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India may miss net-zero emission goal by a decade without green hydrogen boost
Industry News- Sep 26,24
Despite growing interest in renewables, traditional oil and gas companies have delivered 8.3% higher capital returns compared to their green energy counterparts over the past five years, according to S&P Global Commodity Insights.
India is at risk of missing its 2030 net-zero emission target by up to a decade unless it significantly accelerates its green hydrogen economy, according to a recent report by S&P Global. The report highlights that the development of the green hydrogen sector is crucial for meeting the country’s climate goals and calls for urgent investments and policy support to unlock its full potential.
The green hydrogen sector is a vital component of India's strategy to transition to cleaner energy. However, its development has been sluggish, making it imperative for the government to expedite policy reforms and investments. Currently, India's energy transition is guided by four core investment themes: energy efficiency, renewable energy, low-emission fuels, and sustainable mobility.
India’s policy framework includes a mix of subsidies, mandates, taxes, and incentives to stimulate growth in these sectors. Historically, however, investment allocations have skewed towards fossil fuels, which received 37% of the average investment over the last five years, while only 5% went towards green energy initiatives. The government is now working to reverse this trend by establishing a carbon market framework and climate finance taxonomy to channel funding into green technologies.
One major hurdle is the disparity in returns between traditional fossil fuel companies and emerging green energy firms. Despite growing interest in renewables, traditional oil and gas companies have delivered 8.3% higher capital returns compared to their green energy counterparts over the past five years, according to S&P Global Commodity Insights. To bridge this gap, India must adopt measures to make green investments more attractive and financially viable.
Currently, natural gas accounts for only 6% of India’s energy mix, but the government aims to increase this share to 15% by 2030 as a transitional fuel to reduce dependency on coal. Additionally, India is striving to secure access to 30 critical minerals essential for its energy transition through its state-owned entity, Khanij Bidesh India. While international efforts are ongoing, a greater focus on domestic mineral exploration is needed to support these initiatives.
The report stresses that reforms in the power sector are crucial for addressing legacy issues like high transmission and distribution losses. By creating a competitive market environment and encouraging private sector participation, India can improve grid reliability and better integrate renewable energy sources. Addressing these challenges will be essential for India’s overall energy transformation.
To advance its green energy ambitions, India must develop robust manufacturing ecosystems for batteries, electrolysers, and photovoltaic systems. This will require securing domestic raw material supplies, building a skilled workforce, and leveraging government procurement to support local industries. Additionally, fostering an environment conducive to green bond issuances and innovative financing models will be critical to scaling up clean energy investments.
Promoting decentralised renewable energy solutions and supporting research in off-grid technologies can address energy access challenges in rural areas. Public-private partnerships will play a key role in driving technological advancements and ensuring a sustainable energy transition.
The report concludes that while India has made progress in several areas, achieving the 2030 net-zero target will require a significant push in the green hydrogen sector along with broader reforms in the power and manufacturing sectors. Accelerating these initiatives is crucial if India is to establish itself as a leader in sustainable energy and meet its long-term climate goals.
(ET)
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