Delivering the 2020 Darbari Seth Memorial Lecture virtually, Guterres called on India to move away from coal, even as he acknowledged that poverty alleviation and universal energy access were India’s top priorities. Reiterating the idea that Covid-19 recovery efforts must focus on building back better, the UN Secretary General said that clean energy is the “ticket to growth and prosperity,”
As in his address to Tsinghua University in China, Guterres’ address, an annual lecture hosted by Delhi-based TERI in memory of its founder Darbari Seth, focused on coal and the pitfalls of investing in coal. “It spells stranded assets and makes no commercial sense. The coal business is going up in smoke,” said the UN boss. Guterres warned that 50 per cent of the coal will be uncompetitive in 2022, reaching 85 per cent by 2025.
“The Secretary General is right is that the momentum towards renewable energy, away from coal, is considerable. There is likely that because of cost reasons, there will be less interest from the private sector in India to adding much if any new coal fired power plants,” said Navroz Dubash, Professor, Centre for Policy Research, Delhi-based think tank.
Highlighting the health and economic costs of persisting with coal, the UN boss said that India’s top priorities can addressed through renewable energy besides the benefits accruing from reduced air pollution. Elaborating on renewable energy’s employment generation potential highlighted by the UN Secretary General, Ulka Kelkar, Director of WRI India’s Climate Programme said, “new jobs can be created which need to be supported by reskilling, access to finance, and safety nets, for both women and men, particularly in India’s vast informal sector. Our research shows that that taking into account the hidden costs of health, water, land, and climate, renewable energy is far superior to coal. And even on purely commercial terms, new coal investments may soon become uncompetitive.”
Even as he expressed concern about coal auctions and doubling down on domestic coal, Guterres acknowledged India’s sizeable renewable energy programme, the target of 500GW of renewable capacity by 2030 and investment in solar surpassing that on coal power plants in 2019.
According to BP’s Statistical Review of World Energy report 2019, India’s reliance on coal for energy production is to the tune of 56 per cent. This is despite continuing strong growth in renewables: renewable energy increased by over 25 per cent in India in 2018. Statistics from Ministry of Power shows that in March 2020, 35.86 per cent of India’s installed electricity generation capacity was from renewable sources, generating 21.22 per cent of total utility electricity in the country.
The growth of the renewable energy sector in the country is a success story. “This impressive growth could be possible only due to recent changes in policies and focussing on the renewables,” said Anjal Prakash, associate professor at Bharti Institute of Public Policy at Indian School of Business, Hyderabad.
However, Prakash said he does not foresee a complete turnaround “as it would take some time for India to reduce dependence on coal for energy production but the greater emphasis on renewables are welcome step.”
The UN chief’s push for clean energy and his dire warnings on coal, and the government’s aggressive policy on renewable energy and the sector’s remarkable growth story notwithstanding, India is unlikely to abandon coal right away. A key reason being the critical piece of the chain: storage.
“Solar electricity today is the cheapest electricity in India, but only when the sun shines,” said Ajay Mathur, director general, TERI.
“For renewable energy to replace solar, storage has to mature. The latest renewable energy plus storage latest bids at Rs 6 to Rs 7 peak tariff per unit are promising but will take time to scale and mature. We are not there yet,” explained Srinivas Krishnaswamy, CEO of Delhi-based energy and development think tank Vasudha Foundation.
“Therefore, in the short term, both coal and renewables electricity will continue to grow to meet the needs of the millions of Indians who have gained access to electricity only in the last few years, and who are constrained in their ability to pay,” Mathur, who has been a key member of India’s climate negotiation team, and the point person on technology.
The former Indian climate negotiator said, “this situation can change once the cost of round-the-clock renewable electricity becomes cheaper than that of coal-based electricity – which is expected to occur in the next few years.”
In the meantime, Prakash, who is a lead author for the Intergovernmental Panel on Climate Change, suggested adoption of policy efforts that alleviate poverty and encourage uptake of renewable energy. “One of the measures is to reduce subsidy in fossil fuel and provide more incentives for farmers, households and common people to generate energy using solar and contribute to reducing energy poverty. The urban and rural households could generate electricity using sunshine and that could outsmart the coal-based production. More incentives are needed for a decentralised energy production process by removing red tape and bureaucratic provisions and encouraging common people to generate energy,”
As a low middle country with considerable developmental challenges, India will need to carefully plan the transition from coal considering the social, economic and political ramifications of this shift. Dubash said, “India needs to focus on is making sure this transition, which increasingly looks inevitable, will not be socially disruptive, which means preparing coal states for new sources of livelihoods and new jobs, making sure that poorer consumers do not get disrupted supply. Focusing on using the time we have for transition sensibly.”
Experts agree that the transition to clean energy is inevitable but taking into consideration the context of the countries and finding pathways to make the transition is critical to the move away from coal. “It is not clear that making explicit new pledges about how fast coal will decline is more effective than simply encouraging this energy transition,” said Dubash.
In his lecture, Guterres applauded Korea, the United Kingdom, Germany, and the European Union for speeding up the decarbonization of their economies and Nigeria for reforming its fossil fuel subsidy framework.
“Given that India has aggressive renewable energy targets, it is important for the Secretary General to also carry the same message to other G20 countries who are going much slower on their renewable energy transition,” said Dubash.
The UN chief urge all countries, especially the G20 countries, to commit to increasing their ambition and scope of their climate action ahead of the UN sponsored climate meet in Glasgow next year. He was however silent on the enabling this enhancement of ambition— that is ensuring the financial and technological support for developing countries to ramp up their efforts to address climate change.