Economic Survey calls for balanced approach to climate change, diversified energy transition

It has also suggested a diversified approach for energy transition with the integration of renewables, alongside exploring nuclear energy and biofuels, wherein thermal power would provide the base-load to support largescale deployment of renewables.

Further, it noted that the present global narrative on climate change—by calling it a climate emergency—shifts focus from critical developmental problems and can cause panic.

The statement gains significance given that India has refused to give in to pressure from developed economies to stop fossil fuel usage, while at the same time setting up an ambitious net-zero target aimed at achieving the Paris Agreement commitment of preventing a global temperature increase of 1.5 degree Celsius.

Describing the current global strategies for climate change as flawed and not universally applicable, the survey asks all developing countries to look at the climate change problem from a ‘local lens’. 

Mirroring the country's stand in international deliberations, the survey states that a ‘one-size-fits-all’ approach will not work, and developing countries must be free to choose their pathways since they are tasked with balancing developmental goals with meaningful climate action. 

The survey points out that adopting the practices of the West could prove to be disastrous for India where culture, economy, and societal norms are already intertwined with the environment.

The funding challenge

Stressing on the need for affordability and accessibility of financial resources for the green transition, it said that so far India has relied on its resources for the same and developed economies should mobilize funds towards the developing countries in line with the objectives of the UNFCCC and the Paris Agreement of 2015.

“Lack of access to adequate and affordable financial resources remains a significant constraint for developing countries in implementing their climate commitments," it said.

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“India’s current economic survey has highlighted that the ‘pace of energy transition’ would also need to factor in a better climate-resilient energy system with three ‘A's in mind—alternative energy resource planning, affordability, and accessibility," said Manisha Mukherjee, executive director- sustainability & ESG solutions, Nangia Andersen LLP.

Further, Mukherjee added that sustainable and equitable growth will be at the heart of India’s energy transition. “Access to innovative technologies as well as renewable energy financing will be two deciding factors for India’s multidecade energy transition," she said.

Good progress

The survey, tabled by finance minister Nirmala Sitharaman in the Parliament, outlined that India has made significant progress in climate action, creating a carbon sink of 1.97 billion tonnes of carbon dioxide (CO2) equivalent between 2005 and 2019. The country is aiming for 2.5-3 billion tonnes by 2030 and is on track to create the additional carbon sink through tree and forest cover, it said.

Carbon sinks such as plants, soil and the oceans absorb more greenhouse gases than they release. They are vital to mitigate human-induced climate change, in particular when oceans and forests are healthy.

“Given the economic survey's emphasis on growth and development-aligned climate actions, we can expect incentives that boost domestic manufacturing to be a key pillar of the budget's climate-related announcements," said Vaibhav Chaturvedi, senior fellow, Council on Energy, Environment and Water (CEEW), adding that this should include incentives for solar panel manufacturing and green hydrogen production. 

"While the economic survey emphasises energy efficiency practices under LiFE, it must also emphasise the criticality of technology efficiency and super-efficient appliances that the budget could support through appropriate incentives and measures," Chaturvedi added.

The energy transition challenge

On energy transition, the survey pointed out that as India aims to achieve its ambitious growth targets, it faces the dual challenge of meeting energy demands while reducing carbon emissions. 

Given the close linkage between energy consumption and various social indicators, the government has a priority to ensure access to sustainable and clean energy sources, it said.

Although it acknowledged that non-fossil fuel sources are critical to India’s ambitious net-zero target of 2070, it said that phasing in of non-fossil sources has its challenges including intermittency related to renewable power, handling of nuclear and solar panel waste, and implications of biofuel production on food security, among others.

Emphasizing on the need for diversification of energy sources, the economic survey said: "Such diversification will help minimise risks associated with energy systems while pursuing low-emission pathways in line with national commitments. The integration of renewables, alongside exploring nuclear energy and biofuels, presents a path towards achieving these objectives. This will also include a significant role for thermal power, especially coal-based power plants, in providing base-load to support largescale deployment of renewables."

India already has taken up a diversified approach and along with the target to achieve 500 GW of installed non-fossil power capacity by 2030, the government also plans to add about 80 GW of coal-based power generation capacity by 2032, in a bid to meet the near-term surge in demand and provide stability to the grid.

The survey noted that India has made progress in increasing its installed solar power capacity. 

As of 30 April 2023, the cumulative solar power capacity reached 82.64 GW, with an addition of 15.03 GW in 2023-24. India’s GDP between 2005 and 2019 grew at a compounded annual growth rate (CAGR) of about 7%, whereas the emissions grew at a lower CAGR of about 4%, it said, indicating that India has decoupled its economic growth from greenhouse gas emissions, reducing the emission intensity of its GDP.