
Our analysis has considered two scenarios. The first is the ‘Current Policy Scenario’ (CP sc), where it is assumed that there is a policy intervention aimed at reducing carbon dioxide emissions from the end-use sectors. We have considered policy interventions in the residential, transport, and power sectors. The major policy intervention in the industry sector for energy efficiency improvement since 2015 was the Perform, Achieve and Trade (PAT) scheme (Energy Efficiency | Government of India | Ministry of Power 2024). The incremental impact of the PAT scheme on India’s industrial energy efficiency use has been marginal at best, as per available evidence (Giri and Sharma 2024), hence for now, we have not considered its impact in our analysis. The Renewable Energy Certificates (REC) market, as per published assessments (Sawhney 2022), has also not driven a meaningful increase in the share of RE, and hence, has not been included in our assessment. In future, if there is additional evidence suggesting a meaningful impact of the PAT and REC schemes, this analysis will be updated.
Other key policies of the government of India—the National Green Hydrogen Mission, Carbon Credit Trading Scheme (CCTS), PM Suryaghar Yojna (focussing on rooftop solar) and PM-eBus Sewa Scheme—are expected to significantly impact India’s future emission pathways. However, these are in their initial stages, and hence, their impact has also not been included.
The ‘No Policy Scenario’ (NP sc) assumes no such policy intervention in the selected sectors. The comparison of electricity generation by fuel, energy consumed in the end-use sectors, as well as carbon dioxide emissions between the two scenarios helps us understand the impact of India’s climate policies.
We assess the aggregate impact of the policies, as opposed to evaluating the impact of each policy separately, and our methodological approach has been designed for the same.
Government policies play a pivotal role in shaping low-carbon technologies with the overarching target of achieving net-zero. It is critical to assess how these policies impact these technologies in practice. This will allow us to better understand the real-world effectiveness of these policies in driving towards a low-carbon economy. This considers both the market conditions and technological advancements of green technology.
The Government of India (GoI) has implemented many emission reduction policies across sectors. Many of these policies have specific technology targets, such as 500 gigawatts of RE by 2030. We, however, do not use the government-specified target as given. We assess the potential impact of the policies on the costs and efficiencies of specific technologies (solar and windbased electricity, LEDs, ACs, electric two- and fourwheelers, and oil-based cars, buses, and trucks) and let the model endogenously decide the penetration of these.
We choose specific policies based on the following two criteria: (i) policies that have had a clear impact on the ground, based on our discussions with sector experts and our own judgement; and (ii) policies where enough information is publicly available to help us model their impact on cost and efficiencies of low carbon technologies. Table 1 features the list of policies for which we assess the aggregate impact.
Table 1 Shortlisted policies assessed in this study for their aggregate impact
Source: Authors’ compilation from https://climatepolicydatabase.org/countries/india
The fundamental part of any assessment that seeks to understand the impact of policies is to establish a credible counterfactual. The challenge with an assessment of climate policies is that the counterfactual is not a point in the past, but is an outlook of the future, if the specific climate policies had not been in place. The key to this process is understanding the difference between market trends across sectors that would have anyway led to additional emission reductions, even in the absence of dedicated policies, and the potential impact of dedicated climate policies.
Climate policies seek to change the behaviour of actors on the production and consumption parts of the value chain, in favour of low-carbon choices.
These essentially seek to alter market trends if they are not in the direction of emission mitigation targets. The key to our assessment, hence, is to understand the future evolution of market trends for low-carbon technologies, even in the absence of dedicated climate policies, which is the underlying assumption in the NP sc. Once we understand that for specific sectors, we overlay these with the potential impact of sector-specific climate policies, which form the CP sc. This section explains the approach for the specific sectors that have been evaluated in this assessment.
We create two scenarios for answering the research question (Table 2). The first is an NP sc, where we only include the impact of market forces that would have anyway led to progress in key sectors. The second is the CP sc, where we include the impact of dedicated climate policies across sectors on top of the market-driven forces. We delve deeper into each of the key sectors further in this section to explain our scenarios and assumptions better.
Table 2 What the scenario would look like with and without government interventions
Source: Authors’ analysis
For the analysis, 2015 has been chosen as the base year, and separate efficiency and cost parameter trajectories from 2015 to 2070 have been assumed for the two scenarios for specific technologies in the power, transport, and residential sectors, as mentioned earlier.
2.2.1 Power sector
The GoI has given a thrust to the power sector in the form of its policies, given its importance for India’s carbon dioxide emissions. These range from incentives introduced through the National Solar Mission for solar electricity, incentives like Generation-Based Incentives (GBI) for the wind sector, as well as a series of measures aimed at reducing the risk of investments in India’s solar and wind electricity generation sectors.
In terms of solar-based electricity generation, there has been a continuous decline in global panel prices. A detailed India-specific assessment of the cost of solar-based electricity (Chawla and Aggarwal 2016) presents the different components of this cost—module, operation and maintenance, balance of system, land, transmission system, and finance. The key finding of this assessment is that the cost of finance is the biggest component of solar-based electricity generation cost for India. This is where GoI policies have intervened by reducing the risks, and hence, the risk premiums (CP sc). However, in the absence of dedicated interventions as well, the cost of solar-based electricity generation in India would have declined due to the fall in global panel prices (NP sc). We present our assumptions related to the cost components of solar-based electricity generation for both scenarios in Annexure 1. It’s the same case for developments in the wind sector.
We assume that the aggregate impact of these policies has been and would be continuously decreasing cost of solar- and wind-based electricity generation (including their integration cost) in the CP sc, while in the NP sc, the generation cost of both these technologies would still decline, but at a slower pace, based on market trends. We present some key policies related to the power sector in Annexure 1.
2.2.2 Transport sector
Post-2015, there have been rapid developments in India’s transport sector, with the share of electric vehicles (EVs) rising rapidly. This growth has been most visible in the two-wheeler and three-wheeler segments. Early signs of a big transformation towards electric cars are also visible in the four-wheeler segment. In terms of separating the impact of market forces and government interventions, we assume that decline in cost of batteries has been a global phenomenon and has not been impacted by GoI policies. However, the policies related to financial incentives for two-wheelers and four-wheelers, through the FAME scheme, have been instrumental in creating an ecosystem for EVs in India, and a consequent decline in the non-battery component cost of electric vehicles. Our literature assessment shows that most of the big investments in EV manufacturing in India happened only after the announcement of the first phase of the FAME scheme. At the same time, the move towards Bharat Stage IV norms in 2017, and the subsequent leapfrog to Bharat Stage VI norms, while aiming to curb local pollutants, has led to a move towards higher energy efficiency of fossil fuel-based car, bus, and truck engines (Mattoo and Saxena 2023).
In the CP sc, we assume that the aggregate impact of these policies has been and would be continuously declining costs of EVs, as well as a rapid pace of increase in charging infrastructure. For the NP sc, we assume that the cost of EVs declines only due to the decline in the cost of batteries, which is unrelated to GoI policies. The cost of non-battery components of the vehicles has been assumed to be constant in the NP sc. We only focus on the electrification gains made in the two-wheeler and four-wheeler segments and efficiency gains for oil fuelbased cars, buses, and trucks for our assessment. The summary of the FAME scheme and Bharat Stage norms and the assumptions based on the same are presented in Annexure 2.
2.2.3 Residential sector
The GoI’s policies in the residential sector have focussed mainly on enhancing the energy efficiency of appliances and lighting. The flagship programmes have been Standards and Labelling (S&L) as well as Unnat Jyoti by Affordable LED for All (UJALA). The S&L programme focusses on the star labelling of appliances and continuously enhancing the standards for energy efficiency for various star labels. The UJALA scheme focusses on promoting LED use in the residential segment.
In the CP sc, we assume that the aggregate impact of these policies has been and would be continuously increasing the efficiency of ACs as well as rapid penetration of LEDs in the Indian market, while in the NP sc, we assume that the efficiency of ACs is fixed at the 2015 value and that India’s lighting needs continue to be served by incandescent and CFL technologies. For the S&L programme, we only focus on the gains made in the air-conditioning segment. The GoI also has an ambitious Energy Conservation Residential Codes programme to enhance the energy efficiency of residential envelopes. However, we don’t include its impact in our assessment as its implementation and gains have been partial at best. The summary of the S&L and UJALA schemes and the assumptions based on the same are presented in Annexure 3.
This analysis has been undertaken within the framework of the Global Change Analysis Model (GCAM version 6.0, CEEW version), a widely used integrated assessment model (Chaturvedi and Malyan, 2022). The GCAM is a community model freely available for use in the research and academic community, and is one of the most-cited models in scientific literature.
Under the GCAM, the overall structure of the energy system includes three major components: energy resources, energy transformation, and final energy demands, and all the elements of the model interact with each other through market prices and physical flows. Energy demand is modelled for the key enduse sectors, which include residential (commercial, residential urban, and residential rural), transport (passenger and freight), industry (aggregate), and agriculture. The energy demands of these sectors are serviced by the energy supply sector, which includes the power generation sector and refining industries.
Figure 1 depicts the interaction between energy demand and supply, and how it is modelled within the GCAM. Key drivers of future sectoral energy demands are economic and population growth, urbanisation rate, consumer behaviour, technology costs, energy prices, and government policies. The model can explore various scenarios like the implications of increases and decreases in economic growth and urbanisation rates, solar/wind electricity generation cost trajectories, adoption rates of EVs, and rates of efficiency improvements, among others. In our analysis, we have used GCAM to model two scenarios—CP sc and NP sc—to assess the impact of policies implemented post-2015 in the Indian economy.
Figure 1 Schematic representation of GCAM
Source: Authors’ adaptation from Joint Global Change Research Institute (JGCRI) and Pacific Northwest National Laboratory (PNNL) (“GCAM v6 Documentation: Table of Contents” 2024)
This section discusses sectoral results derived from our analysis, highlighting the impact of policies on advancing low-carbon technologies, which lead to overall emissions reductions. Through our results, we provide a clearer picture of the contributions of the selected policies towards green transition, and laying the path for a low-carbon economy in the long run.
India’s power demand is growing at a fast pace, given the rise in its GDP. The increasing demand of airconditioning, lighting, appliances, industrial goods and transport services, among other things, has led to a significant rise in power demand in the past couple of decades. We expect this to continue as the economy continues its growth momentum.
India’s power demand, as per our projections, would increase 3.97 times between 2020 and 2050 in the NP sc. Increase in demand is directly correlated to increase in power generation, which would also increase by 3.63 times between 2020 and 2050 in this scenario.
In the CP sc, there are two simultaneous effects of India’s climate policies on the long-term electricity demand. First, there is an increase in electricity demand due to rapid electrification of the transport sector induced by EV push policies. Electricity consumption induced by the EV push in the transport sector (CP sc compared to NP sc) increases by 9.4 terawatt-hour (TWh) in 2030, 103 TWh in 2050 and 440 TWh in 2070. Second, there is higher electricity consumption in the industry sector driven by lower average electricity prices, due to lower cost of solar- and wind-based electricity generation. Industrial electricity consumption increases by 154 TWh in 2030, 462 TWh in 2050 and 716 TWh in 2070 in the CP sc relative to the NP sc.2 Third, there is an increase in residential AC use due to lower electricity prices along with higher energy efficiency improvement, essentially the rebound effect as explained later in section 3.3.
In terms of the impact of mitigation policies on the power generation mix, we see that in the absence of policies adopted by the GoI (NP sc), coal would have continued to be the only dominant source of electricity generation in India, given its abundance as a domestic resource, competitive prices, and the priority accorded to energy security and affordability. In the CP sc, the policies adopted by the GoI to push solar and wind in the electricity generation mix will yield significant dividends; the aggregate impact of policies evaluated will push the share of solar and wind to 43 per cent of India’s electricity generation by 2050. This will mainly be at the expense of coal. Interestingly, the push for solar and wind will also lead to decline in the penetration of nuclear-based electricity. This interesting behaviour is similar to what has been highlighted in Shukla and Chaturvedi (2012), that incentives for one type of low-carbon technology lead to a negative impact on another low-carbon technology, unless there is a dedicated push for that as well.
While in the NP sc as well, solar and wind would have witnessed some growth in the future due to the global fall in panel prices, they would still have been a small part of India’s electricity generation mix. Our projections show that in the NP sc, solar- and wind-based electricity would have been 571 TWh and 318 TWh respectively in 2070, and together, they would have still contributed less than a tenth of India’s electricity generation mix. Compared to this, in the CP sc, solar- and wind-based electricity generation will be 2,568 TWh and 1,816 TWh respectively in 2070. The impact of India’s push for solar and wind is also clearly visible in the short run. In 2030, cumulative solar and wind generation will increase to more than two and a half times due to climate policies (compared to NP sc), a significant jump.
Figure 2 (a) Electricity generation mix by fuel (Exa-Joules [EJ]) (b) Electricity generation shares by fuel (%)
Source: Authors’ analysis
In terms of impact on coal-based electricity generation, our assessment shows that India’s push for solar and wind will lead to a decline in coal used in power generation by 24 per cent in 2030, and by 34 per cent in 2050 and 36 per cent in 2070, as compared to the NP sc. This essentially implies that 80 GW of coal based power generation capacity addition has been avoided due to India’s climate policies. While the current mitigation policies have significant implications in terms of declining coal use for India’s power generation, these will still fall short of pushing the power sector to a netzero future by 2070.
This highlights two realities. First, India’s push on energy security and affordability would mean continued reliance on coal in the near future. Second, the adoption of the 2070 net-zero target marked a pivotal moment in India’s climate policy. While mitigation efforts have successfully promoted low-carbon technologies to a significant degree, they will still fall short of delivering the level of climate ambition required to meet the objectives of the Paris Agreement without a clear end goal.
This is why the 2070 net-zero goal is so critical, and the mitigation policies that are being pursued post the netzero announcement, particularly the domestic cap and trade market that is to levy a carbon price on emissions in the covered sectors, will be critical to decisively move towards the net-zero goal.
India is witnessing a rapid growth in the ownership of private vehicles, both two-wheelers (2W) and fourwheelers (4W). Our results show that this growth would continue unabated for the next few decades within increasing per capita incomes. Interestingly, the pace of 4W additions would far outstrip the growth in 2W sales by 2050. As more and more Indians become rich, they will prefer using private 4W instead of 2W.
Figure 3 Changing landscape of passenger road transport energy consumption by fuel
Source: Authors’ analysis
In terms of the fuel mix, we see a move towards battery electric vehicles (BEVs) both in the 2W and 4W segments, even in the NP sc, mainly in the 2W segment. This is because we are witnessing a decline in global battery prices that is not linked to Indian policy interventions. In terms of on-road stock, electric 2W and 4W would have accounted for 22 and 2 per cent respectively even by 2050 in the NP sc, which means the shift in 2W would have been much faster as compared to the 4W segment.
In the CP sc, we see a rapid increase in the penetration of EVs, particularly in the 4W segment. By 2050, the share of e-2W and e-4W in on-road stock will be above 65 per cent for both segments. The 4W segment, as per our assessment, will undoubtedly benefit from the concerted policy signalling and push in terms of moving towards EVs.
In addition to the policies related to pushing e-2W and e-4W within the passenger segment, increasing efficiency of oil-based cars, buses and trucks will have a significant impact in terms of reducing the potential demand of oil and gas in India’s road transport segment. The aggregate demand of oil and gas consumed in the transport sector will reduce by 55 per cent in 2050 and 83 per cent in 2070 (relative to NP sc) due to the EV push, as well as energy use efficiency improvements due to the BS VI norms.
Air-conditioning use in India is continuously increasing, owing to higher temperatures and increasing affordability. No longer are ACs regarded as a luxury commodity. Our results show that even in the scenario with increasing efficiency (CP Sc) driven by the Standards and Labelling (S&L) programme, AC-related electricity consumption in India’s households will increase by almost 10.2 times between 2020 and 2050, and further grow 1.51 times between 2050 and 2070. This is driven by not just higher incomes, but also lower electricity prices in the CP sc.
While the average energy efficiency of air-conditioning significantly improves, the overall electricity demand for cooling increases drastically in the CP sc relative to the NP sc, driven by lower electricity generation costs. Average costs of electricity generation are lower by 21% in 2030, 23% in 2050 and 30% in 2070. As ACs are significant power guzzlers, lower generation costs incentivise more AC ownership and use in the CP sc leading to a significant increase in the overall electricity consumption. Electricity consumed by residential ACs will end up increasing by 2.5 times in 2050, and 1.5 times in 2070 in the CP sc relative to the NP sc. This is the due to the rebound effect.
Figure 4 Residential sector energy consumption by fuel
Source: Authors’ analysis
The rebound effect means that people start consuming more of a fuel as its effective cost decreases, due to higher energy efficiency of equipment. The effect is shown as the air-conditioning service delivered in our model results is much higher in the policy intervention scenario (CP sc) as compared to the NP sc. The total cooling service delivered in the NP sc between 2020 and 2050 grows by 6.5 times, as compared to 17 times observed when ACs become more energy efficient (CP sc). This essentially implies that while the electricity consumption increases by 10.2 times between 2020 and 2050, the associated cooling delivered increased a lot more. Undoubtedly, AC efficiency increase will lead to positive welfare gains for users, who can effectively use cheaper electricity due to more efficient ACs as well as lower electricity costs.
The energy intensity effect, while not so visible in the headline AC electricity use number due to the rebound effect, can be observed in the cooling service delivered per unit of electricity consumed, which is only 3.81 EJ-output/EJ in 2070 in the NP sc, as compared to 7.35 EJ-output/EJ in the CP sc.
India’s UJALA programme, which focuses on pushing LEDs in residential households, has been very effective. As per our assessment, this programme will lead to a decline in India’s residential lighting electricity use by 48 per cent by 2030, 59 per cent by 2050, and 62 per cent by 2070 in the CP sc, relative to the NP sc. Even our NP sc assumes a high penetration of CFL bulbs based on market trends, which are already a lot more efficient compared to incandescent bulbs; LED lights further enhance efficiencies of lighting electricity use in India.
Interestingly, lower power prices also imply that electricity-based cooking becomes less expensive and more attractive for Indian households. In absence of any big non-economic barrier like a preference for flame-based cooking as against electric inductionbased cooking, our results show a significant shift from liquefied petroleum gas to flameless cooking. This would lead to a decline in direct emissions from the residential sector, but a higher demand for electricity.
The aggregate impact of the mitigation policies analysed in this assessment will lead to a significant decline in India’s carbon dioxide emissions from energy use across sectors. Current policies will have a decisive impact in terms of India’s long-term emissions trajectory, with the total energy sector carbon dioxide emissions reducing by 634 MtCO2 in 2030, 1,693 MtCO2 in 2050, and 2,705 MtCO2 in 2070, compared to the NP sc.
Our assessment shows that the largest mitigation impact will be on power sector emissions. This is not surprising as these constitute almost half of India’s energy sectorrelated carbon dioxide emissions. Industrial sector emissions constituted almost 30 per cent of India’s energy sector CO2 emissions in 2020, while transport sector emissions constitute around 12 per cent. Given that we have not included the impact of the PAT scheme on industrial energy efficiency reductions, the bulk of reductions in our assessment will happen in the power sector.
The GoI’s mitigation policies will be able to reduce power sector emissions (relative to the NP sc) by 23 per cent in 2030 (507 MtCO2), 44 per cent in 2050 (1,257 MtCO2), and 46 per cent in 2070 (1,895 MtCO2). Thus, power sector emissions will decline significantly even though electricity generation increases at the same time.
Other sectors will also see a meaningful decline in direct emissions as a result of climate policy. Relative to the NP sc, industrial and transport sector emissions in the CP sc will reduce by 7 per cent and 9 per cent respectively in 2050; and 9 per cent and 19 per cent respectively in 2070. But the quantum of absolute emission reduction in these sectors will be far smaller than in the power sector, given the high emissions in the latter to begin with. Even though we do not test an industrial sector specific mitigation policy, we find that decline in electricity generation cost in the CP sc will lead to higher electrification of the industrial sector leading to decline in direct emissions.
Our assessment refutes the often-made argument that the push towards EVs in India is not a useful strategy as the country’s grid is coal-heavy. Figure 5 shows that India’s grid is also decarbonising fast, even as electricity generation is increasing to meet new end-use demands like energy efficient EVs. In terms of cumulative carbon dioxide emissions saved, India’s current mitigation policies have already mitigated 440 MtCO2 between 2015 and 2020, and are on track to save 3950 MtCO2 emissions between 2020 and 2030, 22670 MtCO2 emissions between 2030 and 2050, and 44700 MtCO2 emissions between 2050 and 2070. This mitigation achievement is due to existing policies in the power, transport, and residential sectors, and we can expect that the new set of policies that have been introduced will lead to a further decline in India’s carbon dioxide emissions.
Figure 5 India’s carbon dioxide emissions by sector
Source: Authors’ analysis
The GoI has been pursuing dedicated mitigation policies across sectors to reduce India’s emissions impact for over a decade now. While it is clear that there has been momentum for mitigation actions across sectors, it is unclear whether this is the impact of market forces or government policies. This study has delineated the impact of market forces like the global decline in battery costs and selected dedicated mitigation policies implemented across sectors in India, and assessed the impact of these climate policies on electricity supply, energy demand and emissions.
Our assessment finds that the current policies can significantly impact the energy mix across sectors and decisively lower India’s long-term emissions curve. The policies have pushed India on the path to a higher share of renewable energy in its electricity generation mix, a higher share of electric vehicles, and lower electricity consumption for ACs and lighting due to energy efficiency improvements.
In terms of energy sector carbon dioxide emission reductions, the highest reduction due to policy interventions is observed in India’s power sector, given that its share of the country’s carbon emissions is significantly higher than other sectors. There are sizeable emission reductions even in the transport and residential sectors.
We also observe that while these policies have been successful in lowering India’s long-term emissions curve, it will still be a rising curve in the absence of additional mitigation policies (many of which have already been announced), given the powerful effect of economic growth and the GoI’s efforts to ensure energy security and affordability to millions of households in a fast-growing economy. We emphasise that the adoption of the 2070 net-zero target has been a watershed moment in India’s climate policy, as it has led to the continued quest for additional mitigation policies. Policies without a long-term mitigation target in sight, while successful in pushing low-carbon technologies to a good extent, still would not be able to deliver on the climate ambition showcased by India to achieve the goals of the Paris Agreement.
Future research would expand the ambit of policies to include other recently introduced schemes, such as the National Green Hydrogen Mission, Carbon Credit Trading Scheme (CCTS), PM Suryaghar Yojna (focussing on rooftop solar) and PM-eBus Sewa Scheme. Many of these additional policies have already been unveiled—of particular importance, in our view, is the domestic CCTS, which will levy a carbon price on India’s emissions from the key sectors and could further bend the emissions curve and reduce its peak emissions on the path towards the net-zero goal.
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.
Supporting Climate Policy for Indian States
Role of Financial Players in the Indian Carbon Market
Tamil Nadu’s Greenhouse Gas Inventory and Pathways for Net-Zero Transition
The Emissions Divide: Inequity Across Countries and Income Classes
