Achieving net zero by 2050 hinges on India mainstreaming emerging technologies by the end of this decade. With substantial growth in energy-intensive industries, India faces the unique challenge of decarbonizing far more new and early-life production units than other major economies. But this also presents an opportunity to stimulate industrial growth through low-carbon technology manufacturing and supply-chain development far earlier in the investment cycle.
Unlocking India’s internal potential
Its scale, population and levels of economic development offer India a range of unique opportunities to decarbonize. With around 750 million tonnes per annum (Mtpa) of biomass residue, its bioenergy potential is largely untapped. Shifting bioenergy usage from the residential to the industrial and transport sectors would help reduce both oil imports and air pollution from stubble burning.
India is already a global leader in compressed biogas, biomass pelleting and bioenergy use in road transport and thermal power plants. Its significant potential in sustainable aviation fuel (SAF) is demonstrated by its abundant bio-feedstocks and progress on in-house solutions. Approval for an indigenous SAF production process is expected this year, with Mangalore Refinery’s SAF plant set to be operational by early 2025. To further these advancements, India must expand regulation to ensure biomass supply-chain development and provide federal funding support for modern biofuel production units using local resources. Biofuels displace 0.5 million barrels of oil demand a day under our Net Zero 2050 scenario.
India could also lead in small modular reactors (SMRs) of 300 MW or less, given its scientific capabilities and experience in indigenous pressurized heavy water and submarine reactors. The recent partnership between the Nuclear Power Corporation of India and the National Thermal Power Corporation to accelerate nuclear deployment could fast-track SMR development. But private-sector investment will also be required, and the Atomic Energy Act of 1962 is under review to enable broader participation.
Even so, we recognize the huge challenge for India to deliver on its nuclear potential. Under our Net Zero 2050 scenario, we estimate that 120 GW of nuclear is needed, well above the 50 GW in our base case.
Realzing India’s green hydrogen
Low-carbon hydrogen is pivotal to decarbonizing India’s most challenging sectors. With a relatively high solar irradiance (1,200-2,300 KWh/m2/year) and wind speeds (4-6 m/s), we estimate that India’s levelized cost of hydrogen (LCOH) produced from renewables offers a cost-effective, round-the-clock option when combined with battery storage. Hybrid onshore wind and solar could cut the LCOH to US$4.3/kg H2 by 2030, the second lowest in Asia after China. To incentivize this, the government has allocated US$2.1 billion through a three-year incentive scheme to reduce electrolytic hydrogen production costs by 10 per cent. India’s hydrogen policy also allows developers to purchase renewable power from the grid with no transmission costs for 25 years.
This will not be achievable unless India continues to ramp up its delivery of wind and solar power, however. Alongside decarbonization, renewables must deliver 125 GW of clean power for India to hit its 5 Mt green hydrogen production target by 2030. We forecast that around 4 Mt of low-carbon hydrogen is likely to be operational by 2030, accounting for around 5 per cent of global production.
Much more will be required: India needs 55 Mt of hydrogen to reach net zero by 2050. Of this, we believe India has the potential to produce up to 35 Mtpa domestically, with the remaining supply met through imports.
Carbon capture and storage requires urgent support
While the combination of policy support and cost efficiency positions India favourably in low-carbon hydrogen, the government must go further to stimulate other sectors, for example, carbon capture, utilization and storage (CCUS).
Though the government recognizes the importance of CCUS, its approach remains overly cautious. NITI Aayog, the Indian government’s influential think tank, has identified a substantial of CCUS potential, yet the country lacks a defined timeline and financial support. India’s upcoming carbon pricing regime, due to be operational by 2026, will help, but more initiatives are imperative. Using captured CO2 to produce urea for India’s mammoth fertilizer sector and methanol to be used by India’s road fleet, diesel generators and tractors should all act as incentives.
With more than 1 gigatonne of CCUS capacity required in our Net Zero 2050 scenario, the lack of progress is a concern.