India needs $900 bn for just energy transition

India needs an estimated $900 billion for a just energy transition vis-a-vis coal mines and thermal power plants over the next 30 years, a report of independent non-profit environmental research and innovation organisation International Forum for Environment, Sustainability & Technology (iFOREST) has said.

India has set goals of net zero emissions by 2070 and energy independence by 2047. iFOREST said a framework for the just transition at the national and state levels is essential for it.

iFOREST report released on Thursday said $600 billion of the estimated cost will have to come as investments in new industries and infrastructure and $300 billion for grants/subsidies to support the transition of the coal industry, workers, and communities.

IFOREST derived the estimation based on the cost of transition in coal/lignite regions in Germany and Poland as well as the main coal-producing region of South Africa. It also factors in a study of four coal districts of India in Jharkhand, Chhattisgarh, and Odisha. The study assumes all existing mines and coal-based power plants will be phased down by 2050.

The key costs of the transition involve mine reclamation and repurposing, decommissioning of thermal power plants, labour support, economic diversification, etc.

He called for the need for new financial instruments and revision of how multilateral institutions work to improve financing. “Wind and solar energy combined with pumped storage will be the key to lowering the cost of green hydrogen. These will pave the path towards an energy transition for India.”

iFOREST president and CEO Chandra Bhushan said India’s just transition framework should include all fossil fuel sectors and not just coal. He added India needs its own comprehensive decarbonisation strategy.

Just Energy Transition Partnerships (JETPs) as a funding model began with South Africa at the UN Climate Change Conference in Glasgow (COP26).

France, Germany, the UK, the US, and the EU (the International Partners Group, or IPG) committed to providing $8.5 billion over three to five years to support South Africa’s national climate plan to move away from coal and increase the share of renewable energy.

In June 2022, a communique of the leaders of G7 said the intergovernmental forum of Canada, France, Germany, Italy, Japan, the UK, and the US is working with India, Indonesia, and Vietnam on more such partnerships.

iFOREST said apart from bilateral partnerships, the transition is primarily being advanced through national policies, laws, and sub-national or provincial plans in the global north.

Naude said these are bilateral partnerships under which a group of countries is partnering with a country that is strategic to them thereby making energy transition only in some countries.

India depends heavily on coal while the developed nations are dependent on oil and gas. At COP26, India opposed hard targets on phasing out coal, which remains among the key sources of energy for developing nations.

India was among the developing countries that opposed the language on coal and phasing out of fossil fuel subsidies in the Glasgow pact. It pushed to introduce equity and safeguards on fossil fuel subsidies for the poor following which the text in the final pact was reworded.

Experts said India may take a careful call on JETP with G7 because of the push from developed nations to phase out coal first.