Fitch Solutions said on Friday that India must substantially alter its current trajectory if it has to deliver on Prime Minister Narendra Modi's climate targets for 2030,
Modi at the COP26 announced India by 2030 will increase its non-fossil fuel power generation capacity to 500 GW, generate 50 percent of its power from renewable sources, reduce its total carbon emission by 1 billion tonnes and bring down the carbon intensity of its economy by 45 percent.
''India now faces the challenge of balancing strong economic growth with a sharp deceleration in its CO2 emissions,'' Fitch Solutions said in a note.
''India must substantially alter its current trajectory if it is to deliver on its commitments. Based on the current state of play, the country will fall far short of its climate objectives.''
As of 2020, coal, oil, and natural gas accounted for 55 percent, 28 percent, and 7 percent of the primary energy mix, respectively.
''By 2030, we estimate they will account for a respective 45%, 33%, and 8%. That is, their total share will fall from 90% to 86%, with a decline in coal largely offset by a rise in oil and gas.
''Admittedly, we have proxied renewables growth with the growth in renewables power generation. Given that renewables look set to grow more rapidly outside of the power sector (e.g. in biofuels and hydrogen), we have likely understated their share in the overall energy mix in 2030. However, growth will occur from such a very low base that the impact will likely be marginal,'' it said.
Stating that the strongest prospects for displacing fossil fuels are in the power sector, Fitch said the targets are likely to be missed in absence of a step change in the sector.
''Our analysts currently forecast nuclear, hydropower and non-hydropower renewables generation capacity to reach 314GW by 2030, with their share in total generation rising to around 30 percent. Both would then fall shy of their targets, of 500GW and 50 percent,'' it said.
A number of headwinds in the form of supply chain bottlenecks, limited domestic manufacturing capacity and broader delays to project developments will likely continue to weigh on growth, it said.
In the transport sector, the easiest abatement options lie in the road transport segment. Currently, EVs account for less than 0.05 percent of the total vehicle fleet, with limited domestic EV options and a lack of charging infrastructure among the key barriers to growth. But both the central and state governments are expanding incentive schemes to increase the production and sales of EVs.
''While India is undoubtedly taking steps in the right direction, further policy support will be needed, to substantially erode the demand for oil.
''Based on the current policy landscape, our Autos team forecast rapid, 1,200 percent growth in the EV fleet over the coming decade. Nevertheless, EVs will still account for less than 1.0 percent of the total fleet by 2030,'' it said.
Moreover, emissions reduction benefits will be limited, as long as fossil fuels remain the dominant source of power generation in the country.
Higher fuel standards, improved engine efficiency, and higher ethanol blending mandates will likely account for a greater share of oil demand destruction over a 10-year horizon.
The other transport sectors are harder to abate. Both the maritime and aviation sectors are heavily reliant on oil and the high cost and low technological maturity of alternative fuels, combined with long fleet renewal cycles, will limit uptake in the near term.
''There is significant scope for emissions reduction in the industrial sector. Emissions reductions will largely stem from improved energy efficiency, with electrification, a switch to alternative feedstocks, and the deployment of carbon capture technologies all facing substantial technical and financial barriers to uptake,'' it added.
(With PTI inputs)
