Sustainable development and energy policy in India’s Covid-19 recovery

In recent years, India has made major progress in implementing energy policies that have set it on the path to achieving the UN Sustainable Development Goals. It has been successful in providing more of its citizens with electricity access, boosting energy efficiency and renewables, and taking steps to reduce air pollution. A recent IEA review of India’s energy policies and progress shows that energy access, air quality and climate change goals are being pursued simultaneously and can be mutually supportive. The road to achieving them could be challenging, however. Given that India’s energy sector alone accounts for 74% of the country’s greenhouse gas emissions, the need to reduce air pollution and emissions should be carefully considered and incorporated in India’s energy policy framework to accomplish its clean energy transition.

In the context of the Covid-19 crisis, reducing pollution and emissions assumes even greater importance. Air pollution contributes to heart and lung diseases, including Covid-19. India has 14 of the world’s 20 most polluted cities (by particulate matter PM 2.5), so a greater focus on people’s health and well-being should include efforts to curb air pollution. Reducing air pollution and emissions by strengthening green stimulus policies – with a focus on energy efficiency and renewable energy – will aid economic recovery in the short-term by creating jobs.

Achieving universal household and rural energy access, including electricity and clean cooking – one of the targets under the seventh Sustainable Development Goal – has been a key priority for India for the past 15 years. In April 2018, the government announced that India had achieved its goal of providing electricity to every village in India. Just one year later, the government indicated that it had connected all households. This not only has important social development benefits, giving children light to study in the evenings and powering rural health and social facilities, but also improves indoor air quality, as kerosene is replaced with electricity. Electricity can also increase productivity in agriculture and rural small and medium enterprises.

Progress in access to clean cooking, however, has been much slower, but government programmes have helped half of the country’s population use cleaner fuels, such as liquefied petroleum gas, for cooking. Switching to cleaner fuels sharply reduces household air pollution and lowers associated premature deaths. It can also lower greenhouse gas emissions by replacing traditional biomass in cooking.

Almost 99% of the people who gained electricity access in India over the past few years did so thanks to grid extensions. About 75% of grid electricity is generated by coal and 20% from renewable sources (including large hydro). Decarbonising electricity generation therefore remains a key priority to further reduce air pollution and emissions, and ensure that affordable and reliable electricification continues to provide lasting socio-economic benefits.

Share of modern renewables, proportion of population with access to electricity, and energy intensity in India, 2000-2030

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The Covid-19 pandemic has significantly lowered electricity and oil demand, as well as industrial production, reducing fossil fuel combustion. As a consequence, air quality has improved dramatically, providing Indians with a glimpse of what life without air pollution could be like. This will increase the pressure to solve the air pollution crisis in India. Sustainable energy policies will be key to reaching this goal. They can also help India to meet the objective in its nationally determined contribution (NDC) under the Paris Agreement of reducing its CO2 emissions intensity by 33‑35% from 2005 levels by 2030.

In the power sector, full implementation of stringent air pollution standards and decarbonisation of the power mix would reduce sulphur dioxide emissions from the sector by 90% between now and 2040. Ambitious renewable energy targets that reflect the extensive growth potential for modern renewables (which exclude traditional biomass) can also contribute to meeting air pollution objectives. The government of India has announced a renewable capacity target of 450 GW by 2030 (excluding large hydropower), a sharp increase from a total installed renewable electricity capacity of 80 GW in 2019. Ensuring that renewable electricity generation remains an integral part of the air pollution reduction strategy will also limit growth in CO2 emissions.

One unexpected benefit of the Covid-19 pandemic was that the gap between the shares of renewables and coal-fired power in India’s electricity generation narrowed more than ever before. Renewables rose from 17% just before the pandemic to almost 24% and coal-fired power declined from 76% to 66%.  This reflects the government’s commitment to decarbonise power generation through renewables, notably using priority dispatch schemes.

As India continues to reform its power system, including through measures announced in its recent economic relief package, now is a critical time to consider the important multiple benefits that energy transition policies can have. A reduction in unabated coal-fired generation would reduce both air pollution and CO2 emissions, improving the long-term health and well-being of Indian society. Moreover, given the decline in the share of coal fired‑generation use by 10% and the rapid scale-up of renewables, newer and more efficient coal plants should be prioritised for dispatch and investment over the short term. 

Despite the progress within the power sector, air pollutant emissions from other sectors continue to rise. Air pollutant emissions from industry are expected to grow substantially, and be two and a half times higher in 2040 than today, as a result of long-term growth in the Indian economy. Tighter emissions standards will be key in improving the emissions intensity of the main energy-intensive industrial sectors.

The air pollution gains made in transport and power, and the resulting reductions in SO2, NOx and particulate matter (PM 2.5), could clearly be further exploited when it comes to industry. The expected growth in industrial output will increase coal consumption almost fourfold, which will not only increase air pollution but could also quadruple CO2 emissions. Thus, measures that reduce emissions from industrial coal consumption will be instrumental for controlling both CO2 and air pollution.

Emissions of major air pollutants, 2018 and 2040 in the Stated Policies Scenario

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Implementation of energy efficiency measures, particularly in the industry, services and buildings sectors, has been key in helping India to decrease its energy intensity by 27% over the past ten years. Over the same period, India’s primary energy demand nearly doubled, driven by strong economic growth averaging 6.8% a year. Improving efficiency not only benefits economic productivity but also reduces emissions. Efficiency improvements undertaken between 2000 and 2018 helped avoid 14% of CO2 emissions, as well as more than 15% of SO2 and NOX air pollutant emissions.

The government has introduced a range of new policy measures to further improve energy efficiency, which will create jobs as well as lower emissions. These policies could reduce energy intensity by over 30% by 2030 compared with 2018. They would improve energy efficiency by 3.3% a year, aligning India with target 7.3 of the Sustainable Development Goals (“By 2030, double the global rate of improvement in energy efficiency”).

As governments look at restarting economies, job creation remains on top of policy makers’ minds. Implementing energy efficiency and renewable energy measures can lead to immediate job creation and retention, particularly in the labour-intensive buildings sector, which employs 12% of India’s workforce.

Similarly on the renewable energy side, India’s renewable energy workforce has grown five-fold in the past five years and its clean energy targets of 175 GW equate to employment potential of over 330 000 workers by 2022. Rooftop solar and decentralised energy technologies are labour-intensive industries and promise much higher job creation potential than utility-scale power plants.

India’s environmental, health and development policy successes and challenges underscore the links between increasing energy access, decarbonising power generation, reducing air pollution and improving energy efficiency. Air pollution reduction policies support clean energy technologies that also improve energy access and reduce CO2 emissions. The synergies could be even stronger: scaling up policies aimed at enhancing universal energy access and reducing CO2 emissions – such as furthering clean cooking access, encouraging electric mobility and decarbonising power generation – could contribute to 30% of reductions in nitrogen oxides and particulate matter (PM 2.5) and 25% of reductions in sulphur dioxide emissions in 2040.

It is now all the more important for the Indian government to carefully consider the impacts of its energy policies, which could bring lasting benefits for the health and well-being of its citizens. The Covid-19 pandemic should be used as an opportunity to fast-forward India’s sustainable energy goals. These will help India not only in its fight against the pandemic, but also in reviving its economy by creating jobs in clean energy industries. There is much to gain in India from continuing to tackle these challenges through increasingly linked policy agendas. The path that India will take will provide many lessons for countries around the world.