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Business News/ Opinion / Views/  We must act now to clear our path to carbon neutrality
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We must act now to clear our path to carbon neutrality

The success of India’s transition to clean energy aimed at carbon neutrality will depend on the timely availability of minerals whose supplies are constrained and expected to get costlier.

Photo: BloombergPremium
Photo: Bloomberg

Net zero emissions or carbon neutrality has been talk of the town globally. At the onset of CoP-26 in Glasgow, developed countries led the push for a net-zero world. India has shown determination by setting a target of carbon neutrality by 2070. Reducing emissions is as vital to the effort as removing carbon. A transition from fossil-fuel-based energy to renewable sources holds the key. Currently, nearly 40% of India’s installed power capacity and 25% of electricity generation is non-fossil-fuel based, with renewable energy (including large hydro plants) at 37% and 22%. Yet, multiple hurdles lie in the country’s path from coal-based to clean renewable energy.

The World Bank’s Minerals for Climate Action report postulates that a transition from conventional to clean energy will be mineral intensive; over 3 billion tonnes of minerals and metals would be required to restrict the global average temperature increase below 2° Celsius by 2100. Solar photovoltaic (PV) technology requires minerals like aluminium and silver, while wind turbines primarily need steel and rare earth elements like neodymium. A cross-cutting mineral used across all renewable energy systems is copper.

Some of these systems, like solar and wind, offer intermittent power supply, given their dependence on sunlight and high-speed winds. This makes energy storage vital to their resilience. Power must be captured, stored as another form of energy and released when needed. This has also garnered attention because of its potential to substitute cars that run on fossil fuels with electric vehicles (EVs). While lithium and cobalt are crucial minerals for energy storage, batteries also need graphite, lead, manganese and nickel.

Therefore, India’s transition to cleaner energy aimed at carbon neutrality is contingent on the timely and adequate availability of these minerals. In the short run, the supply of minerals is limited by existing knowledge of mines and technologies for extraction, which makes them price inelastic. Indeed, their prices are expected to skyrocket as more countries speed up their energy transition. The International Monetary Fund’s base metal price index grew by 9.7% between February and August 2021 on the back of a global manufacturing recovery from disruptions of the pandemic. The London metal exchange also witnessed a steep rise in the prices of aluminium, copper and nickel in 2021. Further buoyancy in expectations of a global energy transition and the concentration of many minerals’ production (like lithium, neodymium and graphite mainly in China), may drive up demand and prices, creating bottlenecks for climate action. With developed countries as front-runners of net-zero emission plans, India must avert the risks of being a late adopter to ensure smooth availability.

Secondly, the weather dependence of solar and wind energy systems impacts overall electricity generation, especially in extreme conditions. As climate change worsens, extreme weather events are set to become more frequent and severe. This is a major factor responsible for Europe’s energy crisis.

The EU and US have made significant progress on renewable energy; at last count, 30% of Europe’s net electricity generated was by renewable systems—13% alone from wind. In the US, 20% of total electricity is from renewable sources, with 7.3% and 8.4% coming from hydro and wind. In India too, hydro contributes about 11% of total electricity generation (by utilities), followed by wind and solar energy that each supply about 8% of the total. But an unexpected surge in energy demand after the pandemic and extreme weather conditions in some parts of Europe and the US have strained electricity supply across the globe. Subsequently, demand for coal and natural gas for power generation has risen. With limited resource availability and strong interdependencies among countries in a globalized world, problems in one country can have seismic effects in others. This strengthens the case for a simultaneous focus on developing energy storage and identifying an optimal mix of renewable energy systems to create a stable and sustainable clean energy network. India must strive to work out a plan that makes it ‘atmanirbhar’ or self-reliant in clean energy, with fewer dependencies on other countries for the means required to make its transition.

A long-run solution to finite mineral reserves and mounting price pressures would be a 3R formula: Reuse, Recycle, Repurpose. This idea is to effectively shift the dependency of our energy transition from primary minerals (freshly mined and processed) to secondary minerals. The steel industry, for example, has identified ways to recycle steel, reduce its dependence on iron ore and shrink the carbon footprint of steel production. The recycling of other minerals like copper and aluminium at affordable costs is also crucial, as demand for these soars. Also, the recycling of solar panels, wind turbine blades and electric batteries would ensure that renewable energy remains clean from start to end, by saving us the hassle of waste disposal from clean energy systems.

The reuse and repurposing of what exists could enhance our energy storage capacity. Innovation must be encouraged to discover ways to reuse and repurpose batteries. Key minerals like lithium need to be conserved. India’s journey towards carbon neutrality requires a holistic approach in fostering innovation and investment across the entire chain of power generation, storage and supply.

These are the author’s personal views.

Ritika Bansal is an Indian economic service officer working in the ministry of finance.

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Updated: 03 Feb 2022, 10:35 PM IST
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