A Framework for Climate

Change Mitigation in India

Jean Chateau, Geetika Dang, Margaux MacDonald, John
Spray, and Sneha Thube

WP/23/218

IMF Working Papers describe research in

progress by the author(s) and are published to
elicit comments and to encourage debate.
The views expressed in IMF Working Papers are
those of the author(s) and do not necessarily
represent the views of the IMF, its Executive Board,
or IMF management.

2023
OCT
 © 2023 International Monetary Fund WP/23/218

IMF Working Paper

Asia and Pacific and Research Departments

A Framework for Climate Change Mitigation in India

Prepared by Jean Chateau, Geetika Dang, Margaux MacDonald, John Spray, and Sneha Thube*

Authorized for distribution by Nada Choueiri and Florence Jaumotte

October 2023

IMF Working Papers describe research in progress by the author(s) and are published to elicit
comments and to encourage debate. The views expressed in IMF Working Papers are those of the
author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

ABSTRACT: Climate change poses challenging policy tradeoffs for India. The country faces the challenge of
raising living standards for a population of 1.4 billion while at the same time needing to be a critical contributor
to reducing global GHG emissions. The government has implemented numerous policies to promote the
manufacturing and use of renewable energy and shift away from coal, but much still needs to be done to reach
India’s 2070 net zero goal. Reducing GHG emissions will almost certainly have a negative impact on growth in
the short run and have important distributional consequences for individuals and communities who today rely
on coal. But with the right policies, these costs—which are non-negligible but dwarfed by the cost of climate
change over the next decade if no action is taken—can be significantly curtailed. This paper provides an in
depth review of the current climate policy landscape in India and models emissions trajectories under different
policy options to reduce GHG emissions.

JEL Classification Numbers: Q5, Q4, Q2, C68

Keywords: Climate; IMF-ENV; India; net zero

gdang@[Link]; mmacdonal@[Link]; jspray@[Link];

Author’s E-Mail Address:
sthube@[Link]

* The authors would like to thank Nada Choueiri, Florence Jaumotte, James Roaf, Luis Breuer,
Jarkko Turunen, Ian Parry, Simon Black, Victor Mylonas, Karlygash Zhunussova, and Rahul Tongia
for very helpful comments.
 1. INTRODUCTION

1.1 The threat from climate change

Climate change confronts policy makers with difficult policy tradeoffs. On the one hand,
the world needs to transition away from the burning of fossil fuels and accelerate climate
adaptation. On the other hand, these transitions require new policies which may impose costs,
including on short-term growth, and generate winners and losers. Estimates put the cost of
transition to net zero in 2050 as high as US $9.2 trillion annually (McKinsey Global Institute,
2022).

India is no exception to these tradeoffs and Figure 1. Annual Precipitation

is facing increasingly severe risks from (Meters)
28
climate change. Over the period 1950-2018, Average Precipitation Linear (Average Precipitation)
27
average temperatures increased by 0.5oC while 26
average rainfall fell by 0.6m (Error! Reference 25

source not found. and Error! Reference 24

23
source not found.). More importantly for India,
22
there has also been an increase in weather 21

variability, with temperatures regularly above 20

50oC in certain regions and the monsoon 19

1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
season becoming increasingly unpredictable
(in timing and quantity of rainfall). The impact is Sources: World Bank Climate Dashboard; and IMF
not uniform across states and is harming Staff Calculations
sectors of the economy which are dependent
on the weather such as agriculture and transport (Hasna, Hatton, Mohaddes, & Spray,
Forthcoming). Climate change and pollution are also causing stress to health outcomes. Those
activities that drive climate change globally also
tend to be significant producers of pollution Figure 2. Average Temperature
locally, which has direct, negative impacts on (Degrees centigrade)
individuals’ health. Research has found that 24.5
Average Annual Temperature Linear (Average Annual Temperature)
pollution in India led to US$28.8 billion in 24

output loss due to premature deaths and $8 23.5

billion in output loss due to morbidity in 2019,

23
with the poorest disproportionately affected
22.5
(Pandey, et al., 2021; Kopas, et al.,
Forthcoming; Xue, et al., 2001). Looking 22
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016

ahead, it is expected that climate change will

cause about 250,000 additional deaths per
year between 2030 and 2050 due to Sources: Willmott Matsuura, University of Delaware;
and IMF Staff Calculations
malnutrition, malaria, diarrhea, and heat stress
(Government of India, 2019).
 1.2 India’s Green House Gas (GHG) emissions

India is the world’s third largest

Figure 3. Aggregate GHG Emissions
greenhouse gas (GHG) emitter, however in
terms of emissions per capita it has the 15000 20
Total Aggregate GHGs (MtCO2e) LHS
lowest level in the G20. Error! Reference
15
source not found. shows India has slightly Total Aggregate GHGs percapita
10000 (MtCO2e/million pop) RHS
more emissions than the European Union (EU)
10
but only one third of the emissions per capita,
5000
while the United States has 7 times higher 5
emissions per capita. Given India’s modern
economic development began considerably 0 0
China U.S. India EU G20 EM G20 AE
later than that of advanced economies, it has a
small contribution to global historical Sources: IMF; EDGAR; UNFCCC; FAO; EU; and IMF
staff estimates.
cumulative GHG emissions of approximately 3
Note: Values reported in per capita millions. G20 EM
percent (UNEP, 2022). and G20 AE are simple averages, excluding EU and
including Spain.
Under current policies, India’s GHG emissions are on an upward trajectory. The power
sector is the largest emitter in India, accounting for 37 percent of total GHG emissions, followed
by the agricultural sector (21 percent), manufacturing (17 percent) and the transportation sector
(9 percent).1 The blue line in Error! Reference source not found. shows India’s historical and
projected total GHG emissions under current policies. Note that historical emissions have been
slowly but steadily rising since 2014 in line with economic development. Over the next two
decades, India has ambitious growth plans which, if realized, will see it accelerate from lower
middle income to higher middle income (Morgan Stanley, 2022). As average incomes rise, it is
expected that firms and households will demand more electricity from amenities such as air
conditioners or fridges (Davis, Gertler, Jarvis, & Wolfram, 2021; Akpinar-Ferrand & Singh, 2010;
Isaac & van Vuuren, 2009). While this development story is positive, it is anticipated, under
current policies, that such a growth path will lead to a 41 percent increase in GHG emissions by
2030. India’s NDC target is to reduce emissions intensity of its GDP by 45 percent by 2030 from
2005 leveli and India will reach this target with the existing policies (Thube, Peterson, Nachtigall,
& Ellis, 2021). However, model estimates suggest that it will exceed the NDC emission level in
2031 and continue to see growing emissions levels up to 2040 and therefore, additional
mitigation policies would need to be introduced to bring India’s emissions towards a trajectory
that is compatible with its long-term mitigation goals.

1
The remaining emissions are from buildings, waste, other fuel combustion, and fugitive emissions
Industrial sector is the sum of lime production, aluminum production, cement, cement production, refinery,
iron and steel, and nonspecific industries. Source: Third BUR.

4
Delays in transitions from the current emissions trajectory to India’s 2070 net zero goal
trajectory will be costly. Economic growth is a key priority for India and would be
accompanied by increased demand for energy. However, the status quo energy composition
that relies heavily on brown fuels puts India’s emission trajectory in the opposite direction of an
illustrative linear path to Net Zero Emissions (NZE) by 2070 (shown in red in Error! Reference
source not found.). Delaying the switch to green energy will be costly for India for three
reasons. First, India is currently planning
Figure 4. GHG All Emissions
substantial investments in coal-fired power (mtCO2e)
plants which have typical lifespans of multiple 8000

7000
decades and significant fixed costs. If the
6000
country wishes to close these plants before 5000
their full lifespan, these fixed costs will be 4000 Estimated 2030 NDC
amortized over a shorter period inducing high 3000

2000
transition costs and risking stranded assets.
1000
Second, scaling up renewable alternatives 0

2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
requires solving challenges such as
intermittency problems, storage and grid BAU Illustrative path to NZE 2017 NDC

connections, which are easier to do over longer

Source: IMF staff calculations and IMF-ENV model.
periods of time. Third, to ensure a just Note: NDC target for India is a 45 percent reduction in
transition it will be important to retrain workers emissions intensity of GDP (ceiling) by 2030 relative
currently in sectors that we see a decline, to 2005 levels. Target is estimated using historical
emissions data and GDP growth projections and is
assist with the process of finding a new job, met in the baseline. Net-zero target for 2070 is
and offer income tax credits schemes to declaration/pledge (purely illustrative near-direct
linear path shown).
provide a safety net whilst also encouraging re-
entry into the labor market (IMF, 2022). This is also easier and less disruptive over longer time
horizons.

India is working on addressing its carbon footprint. Domestically, India launched the
National Action Plan on Climate Change (NAPCC), in 2008, providing the country with a
strategy to adapt to climate change and enhance its ecological [Link] Eight National
Missions focusing on different aspects of development, adaptation, mitigation, and sustainability

Missions under the Natioanl Action Plan on Cllimate

Change

• Natinal Solar Mission

• National Mission for Enhanced Energy Efficiency
• National Mission for Susutainable Habitats
• National Water Mission
• National Mission for Sustainng the Himalayan Ecosystem
• National Mission for Green India
• National Mission for Sustainable Agriculture

5
were launched under the NAPCC. From the multilateral side, in 2022, India submitted an
updated Nationally Determined Contribution (NDC) to the United Nations Framework
Convention on Climate Change (UNFCCC) and its third Biennial Update Report (BUR) on
emissions levels. In addition to previous commitments, the updated NDC committed India to
lower the emissions intensity of its GDP by 45 percent from 2005 levels by 2030. It also
committed to achieve 50 percent of total installed power capacity from non-fossil fuel-based
energy resources by 2030 and to put forward and further propagate a healthy and sustainable
way of living (LiFE). India also committed to get to NZE by 2070 at COP26.

1.3 Paper outline

This paper aims to add to the discussion on India’s transition to net zero by providing a
policy proposal framework, in the context of India’s existing policy landscape.
Specifically, we consider 1) how India’s current policies across all sectors of the economy are
addressing its joint need to reduce emissions and transition to net zero while maintaining its
development priorities; 2) what would be the policy trade-offs if India accelerates this transition;
and 3) what conditions might facilitate a global agreement on more ambitious climate goals
including climate financing and technology. The remainder of this paper is organized as follows.

In Section 2 we present a sectoral mapping. This considers which sectors have the largest
emissions, which fuels contribute to those emissions, to what extent do current policies target
those sectors and emissions, and what challenges they face in their implementation. We find
India is making important progress in implementing its climate agenda at the sectoral level. This
includes policies to improve energy efficiency, reduced reliance on traditional biofuels, and
financial support to renewables and to electric vehicles. However, the power and manufacturing
sectors remain the largest driver of emissions. Although renewable energy investment has
been impressive, and new supercritical technology to enhance the efficiency of coal fired power
plants is coming online, further reducing emissions from fossil-fuel power generation is essential
to transition.

In Section 3 we present a set of policy packages to consider the policy trade-offs behind
accelerating the energy transition. We consider three policy packages to mitigate GHG
emissions, showing how for same reduction of emission different policy tools will have different
impacts on different metrics: GDP, employment, budget structure, income at aggregate and
sectoral level and energy security. Each policy package is designed to deliver 15 percent lower
emissions by 2030 relative to a “business as usual” scenario. We find ambitious reforms are
possible through renewable subsidies or by combining renewable subsidies with higher coal
tariffs and carbon trading while providing greater energy security, and a potential increase in
fiscal revenues. The corresponding costs include a possible increase in government
expenditure, output costs from distortions, and the need for job transitions. In order to mitigate
these costs, the GoI could utilize social transfers and active labor market policies to help the
transition; and revenue transfers to compensate the poorest and those who are affected by
these new policies.

In Section 4 we review the gap to a global agreement on climate change and cite potential
solutions for how to provision climate financing and technology transfer. We find that

6
meeting the Paris climate goal of keeping temperature rises to 2 degrees centigrade will require
substantially more ambition from all countries. Given no country can address this gap alone,
and given India’s position as a global leader, an agreement on a global solution will only be
possible with India’s participation. An agreement on meeting this ambition gap will likely be
accompanied by an agreement on climate financing and technology transfer. Global estimates
for required climate financing vary substantially but in all likely instances India will be a net
beneficiary. India is already playing a leading role in the global distribution of climate technology
and technology transfer, in particular, solar technology.

2. CURRENT EMISSIONS AND POLICY LANDSCAPE

To critically understand India’s emissions mitigation strategy, this paper narrows this
appraisal to five sectors with the highest emissions intensity. These are the power,
industrial, transport, residential and agriculture sectors. Figure 5Error! Reference source not
found. shows a general flow of implemented programs aimed at mitigation, mapped across the
shortlisted [Link] The qualitative sector analysis is based on a wide literature review of
government submissions to the UNFCCC, public resources on government policies and
programs, annual reports of relevant ministries and public sector enterprises, impact
assessments of programs commissioned by the authorities, among other sources including
estimates from the International Energy Agency (IEA).

Figure 5. Major mitigation-oriented policies across the five most emission intensive sectors

7
2.1 Power sector

2.1.1 Context

India’s electricity generation is dominated Figure 6. CO2 emissions from fuel combustion in
by coal, but there is increasing focus on Power sector by fuel type(Ktoe)
1400000
renewable power generation. Electricity
1200000
generation accounts for almost 40 percent of
iv 1000000
total CO2 emissions in India. This is largely Coal Oil
800000
due to the role of coal in the sector, which
600000
accounts for over 70 percent of electricity
400000
output, 50 percent of installed capacity, and
200000
most emissions for the sector (Error!
v,vi vii 0
Reference source not found.). Coal
1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

capacity continues to grow, increasing by 3.3

percent since 2019, equivalent to 204 GW. viii Source: OECD IEA Big CO2; and author calculations.
Renewable energy currently accounts for over
36 percent of all installed capacity in the sector, including hydro (Figure 7). Renewable energy
capacity has grown by 150 percent since 2019, but from a low base this amounted to a
significantly smaller increase relative to coal, of 60.81 [Link],x In 2015-16, the Indian government
set a target of achieving 175 GW of renewable energy capacity by 2022 (this target was not met
by end-2022) and enhanced this target to 500 GW renewable energy capacity by 2030 at

8
[Link] India’s updated NDC also includes a target to achieve 50 percent cumulative electric
power installed capacity from non-fossil fuel-based energy resources by 2030, with the help of
transfer of technology and low-cost international finance including from the Green Climate
[Link]

2.1.2 Sector Strategy Figure 7. Electricity generation, by fuel type (2020)

(Gwh)
Given coal’s continued widespread use, Biofuel
2%
the Government of India (GoI) has focused Modern
renewables
on reducing emissions intensity of existing 18%

and new coal-fired generation plants. The

Oil
GoI has indicated that coal use for electricity 5%
Other
will remain a large component of source 3%

energy for the foreseeable future, but Coal

supercritical technology is being adopted to 72%

enhance the efficiency of coal fired power

plants. Plans to adopt ultra-supercritical plants
and develop advanced ultra-supercritical Source: OECD IEA Extended World Energy Balances
technology, which are estimated to have emissions savings of 15-20 percent according to the
IEA, are in [Link]

Concurrently, the GoI is implementing a host of innovative mechanism for accelerated

renewable energy deployment. Requirements for a floor on the share of renewable energy in
the electricity source mix of distribution companies (DISCOMs) have been established (21
percent as of 2021/22), known as Renewable Purchase Obligations (RPOs).xiv,xv This will be
scaled up to 43 percent share by [Link] DISCOMs that are unable to meet mandated RPOs
can purchase Renewable Energy Certificates (RECs)—green certificates that represent the
environmental attributes of power generated from renewable energy but not the actual power
itself—on national energy exchanges. xvii An analysis of the REC market from 2011-2021
showed an initial sharp increase in renewable energy certification rates from 2 percent in 2011-
12 to 15 percent in 2014-15, but more recently rates fell to 3.6 percent in 2020-21. The fall
coincided with a fall in the average price of solar RECs and a rising inventory of unsold RECs
(driven by a lack of demand), as such renewable power producers chose to stay out of the
market mechanism, given that returns were decreasing and uncertain (Sawhney, 2022). More
recently in 2022 the Green Open Access Policy was established to promote generation,
purchase and consumption of green energy including through waste-to-energy plants and by
allowing consumers to demand green power from DISCOMS, with no minimum limit for captive
consumption. This policy is expected to prompt smaller industries, commercial consumers, and
large households into shifting towards green energy, uptake is further incentivized through
issuance of green certificates (issued to end consumers of 100 kW or more).

Investments in physical infrastructure to further scale renewable energy capacity,

storage, and grid flexibility are also ongoing. More than 40 percent of installed capacity in
India is from renewable energy, and that share is rising. Considerable investments have been
made in setting up solar parks, a green energy corridor (which aims to synchronize electricity
produced from renewable sources with conventional power stations in the grid), smart grids, as

9
well as on transmission infrastructure [Link] To secure domestic supply chains, budget
FY 2022-23 committed INR 195 billion to the Production Linked Incentives (PLI) scheme for
manufacturing integrated solar [Link] The PLI scheme (which is significantly broader than
only solar panels) involves GoI-backed incentives on incremental sales from products
manufactured domestically. Other initiatives include research into alternatives to lithium-ion
batteries for renewable energy storage. This includes hybrid renewable energy, such as a
combination of solar and wind, as solutions for industry requirement of continuous, reliable
[Link]

2.1.3 Barriers to Decarbonize

One of the key challenges facing the power sector is the debt-distress of state DISCOMs.
DISCOMs struggle to raise revenues amid underpriced electricity, inadequate subsidy payments
and long-term purchase agreements with electricity generation companies. In addition, they face
high energy losses (a combination of technical loss, theft, and inefficiency in billing) and high
commercial losses (default in payment and inefficiency in collection). Given their heavy financial
losses, DISCOMs have generally under-invested in improving power distribution or in upgrading
the energy distribution [Link] Political economy constraints have historically impeded
reforms to DISCOMs and their pricing structure. Furthermore, DISCOMs’ payment delays to
renewable energy generators act as one of the major barriers to scaling up renewable energy in
[Link]

The GoI has undertaken several initiatives to resolve DISCOM debt stress. Around USD 60
billion has been allocated across several programs since 2015 aimed at resolving debt stress
while trimming electricity losses, gradually narrowing the cost-revenue gap, improving the
reliability and quality of power supplies, and promoting more sustainable competition in the
sector (Ujwal DISCOM Assurance Yojana (UDAY) 1.0 and 2.0, and the Revamped Distribution
Sector Scheme). State governments took on the debts of DISCOMs in UDAY 1.0, but they
nonetheless continued to face financial strains. The use of smart meters has been recognized
as an additional solution to minimize DISCOM losses—and that could aid demand side
management as well as narrow the cost-revenue gap of stressed DISCOMs—but this has had
slow [Link] Revising electricity tariffs will also be important to address the question of
DISCOM viability. Looking forward, such schemes remain critical as DISCOMs face a further hit
to their financial stability (from revenue loss), distribution system issues (from reactive power,
voltage impacts and reverse power flows) and demand forecast uncertainty as renewable
energy ramps [Link]

Given India’s energy needs, substantially decarbonizing at scale remains a challenge.

The country needs to auction around 40 GW of renewable energy projects annually but to date
has only been able to auction about 20 GW annually.2,xxv Additionally, the Parliamentary
Standing Committee on Energy (2021-22)xxvi indicated that investments in the renewable energy

2
The 2015 target of 175GW of RE capacity by 2022 was approximately equal to an additional 40GW.
Auctioned amounts were less due to limited financing for RE generators, DISCOMs distress leading to
contract renegotiation leading to payment underwriting requests from RE generators and increases in
solar PV costs due to supply chain disruptions and import taxation by authorities.

10
sector have been, at most, half of what is required meet India’s 2030 target of 500 GW
renewable energy installation. Second, to viably scale up the use of renewable energy, India will
also need to better coordinate the flow of power between DISCOMs, which are under the
jurisdiction of states. This would allow excess power in one region to be sent to regions with
power [Link] It would also be important to ensure energy from fossil fuels, rather than
renewables, is curtailed when there is an overall surplus of energy. Third, improvements in
renewable energy storage technology—though not a constraint unique to India—will help
ensure consistent electricity provision from renewable energy. The international solar alliance
has been demonstrating the potential of pumped storage hydropower (PHP), and research is
underway to understand the applicability of liquid-based batteries. Finally, the GoI will need to
ensure that its investment schemes are able to crowd-in private investment. Evidence has
shown that private capital tends to be directed towards more innovative, mature companies with
better emissions reducing technologies (Cornelli, Frost, Gambacorta, & Merrouch, 2023)

Delaying action on reducing the use of fossil fuels in the power sector will be costly, but
it may be difficult for India to avoid. Given renewable energy technological constraints,
existing infrastructure, and India’s energy needs, the cost of completely ending India’s
dependence on coal in the near term may be prohibitively high. At the same time, an energy
system comprised mainly of long-lived coal-fired power plants potentially represents a carbon
lock-in which may delay investment in, and deployment of, modern renewable energy
infrastructure, and threaten the likelihood of meeting long-term climate objectives (SEI, 2022).
Reaching the long-term emissions targets may then require premature retirement or coal-fired
plants or retrofit with carbon-capture and storage. Both options would result in significant
additional costs, and highlight the importance of acting now to start reducing fossil fuel
dependence in the sector (Seto, et al., 2016).

11
Power Sector – Major policy initiatives

Policy Description Budget Challenges Emissions

name saving
PLI scheme Production-linked incentive scheme, which FY 23 Budget: Steep targets for incentives. Until 2021, only 3-4 companies achieved the incremental Aimed at reducing
for high provides financial incentives to private companies Rs. 1.97 lakh sales targets to qualify for the PLI scheme. Most domestic companies rely on one or two emissions intensity of
efficiency based on incremental domestic manufacturing of crores, over 5 supply chains which have been severely disrupted. GDP by
solar PV solar panels years starting reconfiguring the
modules FY 2021-22xxviii energy mix of the
country

Repurchase RPOs are obligations set by state regulators that Almost all the demand for RECs comes from obligated entities such as DISCOMS
Obligations require large electricity consumers (e.g. DISCOMs) (60per cent) and captive power plants or open access consumers (nearly 40per cent),
(RPOs) and to purchase a certain percentage of their energy NA with negligible participation from voluntary [Link] Poor enforcement of penalties in NA
Renewable requirements from renewable sources. Companies case of non-compliance to RPOs: A failure to meet RPOs attracts a penalty defined by
energy can purchase RECs in lieu of their RPOs. the regulator. Discretionary powers given to regulators to specify penalty charges have
certificates Renewable energy producers sell electricity to led to obligated entities being allowed to carry forward their RPOs to next year despite
(RECs)xxix distribution licensees at the rate of conventional availability of RECs in the market, causing a shortfall in demand in the market. xxxi
energy and recover the balance cost by selling
RECs to other obligated entities, enabling them to
meet their RPOs. Green open access enables
Green open Commercial and Industrial Consumers to request NA Under the original open access plan (2016), uncertain/high open-access charges posed NA
access, 2022 green power DISCOMs a key challenge, with varying state policies inhibiting the broader adoption of open-
access regulations. xxxii xxxiii xxxiv Many states do not allow inter-state open access due to
potential revenue losses for state [Link]

Development A series of solar power parks planned, with Estimated Acquiring contiguous land close to power grids. According to the draft scheme, the park The GoI estimates
of ultra-mega minimum capacity of 500 MW. Central must have at least 5 acres per MW towards installation of solar projects and land that when fully
and mega Financial acquisition is the responsibility of the state [Link],xxxix operational an ultra-
solar Assistance mega solar plant is
parksxxxvi (CFA) of expected to generate
Rs.8100.00 6,000 million units of
crore under the electricity annually
National Solar for 25 years and
Mission (NSM) offset more than four
xxxvii
million tons of CO2 a
[Link]
2.2 Industry

2.2.1 Context

The industrial sector in India accounts for around 22 percent of total GHG emissions and
is less efficient than equivalent sectors in Figure 8. Industrial sector emissions, by sub-
other countries. Within the sector, around 98 sector
(MtCO2e)
percent of emissions are from CO2 and, of 1000
those, over 90 per cent are concentrated in
800
four broad sub-sectors (metals, minerals,
600
machines, and rubber and plastics) and are
largely related to fossil fuel combustion (Figure 400

8). These sub-sectors also tend to have very 200

high emissions intensity both relative to other
0
sectors and other countries, largely due to the

1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
reliance on coal power to fuel manufacturing Metals Machines Rubber Minerals Coke and refined petroleum Other

xli
activity (Figure 9). Despite significant Source: IMF Climate Dashboard; and author
emissions, the industrial sector in India calculations.
Note: 'Other' category includes: food, beverages and
accounts for only about 25 percent of both tobacco; paper products and printing; wood and "
gross value added and employment. "wood products; textiles, leather, footwear; chemicals
and pharmaceutical products.
To achieve India’s desired development
trajectory, the industrial sector will need to grow to supplement the already large
services sector. In particular, the industrial sector will need to help support the large share of
the population currently living and working in rural and agricultural sectors. Under current
production technologies in India, this will put further upward pressure on the sector’s emissions
which have already been rising over time, with Figure 9. Industrial sector, emissions by fuel type
coal playing an ever-important role in fueling (MtCO2e)
1000
final consumption (both directly and through
900
electricity) and emissions. Without policy 800

intervention to reduce the industrial sector’s 700

Coal Oil Solid biofuels Other
600
carbon intensity, this will lead to a significant
500
rise in emissions. 400
300
2.2.2 Sector Strategy 200
100
GoI is using a multi-pronged approach to 0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
meet the challenge of decarbonizing the Source: OECD IEA Big CO2 database; and author
hard-to-abate industrial sector. There has estimates.
been a strong focus on enhancing energy Note: Other includes biogases and natural gas.
efficiency of industrial units that predominantly use fossil fuels for the energy and process
requirements. More recently, there has been a growing strategic focus on enabling clean energy
for the energy intensive sector.

Several programs to boost efficiency of energy consumers have been implemented. The
Perform Achieve and Trade (PAT) is a market-based mechanism wherein large energy
consumers trade excess energy savings certificates (issued when plants achieve a reduction in
energy consumption in excess of their government mandated target) that can be traded on the
power [Link] The Energy Efficiency Services Limited (EESL)xliii company was created as
a joint venture of several public sector undertakings (PSUs), with the aim to facilitate energy
efficiency projects, with one of the implemented programs designed to stimulate supply for high
efficiency motors in the country (the National Motor Replacement Program (NMRP)) to
decarbonize the industrial [Link]

Programs targeting energy efficiency of the Micro, Small and Medium enterprises
(MSME) are also critical for reducing emissions. MSMEs constitute about 90 percent of
India’s industrial sector, and it has been estimated that 10-30 percent of energy consumption
and GHG emissions could be reduced if MSMEs adopted energy efficient technologies.3 xlv,xlvi
The Ministry of MSMEs has implemented programs to assist firms in improving their operational
technology and competitiveness in the market while reducing emissions including financial
support to reduce emissions, a capital subsidy for loans to adopt new technology, and financial
assistance to improve efficiency and obtain certification for meeting national and international
efficiency standards. These policies can be seen as a part of a wider policy program which aims
to facilitate the renewable energy transition in MSMEs while ensuring global competitiveness.

New minimum energy standards for commercial buildings will help reduce the sector’s
overall emissions. The Energy Conservation Building Code (ECBC) is estimated to lead to a
50 percent reduction in energy use by 2030, which is estimated to lead to a reduction in CO2 of
250 million tons. As of December 2021, only 264 existing buildings have adopted Bureau of
Energy Efficiency (BEE) star ratings and 18 States, and 2 Union Territories have notified
[Link],xlviii

Programs to increase options for industrial feedstocks will help reduce the hardest to
abate emissions in the industrial sector. With a significant decline in the cost of renewable
energy several heavy industries have voluntarily shifted to renewable energy as their primary
energy [Link],l,li Pumped storage hydropower and group captive renewable energy
generation (when a project is developed for the collective usage of one or many corporate
buyers) are enabling this shift. The Ministry of Petroleum and Natural Gas (MoPNG) is
preparing a strategy for the development and implementation of carbon capture utilization and
storage techniques in the oil and gas sector in [Link]

Lastly, an increased policy focus on green hydrogen is laying the pathway for cleaner
energy for industries in India. The National Hydrogen Energy Mission (NHM) will provide a
roadmap for green hydrogen (hydrogen produced from electrolysis powered with renewables),
with the aim to develop India as a global hub for hydrogen technologies manufacturing; to this
end, a framework to support manufacturing via incentives and facilitation will be developed. The
Government will also facilitate demand creation in specific areas, including mandates for using
green hydrogen in industry (fertilizer, steel, petrochemicals etc.) and in transport. The provision

3
This estimate is based on energy saving potential across key industrial sectors in the MSME sector
(Biswas, Sharma, & Ganesan, 2018) .

14
of free and easy open access to the inter-state transmission system network for 25 years for
capacity installed up till June 2025 will bring down costs significantly. Green hydrogen can also
be used to fulfill RPOs according to the green Open Access Rules [Link]

2.2.3 Barriers to Decarbonize

Abating emissions in the industrial sector, particularly for heavy industries, is

significantly more challenging than in other sectors given the capital-intensive nature of
the sector and the high energy-intensity of many production processes. Shifting to
alternative fuel sources may require a complete change in production processes and
technologies, which may not be financially viable for many firms. In some cases, the
technologies needed to run these processes on renewable energy have yet to be developed.
For the MSMEs segment, given the fragmented and often informal nature, a key challenge lies
in regulating and monitoring the set standards of emissions.

Other sources of decarbonization for the sector will likely need to include demand
management measures. This would include greater use of recycled inputs, thus bypassing the
process emissions of new products. It may also include carbon capture and storage, especially
for industries where zero-carbon products are nearly impossible (such as steel and cement).
That said, carbon-capture and storage is not yet affordable at a large [Link] Switching fuels to
zero-carbon fuels such as (green) electricity will be critical. While green hydrogen and biomass
could be used for higher-temperature processes that are difficult to electrify, the projected costs
of such technologies are significant. The MoPNG has recently notified a draft framework for a
voluntary carbon credit trading scheme in India. The PAT scheme, focused on energy savings
particularly in the industrial sector, is proposed to transition into a nation-wide cross-sector
compliance market for carbon trading.

15
Industrial Sector

Policy name Description Budget Challenges Emissions saving

The Perform, A regulatory instrument to reduce NA Continued surplus supply of EScerts in the BEE has rolled out six PAT cycles from 31st March 2020 with 1073
Achieve, Trade energy consumption in energy market and muted demand leads to sustained consumers covering 13 sectors. It is projected that total energy savings
(PAT) intensive industries, with an lower prices in EScerts trading, eventually of about 26MTOE translating into 110 million tons of avoided CO2
associated market-based deterring consumers to make investments in emissions by March [Link] The latest PAT cycle (VII, for the period
mechanism to enhance the cost energy efficient [Link] 2022-23 to 2024-25) targeted 509 consumers with an estimated energy
effectiveness through certification saving target of 6.627 [Link]
of excess energy saving (EScerts)
which can be traded.

National Motor Enables easier and faster adoption NA Risks in program executionlviii: EESL signed agreements with over 30 major industries to replace over
Replacement of efficient motors by addressing 1,200 inefficient motors with IE3 motors, enabling energy savings of
Program (NMRP) the barrier of paying a higher 1. High upfront costs for consumer/non 48,16,535 kWh and emission reduction of 4,240 tCO2, annuallylix#
upfront cost by the industry. availability of funds for capex
2. Apprehensions about ‘shared savings
model’ in context of motors
3. Longer delivery time of motors and after
sales service
4. Lack of demand from industry

ECBC- Sets minimum energy standards NA Slow uptake: It is estimated that India will add 1 billion new commercial buildings with
commerciallx for commercial buildings. increased demand for air conditioning. BEE estimates that if the future
As on 31st March 2021, only 227 buildings have stock is built in compliance with ECBC, about 300 BU electricity will be
been registered under ECBC. The 227 saved by 2030. This translates to 15 GW peak demand reduction and
constructed and ECBC compliant buildings with 250mtco2 co2 abetment.
total area of 3.52 million square meter have led to
energy savings of 141.65 MUlxi
2.3 Agriculture

2.3.1 Context
Figure 10. Agriculture sector emissions, by activity
Emissions in the agriculture sector stem
(KtCO2e)
primarily from livestock’s enteric 900000

fermentation and rice cultivation 800000

700000
(methane) and from manure and residue 600000
burning (nitrous oxide) (Figure 10Figure 500000
400000
10). The sector represented 14 per cent of
300000
the total GHG emissions. Despite a decline 200000
in cattle population since 2014, the sector 100000
0
nonetheless still accounts for about 74

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018
percent of the country’s methane emissions, Enteric fermentation Rice cultivation Manure
Synthetic fertilizers Other Crops residue and burning
which have an outsized impact on
Source: FAOSTAT Database
temperatures (Parry, Black, Minnett,
Note: Other includes drained organic soils; Savanna,
Mylonas, & Vernon, 2022). The agriculture forest, tropical forest, and organic soil fires; on farm
sector also accounts for 20-25 percent of energy use; and drained organic soils. Enteric
fermentation is fermentation that takes place in the
electricity consumed in the country, digestive system of animals, primarily cattle, sheep,
predominantly for irrigation, despite only 40 goats, and camels.
percent of arable land being irrigated. lxii,lxiii Further, the issue of stubble burning causing air
pollution between cropping cycles has been an area of policy focus.

2.3.2 Sector Strategy

Given food security needs, India has exempted agriculture from its energy intensity
reduction commitments but has nonetheless implemented policies that help reduce
[Link],lxv To date, most of the climate-related policy action in the sector has focused on
enhancing the adaptation through insurance, direct benefit transfers, crop diversification, and
research on climate-stress resilient seed varieties.

Given the national grid configuration and significant demand for electricity by the sector,
load is usually met at night. While the power costs Rs 2.75 per kilowatt-hour (kwh) at most
during the day on energy exchanges, the rate surges to as high as Rs 12/kWh in the night.4
Since electricity is heavily subsidized (or free) for agriculture, this practice causes heavy losses
to DISCOMs. The current policy focus to solarize agriculture is designed to not only ease
financial stress on DISCOMs,lxvi and enable day irrigation for farmers, but has also created
opportunities for round the clock energy availability for green hydrogen production by renewable
energy [Link]

4
To ensure the industrial sector has reliable power during the day, agriculture electricity load is typically
shifted to nighttime. However, given the limited of renewable energy storage, DISCOMs supply power at
night using mostly thermal energy. Currently, a unit of thermal energy is more costly than a unit of
renewable energy. Power supplied to the agriculture sector is also often free of the cost, resulting in
massive losses to the DISCOMs. Some of these losses are offset by heavy tariffs on the industrial sector.
Policies to boost the use of solar energy, which eases financial stress on DISCOMS while
reducing emissions, have been prioritized. Given the sector accounts for a fifth of all the
power used in the country, efforts are underway to ensure energy security for farmers (“PK-
KUSUM” scheme). This includes deploying 10 GW of solar capacity through installation of small
solar power plants of capacity up to 2 MW, installing 2 million standalone solar powered
agriculture pumps, and solarizing agricultural feeders for 1.5 million grid connected [Link]
The first goal is directly linked to enhancing clean energy capacity, and when combined with
goal two, also aids in the domestic market development of solar cells, while the third goal is
related to deepening the integration of renewable energy in the electricity infrastructure of the
county. Further, the second goal to deploy two million standalone solar pumps in off-grid areas
will help reduce the use of diesel in pump sets, directly reducing [Link]

Mandated blending of coal and biomass also aims to reduce emissions. To incentivize
farmers away from stubble burning, the MoPNG issued a policy for biomass utilization for power
generation through cofiring in coal-based power plants, mandating a 7 percent blend of biomass
pellets made from agro-residue along with [Link] While aiding reduction in pollution, the
program also aids coal-fired plants to reduce coal utilization per unit power generated.

The GoI is also committed to mitigating methane emissions from livestock and rice
cultivation. The National Livestock Mission includes a focus on breed improvement and other
measures to reduce etheric fermentation. Local research institutes have developed an anti-
methanogenic feed supplement which cuts down bovine and sheep’s methane emissions by 17-
20 percent and results in higher milk production and body weight [Link]

2.3.3 Barriers to Decarbonize

To date, there appears to be less effort to decarbonize the agriculture industry relative to
other industries in India, largely due to its unique position in the Indian economy. The
agriculture sector is omitted from India’s long-term climate strategy. Additionally, despite being
one of the largest emitters globally of methane, India has not joined the Global Methane Pledge.
This Pledge was launched at COP26 in November 2021 to catalyze action to reduce methane
emissions by 30 percent by 2030 and signed by 100 countries (Mondal, 2021). There are
various explanations for this including, importantly, that India views methane emission as
necessary for the survival of small and medium-size farms in India, upon whose production
rests the livelihood of millions of people. Additionally, India views the NDC targets, which are
agnostic on type of GHGs, as sufficiently strict to reasonably commit to global emissions
reductions.

Most farming in India is carried out by subsistence farmers who face high rates of
poverty. With small farms and low margins, the cost to adopting new technologies that lower
emissions are high. Recent research has shown that despite the promise of solarization of
agriculture, states are finding it difficult to get farmers to shoulder the beneficiary contribution
under the scheme in the backdrop of free or subsidized power for [Link],lxxiii However,
without farmer contribution, the viability of the model gets severely constrained. Additionally,
limited awareness of mitigation-oriented agricultural practices is also a challenge in scaling
solutions, for instance promoting wider uptake of methane reducing cattle feed.

18
Capacity challenges as well as trust-deficit impair wide adoption of mitigation-oriented
solutions. Other challenges to solarization include capacity issues with far fewer solar pump
sets sanctioned by the government when compared to the scheme [Link] The grid-
connected model also requires pumps to be metered and billed for accounting purposes but
suffers from a lack of trust between farmers and DISCOMs since regular power supply to
agriculture is heavily [Link]

High subsidies also distort farming practices in India. The way subsidies are currently
provided are either directly (for instance, through minimum support prices and guarantee
purchases by the government, which encourage cultivation of high-emissions rice) or indirectly
(for instance, through highly subsidized energy and water resources) which tend to lead to an
over consumption of energy by farms.

19
Agriculture Sector

Policy name Description Budget Challenges Emissions saving

Sustainable Replace coal with agro- FY 2021-22 34.56 Crlxxviii Demand: NTPC (a PSU) accounts for 98.3per cent (58,000 MT) of all the Used in 40/180 coal-fired power plants,
Agrarian Mission residue in coal-fired power [Link],lxxx Lack of awareness among farmers and/ or the compensation for 59,000 metric tons (MT) of biomass cofired to
on use of Agro plants – will reduce agro waste below the cost of transporting the waste to the plant. date. Biomass has been recognized as a
Residue in coal- emissions from coal-fired carbon neutral fuel and biomass co-firing is a
fired Power Plants plants and reduce air technology recognized by UNFCCC as a
pollution from stubble measure of reducing greenhouse gas
burning in farms. emission.

National Policy on Foster domestic biofuel Unblended fuel has Almost entire quantity of ethanol is transported by diesel-based road tankers The carbon dioxide released by a vehicle
Biofuels, 2018 and production, reduce additional differential adding to cost, potentially increasing GHGs on net. lxxxii when ethanol is burned is offset by the carbon
2022 petroleum imports, impose excise duty of ₹2/ liter dioxide captured when the feedstock crops
amendmentlxxvi 20$ bioethanol in petrol since October 2022lxxxi are grown to produce [Link]
regulation from 2023.

Reduce the energy FY 2021-22 369.42 in Improper metering and calculations for energy savings. Limited awareness As of 8th Nov 2022, 81,173 pumps replaced
Agriculture
intensity of agriculture sale of goods. FY 2021- regarding water use efficiency and energy efficiency. The connectivity issues amounting to .15Mt CO2 reduction per
Demand Side
pumping sector by 22 540.75 lakhs in for the smart control panel of the Energy Efficient Pump [Link] [Link],lxxxvii This could result in 54 BU in
Management
carrying out efficiency up services renderedlxxxiv energy savings, an Rs. 271.9 billion
(AgDSM)lxxvii
gradation of agricultural reductions in subsidies, and annual 40 Mt
pump sets reduction in CO2 emissionslxxxviii,lxxxix

The Kisan Urja Increasing the share of Budgeted central Most DISCOMs have a surplus of contracted generation capacity and are wary According to MNRE, nearly 80 lakh pumps out
Suraksha evam installed capacity of financial support of Rs. of procuring more power in the short term. DISCOMs often find utility-scale of approximately 3 crore agricultural pumps
Utthaan electric power from non- 34,422 Crore including solar cheaper than distributed solar (under the scheme) due to the latter’s installed in India are diesel pumps. The total
Mahabhiyan fossil-fuel sources to 40% service charges to the higher costs and the loss of locational advantage due to waived inter-State diesel consumption of these pumps in a year
(KUSUM) by 2030. Setting up implementing [Link] transmission system (ISTS) [Link] States are finding it difficult to get works out to 5.52 billion liter per annum along
renewable power plans on farmers to shoulder the beneficiary contribution under the scheme (40 per with equivalent CO2 emission of 15.4 million
barren land and on cent), given free or subsidized power for agriculture. Without farmer tons. When implemented fully, PM-KUSUM
cultivable land on stilts contribution, the viability of the model gets severely constrained. will lead to reducing carbon emissions by as
where crops can be grown much as 32 MTCo2 per [Link]
below the solar panels.

Revamped Seeks to improve the Under the scheme, 3-4 acres of land required to install one decentralized solar power project of 1
Distribution Sector operational efficiencies works of separation of MW capacity for solarization of agricultural feeders, and the land has to be
Scheme – and financial sustainability 10,000 agriculture within 2-5 kms radius from the DISCOMs [Link] For example, 190 sq
agricultural feeder of all DISCOMs by feeders would be taken kms of land is required to solarize all agri feeders in Maharashtra. Metering
component under providing conditional up through an outlay of and billing a large number of dispersed connections and managing the non-
PM financial assistance for almost Rs 20,000 participant farmers connected to the feeder make the scheme unattractive for
KUSUMxciii,xciv,xcv improving supply [Link] DISCOMS.
infrastructure.
2.4 Transport

2.4.1 Context

India’s largely oil-dependent transport

Figure 11. Transport sector emissions, by activity
sector accounts for about 9 percent the (MtCO2e)
country’s GHG [Link] Road transport 350
alone accounts for about 90 percent of sectoral 300

emissions (Figure 11).c This is primarily due to 250

Road Air Rail Water Pipline Other
the number of vehicles on the road as 200

emissions intensity (defined by CO2 per 150

kilometer driven) is substantially lower than in 100

other emerging market economies and closely 50

aligned with intensities observed in advanced 0

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
economies. India benefits, in part, from the
prevalence of smaller vehicles, especially 2- Source: OECD IEA Big CO2

and 3-wheel vehicles which have much lower emissions intensities.

The sources of fuel in the transport sector Figure 12. Transport sector, final consumption by
are highly specific to the mode of transport. fuel type
(Ktoe)
About 97 percent of road transport relies on 120000
petrol or diesel, air transport relies entirely on
100000
jet fuel, and rail mostly on electricity (Figure Gas/diesel oil excl. biofuels
80000 Motor gasoline excl. biofuels
12). Nonetheless, despite a rise in the absolute Kerosene type jet fuel excl. biofuels
Electricity
use of electricity as a fuel source, its share of 60000 Bio diesels and gas
Other
overall final transport fuel consumption has 40000

declined in recent years due to the sharp rise in 20000

petrol and diesel consumption.
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Absent additional policy interventions, road
emissions will continue rising as demand Source: OECD IEA Extended World Energy Balances
for vehicle ownership rises with an increase Note: Other includes fuel oil, natural gas, liquefied
in population and real incomes. Similarly, petroleum gases and other bituminous coal

demand for air travel is likely to increase. Attaining India’s ambitious 2030 e-mobility vision (70
percent of commercial vehicles, 30 percent of private cars, 40 percent of buses, 80 percent of 2-
and 3-wheeler sales to be EVs) requires a significant change in vehicle purchasing trends,
investment in EV charging infrastructure, and battery [Link],cii

2.4.2 Sector Strategy

India relies on a multi-pronged approach to pursue its transport sector emission goals,
including regulatory measures and subsidy schemes. The country is focusing on both
enhancing the fuel efficiency of internal combustion engine (ICE) vehicles as well as market
development for EVs through subsidies and investments in battery charging infrastructure. Fuel
taxes and excise duties also play an important role in the cost of fuel in the sector, and thus
affect demand, but they are generally not used to explicitly meet emissions targets.

Fuel-efficiency and fuel-consumption standards are key regulatory measures. Policy

programs include passenger vehicle emission standards (Bharat Standard (BS)5 and overall
fuel-economy standards (CAFÉ Norms). A third program aimed at bringing down the absolute
share of fuel used in internal combustion vehicles focuses on the production of ethanol from
damaged food grains which are unfit for human consumption (National Policy on Biofuels).

Subsidies and policies to boost EV and battery production are another critical aspect of
the sector’s emissions reduction strategy. To maintain its market share as the third largest
auto maker globally and address price sensitivity of customers in the transition to low emissions
vehicles, India has announced various polices to boost EV production. these include better
integrated supply chains, availability of vehicular components, investments in battery solutions
(advanced chemistry cells, battery swapping, and charging), and stronger domestic demand
(Faster Adoption of Manufacturing of Electricity vehicles (FAME) 1.0 & 2.0). ciii civ Specifically,
PLI schemes for Advanced Chemistry Cells—the newest generation of energy storage—and for
manufacturing of EVs have been [Link] cvi A five-year phased manufacturing mission to
set up large-scale, export-competitive integrated battery and cell-manufacturing giga plants has
been established which prioritizes domestic manufacturing of the entire supply chain for EVs
(The National Mission for Transformative Mobility and Battery Storage) . As a part of this
mission, a draft battery swapping policy has been released that emphasizes the need for
interoperability standards to improve efficiency in the EV [Link] Battery swapping is
particularly relevant for 2- and 3-wheelers and
will be particularly useful in the context of Figure 13. New rail electrification
(Route kilometers)
limited charging infrastructure in urban
12000
[Link],cix,cx Finally, under India’s foreign
10000
direct investment rules, electric vehicles are
8000
permitted to have 100 per cent foreign
6000
investment without any requirement for
government approval. cxi 4000

2000
India has a vast network of railways, used
0
to transport both goods and passengers,
with a long-standing goal of electrification.
Since 1979 the Ministry of Railways has Source: Indian Railways Yearbook 2019-20
made electrification of railway tracks over the
Indian Railways a key objective. It has electrified 52,247 Route kilometers (RKM), or about 80
percent of the total (broad-gauge) network railways, by March 31, 2022 (Error! Reference
source not found.).cxii The annual level of new electrified railways has been rising at a rapid
pace, and the Ministry has targeted the electrification of all routes by December 2023. Railways
is also covered under the PAT program.

5
Currently, BS VI is being enforced in the country which is like the euro standard IV.

22
2.4.3 Barriers to Decarbonize

Most of the transition enabling polices in the transport sector are focused on road-based
passenger vehicles with minimal focus on emission intensive heavy-duty freight or
aviation segment. India’s freight sector is dominated by trucks, making it a hard to abate sector
due to limited availability of sustainable alternatives. Further, with rising income, the demand for
domestic air travel will continue to increase. This is projected to significantly increase the share
of aviation in transport emissions due to its high carbon intensity. Focused policy interventions
will be required in both heavy-duty freight and aviation to ensure they become sustainable, while
remaining [Link] For example, including aviation emissions in emissions trading
schemes while also modernizing and improving air traffic management technologies,
procedures and systems, as in the EU, could contribute to reducing emissions from the sector.

In the passenger vehicle segment, India’s pace of transition to EVs will be determined by
the pace of deployment of support infrastructure, primarily battery charging facilities.
The proposed Battery Swapping Policy offers a potential solution to the need for charging
infrastructure, but it remains in a nascent [Link]

23
Transport sector

Policy name Description Budget Challenges Emissions saving

100 percent railways Full electrification of all railways The rail budget for No-objection certificate for open access: Open access has 100 percent electrification is estimated to
electrification FY23 gave an outlay been granted as a deemed licensee in 11 states and the reduce 15 million tons of Carbon Dioxide
of ₹7,452 crore for Damodar Valley Corporation area. However, there have been (CO2).cxviicxviii,cxix,cxx This would save Rs 170
electrification regulatory challenges in other areas. Wheeling and banking billion in fuel costs and other savings per
[Link] provision: Full deployment of solar potential will become more year.
feasible if states provide wheeling and banking
[Link]

The Faster Adoption FAME 1.0 encouraged electric and Fame 1.0’s budget Regulatory loopholes: Recently, FAME 2 was amended to EVs sold through 2030 could cumulatively
and Manufacturing of hybrid vehicle purchase by providing outlay of Rs 895 better account domestic value addition— following allegations save 474 million tons of oil equivalent (Mtoe)
Electric Vehicles financial support. FAME 2.0 focused [Link] 2.0 that some EV manufacturers were availing the subsidy while worth INR 15 lakh crore and generate net CO2
(FAME) 1.0 (2015- on electrification of public transport Rs. 10,000 crores for importing components significantly from abroadcxxiii Industry savings of 846 million tons over their
2019), 2.0 (2019-) infrastructure and charging a period of five representatives claim the 50 percent localization policy operational [Link],cxxv
[Link] requirement will make it challenging for industry to avail the
scheme.

PLI for ACC batteries Production-linked incentive scheme to Rs 18,100 Cr (2.48 Need for standards: Rules and regulations need to be created Batteries and hydrogen are both energy carrier
promote domestic manufacturing of bn USD) that require original equipment manufacturers (OEMs) to and storage technologies. As such they are
advanced chemistry cell batteries manage the end-of-life disposal, recycling of, or reuse of only as green as the source of energy that
batteries after first-life application. A framework of minimum gets stored in them.
specifications and standards must be established to ensure
these second-use batteries can be installed safely and
effectively

BS IV Fuel Economy Emission standards based on NA Cost implications: Changes in engine and after-treatment Transition is estimated to reduce almost 70
Standards European regulation instituted by the systems have been estimated to account for a total one-time per cent in nitrous oxides and hydrocarbons,
GoI to regulate the output of air investment of around Rs 40,000-50,000 crore and an and a 50 per cent reduction in particulate
pollutants from compression ignition operating cost impact of Rs 30,000-40,000 crore for matter emissions, compared to BS-IV
engines and Spark-ignition engines automotive OEMs. This increase in investment and operating [Link]
equipment, including motor vehicles. costs, in turn, resulted in increases in vehicle [Link]

Cost implications: Difficult to implement updated CAFÉ II Fuel savings for the period 2017-20 are
Corporate Average CAFÉ norms regulate how far vehicles NA norms (earlier CAFÉ 1) with price increases being passed on estimated at 1.2 Mtoe, and the emission
Fuel Economy must travel on a gallon of fuel. to consumers. While BS norms limit the emissions of reduction is estimated at 3.7 MtCO2 for the
(CAFE) norms pollutants like hydrocarbons, sulfur and oxides of nitrogen, same periodcxxviii
CAFE norms deal with overall fuel consumption that are
directly proportional to CO2 emission output.
2.5 Residential

2.5.1 Context

India’s residential sector contributes about Figure 14. Residential sector, final consumption
4 percent to the national GHG emissions. by fuel type
cxxix Solid biofuels (e.g., wood) remain the most (Ktoe)
180000
common source of fuel in the sector, however 160000
consumption of electricity has been rising in 140000
120000
line with improved electricity access (Figure 100000

14). While this is a cleaner source of fuel for 80000

60000
households, it remains an important contributor 40000
20000
to emissions because most electricity remains
0
coal-powered (see section 2.1). 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Solid biofuels, biogas LPG and natural gas

Charcoal, briquettes, coking coal Solar
Ensuring 24-hour reliable access to Electric Kerosene

electricity for all citizens is a key priority in

Source: OECD IEA Extended World Energy
India. The percentage of households with Balances.
access to electricity has increased from 55 Note: Electricity is generally coal-powered in India
percent in 2001 to near universal by [Link],cxxxi,cxxxii Much of this progress was made under the
schemes which supported rural electrification and provided free or subsidized electricity
connections to homes. Consistent with greater access, electricity consumption has been
rising—both overall, and on a per capita basis. Looking ahead, India is set to more than double
its building space over the next two decades, with 70 percent of new construction happening in
urban areas as migration from rural to urban areas [Link] Given the country’s
requirement of new building stock, the extent to which new construction follows energy-efficient
building code will shape patterns of energy use for the sector.

2.5.2 Sector Strategy

The GoI has used a combination of approaches to mitigate emissions in the residential
sector. The overall strategy is one that allows meeting both the needs of current urban and
rural houses, as well as the need for standard setting for the housing stock of the future. Local
municipalities and state DISCOMs are critical stakeholders and beneficiaries of the approach.

Enhancing energy efficiency is a key feature of the mitigation-oriented demand-side

management polices deployed in the residential sector. The BEE and EESL have
implemented important work to reduce energy requirements of the residential sector. These
include programs to improve energy efficiency of home appliances (the “Standard and
Labelling” (S&L) program); programs to purchase LED light bulbs at scale (establishing
economies of scale and brining cost of production down) and at discount distribution to
consumers through state DISCOMs, with cost savings passed on (Unnat Jyoti by Affordable
LEDs for All (UJALA) program); programs to conduct energy audits and implement efficiency
measures through Energy Service Companies (ESCOs), including installation of LED
streetlights (under the Street Light National Program (SNLP), part of the wider Municipal
Demand Side Management (MuDSM), that focuses on capacity development of municipalities in
energy efficiency measures strategy ).

In rural areas, switching to cleaner cooking and heating fuels has been a key priority. The
ministry of New and Renewable Energy launched the Biogas program, among other objectives,
to provide clean cooking fuel, lighting, meeting thermal and small power needs of users which
results in GHG [Link], The scheme promotes biogas based decentralized renewable
energy sources of power generation, in the capacity range of 3 kW to 250 kW or thermal energy
for heating/ cooling applications from the biogas generation produced from biogas plants of 30-
2500 M3 size.

Over longer horizons, a focus on cleaner fuels for cooling has been prioritized. India is
one of the first countries in the world to have a Cooling Action Plan (ICAP), under the Montreal
Protocol, to ensure provision of sustainable cooling and thermal comfort for all while securing
environmental and socio-economic [Link] While ICAP aims to provide a long-term vision
to address the cooling requirement across sectors, including a focus on the residential, the
Energy Conservation Bill (2022), recently passed by the Indian Parliament,cxxxvi empowers the
central government to specify an energy conservation code for residential buildings. This new
code will provide norms for energy efficiency and conservation, use of renewable energy, and
other requirements for green buildings.

2.5.3 Barriers to Decarbonize

The greatest challenge to reducing Figure 15. Air conditioner ownership, by income
decile
emissions in India’s residential sector is the (Percent)
No A/C A/C
need to boost living standards for a large 100%

share of the country’s population. In both 90%

80%
urban and rural settings, many still live in non- 70%
60%
permanent housing and use biofuels for 50%
40%
cooking and heating. As India continues along 30%
its development path, there will be a continued 20%
10%
shift towards building more residential housing, 0%
Up to 5,001 to 10,001 20,001 30,001 40,001 50,001 75,001 More
and with it, greater electrification, use of 5,000 10,000 to to to to to to than
20,000 30,000 40,000 50,000 75,000 100,000 100,000
appliances, and need for cooling (Figure 15). Income (Rs)
These factors will all drive emissions up in the Source: India Residential Energy Survey via Harvard
sector. Dataverse; and authors calculations.
Note: The top two income deciles have been
Lack of access to financing makes high-up- collapsed into one for presentation.

front-cost efficiency-improving retrofits or renovations to residences and appliances out

of reach for many households. Apart from cost-sensitivity of consumers hindering adoption of
energy efficient appliances at scale, the frequent change in regulations hinder margins of
producers and hence prices have stayed high. Ensuring high energy efficiency standards for
new residential buildings will be critical to help offset some of this trend. In this context, the
developments on the Energy Conservation Bill (2022) detailed earlier is encouraging.

India’s residential electricity tariff policy should be rationalized. There is a complex system
of cross-subsidization in India’s electricity market. Low-income households, whose energy costs

26
account for a significant share of expenditure, as well as agriculture consumers are charged
prices below the DISCOM’s supply cost. To compensate for these lost revenues, DICOMS
charge other customers (typically commercial and industrial users) higher prices and they
receive direct subsidies from state governments. As demand for electricity rises by households
in India, either subsidy costs will rise, or residential and agriculture customers will transfer to
cheaper sources of electricity (e.g. off-grid solar panels)—both of which will exacerbate
DISCOMs financial troubles.

27
Residential Sector

Policy name Description Budget Challenges Emissions saving

Over 1.55 million sqm of the residential built-up area has
Eco-Niwas An energy conservation building code for NA Greater policy focus is on increasing been compliant with ENS. The residential labelling
Samhita (ENS) residential buildings that promotes energy the efficiency of cooling technologies program takes ENS forward and is estimated energy
efficiency in design and construction. Part-I rather than on efficient building saving potential is around 388 BU by year [Link]
prescribes minimum standards for building envelopes to reduce the rapidly
envelope designs. increasing cooling [Link]
The S&L program resulted in savings of 69 BU, leading
Standard and Requirement for labels affixed to products to NA Frequent change in codes limit to monetary savings of Rs. 39,000 crores and emission
Labelling program provide consumers an informed choice about producers’ ability to produce at scale reduction of 53.307 MT per annumcxli
(S&L) the energy saving and consequent cost saving due to constant cost [Link]
potentials of the respective products. Labelling is self-declared with limited
testing facilities for certification

Unnat jyoti by UJALA: LED bulbs, Tube lights and energy FY 21/22: Revenue of NA Over 36.86 Cr LEDs sold, resulting in annual savings of
affordable LED for efficient fans provided to domestic consumers 960 Lakhs from sale of 47.87 billion kWh of electricity, Emission reduction is
all (UJALA)cxlii for replacement of conventional and inefficient goodscxliii estimated at 38.78 MtCO2 annuallycxliv
variant.

Street Lights SNLP is a program to replace conventional FY 21/22: 102850.72 Conflicting budgetary interests of 5.99 million tCO2 GHG emissions reduction from
National Program streetlights with smart and energy efficient lakhs for services; municipalitiescxlvi installing 12,954,065 [Link] 8700.49 Mus
(SNLP) LED streetlights across India. It aids 9510.18 lakhs for sale energy saved annually, and 1450.08 MW avoided peak
municipality-level power demand of goodscxlv demandcxlviii
management.

Super-Efficient AC Super-Efficient Air Conditioners distributed NA Price sensitivity and brand preference Sold more than1,300 air conditioners, leading to an
Program (ESEAP) and subsidized by the Ministry of Power for of Indian consumerscxlix energy saving of 9.2 Lakhs Units annually and CO2
sale to consumers. emission reduction of 7.54 lakh kg CO2e
Energy savings of 20 percent to 40 percent,
Municipal Energy MEEP replaces inefficient pumps in public NA After 5 years of implementation, IGEA approximately 4800 MUs of energy savings per annum.
Efficiency water works and sewerage systems at no studies for only 338 cities have been Reduction of 3.9 million tons of CO2 emissions per
Programme upfront cost to the municipal bodies, for 500 executed out of the targeted 500 annum and Monetary savings of approximately Rs 3200
(MEEP) cities. The investment will be recovered from [Link] Crores per annum. cli
the savings in energy costs. The program
supports municipality-level power demand
management.

Building Energy Mainstreaming energy-efficient and thermally FY 21/22: Revenue of Ministry limits its service offering to the A total of 702,959.14 tCO2 emissions reduction from
Efficiency Project comfortable (EETC) building design for both 360.29 Lakhs from sale replacement of selected [Link] annual 75.64MW avoided demand, resulting in
(BEEP) commercial and residential buildings. of goods and 7296.77 224,021,105.55 kWh annual avoided energy [Link]
Lakhs from rendering
[Link]
 Text Box 1: India moving towards a National Carbon Market

India’s focus on energy efficiency helped achieve total energy savings of 40 Mtoe in 2019-20,
corresponding to annual monetary savings worth INR 152,241 crores per annum, which implies an
equivalent reduction in CO2 emissions of around 267.98MT [Link] One of the key drivers in
energy savings-based emission reduction was the PAT scheme, accounting for about two-thirds of all
the energy savings in FY 2019-20 and more than half (55.4 per cent) in FY [Link],clvii
Shares of different schemes in overall energy savings (percent)

To efficiently drive decarbonization across sectors, particularly the industrial sector, the GoI has been
working towards the rollout of a voluntary, and eventually compulsory, market for carbon credit trading.
The setting up of a carbon market will expand the policy toolkit, beyond the currently emphasized
instrument of enhancing energy efficiency across industries and processes. A systematic pivot towards
a carbon market is illustrated by following policy developments:

• The Energy Conservation (Amendment) Bill, 2022, equips the central government to specify a
carbon credit trading scheme in India. The bill was passed by the Parliament in late 2022 and
is awaiting Presidential accent.
• Earlier in 2022, the Bureau of Energy Efficiency (BEE) released a consultation paper on a
National Carbon [Link] The paper proposed that the existing PAT scheme be transition
into the national carbon market.
• In December 2022, the Indian Energy Exchange set up the International Carbon Exchange
Pvt. Ltd (ICX), to enable voluntary participants to buy and sell voluntary carbon credits at
competitive prices.
• Further, in March 2023, the MoPNG released a draft carbon credit trading scheme, with a
proposed framework for carbon trading, drawing from the BEE consultation paper released in
2022. The draft proposes the BEE as the market administrator given its experience with
administering the PAT scheme.

The compliance market for energy saving—PAT scheme—was particularly successful compared to
other BEE programs in achieving emissions reduction. A similar compliance market (cap-and-trade
mechanism) for carbon credit trading, leveraging BEE experience, holds the potential to benefit the
country with enhanced pace of transitions to cleaner production methods across sectors.
2.6 Sectoral conclusions

While India is making important progress in implementing its climate agenda at the
sectoral level, emissions remain on a strong upward trend. The power and industrial
sectors are the largest emitters, and ambitious action will need to be taken in addition to existing
policies to bring emissions down in a meaningful way. Further support for renewable energy
alternatives, for investment in green and efficient new technologies, and for market-based
mechanisms to incentivize emissions reductions is needed.

Challenges remain across sectors on the path towards decarbonization. In the power
sector, the market structure and precarious financial position of DISCOMS are an important
roadblock to increasing the renewables share of electricity, as is the reliance of many
communities on coal and related industries. This is further exacerbated in the residential and
transport sectors as the expected rise in household incomes will continue to put pressure on
demand for electricity, vehicles, and air travel. Heavy industry may need to rely on recycling and
on the future viability of green hydrogen to power intensive processes, while others in the
industrial sector will need to shift to existing renewable energy sources.

The cumulative impact of the actioned solutions, while ambitious, will nonetheless fall
short of meeting the net zero 2070 goal. Investments in the renewable energy sector have
been around half of what is required to decarbonize according to the Ministry of New and
Renewable [Link] While technology transfer and international finance will have to be
leveraged (see Section 4), domestic debt markets may provide important sources of finance.
The schemes already announced or in place cumulatively demand sizeable fiscal space, and
given the projected extreme climate events, this will become ever more important. There is merit
in considering the efficacy of various fiscal instruments, taxation vs subsidy, in meeting the
countries emissions reduction target.

3. MACROECONOMIC MODEL

3.1 Section introduction

India’s business as usual (BAU) projected GHG emissions are on a strong upwards trend
and moving away from an illustrative near-linear path to net zero emissions by 2070
(Figure 16). As discussed in Section 1, there are significant potential costs with delaying
adjustment towards the net zero path. However, given India's ambitious development goals, it is
likely to also be prohibitively costly to begin reducing aggregate net emissions immediately.

A middle-ground can be achieved but will require trade-offs between emissions

reductions and transition costs. In this section, we consider how feasible it would be for India
to tread a middle ground of accelerating the transition towards renewable energy and what are
the trade-offs inherent in the different policy options which could be used to meet this goal. This
middle ground is shown in the green line in Figure 16Error! Reference source not found.. In
this scenario, GHG emissions would continue to rise in India but at a lower rate than in the
baseline. This would mean emissions are 15 percent lower in 2030 compared to the BAU
although they would remain 25 percent higher than current levels. This trajectory was chosen

30
because it is equivalent to the level of Figure 16. GHG emissions path and alternative
emissions that India would produce if the trajectory
(mtCO2e)
government adopted a US $5/tCO2e carbon 8000

price in 2030—lower than the IMF’s proposal 7000

6000 Estimated 2030 NDC
of US $25/tCO2e and the level needed to meet 5000 Target
the Paris Agreement targets,6 but nonetheless 4000
3000
a realistic target to achieve over the next eight 2000
years. This trajectory is one of many that could 1000
0
be adopted and is presented to discuss policy

2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
trade-offs and not as an explicit BAU Alternative emissions trajector
recommendation.7 Illustrative path to NZE 2017 NDC

Source: IMF staff calculations and IMF-ENV model.

3.2 Model description Note: NDC target for India is a 45 percent reduction in
emissions intensity of GDP (ceiling) by 2030. Target is
We utilize a global dynamic computable estimated using historical emissions data and GDP
general equilibrium model (IMF-ENV) to growth projections and is met in the baseline. Net-zero
target for 2070 is declaration/pledge (illustrative near-
capture the macroeconomic dynamics of direct linear path shown). Alternative emissions
emissions reductions. 8 The model has three trajectory is a reduction equivalent to a 15% GHG
emissions reduction in 2030 (or about a $5/tCO2e).
core strengths which we utilize in this paper:

1. Macroeconomic dynamics up to 2040;

2. Rich detail on inter-sectoral economic linkages and sectoral emissions; and

3. Accounting of interactions between domestic and international policies.

Macroeconomic Dynamics: Production activities are represented by a regionally calibrated

nested CES and rely on primary factors (land, labor, capital, and natural resource) and
intermediate inputs. 9 The outputs from each production activity could enter as intermediate
demand in other domestic sectors, direct demand by households and/or be internationally
traded. A key characteristic of the model is that it considers frictions in domestic reallocation of
capital (which is unique to among most computable general equilibrium models, and provides
more realism) by differentiating capital by vintage types. The model baseline is calibrated to
reported data on GDP, GHG emissions, electricity generation between 2014 to 2021 and in the
subsequent years to macroeconomic projections from IMF’s World Economic Outlook (WEO)
and GHG and electricity generation projections from Climate Policy Assessment Tool (CPAT).
In the policy scenarios the, the policies are introduced starting 2022 and the model solves for an
equilibrium in commodities and factor markets in each year from 2022 to 2040, allowing us to
consider the trajectory of sectoral growth over a horizon of about 25 years.

6
See Parry, Black, and Roaf, 2021, “Proposal for an International Carbon Price Floor Among Large
Emitters” and Gaspar and Parry, 2021, “A Proposal to Scale Up Global Carbon Pricing”
7
A larger policy shift, equivalent to a US$ 25/tCOe was also considered in the 2022 Article IV for India
(Country Report No. 2022/386). Results are shown in the India 2022 Article IV Box 4, page 43.
8
Model described in detail in Annex 1.
9
Land is used as input in the agriculture sector. Natural resource is necessary for economic activities
associated to forestry, fisheries, minerals, and fossil extraction sectors.

31
Inter-sectoral economic linkages and sectoral emissions: The model provides rich detail on
economic impacts and related GHG emissions for each of the 36 sectors. Sectors which
determine GHG emissions are modelled in more detail including fossil fuel goods (coal mining,
crude oil, refined oil, gas extraction, gas distribution), power generation (coal, oil and gas-
powered electricity, hydro power, solar, nuclear, and other) and energy intensive and trade
exposed (EITE) sectors (iron and steel, non-metallic minerals, chemical, pulp and paper, and
non-ferrous metals). The growth or decline in these sectors will then determine the level of GHG
emissions produced in the country.

Accounting of domestic and international policies: Each of the G20 countries are individually
calibrated in the model and the rest of the world is aggregated into six model regions. Model
regions are linked to one another via bilateral trade across sectors. Thus, the model captures
the cross-border spillovers of policies via changes in bilateral trade and thus, can also quantify
global impact of domestic and international policy changes on international trade, international
commodity prices, and global GHG emissions.

While the model has rich detail in its treatment of the local and global macroeconomic
structures, there are also important caveats. It has less detail in its incorporation of
microeconomic frictions and in assumptions of technological change. For example, the model
assumes that labor can move between sectors without frictions such as retraining or migration.
This means the model may underestimate the cost of policy changes in the short-run due to
missed adjustment costs. The model does not explicitly model the role of technological change
potentially leading to overestimating the cost of transition in the long-term. For instance, if green
hydrogen becomes economically viable this could make reducing GHG emissions less costly. A
second important caveat of the model is that it does not capture the distributional impacts nor
co-benefits like the human health impacts of changes in policy.

3.3 Scenarios and intermediate pathway

We consider three policy packages which lower the emissions trajectory to meet the
green Alternative Emissions Trajectory lineError! Reference source not found., but which
have significantly different costs. All of scenarios lower emissions in 2030 by 15% relative to
BaU and are closely aligned with India’s current policy mix: (i) only a renewable subsidy, (ii) a
renewable subsidy + coal excise tax (iii) a renewable subsidy + medium coal excise tax + a
carbon price.10 All three policies are introduced in a budget-neutral way. The green subsidy rate
in India is endogenously determined in the model and is financed by increasing wage taxes. In
all three scenarios we assume that high income countries meet their NDC targets by 2030 using
carbon pricing and governments balance their budget by adjusting labor income taxes. Middle
income countries and other low-income countries only continue with their current policies, and
this is a conservative illustration of the pace of global decarbonization by 2030. Carbon tax

10
A carbon tax differs from the coal excise tax in two ways. First, a carbon tax is calculated based on the
carbon intensity of the fuel versus the coal tax that is applied per unit of output of coal. Second, the
carbon tax disincentivizes the use of brown energy sources (coal, oil and gas) while the coal tax only
disincentivizes the production of coal, which is the most carbon intensive brown fuel.

32
revenues in all regions are recycled by reducing the wage taxes. All policies are gradually
phased in to allow an orderly transformation in the sectors.

The three policy packages are:

1. A subsidy to renewable power

In the first policy package, the entire emission reduction target is met using only a subsidy on
the production of solar and wind power. This policy tool similar to the Indian government’s
current approach in using renewable purchase obligations (RPO) and production linked
incentive (PLI) schemes to support expansion of green power sectors.11

2. A subsidy to renewable power + coal excise tax

In the second policy package, in addition to a subsidy on renewable, coal excise taxes are
increased to meet the mitigation goal. This policy tool is effectively ramping up the Indian
government’s current excise duty on coal. The combination of the renewable power subsidy and
coal tax works similar to a feebate12. Since there are two mitigation tools- one that incentivizes
the use of green power and other that disincentivizes the production of coal, the subsidy to
renewables that is needed to deliver the emission reduction is smaller in package 2 versus 1.

3. A subsidy to renewable power + coal excise tax + a carbon price

In the third policy package, we introduce a carbon price on all CO2 emissions from fossil use.
The renewable subsidy needed to meet the emissions goal in package 3 is the lowest among
the three policy packages. This is because both carbon tax and coal excise tax discourage the
use of carbon-intensive fuels and therefore, contribute towards the emission target while leaving
a lower mitigation target that needs to be delivered by the subsidy on green power.

3.4 Results

a. Energy mix

In the baseline, India’s electricity demand is forecast to rise rapidly from about 1500 Twh
in 2020 to almost 5500 Twh in 2040 (Figure 17, panel 1). Under current policies, part of this
demand is met by an expansion in renewable energy, nuclear and hydropower sources which
grow to meet 44 percent of total electricity demand in 2040. Although the proportion of electricity
from coal is falling, still 49 percent of demand is forecast to be met via coal power production in
2040 with the level of electricity from coal set to grow by almost 150 percent compared to 2020

11
Neither policy is identical to simply subsidizing energy. The RPO scheme is not technically a subsidy as
it mandates an amount of certain types of renewable energy that must be purchased by distribution
companies (DISCOMs). In practice, this will act in a similar way to a subsidy if the cost of renewable
electricity exceeds that of alternative forms. The PLI schemes are supporting the manufacturing industry
in renewables, which should lower the cost of renewable energy but is not a direct subsidy to renewable
energy generation.
12
A feebate is a system that charges fees to higher emitting firms or sectors and rebates to those firms or
sectors which produce lower carbon. This incentivizes lower carbon usage without the problem of
substantially raising the price of the good.

33
levels.13 Indeed, power generation, iron steel, and nonmetallic minerals are set to make up 66
percent of India’s CO2 emissions by 2030.

Total electricity supply increases when renewable power is subsidized. Under each of the
policy package, the subsidy on production of renewable power supports the rapid expansion of
the wind and solar sectors and overall electricity supply increases by almost 10 percent relative
to BaU in 2040. The second panel of Figure 17 shows the impact on the energy mix from only a
large renewable subsidy. Given the production prices in these sectors are lower with subsidy
relative to BaU, they also contribute to a gradual decline in coal power production.

With a combination of renewable power subsidies, carbon tax and coal taxes, the share
of renewables in the energy mix also rises. The third and fourth panel of Figure 17 show the
impact of combining renewable subsidies with taxes on emitting sectors. Policy packages 2 and
3 work like a feebate and the subsidy increases the production of renewable power with the net
effect on the electricity price being a decline between 7 to 11 percent relative to BaU in 2040.
Nonetheless, since renewables are still relatively cheaper, the energy mix remains tilted heavily
towards renewable energy sectors.

Figure 17. Electricity Mix in India

(Twh)
7000
Coal Power Gas Power Oil Power Solar Power Wind Power Other Nuclear HydroPower
6000

5000

4000

3000

2000

1000

0
2020

2025

2030

2035

2040

2020

2025

2030

2035

2040

2020

2025

2030

2035

2040

2020

2025

2030

2035

2040
BAU Large RE subsidy Coal excise with RE subsidy Coal excise tax with RE
subsidy and carbon tax

Source: IMF staff calculating using the IMF-ENV model.

Note: BAU is business as usual scenario, with no change in currency policy. All other scenarios assume that high
income countries (excluding Saudi Arabia) meet their NDC pledges and India reduces emissions by 15 percent
relative to the BAU by 2030, starting in 2023. Labels indicate the policy choices to achieve the 15 percent relative
reduction in emissions. The size of the RE subsidy differs across scenarios, see main text for details.

b. Energy security

13
The estimates are broadly in line with the coal capacity increase envisioned in the Draft National
Electricity Plan from 2022 to 2027 (Ministry of Power , 2022)

34
A key outcome from the three scenarios is that all of them increase energy security in
India. Figure 17 shows imports of fuels under the three scenarios by 2035 when compared to
the BAU scenario. In this exercise the change in import of fuel depends on the price of fuels,
which themselves depend critically on both the domestic and (simultaneous) international
mitigation efforts. In all three scenarios coal imports decline substantially as demand declines
and can be met domestically. The domestic price of coal also does not rise as much as the
international price, contributing to lowering
imports. Electricity imports also decline Figure 18. Import of Energy
across all
(Percent change wrt BAU by 2035)
10
three sectors, as it is replaced by the
subsidized renewable electricity which is 5

produced domestically. Across all three 0

scenarios oil and petroleum imports continue -5

to rise, because international emissions -10

mitigation efforts reduce the international Large RE subsidy
-15
(pre-tax) price of oil and petroleum. Global Coal excise with RE subsidy
-20 Coal excise tax with RE subsidy and carbon tax
mitigation effort also lowers international gas
-25
prices, though by a lower amount than oil, Coal Electricty Gas Oil Petroleum

with mixed effects on gas imports,

Source: IMF staff calculations using the IMF-ENV
depending on the extent of subsidization of model.
renewables. Note: Changes calculated in volume of commodity
with respect to a baseline of no change in policy.
c. Output costs

While the policy packages will all result in lower emissions, increased renewable energy
and greater energy security, they all come with trade-offs. By design, each of the policy
packages delivers identical emission reduction but because of differences in the policy tool, they
have different impacts on output, as shown in Figure 19 Figure 18.

Only subsidizing renewable power without complementary measures to mitigation is

more expensive. The model estimates that this would lead to a 0.45 percent of reduction in
GDP by 2030 compared to baseline. This is because – (i) financing the subsidy by increasing
wage taxes reduces the demand for labor and (ii) lowers labor income received by households
consequently also lowering consumption. Together, both these channels contribute to lower
growth. The decline in GDP growth, however, is relatively small – about 0.05 percentage points
per year, on average.

Figure 19. Real GDP

(% diff. wrt BAU, 2030)

35
The other two policy packages also lead to
0
a decline in output, albeit smaller. -0.05

Complementary mitigation policies ease the -0.1

-0.15
fiscal pressure of financing the subsidy to -0.2

renewable power and thus, GDP costs are -0.25

-0.3
more modest 0.18 to 0.3 percent by 2030. By -0.35
design, a feebate is fiscally less expensive -0.4
-0.45
because it finances green subsidies with higher
-0.5
taxes for emitting sectors, which generate Large RE subsidy Coal excise with RE Coal excise tax with RE
subsidy subsidy and carbon tax
revenue. Thus, relative to only green subsidies
Source: IMF staff using IMF-ENV.
financed via income taxes, a feebate can be
financed via revenues from the carbon tax and therefore, a lower increase in income taxes is
needed. Revenues from the carbon tax are recycled to reduce wage taxes. Therefore, adding a
carbon tax on top of the coal excise tax dampens the wage tax increase needed to finance the
green subsidies while incentivizing a move away from carbon-intensive sectors by correcting the
price signals. The accompanying switch from carbon-intensive to low-carbon or carbon-neutral
sectors contribute to mitigation thereby, reducing the pressure on public finances for green
power subsidies needed to reach the same GHG emissions.

Alternate ways of recycling the carbon revenues could impact GDP differently. For
instance, GDP losses are greater when revenues from carbon taxes are distributed via lump
sum transfer to households than when they are used to fund public investment or reduce labor
taxes (Black S. , et al., 2022).

d. Just transition

In addition to considering aggregate losses, it is also important to consider the impact

on labor. Figure 20 shows the change in employment in selected sectors compared to baseline.
Importantly, there will be sectors which expand such as solar and wind, and some which shrink
such as coal and gas. As a conservative estimate, more than 13 million people are employed in
coal mining, transport, power, sponge iron steel, and bricks sectors (National Foundation for
India, 2021). This figure does not include those in the informal sector in coal mining, labor
involved in coal imports (at the ports or transport from ports to coal-fired power plants), indirect
activities in the iron and steel sector including third party sellers, warehousing staff, iron ore
mining, the dependents of workers or even third-party vendors like equipment manufacturers.
Including indirect jobs, there are likely more than 20 million people dependent on the [Link]
What makes this even more challenging is that the Indian states with currently high levels of
employment in the coal sector tend to have less optimal conditions for solar and wind energy
and consequently have few jobs in these sectors (Ordonez, Jakob, Steckel, & Ward, 2021). This
is not just unique to India: a recent cross-country analysis found that the probability of workers
in pollution-intensive jobs moving to a green-intensive job is very low, between 4-7 percent
(IMF, 2022). That said, in other sectors the transition may be somewhat easier: it is estimated
that electric vehicle production in India will create 10 million direct and 50 million indirect jobs by
2030, which will offer an opportunity to upskill and integrate the existing 35 million workforce

36
currently producing internal combustion engines (Sattva Consulting and Skill Council for Green
Jobs, 2023).

Modelling work undertaken as part of the IMF’s World Economic Outlook demonstrated
three policies are crucial to help these workers. First, training programs can help displaced
workers to develop new skills making them more able to work in modern sectors. Second,
assistance with finding jobs can help reduce matching frictions. Third, an earned-income tax
credit which reduces taxes owed by lower-income workers can encourage them back into the
work force. Where informality in employment is high, such as in India, the earned income tax
credit should be supplemented with cash transfers for income support, targeted toward those
most likely to be working informally (IMF, 2022).

Figure 20. Change in employment

(Percentage change wrt BAU)
140
120
100
Large RE subsidy
80
Coal excise with RE subsidy
60
40 Coal excise tax with RE subsidy and carbon tax

20
0
-20
-40

Source: IMF staff using IMF-ENV.

e. Other impacts

The transition towards greater use of greener fuels will impact all aspects of life and the
economy in India, not all of which can be modelled with the IMF-ENV. Importantly, studies
have found that by lowering GHG emissions local air pollution will also improve substantially,
thereby reducing the welfare costs of such policies (Black S. , et al., 2022). This will both
improve health outcomes (including preventing air pollution deaths) and lead to fewer lost work
and school days, thereby supporting productivity and ultimately output (Parry, Mylonas, &
Vernon, 2017).

Any transition will not pose an equal burden on all of society. Several policy instruments
could be mildly progressive in India including carbon taxes, coal taxes, electricity tax and road
fuel tax (Parry, Mylonas, & Vernon, 2017). Furthermore, the widespread digitalization of their

37
public welfare distribution system and in particular, its ability to target recipients can also help
make any regressive options progressive with targeted transfers to households.

4. TOWARDS A GLOBAL AGREEMENT ON CLIMATE CHANGE

India’s climate change mitigation needs are not only domestic, but global. As such,
consideration must also be given to what might help facilitate a global agreement on more
ambitious GHG reduction goals. A recent IMF paper estimates that even if fully achieved,
current country pledges would cut global emissions by just 11 percent by 2030 compared to
2019 levels. This falls well short of the required 25-50 percent cut needed to keep global
warming to between 2°C and 1.5°C (Black S. , et al., 2022).

In order for the Paris process to be a success, the world will need to work together. The
Indian government has highlighted that for this to succeed the world will need to properly
respect the principles of equity and common but differentiated responsibilities and respective
capabilities and that commitments should be accompanied by climate financing and technology
transfer (Ministry of Environment, Forest and Climate Change, 2021). The next section draws
on work from the IMF and other institutions to consider possible options for global agreement.

4.1 Climate financing options

There are many proposals for how to adequately finance the global transition. In 2009 at
COP15, developed countries agreed to mobilize $100bn a year in climate financing from 2020
onwards for developing countries. This commitment however was loosely defined. Developing
countries have noted that a large portion of the materialized finance comes from multilateral
development banks and privately leveraged sources, and thus much of it is lending rather than
transfers. Actual financing, whether lending or transfer, has fallen significantly short of pledges.
Even when taking the broadest possible definition, the current annual flows are approximately
$80bn (Black S. , et al., 2022).

It has been estimated that under 2°C consistent pathways compensating the abatement
costs of countries with per capita income below $4,500 would cost $60 billion in transfers
annually in 2030. These estimates are calculated by considering the climate financing
requirements needed to compensate lower income countries (including India) for their pure
abatement costs14 under a scenario designed to meet a global 2 degrees centigrade reduction
in emissions (Black S. , et al., 2022).. The authors also estimate that to fully compensate
countries for their pure CO2 mitigation costs alone would require annual transfers of about $30
billion. In three modelling scenarios, the authors illustrate the GDP effects of transfers from
HICs in the amount of $30 and $60 billion to provide compensation to LICs for their mitigation
burdens:

14
Pure abatement costs refer to the area under the marginal abatement cost curves which, at the
economy-wide level, illustrate the cumulative emissions reductions from abatement opportunities in
different sectors by ascending order of cost.

38
• Ability & Need: High-income countries contribute based on their share of emissions while
middle and low-income countries receive transfers in proportion to their share of their
population.

• Compensate: High-income countries contribute based on their share of emissions.

Transfers are made in the amount equivalent to the abatement cost of the country until
cumulatively $60bn (or $30bn) are disbursed. In this scenario, India is fully compensated
with $60bn and partially compensated with $30bn.

• Per capita emissions:15 A country’s role as contributor or receiver of payments is based

on the deviation of domestic per capita emissions from the global average. Regions with
higher (lower) per capita emissions than global contribute (receive) an amount equal to
the deviation benchmark times the regional population multiplied by a global carbon
incentive (GCI). The GCI is $4/tCO2 in 2030 and is calibrated to make the total amount
of transfers equal to $60bn.

In all of the potential scenarios India is a recipient of transfers (30-39 percent of total
transfers), due to its large population size and relatively small emissions per capita. The
model also projects that Indian GDP would rise in all scenarios, due to a combination of the
direct climate financing and lower costs on fossil fuel imports coming from the global transition
away from fossil fuels. Importantly, all scenarios could be feasibly funded via carbon taxes in
high income countries. To meet the $60bn ($30bn) goal the size of contributions from high-
income countries is 3.4 (1.7) percent of carbon tax revenues.

While this exercise represents one potential methodology, there are many alternatives.
For example, the great carbon arbitrage project estimates that to phase out coal starting in 2024
India would require 3.418 tr USD in present value of climate financing (or 1.7% of GDP every
year until 2100), which would cover the opportunity cost of coal and needed investment in
renewables (Adrian, Bolton, & Kleinnijenhuis, 2022). The Centre for Energy Finance has
estimated that investments worth over USD 10 trillion are needed to achieve Net Zero by 2070.
Consequently, the authors argue for support of $1.4tr in concessional financing (Pratap Singh &
Sidhu, 2021). Both estimates are based on much more ambitious targets that what is examined
in this paper, hence the significantly higher costs as well as a focus on the total green
investment rather than incremental costs of green over carbon-intensive investments, as this
paper has done. Nonetheless, both of these large estimates argue that these very large values
can be made feasible through blended financing. For example, they suggest concessional
financing can take a first-loss tranche in a large public-private partnership climate fund. This can
increase the investment grade of the fund and crowd in private investment. Another potential
source climate financing comes from both public and private green bonds. India has already
made progress in this regard, with the first two sovereign green bonds issued in 2023, the RBI
working on a taxonomy for green bonds, and India’s participation in the Network for Greening
the Financial System .

4.2 Technology Transfer

15
This is a scenario first proposed by Raghuram Rajan.

39
Many low-income countries also argue that there is a need for the transfer of technology,
or sharing of patents, of frontier GHG-emissions reducing technologies. The Indian
authorities submitted a list of technology needs as part of their most recent UNFCCC bi-annual
report. This includes making available cutting-edge technologies in renewable energy
generation (Ministry of Environment, Forest and Climate Change, 2021). In this area India is
already playing a leading role through leadership of the International Solar Alliance, which aims
to mobilize USD 1,000 billion of investments in solar energy solutions by 2030. However,
challenges remain including how to encourage knowledge sharing across countries when
patents are privately held, how to ensure that the right technology is made available, and how to
ensure critical minerals are widely available for purchase by all countries.

5. CONCLUSION

Climate change poses challenging policy tradeoffs for India, but a path towards greener,
stronger, and inclusive growth is possible. India faces important development goals,
including to continue raising living standards for over a billion people. At the same time, it must
be a critical contributor to reducing global GHG emissions as it is one of the largest emitters
today in absolute terms. The government has implemented numerous policies to promote the
manufacturing and use of renewable energy, including through PLI schemes, RPOs, and PAT,
among many others, and most recently a carbon trading market. More efforts are needed to
reach the 2070 net zero goal.

Shifting away from coal is a formidable challenge, and the Indian government is taking a
multipronged approached. The Indian economy relies heavily on coal which powers over 70
percent of electricity generation, and accounts for almost 40 percent of India’s CO2 emissions.
Much of the industrial sector also runs on coal, and over 20 million people are dependent on the
mineral, its extraction and use for employment either directly or indirectly. In its effort to shift
towards renewable energy sources and reduce emissions, the Indian government has deployed
many policy tools. Various forms of subsidies for renewable energy adoption and generation are
widespread (e.g., PLI schemes for solar module and battery manufacturing, National Motor
Replacement Program, FAME for EVs, LED streetlights and bulbs), as are regulatory
requirements (e.g., RPOs for electricity, building efficiency standards, vehicle emissions
standards, standards & labelling, bioethanol), and tradable energy certificates (RECs, PAT).
These policies are helping India begin its shift towards lowering emissions. Without further
efforts, however, India’s emissions are on track to continue to increase at a rapid pace.
Investment in renewables will need to be scaled up substantially. This will require leveraging, in
particular, technology transfer, international finance, and domestic debt markets.

Depending on which policy prescriptions India chooses to reach its net zero goal, there
will be both costs and benefits. Modelling emissions trajectories under different policy options
show that reducing GHG emissions will almost certainly have a negative impact on growth in the
short run and have important distributional consequences for individuals and communities who
today rely on coal. But with the right policies, these costs can be significantly limited. On the
positive side, there will be many benefits of reducing emissions. This includes improved health
outcomes and productivity from reduced pollution. Policy will also need to focus on ensuring

40
those most impacted by the shift to cleaner energy are not left behind – this will have to be done
through a combination of transfers and re- or up-skilling. Any delays in transitioning from the
current emissions path towards a more sustainable one will increase costs and decrease
cumulative benefits.

41
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43
ANNEX 1 - AN OVERVIEW OF THE IMF-ENV MODEL

The IMF-ENV model is a recursive dynamic neoclassical, global, general equilibrium model,
built primarily on a database of national economies and a set of bilateral trade f lows. The model
describes how economic activities and agents are interlinked across several economic sectors
and world countries or regions. The central input of the model is the data of the Global Trade
Analysis Project version 10 database (Aguiar and others 2019). The database includes country -
specif ic input-output tables for 141 countries and 65 commodities and real macro flows. It also
represents world trade flows comprehensively for a given starting year. The currently used
version 10 is based on data f rom 2014. The model is based on the activities of the key actors:
representative firms by sector of activities, a regional representative household, a government,
and markets. Firms purchase inputs and primary factors to produce goods and services,
optimizing their profits. Households receive the factor income and in turn buy the goods and
services produced by firms; household demands result from standard welf are optimization
under households’ budget constraints. Markets determine equilibrium prices for factors, goods,
and services. Frictions on factor or product markets are limited, except as described elsewhere
below.

The model is recursive dynamic: it is solved as a sequence of comparative static equilibria. The
fixed factors of production are exogenous for each time step and linked between time periods
with accumulation expressions, like the dynamic of a Solow growth model. Output production is
implemented as a series of nested constant-elasticity-of-substitution functions to capture the
different substitutability across all inputs. International trade is modeled using the so-called
Armington specification, which posits that demands for goods are differentiated by region of
origin. This specification uses a full set of bilateral flows and prices by traded commodity. In
contrast to intermediate inputs, primary factors of production are not mobile across countries.
Model closures assume real government expenditure and current account to be constant to
baseline values.

While the capital market is characterized by real rigidities, the labor market is not. One major
characteristic of the model is that it features vintage capital stocks in such a way that a firm’s
production structure and a firm’s behavior are different in the short and long term. In each year,
new investment is flexible and can be allocated across activities until the return to the “new”
capital is equalized across sectors; the “old” (existing) capital stock, on the contrary, is mostly
fixed and cannot be reallocated across sectors without costs. As a consequence, short-term
elasticities of substitution across inputs in production processes (or substitution possibilities) are
much lower than in the long term and make adjustments of capital more realistic. In contrast,
labor (and land) market frictions are limited: in each year, labor (land) can shift across sectors
with no adjustment cost until wages (land prices) equalize, and the labor (land) supply responds
with some elasticity to changes in the net-of-taxes wage rate (land price).

The model also links economic activity to environmental outcomes. Emissions of greenhouses
gases (GHGs) and other air pollutants are linked to economic activities either with fixed
coefficients, such as those for emissions from fuel combustion, or with emission intensities that

44
decrease (nonlinearly) with carbon prices—marginal abatement cost curves. This latter case
applies to emissions associated with non-energy-input uses (e.g., nitrous oxide emissions
resulting from fertilizer uses) or with output processes (like methane emissions from waste
management or carbon dioxide emissions from cement manufacturing). In the very long term,
the model may overestimate the cost of decarbonization, since it does not take into account
radical technology innovations that could materialize at this longer horizon (hydrogen, second
generation of nuclear and biofuel technologies, carbon capture and storage technology). While
some of these new technologies are at an experimental stage, it is dif ficult to include them in
the model at the moment because of a lack of information about the future costs of these
technologies if they were deployed at industrial scale.

The model can be used for scenario analysis and quantitative policy assessments. For scenario
analysis, the model projects up to 2050 an internally consistent set of trends for all economic,
sectoral, trade-related, and environmental variables. In this context, the model can be used to
analyze economic impacts of various drivers of structural changes like technological progress,
increases in living standards, and changes in preferences and in production modes. A second
use for the model is quantitative economic and environmental policy assessment for the coming
decades, including scenarios of a transition to a low-carbon economy. In this case the model
assesses the costs and benefits of different sets of policy instruments for reaching given targets
like GHG emission reductions.

45
 End Notes

i
India’s submission to UNFCCC in August 2022
ii
[Link] ([Link])
iii
Some programs, like the ECBC, that target commercial buildings, have been added to industry to ensure major policies deployed
that impact MSMEs are captured.
iv
Third BUR
v
Generation share: Dashboard - Central Electricity Authority ([Link]), Last visited on 19-12-2022
vi
Power Sector: Stumbling block in India’s net-zero journey | ORF ([Link])
vii
[Link]
viii
ibid
ix
[Link]
x
[Link]
xi
[Link]
xii
[Link]
xiii IEA [Link]
xiv

[Link]
xv
[Link]
xvi

[Link]
[Link]
xvii
POSOCO.2018. “REC Mechanism- Key learnings, Data analysis and way forward.”
xviii
Significant transmission infrastructure upgrades have been made under the Integrated Power Development Scheme (IPDS)
xix
Budget FY 2022-23. [Link]
allocates-rs-19500-cr-boost-for-modules-2422284/
xx
Renewable hybrid energy systems as a game changer in India | McKinsey & Company
xxi
NITI Aayog Electricity distribution report 2021
xxii
[Link]
xxiii
A surprise hurdle for India's smart meter plans | Mint ([Link])
xxiv
See IEA for further discussion of these issues.
xxv
[Link]
xxvi
Parliamentary Standing Committee on Energy (2021-22), 2022, Financial Constraints in Renewable Energy Sector: Twenty First
Report
xxvii
The Draft Electricity Bill, 2022 covers some of these issues [Link]
2020#:~:text=Sources%3A%20The%20Draft%20Electricity%20(Amendment,)%20Rules%2C%202020%3B%20PRS.&text=The%20
Act%20empowers%20SERCs%20to,regulations%20on%20tariff%2Drelated%20matters.
xxviii
[Link]
xxix
RECs are traded in the India Energy Exchange (IEX) and Power Exchange India Ltd (PXIL) at a price within the forbearance and
floor price determined by the Central Electricity Regulatory Commission (CERC).
xxx
[Link]
xxxi
In FY2020, only 5.3 million RECs were bought against an expected demand of 72.5 million RECs from 27 non-compliant discoms
that did not meet their RPO targets. There was a shortfall in demand amounting to 67.2 million RECs. Source: Few takers for
renewable energy certificates despite policy push | Mint ([Link])
xxxii
Open-access charges include central transmission charges, state transmission charges, wheeling or distribution charges, cross-
subsidy surcharge, additional surcharge, SLDC charges, etc. [Link]
access-alternative-to-scaling-renewables-in-india
xxxiii
The recently notified Green Open Access Policy, 2022, is designed to homogenize the state-level policies and pricing
calculations.
One such varying component is the “cross subsidy charge” –it was designed to be phased out over time but has kept growing its
share in the overall cost structure.
xxxiv
However, it still allows for variable cross-subsidisation component.
xxxv
Inter-state open access allows a consumer to procure power from a generator within as well as outside of the state of
consumption., ibid
xxxvi
Schemes | Ministry of New and Renewable Energy, Government of India ([Link])
xxxvii
[Link]
xxxviii
[Link]
xxxix
[Link]
xl
Who needs ultra mega solar power plants? ([Link])
xli
IMF Climate Dashboard
xlii
ESCerts are issued to overachieving DCs, and underachieving DCs have to purchase ESCerts if they fail to meet their specific
energy consumption (SEC) reduction targets. One ESCert is equivalent to one metric tonne of oil equivalent (toe).
xliii
EESL helps drive prices of advanced tech down by subsidizing products for market off take which enable production at scale
xliv
EESL signed agreements with over 30 major industries to replace over 1,200 inefficient motors with IE3 motors, enabling energy
savings of 48,16,535 kWh and emission reduction of 4,240 tCO2, annually. Ibid
xlv
[Link] ([Link])
xlvi
European Union and SIDBI (April 2016); Financing Sustainable Production among MSME Clusters -Experiential Learnings and
Policy Recommendations
xlvii
[Link]
xlviii
[Link]
xlix
Developing clean energy alternatives for industries | ORF ([Link])
l
Jindal Stainless Ltd taking measures to reduce carbon emissions: MD | Business Standard News ([Link])
li
Tata Steel | Climate Action
lii
[Link]
liii
[Link]
liv
Racing to Net-Zero: A Captivating but Distant Ambition ([Link])
lv
[Link] PDF pg 14
lvi
BEE annual report FY 2020-21. Annual Report | Bureau of Energy Efficiency ([Link])
lvii
[Link] 135 DCs are under,saving target of 6.627
MTOE.
lviii
[Link]
lix
[Link]
lx
FY 2021-22, GoI Budget
lxi
*Impact Assessment 2020-21_FINAL.pdf ([Link])
lxii
Renewable Energy: Revolutionizing Farmers’ Incomes ([Link])
lxiii
Agricultural irrigated land (% of total agricultural land) - India | Data ([Link])
lxiv
COP27: India welcomes 'loss & damage fund', says 'world has waited far too long for this'. Source
lxv
the reasons for not signing up for the Global Methane Pledge at COP26 in Glasgow:
[Link]
lxvi
Further, according to MoP, With solarization, while the electricity to farmers would be available free of cost/at very low cost
during the day time, savings would accrue to the State Government on account of subsidy being paid to the DISCOMs for electricity
supply to farmers at subsidized tariff. Such savings can be utilized by the State to pay off the loans to be availed from
FIs/Banks/NABARD and once repayment is done, the State Government would be free of the burden of this subsidy and deploy this
resource for other developmental activities. PDF pg 11/240
lxvii
[Link]
lxviii
Originally, the third goal was solarization of 15 million Grid-connected Agriculture Pumps, which was recently redesigned to
solarize separate agricultural feeders at DISCOMs instead.
lxix
[Link]
lxx
[Link]
lxxi
[Link]
methane-emissions-by-livestock-7389140/
lxxii
PM KUSUM attracts 30% Central Financial Assistance for stand-alone solar agriculture pump, the state government assists with
at-least a subsidy of 30%; and the remaining at-most 40% will is provided by the farmer. Bank finance can be availed by farmer with
a 10% initial payment of the cost and remaining up to 30% of the cost as loan.
lxxiii
Subsidies alone will not scale-up solar pumps | CEEW
lxxiv
PM KUSUM ([Link])
lxxv
Revitalising PM-KUSUM - The Hindu
lxxvi
The amendment, among other provisions, focuses on allowing more feedstocks for production of biofuels, and to advance the
ethanol blending target of 20% blending of ethanol in petrol to ESY 2025-26 from 2030. For full scope of amendments see:
[Link] [Link]
[Link]
lxxvii
EESL aims to replace 21 million inefficient pumps with BEE 5-star rated pumps with no upfront cost to the farmer, with cost
recovery through reduction in state government subsidies over 5-10 years.
lxxviii
Refer pg 387/644, [Link]
lxxix
[Link]
lxxx
Torrefied biomass co-firing up to 20% and provision of CCU of up to 10-20% is being kept in the future NTPC thermal projects
lxxxi
[Link]
blending/articleshow/[Link]
lxxxii
To carry the entire quantity of required ethanol, about 3,50,000 tanker trucks shall be required based on one truck carrying
29,000 litres. “Movement of these number of trucks would result in GHG emission of 76 million tonnes, unless most of the ethanol is
moved either through pipeline or by Railways.” [Link]
target-likely-to-be-achieved-by-2025-but-may-add-76-million-tonnes-of-ghg-emission/[Link]
lxxxiii
[Link]
lxxxiv
[Link] pdf pg 239/246
lxxxv
[Link] PDF pg 41/66
lxxxvi
NATIONAL AgDSM DASHBOARD | EESL
lxxxvii
Methodology for estimating emissions reduction from AgDSM (pdf pg 128/154):
[Link]
lxxxviii
Page not found – Energy Efficiency Services Limited ([Link])
lxxxix
Method for calculating energy saving – PDF pg 28 BEE_Final Report_Website [Link] ([Link])
xc
[Link]
xci
Revitalising PM-KUSUM - The Hindu
xcii
[Link]

47
xciii
Revamped Distribution Sector Scheme has an outlay of Rs.3,03,758 crore with an estimated budgetary support from Central
Government of Rs. 97,631 crores, which would be available till FY 2025-26. Source:
[Link]
xciv
[Link]
xcv
Feeders having major load for agriculture may also be considered for solarization under the Scheme.
xcvi
[Link]
xcvii
[Link]
singh/articleshow/[Link]?from=mdr
xcviii
[Link]
farmers/articleshow/[Link]
xcix
[Link]
c
Civil aviation accounts for 6 percent of emissions from the energy sector, followed by railways adding up to another 3%, domestic
water-borne navigation accounts 1 percent
ci
[Link]
cii
[Link]
ciii
India becomes 3rd largest auto market globally, surpasses Japan: Report | Mint ([Link])
civ
GoI NEMMP and FAME Press Release
cv
[Link]
[Link]/
cvi
In coordination with the inclusion in the PLI, the GoI reduced the GST on EVs from 12 per cent to 5 per cent and on chargers and
charging stations from 18 per cent to 5 per cent. Furthermore, battery-operated vehicles will be given green license plates and be
exempted from permit requirements, and states were advised to waive road tax on [Link] of Heavy Industries
cvii
[Link]
cviii
[Link]
cix
[Link]
[Link]
cx
[Link]
cxi
Invest in India
cxii
Indian Railways
cxiii
Kamboj, Puneet, Ankur Malyan, Harsimran Kaur, Himani Jain and Vaibhav Chaturvedi. 2022. India Transport Energy Outlook.
New Delhi: Council on Energy, Environment and Water
cxiv
[Link]
cxv
[Link]
cxvi
[Link]
2030-79797
cxvii
According to GoI, Carbon emission by 2029-30 as per Business-as-Usual mode is estimated to be 60 million tons which would
be offset by various measures planned by IR. [Link]
cxviii
[Link]
cxix
[Link]
cxx
[Link]
cxxi
[Link]
cxxii
[Link]
cxxiii
[Link]
addition/articleshow/[Link]?from=mdr
cxxiv
[Link]
cxxv
[Link] pdf pg 8/58
cxxvi
[Link]
cxxvii
[Link]
cxxviii
[Link]
cxxix
[Link] pg 42
cxxx
[Link]
cxxxi
Access to electricity (% of population) - India | Data ([Link])
cxxxii
Press Information Bureau ([Link])
cxxxiii
Urbanisation and industrialisation in India – India Energy Outlook 2021 – Analysis - IEA
cxxxiv
[Link]
cxxxv
[Link]
cxxxvi
The bill now awaiting the presidential accent before its deemed as parliamentary law.

cxxxviii
Only a few space-cooling studies analyse potential energy savings from building envelope, while most studies assess the
impact of active cooling technologies. [Link] pg 45
cxxxix
*Impact Assessment 2020-21_FINAL.pdf ([Link]) pg 24/184
cxl
[Link]
[Link] pdf pg 18
cxli
Impact of Energy Efficiency Measures for the year 2019-20, BEE, March 2021 [Link]
Report_Website version_1.pdf
cxlii
UJALA Reform Booklet small_size ([Link])
cxliii
[Link] (pg 239/246)

48
cxliv
[Link].
cxlv
[Link]
cxlvi
Energies | Free Full-Text | Explaining the Diffusion of Energy-Efficient Lighting in India: A Technology Innovation Systems
Approach ([Link])
cxlvii
Last accessed on the 7th of November: [Link]
cxlviii
Methods for calculating energy saving on PDF pg 108 BEE_Final Report_Website [Link] ([Link])
cxlix
[Link] pdf pg 71
cl
EESL annual report, PDF pg 11/246
cli
[Link]
clii
[Link] (pg 239/246)
cliii
World Bank Document
cliv
Data last accessed on 7/11/2022. [Link]
clv
*Impact Assessment 2020-21_FINAL.pdf ([Link])
clvi
ibid
clvii
BEE_Final Report_Website version_1.pdf ([Link])
clviii
[Link]
clix
Parliamentary Standing Committee on Energy (2021-22), 2022, Financial Constraints in Renewable Energy Sector: Twenty First
Report
clx
[Link]
fallouts#:~:text=Coal%20transitions%20in%20India%20are,%2C%20steel%2C%20and%20bricks%20sectors.

49