India has made lofty decarbonisation targets: two months before COP27 – the 27th United Nations climate conference that was held from November 6-20 – the government in September announced that half of its installed power generation capacity will come from non-fossil fuel sources by 2030. However, to achieve this goal, India will need to send strong and consistent signals that it is committed to the energy transition.
This will be key in unlocking the funds promised by the Just Energy Transition Partnership, an alliance between G7, or Group of Seven, countries and India to make potentially billions of dollars available in climate finance. This becomes particularly relevant as India will take up the presidency of the G20, or Group of 20, on December 1.
An amount of $8.5 billion has already been promised, mostly as investments to South Africa through this mechanism. In the second such deal, Indonesia was offered and accepted $20 billion at the G20 just days ago. This was slightly different in that it was a 50-50 public private partnership. Similar arrangements are underway with Vietnam and possibly Senegal.
Phasing out coal
While India can ask for financial support, it should not depend on external support, which often comes in the form of concessional loans rather than grants. Irrespective of where the finances come from, India will need to remain consistent to achieve its decarbonisation goals and unlock the offered funds.
The Indian government clearly sees the enormous growth potential of clean technologies: that is, how China captured the global market for solar panels and how renewable energy provides some of the cheapest power the world has ever seen. Yet, there is inconsistency in India’s stance as evidenced by the construction of 39 new coal-fired power plants.
An equitable energy transition towards renewables has the potential to deliver justice. It will not only ensure livelihood and rehabilitation for coal workers but also have co-benefits in terms of clean air for the billion Indians exposed to pollution levels that surpass levels deemed safe by the World Health Organization.
Estimates of direct and indirect employment due to the coal supply chain range between 13-20 million (4% of the Indian labour force), which is no small order, but coal jobs are often unstable, unsafe and costly for human health.
Unlike service jobs such as business process outsourcing or information technology, which have paved pathways out of poverty, coal-mining states remain amongst the worst performing in terms of human development indicators. In Jharkhand and Odisha, roughly 12.5% of deaths in 2017 were attributable to air pollution, according to a study. Research also shows that child mortality in India systematically rises with proximity to coal-fired power plants.
Air pollution is a part of justice, especially since it disproportionately impacts the young and the elderly. Nation-wide, 8.8% of under-five child deaths in 2017 were due to exposure to air pollution. Air pollution is shortening the lifespan of some Indian citizens by a decade, according to research by the University of Chicago.
The national capital region alone, which is one of the planet’s most dense urban areas with 46 million inhabitants, has 11 coal-based thermal power plants within a 300-km radius. These power plants have been getting extensions up to 2027 to comply with basic air pollution standards written in 2015. Unregulated nitrogen oxides, sulphur dioxide and particulate matter from coal-fired power plants damage human health irreparably.
There is also a tendency for the “just transition” to ignore communities, historically displaced by open-pit mining, who were previously gainfully sustained by traditional agricultural, pastoral, or forest-based livelihoods.
Open-pit mining, which characterises much of India’s coal operations, has a huge ecological and social impact. There are significantly more lax conditions for coal to acquire land relative to general infrastructure projects, leading to significant disenfranchisement of marginalised communities. These communities would see little justice in what has happened.
Finally, there is the need to think about justice for the consumers of electricity who need forward-thinking policymakers. India should not be building coal-fired assets with 30-year lifetimes that will become uneconomic in the next five years because clean energy competitors are becoming cheap.
Green energy costs
Despite requiring upfront investment (which is the case for new coal as well), clean technologies can produce enormous net-savings, according to researchers at the University of Oxford.
The costs of solar photovoltaics, wind, and batteries have dropped at a rate of 10% per year, according to research by the University of Oxford. Why lock consumers and distribution companies into (more expensive) coal assets when solar and wind are, or soon will be, cheaper? For a poor country like India, it is unjust to block citizens or firms from the cheapest option available. Studies show that the Indian grid can technically incorporate a large share of clean, cost-competitive alternative energy.
A just energy transition in India has to be cross-cutting. India needs to walk into the Just Energy Transition Partnership with eyes wide open: advancing contradictory policies that support fossil fuels far out into the future will not unlock these funds or deliver true justice for India’s own citizens. In this regard, India’s call for phasing down all fossil fuels was welcome. It is high-time equity considerations drive up global ambition, especially since India will be at the receiving end of some of the worst climate impacts.
The Just Energy Transition Partnership funds can be used to help economically diversify the eastern coal mining belt of India, that is, to build out sectors that offer higher wages, safety, and better living standards. Extractive industries such as coal create a “resource curse” that stifles economic diversification in an area. This needs to be broken.
It is increasingly becoming clear that green growth is not only possible but also desirable on the grounds of justice and economic efficiency. Renewable energy, the rehabilitation of natural ecosystems, energy efficiency standards, and proper pollution control can deliver better livelihoods for India’s billion plus citizens.
This improves productivity, human health, and economic growth. It is a falsehood to assume that the clean pathway is not also the development pathway: we fundamentally rely on the quality of our environment to be the best versions of ourselves. It is as simple as that. Given the new factual reality, one must ask if holding onto coal is truly in India’s best interests.
Sugandha Srivastav is an Economist based at the Smith School of Enterprise and Environment at the University of Oxford. She advises governments, private firms, and development finance institutions on various aspects of energy and climate policy. Her research focuses on the drivers of low-carbon innovation and the political economy of energy transitions.