Council on Energy, Environment and Water Integrated | International | Independent

Sustainable Development, Uncertainties, and India’s Climate Policy

Pathways towards Nationally Determined Contribution and Mid-Century Strategy

Vaibhav Chaturvedi, Poonam Nagar Koti, Anjali Ramakrishnan Chordia
April 2018 | Low-carbon Economy

Suggested Citation: Chaturvedi, Vaibhav, Poonam Nagar Koti, and Anjali Ramakrishnan Chordia. 2018. Sustainable Development, Uncertainties, and India’s Climate Policy: Pathways towards Nationally Determined Contribution and Mid-Century Strategy. New Delhi: Council on Energy, Environment and Water.


India’s power generation sector has changed significantly since 2015. The change has been mainly driven by a rapid ramp-up of solar energy deployment, substantial decline in the costs of solar and wind-based electricity, and multiple developments in the end use-sectors. This study, an uncertainty assessment encompassing more than 200 cost and economic growth scenarios, presents pathways to meet our NDC targets of 40 per cent of non-fossil-based capacity in 2030’s electricity generation mix and decline in emission intensity of GDP. The study also informs India’s Mid-Century Strategy.

Our research further finds the cost of integrating variable renewable energy (VRE) into the electricity grid, industrial energy efficiency improvements, and share of electricity in industrial energy use as key elements of India’s energy transition to a low-carbon economy.

Key Findings

  • As the share of VRE in total electricity generation in India exceeds 15 per cent, the cost of integration and its implications could become non-trivial.
  • Rising incomes will raise access to electricity and its affordability despite the rising cost of electricity generation. This will lead to a rapid increase in electricity generation.
  • If higher penetration of solar and wind raises the system-wide cost of integrating VRE in the electricity sector, and producers bear a part of this cost, coal-based generation will keep on increasing in the long run in the absence of a policy aimed at reducing coal consumption.
  • Solar-based electricity generation would grow rapidly for at least the next three decades. Electricity generation from wind energy would also see secular growth, and capacity additions would be higher than coal.
  • Gas will not play a key role in India’s power sector unless international market dynamics shift significantly and the cost of gas-based power falls.
  • Non-fossil sources, largely due to rapid growth of solar energy, will garner a share of at least 48 per cent in India’s electricity generation capacity by 2030. This could exceed 65 per cent if the cost of solar and wind-based electricity generation drops sharply.
  • The electricity and industrial sectors play a major role in India’s energy sector-related CO2 emissions, with respective shares of 40 per cent and 32 per cent in 2050.
  • CO2 emissions from India’s transportation sector will grow the fastest. However, its share in India’s CO2 emissions would be lower, 19 per cent in 2050, compared to other sectors.
  • Energy sector CO2 emissions intensity (EI) will decline by at least 48 per cent between 2005 and 2030, on the back of significant developments in energy efficiency of end-use sectors such as residential, transportation, and industrial sectors.
  • If the efficiency improvement in these end-use sectors occurs at a lower rate, energy demand in the economy increases at a faster rate, and share of electricity in meeting industrial energy demand remains stagnant, then the EI of GDP will be higher by 11 per cent in 2030.
  • To be consistent with the 2°C target, India needs to cut its CO2 emissions by at least 4.5 per cent per annum post 2030.
  • If emissions mitigation in transportation sector is minimal, the share of non-fossil sources in India’s electricity generation capacity needs to increase to 98 per cent by 2050, and electricity’s share in industrial energy use has to increase to 54% to be consistent to the 2 °C target.
Non- fossil fuel energy sources, largely due to rapid growth of solar energy, will garner a share of at least 48 per cent in India’s electricity generation capacity by 2030.

Key Recommendations

The study emphasises the need to:

  • Undertake a detailed, India-specific study on estimating VRE integration cost to inform a market design wherein a higher share of VRE can be accommodated. Also, suggest conditions in which conventional plants could also play a role.
  • Undertake a deeper evaluation of industrial sectors and inform policy based on assessment through the ‘CEEW Synergies and Trade-Off Matrix’.

The report was released at the CEEW Dialogue on ‘India's Energy and Climate Policy: Pathways towards NDC and Mid- Century Strategy’ on April 30.

Montek Singh Ahluwalia, Trustee, CEEW, and Former Deputy Chairman, Planning Commission, Government of India, delivered the keynote address at the Dialogue. (Source: CEEW)

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