On 2nd October 2016, India ratified the Paris climate accord becoming the 62nd country to do so. India accounts for 4.1% of global carbon emissions. Countries with 52% of global emissions have now ratified the agreement. With European Union, accounting for 12.1% of total global emission, expected to join shortly, the 55% threshold for the agreement to come into effect would be met and the agreement should come into force by November.
- India has committed to reduce emission intensity by 33% by 2030 and achieve 40% cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030;
- As a result, the renewable sector will attract much larger global scrutiny as well as flow of financing and technical support from international institutions;
- Despite several sector related concerns, India’s global commitment to back its ambitious targets should further help sharpen policy agenda and attract investments in the renewable energy sector;
As part of its Intended Nationally Determined Contributions (INDCs), India has committed to a reduction in carbon emission intensity of its GDP by 33% to 35% by 2030 from 2005 levels. More pertinently for the power sector, India has committed that at least 40% of its installed power generation capacity will be non-fossil fuel based by 2030 (refer). The current number is 30%, if hydro and nuclear power are included. A big share of the commitment will be achieved, if India meets its 175 GW of renewable power capacity target by 2022. The big imponderable here is India’s insistence that it will achieve the targets only if developed countries give it money and discounts on new technology.
India has already become a leading global market for renewables. Ratification of climate accord would attract a much larger global scrutiny on the country’s ability to achieve yearly renewable targets and compliance with policies such as Renewable Purchase Obligation (RPO). We also expect significant increase in financing commitments from international agencies such as the World bank, International Financing Corporation (IFC), Asian Development Bank (ADB), Overseas Private Investment Corporation (OPIC), U.S. Export-Import (EXIM) Bank, European Investment Bank (EIB) and the Japan Bank for International Cooperation (JBIC).
India’s renewable targets are ambitious and delivery on ground in terms of new deployment has gathered considerable pace. The ambitious targets are now further backed by India’s global commitment under a formal multinational agreement. Despite several key concerns that remain, this should help focus government policies for the sector, attract domestic and international capital into the sector and assure growth for all stakeholders.
