When climate negotiations opened in October 2021 at the UN Climate Change Conference of the Parties in Glasgow, the environmental outlook was gloomy. Carbon emissions around the world were rapidly rising. Seemingly every part of the planet was routinely being hit with extreme weather, some of which resulted in thousands of deaths and billions of dollars in damage. But the world’s biggest polluters were doing little to tame their emissions. The planet was on track to warm by well over two degrees Celsius above preindustrial levels. It is a threshold that, if crossed, could prompt extraordinary droughts, cause the seas to inundate major coastal cities, and lead to the extinction of multiple species.

But on the first day of the conference, India made a dramatic announcement: it planned to reach net-zero emissions by 2070. India is the world’s largest country by population and its third-biggest polluter. If India meets that goal, the planet will have a fighting chance to stay within the two-degree target. One estimate found that India’s net-zero achievement could reduce warming by 0.2 degrees Celsius, a remarkable figure for the efforts of just one state. That change could be the difference. Some studies show that if every country follows through on its pledge, the global temperature increase might be kept to 1.8 degrees Celsius.

Although India’s net-zero goal is worth celebrating, it will be extremely difficult to meet. India is trying to develop as fast as it can while eliminating greenhouse gas emissions, and traditionally, states cannot develop and decarbonize simultaneously. Every state that has gone from poor to rich has done so by dramatically increasing its energy consumption, and India is unlikely to be an exception. The country’s electric system, already the world’s third largest, is expected to grow rapidly in the years to come. Indeed, depending on the trajectory India chooses, its total energy demand could more than double between now and 2050. If it wants to fight climate change, New Delhi will have to find a way to make this leap without spewing more carbon into the atmosphere. It will, in other words, have to grow in a manner that no major economy has before.

Thankfully, there are signs that India is up to the task. New Delhi has vigorously promoted clean energy over the past decade, regularly ratcheting up its targets and rolling out green initiatives. Its endeavors are paying off. According to analysis by the Council on Energy, Environment and Water, a Delhi-based independent research institution, India’s efforts to promote solar energy and electric transportation should result in a cumulative emission reduction of more than 1.25 billion tons of carbon dioxide between 2015 and 2030. India has also cut down on appliance emissions, and it is pioneering international clean energy projects.

There is still much more New Delhi needs to do, especially in India’s industrial sectors. And the country will have to better integrate itself into the international energy market if it wants to really embrace green power. But if New Delhi can succeed, India will not only reduce its own carbon emissions. It will also become a global energy player in its own right—and one that carves out a low-carbon, sustainable pathway for high levels of economic development that the rest of the global South can follow.

SNOWBALL’S CHANCE?

Access to energy is a basic human right. It is virtually impossible to stay healthy without electric pumps that can run or produce clean water, and it is difficult to have a functional household without electric appliances or working light bulbs. Any hospital or doctor’s office needs power to treat patients, and schools need energy to teach students. There are very few workers in any industry—even those who labor with their hands—who cannot benefit from energy in some way, if only to get to or from their place of employment. There is a reason why no society has reached a high human development index without a significant increase in energy consumption.

Right now, India is a long way from the kinds of energy usage that are typical in rich countries. The average Indian consumes one-third of the electricity that the average human does and one-twelfth of what the average American churns through. New Delhi is working hard to change these discrepancies, including by rolling out more power lines to businesses and houses that still lack electricity. Such endeavors are good—and necessary. But the government’s push for parity in making electricity accessible will create multiple environmental problems, none of which are easy to solve.

Consider, for example, air cooling. Some Americans and Europeans can get by without good fans or air conditioning, but almost every part of India endures scorching temperatures for sustained periods. As a result, for India, cooling is an imperative for public health and development. In fact, the country’s demand for cooling is expected to rise eightfold between 2018 and 2038—one of the fastest rates among major economies—as India’s population grows and as temperatures rise. But most air conditioning systems require large quantities of power to function, and more cooling will mean more emissions if India’s energy system is dominated by fossil fuels.

And right now, India’s energy system is, indeed, carbon dependent. Coal accounts for a whopping 57 percent of the country’s primary energy consumption; oil accounts for 27 percent, and natural gas accounts for over six percent. Nonfossil fuel sources—such as solar, hydropower, and nuclear energy—make up just ten percent. To achieve net zero, India must therefore dramatically reconfigure its energy sources. In the future, much of the country’s economy will have to be powered by clean electricity. Other parts will have to be powered by clean fuel. For instance, under certain scenarios, India’s industrial and trucking sectors will need to get at least 80 percent of their energy from green electricity by 2070, and the remainder will have to come from other clean energy sources, such as green hydrogen or sustainable biofuels.

Hitting this figure will require extraordinary feats of development to upgrade the country’s infrastructure. As part of the net-zero transition, for example, India wants to deploy 500,000 megawatts worth of clean electricity infrastructure by 2030. (A megawatt of solar energy can power 350 to 400 homes a year.) Right now, its renewable energy capacity is 125,692 megawatts. Reaching the 2030 goal will therefore be a monumental task, requiring India to build an average of 11 megawatts of new renewable energy capacity for ten hours a day, seven days a week, 52 weeks a year, during every year for the remainder of the decade.

But it is doable. In 2010, for example, the country had less than 20 megawatts of solar power capacity. India’s big push for clean energy since then has resulted in the development of 67,078 megawatts of capacity. India’s wind energy journey has been similarly impressive. In 2008, when India’s National Action Plan on Climate Change was announced, the country had 9,400 megawatts of wind capacity. Now, it has more than 42,500 megawatts. Hydropower and nuclear energy make up 46,850 megawatts and 6,780 megawatts, respectively, of India’s power capacity. Collectively, nonfossil sources already account for 43 percent of India’s electricity system.

Of course, clean power capacity is not the same as clean power generation. Renewable energy is intermittent, fluctuating wildly throughout the day and during different seasons. To increase the share of renewable energy that Indians can actually use, the country will need to make its power grid more resilient and invest heavily in battery storage. India’s power grid is already more integrated than that of the United States, but it needs to be ready to transport much larger shares of clean energy whenever and wherever such energy can be produced. New Delhi is aware of this challenge, and it is creating green energy corridors to make it easier to transmit clean power out of eight renewable-rich Indian states and across the country. The project is already showing results: by November 2022, India had built 5,400 miles of transmission lines and charged 19,858 substations. Yet the country will need to pick up the pace if renewables are going to become central to the Indian power system.

The scale of investment that India will need to overcome these infrastructure challenges is staggering. By some estimates, the Indian economy must spend roughly $10 trillion (in 2020 prices) on green energy infrastructure between now and 2070, or $214 billion each year, to meet its target. That figure is a far cry from the $13 billion to $14 billion that the economy is spending on renewable energy each year right now. India’s annual investments in renewable energy—although significantly outpacing its investment in coal—are not accelerating fast enough to make up the difference. In fact, India’s renewable energy industry is growing at a slower rate than it was just a few years ago. The industry increased in size by 25 percent from 2017 to 2018, but it grew by just over 16 percent from 2021 to 2022.

India faces other, nonmonetary obstacles in its efforts at clean development. The country wants to make sure its energy system is not only green but also insulated from international pressure or shocks, and right now, just one state—China, including Hong Kong—accounts for 92 percent of India’s renewable energy equipment, lithium ion, and rare earth elements. This level of concentration could stymie the pace of renewables deployment. Under certain net-zero scenarios, India needs more than 5.6 million megawatts of solar capacity and nearly 1.8 million megawatts of wind capacity by 2070—more than 84 times its current solar capacity and 42 times its current wind capacity. It is highly unlikely, however, that India will choose to build the number of solar panels and wind turbines needed to produce this much energy if doing so entails being highly dependent on one, or even a handful, of international suppliers.

New Delhi does have some of the goods needed to create its own renewable energy manufacturing system. The government, for instance, discovered 5.9 million tons of lithium in Jammu and Kashmir at the beginning of this year, which could help reduce India’s reliance on other countries for a mineral critical to clean batteries. But this find, by itself, will not give India a battery industry. Building the capacity to extract lithium could take up to 20 years, and creating factories that place it inside batteries could take four years. For India to beat this timeline, it will need to get other countries to share the technology needed to efficiently and sustainably extract and then make use of its resources.

GROWING BY GREENING

India’s drive toward net zero will not be easy. Still, the country can make big strides in short order. India, for example, is growing its economy while reducing the emission intensity of GDP—the amount of emissions generated per dollar added to its national income—which fell by 31.5 percent between 2005 and 2020. Encouraged by this success, India has now committed to reducing its emission intensity by 45 percent by 2030.

New Delhi has achieved this reduction by having energy efficiency and green energy actively power its economic development. The country has electrified multiple households in ways that reduce greenhouse gas emissions as part of its Saubhagya (or “good fortune”) scheme, which connected 28 million homes to electricity in 18 months and brought household electrification rates to at least 98 percent. It did this while injecting more clean energy into the grid, keeping the increase in emissions that accompanies rising electrification rates to a minimum. Another priority has been getting Indians to cook using cleaner energy. In the past, most Indian households cooked by burning wood or other plant materials, which emit large quantities of carbon dioxide. Indians do not generally cook using electricity, but India’s 2016 Ujjwala (or “bright”) scheme addressed this problem by bringing much cleaner and more effective liquefied petroleum gas cylinders to more than 85 percent of households—up from just 50 percent of households a few years before.

New Delhi is also leveraging India’s growing digitalization—one of the hallmarks of the government’s development efforts—to help cut back on carbon emissions. Over the last decade, as hundreds of millions of Indians have purchased phones and data plans, New Delhi has launched initiatives that provide citizens with online access to government services. Some of these initiatives have focused on efficiently delivering green energy subsidies to consumers who need them. For instance, since 2017, one digital program has provided Indians with $12.2 billion worth of clean-cooking subsidies.

India’s digital revolution is also making it easier for the country to deploy smart meters, which measure how much power a building is consuming and communicate readings back to the grid in real time. This, in turn, allows utilities to efficiently deliver electricity by calibrating exactly when and where to target the flow of energy, cutting back on waste. Smart meters can also support the use of green appliances, such as superefficient ceiling fans, which should be optimized for power consumption.

And when it comes to installing green appliances, India has already proved itself to be a global leader. The country, for example, has become the world’s largest procurer of LED light bulbs. Billed as the largest such program in the world, the government’s large-scale purchases of LED light bulbs reduced the cost of a single light bulb in India by 85 percent between 2015 and 2019, making energy-efficient light bulbs affordable for ordinary households. By April 2023, India had deployed 368 million LED bulbs, abating 38.7 million tons of carbon each year. The deployment of other, more expensive green appliances will be even easier once additional smart meters are in place.

India’s efforts to encourage the use of green power extend beyond initiatives targeted at households or other buildings. Last year, India ordered 5,450 electric buses, one of the world’s largest tenders, to help ensure that its urban residents—60 percent of whom currently walk as a primary means of transportation—use clean energy as they start turning to vehicles. (The government has become more ambitious and is aiming to order 50,000 such buses.) India’s vast railway network aims to be net zero by 2030, abating 60 million tons of carbon annually. In its effort to move away from relying on China for its green energy needs, India is now subsidizing domestic solar-module manufacturing.

Although India’s manufacturing initiatives are impressive, they pale in comparison to those created by the U.S. Inflation Reduction Act or the European Union’s Fit-for-55 plan. And dollar for dollar, India is unlikely to match them anytime soon; the country simply lacks the fiscal resources of Washington and Brussels. To diversify the sources of its green energy products and to make sure it gets enough of them, India should therefore become part of a renewable energy manufacturing supply chain that extends from the United States to the European Union and from Australia to Japan. It could do so by setting up factories that produce clean energy goods, such as solar cells, battery cathodes, and wind turbine components. These can be made by international energy companies—either independently or in joint ventures with Indian ones.

These manufacturing and procurement policies, however, will not help India decarbonize its heavy industries, which are some of the country’s most significant sources of pollution. The steel, cement, fertilizer, and petrochemical industries alone account for one-fifth of India’s total greenhouse gas emissions and three-quarters of the country’s industrial emissions. New Delhi has been focused on making these and other heavy industries more efficient. It has done so, in part, by launching a program in which different manufacturers trade energy-efficiency certificates; industrial firms that cannot meet legally set energy-efficiency standards buy certificates from those that have surpassed their efficiency targets. But energy efficiency is not the same as emission abatement. The Indian cement sector, for instance, has the most energy-efficient cement plants and factories in the world, and it still produced 76.9 million tons of carbon dioxide in 2019. That figure will only grow as India urbanizes and the size of the cement industry expands. To develop in a green fashion, India needs ways to decarbonize these industries without putting them out of business.

The country can start by convincing its industries to use clean electricity as their main energy source. Right now, industries get less than 20 percent of their energy from electricity, dirty or clean. Heavy industries, of course, cannot use electricity for everything; they need fuels for high-intensity heat. So to make sure that these fuels are clean, too, India is pushing its industries to adopt green hydrogen. The country’s “Green Hydrogen Mission,” approved by the government in January, aims to produce five million tons of the product per year by 2030. The 13 task forces New Delhi has created to clean up the Indian steel industry, which is the world’s second largest, are also promoting green hydrogen. To be effective, the country’s industries will need to get on board with using the product themselves: demand is just as important as supply in bending the emission curve. But if steel or petrochemical manufacturers begin using green hydrogen, India could become one of the world’s lowest-cost green hydrogen producers.

And India may be able to create such demand through its Energy Conservation Act, which the country’s Parliament amended in late 2022 to push for decarbonization. One of the act’s updated provisions promises that the government will create a carbon-credit trading system, which would place legal restrictions on how much companies can pollute and impose a price on carbon. India’s Bureau of Energy Efficiency has already started conducting consultations with accredited energy auditors and carbon verifiers to design India’s carbon market. Once the system is in place, it will send a long-term signal to major polluters that they need to use green energy—and increase demand for cleaner fuels, including green hydrogen for heavy industries.

IT TAKES A VILLAGE

New Delhi has been proactive about protecting the environment. But the central government is far from India’s only government player when it comes to climate change. India is home to a patchwork of states and public enterprises, each with its own energy policies and priorities. Together, they will be important—and perhaps pivotal—parts of India’s green transition. Yet so far, their efforts have had mixed results.

On the plus side, several states are charting clear, low-carbon pathways. Jharkhand, for example, plans to deploy 4,000 megawatts of solar capacity by 2027, up from 117.9 megawatts in April 2023—even though it is home to 27 percent of India’s coal reserves. Bihar, Maharashtra, and Tamil Nadu, three of India’s biggest states, are developing or updating net-zero pathways or updating climate action plans of their own. Tamil Nadu has also created a green climate company staffed by experts and tasked with carrying out many of the state’s plans. Telangana is positioning itself as a global hub for electric vehicles and related manufacturing. As part of its efforts, it hosted the all-electric Formula E car race in February.

Yet net-zero commitments by India’s states have not been backed up by legislative approval, which puts them at risk when governments change. And many states lack the fiscal resources needed to pivot away from carbon fuels. The accumulated losses of state-owned power distribution companies, which are now more than $65 billion, continue to mount, as do these companies’ debts to banks and power generating businesses. The central government has repeatedly bailed out the distribution companies, but if the losses continue, state governments will eventually have to pick up the tab. This overhanging debt makes international institutional investors wary of putting money into India’s clean energy infrastructure simply because they will not get adequate returns if Indian utilities don’t pay up. Such wariness could cause international investors to either bypass India or invest only on terms that will be unaffordable for the country’s clean energy firms. And India desperately needs more financing: right now, India attracts only 2.9 percent of global clean energy investment.

This remarkably low number is not just bad for India. It is also negligent on the part of investors, who ought to be swarming around India’s energy sector irrespective of their concerns about state finances. In this decade alone, investment opportunities in renewable energy, electric mobility, and green hydrogen in India will be more than $500 billion, according to various government and independent estimates. India also has a potential $50 billion market for entities that can offer job-creating, clean energy services in rural parts of the country. Emerging markets that import energy, such as India, will drive half of all the expected growth in new demand for electricity until 2040. It is a fact that makes India a major market for any energy firm that is looking to expand. New Delhi, aware of this potential, has started issuing sovereign green bonds to attract capital.

Given India’s size, it isn’t just investors who should pay attention to the country’s power sector. Policymakers everywhere will need to make sure that the world’s energy security architecture responds to India’s needs—and then meets them with the fuels of the future. To that end, governments around the world should have more dialogue with India about energy security concerns. They also need to have more energy-related conversations with developing countries in general. To create a truly clean global economy, all states must figure out how to best expand and diversify green energy commerce and foster competition.

India is attempting to create such a dialogue through its ongoing G-20 presidency, in which it has made building resilient, renewable energy supply chains a priority. The country has also helped put together a variety of new clean energy initiatives. In 2015, for example, France and India established the International Solar Alliance, which now has 115 signatory countries, to aggregate demand for solar energy (particularly in the tropics) and thereby offer a larger market for institutional investors and project developers. India also created the Coalition for Disaster Resilient Infrastructure, which focuses on reducing climate-related disaster risks for power infrastructure, airports, and telecommunications gear. Such disaster proofing is of particular importance to New Delhi. Three-quarters of India’s districts are already hot spots for extreme climate events, and the intensity and frequency of storm surges, cyclones, and floods are increasing. The country will need detailed, localized, and regular assessments of physical climate risks in order to protect its infrastructure.

There is more on India’s international climate agenda. Along with Sweden, India is chairing the Leadership Group for Industry Transition, a consortium of 18 major economies and several corporations that focuses on decarbonizing heavy industries by 2050. The Green Grids Initiative–One Sun One World One Grid, created in November 2021 with the United Kingdom, aims to connect power grids across the world via high-voltage transmission lines to make sure countries can get clean power from wherever the sun might be shining or the wind might be blowing. Through this project, India hopes to connect its own power grid with those of Cambodia, Laos, Myanmar, Thailand, and Vietnam. To the west, India plans to hook up to the Middle East and eventually to Africa. Doing so will help all these places—together, most of the developing world—both decarbonize and develop.

But New Delhi can accomplish even more. Given the importance of green hydrogen, India should work with the United States to create rules and joint projects for the global green hydrogen economy. The U.S. Inflation Reduction Act promises three dollars of subsidies per kilogram of green hydrogen—effectively undercutting low-cost producers in other countries—and has made other countries, including India, jittery. There is a real risk that, without coordination, green hydrogen protectionist policies and islands of regulation will emerge around the world, creating barriers that make production difficult to scale. Instead, regulators, standards bodies, and industries should come together to create a universally acceptable definition of what counts as green hydrogen and what constitutes its derivatives. States and companies need to harmonize and co-develop green hydrogen standards, safety protocols, and certification systems. Countries could even pool their resources to make the next generation of electrolyzer and membrane technologies for green hydrogen production. The Quad (Quadrilateral Security Dialogue) among Australia, India, Japan, and the United States has a clean hydrogen partnership that could serve as the basis for more broad-based cooperation. When Indian Prime Minister Narendra Modi visits the White House on June 22, he and U.S. President Joe Biden could announce a Global Green Hydrogen Alliance—and invite other countries to join, help set the rules, promote interdependence, and make the green hydrogen market more fair, transparent, and competitive.

LINK UP

India has set out to do the near impossible: simultaneously provide energy access to hundreds of millions of people, clean up one of the world’s largest energy systems, and become a green industrial powerhouse. To complete all three tasks, it has created a variety of spending programs and other initiatives to grow the economy by decarbonizing it, to subsidize domestic solar and wind manufacturing, and to push India’s industries away from fossil fuels. But the country will have to spend and build more—in some cases, much more—if it wants to pull off this transformation.

The rest of the world has an interest in making sure that India succeeds, and countries should invest in India accordingly. But India also needs to engage more with the world. Political leaders like to call for energy independence. Yet for more than a century, no major economy has become completely energy independent; all countries rely on outside states to help fill their energy needs. And India, especially, must be careful not to fall into the trap of green protectionism. It will not win a war of manufacturing subsidies with China, the United States, or the European Union, and it has much to lose from a green energy trade conflict.

Instead, India needs to develop partnerships with other states and international companies. It must make itself into an indispensable and reliable node in the global marketplace for clean energy products and services. It must become a hub for the development, deployment, and export of clean technologies. It must, in other words, become a green power player—one that helps design the energy security architecture that can bring power to people and guarantee a sustainable future.