Reduce dependence on fossil fuels and opt for alternative energy sources for a healthier tomorrow

The report states that in India, it means every dollar of value added by the industry results in 30% less carbon dioxide (CO2) by 2030 than it does today and each km driven by a passenger car, on an average, emits 25% less CO2. Some 60% of two and three-wheelers to be sold in 2030 are electric, a share ten times higher than today

Recently International Energy Agency (IEA) published the World Energy Outlook 2023 in October 2023. Ever since its first publication in 1998 it has been providing critical insights into global energy both demand and supply in different scenarios and the implications for energy security, climate change goals and economic development.

In the current economic uncertainty due to inflation control measures, high interest rates, the war-torn geo political situation, high level of debt contracted most of the countries. They have to lay greater focus on their commitment towards achieving net zero emissions target by 2050 and reduce the global temperature to 1.5°C level above the pre-industrial levels which currently is around 1.2°C. The greenhouse gas emissions have not peaked and the world is already facing extreme weather events. It is in this background that dependence on fossil fuels has to be reduced gradually and alternative energy sources like solar, wind, hydrogen and electric vehicles are given priority.

Meanwhile, the emergence of a new clean energy economy, led by solar PV and electric vehicles (EVs) provides hope for the way forward. According to the report, while in 2020, one in 25 cars sold was electric, in 2023, this is now one in five. Further, over a record 500 gigawatts (GW) of renewable generation capacity are to be added this year. More than $one billion per day is being spent on solar development. The manufacturing capacity of key clean energy system components, including solar PV Models and EV batteries, is expanding at a fast pace. These raise hopes that a pathway to limiting global warming to 1.5%°C is possible, albeit quite challenging.

The report indicates that the global demand for coal, oil and natural gas will reach new peaks by 2030 by edging downwards from 80% to 73%. This will be a good and important shift. However if that does not happen due to continued demand for these fossil fuels, it will be difficult to reach global climate goals.

According to the report, annual investment in fossil fuels and clean energy by way of fossil fuels during 2015 -2023 was $1.1 trillion whereas for clean energy it was $1.8 trillion, which is an encouraging sign. According to the report, annual investment in fossil fuels scenario 2030 (Steps) will be $ 0.9 trillion and on clean energy it will be $ 2.3 trillion. This implies that simply cutting spending on oil and gas will not get the world on track for net zero emissions Scenario. The key to an orderly transition is to scale up investment in all aspects of clean energy system. Hence there is an urgency to step up the pace of new clean energy projects, especially in emerging and developing economies outside China, where investment in energy transitions needs to rise by more than five times by 2030 to reach the levels required in the Net Zero Emissions Scenario. This calls for support from developed countries to flow to less developed nations and currently high debt countries to take up alternative energy projects in the path way for net zero emissions target by 2050.

The report states that in India, it means every dollar of value added by the industry results in 30% less carbon dioxide (CO2) by 2030 than it does today and each km driven by a passenger car, on an average, emits 25% less CO2. Some 60% of two and three-wheelers to be sold in 2030 are electric, a share ten times higher than today. According to the report, 18% of the electricity generated in India will be from solar sources by 2030, up from today’s six per cent.

According to Ministry of New and Renewable energy, India's achievements are globally fourth in overall renewal energy, 42% cumulative installed capacity from non-fossil fuel sources, which is targetted to 50% till 2030, renewable power generation increased to 1.5 times from 196 BU to 291 BU since 2014, solar power installed capacity increased to approx. 30 times from 2.6GW to 70.19 GW since 2014, Wind capacity doubled from 21 GE to 42.6 GW since 2014, about $78 billion investment since 2015 ( including $10.27 billion FDI) and the third highest RE capacity addition of 63 GW in the last five years.

India has launched National Green Hydrogen Mission where a lot of hydrogen projects are in the pipeline. Moreover India has also Solar PV Module PLI scheme, which has attracted private investment, India, along with France, has announced International Solar Alliance in 2015, with the objective of scale up solar energy, reduce the cost of solar power generation through aggregation of demand for solar finance, technologies, innovation, research and development and capacity building. It aims to mobilise more than $1000 billion investment that is needed by 2030 for deployment in solar energy. It is pertinent to note that India has to considerably reduce its dependence on oil.

It is therefore imperative for us to incrementally enhance greater investment towards alternative renewable energy projects to keep up our commitment towards achieving net zero emissions target. India has kept the target of reduce the total projected carbon emissions by one billion metric tons from now (presumably 2022) through 2030. Reduce the carbon intensity of its economy by at least 45% by 2030 compared to the 2005 levels. India wishes to achieve net zero target by 2070. India has made substantial progress toward meeting pledges made in its first NDC announcement in 2016 as it is already on track to achieve 60% or more non-fossil capacity by 2030.

The report concludes that we need to go much further but a fragmented world will not rise to meet our climate and energy security challenges. The Ukraine Russia war, Israel and Hamas conflict and consequent disturbances in the Middle East are not only diverting global attention to these matters but also taking away precious financial resources for not only war but also rehabilitation and medical facilities in war-affected regions.

It is also taking heavy toll on human lives as the report says in lot of children lost their lives in Israel and Hamas conflict.

Can we afford to waste our human resources and economic resources in these wars when we are required to spend on global plans to speed up alternative energy to reduce the global temperature to 1.5°C?

Otherwise emissions remain high enough to push up global average temperatures to around 2.4°C in 2100. Hence every country needs to find its own pathway and it needs to be inclusive and equitable to secure public acceptance, according to the report. For human beings and animals to survive, restricting the temperature rise is absolutely essential. This can be achieved by global cooperation.

We hope there will be further positive outcome from the COP 28 climate change conference at Dubai in December.

(The author is former Chairman & Managing Director of Indian Overseas Bank)