India’s gross domestic product (GDP) is projected to grow between $8.5 trillion and $10 trillion by 2030. We can expect every budget in the intervening years to provide the platform to propel the economy at the required rate, but each will have its context. This year’s budget comes at a time when the context is green.
Finance Minister Nirmala Sitharaman will present the budget 92 days after the Prime Minister declared India’s commitment to attaining net-zero emissions by 2070. This pledge is intertwined with the GDP aspirations for 2030 and, therefore, with the budget.
The United Nations Environment Programme warns business as usual will make global temperatures rise over 3°C this century. That can be devastating for economies. Research says the world economy can lose 10 percent of its value by 2050 if the global temperature rises at its current rate.
If that happens, South Asia, including India, stands to lose as the region most vulnerable to climate change. The World Bank says annual economic losses in the region caused by climate change could average $160 billion by 2030. That can debilitate efforts to pull vast sections of the population out of poverty through economic growth and job creation.
The silver lining is that the region also stands to gain the most if climate action is sufficient and successful. We look forward to the budget to pave the path for it.
Balance of power
There is a widespread expectation the budget will devote a section to deal with the decarbonisation of India’s economy through a sharp reduction in carbon emission. At COP26 in Glasgow, Prime Minister Modi said India would reduce its carbon intensity — carbon dioxide emission per unit of GDP — by 45 percent by 2030, more than the previous goal of 35 percent reduction. We can also expect the budget to take forward the Hydrogen Mission announced by the Prime Minister.
We have strong indications that the approach in moving towards the target of 500 GW of renewable energy by 2030 will be driven, to a degree, by a focus on hybrid power plants as an effective way to address the issue of intermittency in renewable sources such as solar and wind. Using complementary fuels — for example, solar during the day and wind at night — hybrids can help address renewable energy’s trilemma of reliability, affordability, and sustainability.
As we move forward, storage solutions must be introduced into this mix. That focuses on hydropower assets, which lends itself well to pumped storage hybrid solutions.
In the interim, all these can co-exist as we balance the reduction in fossil fuels with the increase in renewable sources. As the transition happens, the role of the grid becomes critical in accommodating the new generation of renewable power flowing in and managing it without disruptions. Digital technologies and data analytics will play a significant role in that.
This transition cannot be only about data. The fortunes of many companies and the livelihoods of hundreds of thousands of individuals are directly or indirectly linked to the coal economy. Therefore, the transition to renewable energy needs to be managed sensibly. Even the 2030 energy generation targets will need 50 percent thermal power.
That makes two things essential for India’s energy transition journey.
First, natural gas can be an excellent bridge from the present to the future. Gas turbine technology can provide energy security by producing reliable, flexible, and sustainable energy that supports and complements renewable energy sources. This is known as “grid firming.” India has large gas assets already deployed. We can utilise them to smoothen the transition with grid balancing.
Secondly, since coal is not going away for many years to come, we can use technology to reduce harmful emissions from thermal plants. The sulphur dioxide emissions react in the atmosphere to form aerosol particles, contributing to outbreaks of haze and hurting the climate. Many of us continue to suffer every year from the hazardous air quality levels in northern India. GE has the flue gas desulfurisation technology that reduces these emissions substantially.
Days after the Prime Minister’s pledge, the Council on Energy, Environment, and Water released a report that said India needs cumulative investments of $10 trillion to attain net-zero by 2070. This is in line with global assessments that the world needs more than $100 trillion to address climate change.
This is possible only through a partnership between governments and the private sector. We also see sustainable aviation fuel playing a significant role in the future of flight. The future of flight will be defined by how the aviation industry innovates to lower emissions and improve fuel efficiency.
The article was written by Mahesh Palashikar.
Source: CNBCTV18Tags: Green fuels, NetZero, Nirmala Sitharaman, Union Budget