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Climate Change: Opportunities for India to become of Green Economy

India faces significant challenges from climate change, such as increasing floods and agricultural instability, but also holds immense potential for a green economic transformation. With its ambitious target of achieving 500 GW of renewable energy capacity by 2030, along with advancements in green hydrogen technology and sustainable farming practices, India has the opportunity to emerge as a model for developing nations. However, realizing this vision requires innovative financing mechanisms beyond traditional public funding, especially in the context of limited global climate finance. Despite these challenges, India’s emphasis on renewable energy, sustainability, and urban resilience positions it to secure its future while setting global benchmarks for driving a green economy.

Green Economy

A green economy is an economic model designed to achieve environmental sustainability, social equity, and economic growth simultaneously.
It prioritizes reducing ecological risks and resource depletion by investing in sectors like renewable energy, clean technologies, energy efficiency, and sustainable agriculture.
The primary objective is to generate employment, enhance overall well-being, and foster sustainable development while minimizing harm to the planet’s natural resources.

Climate Change Vulnerability Driving India’s Transition to a Green Economy

• Frequent Disasters Accelerating Renewable Energy Adoption:
  India’s growing exposure to extreme climate events like floods, heatwaves, and cyclones has highlighted the vulnerability of its fossil fuel-dependent energy systems.
  For instance, the 2023 Himachal Pradesh floods caused extensive damage to infrastructure, including energy networks.
  To address these challenges, India’s renewable energy installed capacity increased by 13.5% in one year, reaching 203.18 GW in October 2024, as part of its 500 GW target by 2030.
• Agricultural Losses Promoting Sustainable Practices:
  Erratic monsoons and rising temperatures due to climate change have severely impacted crop yields and farmer incomes.
  Studies predict that climate change could reduce wheat yields by 19.3% by 2050 and up to 40% by 2080, while kharif maize yields may drop by 18% and 23%, respectively.
  In response, India has adopted initiatives like precision farming, zero-budget natural farming in Andhra Pradesh, and climate-resilient seeds.
  In August 2024, the Indian Prime Minister unveiled 109 climate-resilient and bio-fortified crop varieties, including 34 field and 27 horticultural crops.
• Rising Sea Levels Driving Coastal Adaptation Projects:
  India’s 7,500 km-long coastline is under threat from rising sea levels, jeopardizing livelihoods and infrastructure in cities like Mumbai and Chennai.
  A recent report estimates that 36 million Indians could face displacement by 2050 due to coastal flooding.
  Projects like mangrove afforestation under the Mangrove Initiative for Shoreline Habitats and Tangible Incomes (MISHTI) are being implemented as nature-based solutions, aligning with India’s green economy goals.
• Heatwave-Induced Urban Energy Efficiency Measures:
  With over 200 heatwave days recorded in 2022, India’s cooling demand has surged, placing strain on conventional energy systems.
  To counter this, urban areas are embracing green building codes and energy-efficient cooling technologies.
  The National Cooling Action Plan (NCAP) aims to reduce cooling energy requirements by 20-25% by 2037-38, integrating sustainability into urban growth.
  Additionally, schemes like Perform, Achieve, and Trade (PAT) incentivize industrial energy efficiency, while Renewable Energy Export Zones encourage green manufacturing.
• Water Scarcity Driving Green Innovations:
  India’s per capita water availability has dropped sharply, from 5,177 m³ in 1951 to 1,486 m³ in 2022, due to climate-induced water stress.
  This has led to initiatives such as wastewater recycling and solar-powered irrigation under schemes like the Atal Bhujal Yojana, which promotes renewable energy solutions for groundwater management.
• Biodiversity Loss Encouraging Ecosystem-Based Solutions:
  Deforestation and biodiversity loss, exacerbated by climate change, have disrupted ecosystems crucial to livelihoods.
  India has committed to restoring 26 million hectares of degraded land by 2030, as pledged at COP15.
  This has spurred green initiatives like eco-tourism and agroforestry, creating jobs while addressing ecological challenges.
  The Aravalli Biodiversity Park in Haryana serves as a model for restored ecosystems, combating desertification and supporting biodiversity.
• Financial Risks Driving Climate Finance Initiatives:
  Frequent climate-related disasters have highlighted the economic vulnerabilities of climate change.
  India’s cumulative expenditure for climate adaptation is projected to reach ₹85.6 lakh crore (2011-12 prices) by 2030.
  Green finance mechanisms, such as Sovereign Green Bonds worth ₹16,000 crores issued in 2023, fund renewable energy projects and sustainable infrastructure, making climate resilience a core component of economic policy.
• Public Health Crises Accelerating Green Infrastructure Development:
  Climate change has exacerbated health crises, such as rising cases of vector-borne diseases and waterborne illnesses, affecting 37.7 million Indians annually.
  To address these challenges, India has focused on sustainable urban infrastructure through programs like the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), which emphasizes sustainable water supply and sanitation systems.
  Additionally, initiatives like the Namami Gange Program aim to clean and rejuvenate rivers, reducing water contamination and associated health risks.

Roadblocks in India’s Transition Towards a Green Economy

1. Insufficient Renewable Energy Infrastructure:
   India’s goal of achieving 500 GW renewable energy capacity by 2030 is hindered by inadequate infrastructure and grid integration issues.
   Currently, only 28.04% of India’s renewable energy is on-grid, reflecting significant gaps. Delays in projects like the Green Energy Corridor, which aims to improve grid connectivity, further emphasize the challenges in aligning policy objectives with execution.
2. High Dependence on Fossil Fuels:
   Despite advancements in renewable energy, coal still dominates India’s energy mix, accounting for 77% of electricity generation as of FY23.
   India’s coal production reached 384.08 million tonnes (provisional) by August 2024, showcasing its deep reliance on fossil fuels.
   The absence of a clear strategy to phase out coal plants complicates the transition to a green economy.
3. Financial Constraints and Limited Climate Finance:
   Massive investments are required for the green transition, with NITI Aayog estimating $10.1 trillion by 2070 to achieve net-zero targets.
   In 2022, India’s clean energy investment stood at only $17 billion. While the 2023 issuance of ₹16,000 crore Sovereign Green Bonds was a positive step, it is insufficient to meet the massive funding needs.
4. Policy and Regulatory Uncertainty:
   Frequent changes in renewable energy tariffs and unclear regulations deter private investments.
   For example, the imposition of the Basic Customs Duty (BCD) on solar imports increased project costs by 20-25%, disrupting solar development projects.
   Such unpredictability erodes investor confidence and delays the implementation of green initiatives.
5. Challenges in Workforce Transition:
   Decarbonization threatens millions of jobs in carbon-intensive industries, particularly in coal-dependent states like Jharkhand and Chhattisgarh.
   By 2050, over 30 million jobs could undergo transformation. However, the absence of adequate skill development programs limits workers’ ability to transition into green sectors.
6. Limited Public Awareness and Behavioral Shifts:
   Sustainable consumption practices remain underdeveloped, with energy wastage prevalent in both urban and rural areas.
   A study revealed that only 25% of electrified households were aware of the Bureau of Energy Efficiency’s (BEE) star labels, with rural awareness even lower.
   Weak promotion of programs like UJALA for LED adoption further slows the shift toward sustainable energy use.
7. Technological Gaps and Import Dependence:
   India’s green technology sector heavily depends on imports, particularly from China.
   In FY24, India imported $7 billion worth of solar equipment, with $3.89 billion sourced from China, increasing geopolitical risks.
   Limited domestic manufacturing capacity undermines initiatives like the Production Linked Incentive (PLI) scheme, slowing progress toward self-reliance in green technology.
8. Climate Change Impacts on Renewable Projects:
   Ironically, climate change itself disrupts renewable energy generation.
   For instance, Tamil Nadu’s wind energy generation is projected to decline by 5% in 2024-25 due to erratic wind patterns. Rising temperatures also reduce the efficiency of solar panels, with studies indicating performance loss for every degree Celsius rise.
9. Urbanization and Resource Scarcity:
   India’s rapid urbanization, expected to add 600 million residents by 2031, strains resources and hampers sustainability goals.
   Only 22-28% of solid waste is processed, leading to environmental degradation. Delays in Smart Cities Mission projects further restrict progress in developing green urban infrastructure.
10. International Trade Challenges and Carbon Border Taxes:
    Emerging policies like the European Union’s Carbon Border Adjustment Mechanism (CBAM) pose threats to India’s exports, especially steel and aluminum.
    CBAM is expected to impact 15-40% of Indian steel exports to Europe, forcing Indian firms to balance environmental compliance with economic competitiveness.
11. Fragmented Governance and Coordination Gaps:
    Inter-departmental coordination issues between ministries, such as Environment, Power, and Finance, result in fragmented policy implementation.
    For example, overlapping jurisdictions between the Ministry of Renewable Energy and State Electricity Boards often delay renewable energy projects.
12. Limited R&D Investment in Green Technologies:
    India spends only 0.7% of its GDP on R&D for renewable technologies, far behind global leaders like Germany and the U.S.
    This lack of funding slows progress in areas such as green hydrogen, energy storage, and carbon capture technologies. Despite being the third-largest CO₂ emitter, India lags in developing carbon capture solutions.
13. Transportation Challenges in Electrification Goals:
    The transport sector, contributing 14% of India’s emissions, faces significant barriers in transitioning to electric vehicles (EVs).
    India currently has only 25,000 public charging stations. Moreover, the discontinuation of subsidies under the FAME-II scheme has slowed EV adoption due to high costs and insufficient infrastructure.
14. Social Resistance to Land Acquisition for Renewable Projects:
    Large-scale renewable projects often face delays due to land acquisition conflicts.
    For example, protests over displacement delayed the Bhadla Solar Park in Rajasthan, one of the world’s largest solar parks.
    Addressing these concerns is essential to ensure equitable and timely project execution.

Measures India Can Adopt to Accelerate Transition Towards a Green Economy

1. Scaling Up Renewable Energy Infrastructure with Grid Modernization:
   India must focus on expanding renewable energy projects and upgrading grid infrastructure to integrate intermittent sources like solar and wind.
   Implementing regional grid-balancing systems under the Green Energy Corridor can reduce underutilization of renewables and ensure a stable energy supply.
   Collaboration with initiatives like One Sun, One World, One Grid (OSOWOG) can drive investments and position India as a global hub for renewable energy.
2. Enhancing Domestic Manufacturing for Green Technologies:
   Promoting local production of solar panels, wind turbines, and energy storage systems through the Production-Linked Incentive (PLI) Scheme can reduce reliance on imports.
   India’s target to achieve 110 GW of solar module manufacturing capacity by 2025-26 aligns with the Make in India initiative, fostering job creation and green industrialization.
3. Boosting Green Finance through Innovative Mechanisms:
   India should expand green financing by issuing additional Sovereign Green Bonds and establishing a Green Credit Guarantee Fund to support MSMEs adopting sustainable practices.
   Encouraging private investments through platforms like the National Investment and Infrastructure Fund (NIIF) can mobilize resources for large-scale green projects.
4. Developing Integrated Land-Use Policies for Renewable Projects:
   A unified policy framework is needed to balance ecological and social concerns in renewable energy projects.
   Streamlining land allocation under the National Land Records Modernization Programme (NLRMP) and utilizing degraded lands, such as the Thar Desert and Gujarat’s arid regions, can minimize displacement and environmental harm.
5. Expanding the Electric Vehicle Ecosystem:
   India must develop robust EV infrastructure, including charging networks and battery recycling units, to accelerate transportation sector decarbonization.
   Strategically establishing EV charging stations at dhabas and petrol pumps can improve accessibility on highways and in urban areas.
   Integrating the FAME scheme with the Battery Waste Management Rules (2022) can promote a circular EV economy, reducing import dependence on lithium-ion cells.
6. Promoting Climate-Resilient Agriculture:
   Scaling up sustainable practices like organic farming and micro-irrigation under the Paramparagat Krishi Vikas Yojana (PKVY) can enhance resilience and lower emissions.
   Linking programs like National Innovations in Climate Resilient Agriculture (NICRA) with modern technologies such as drone-based precision farming (promoted under the Drone Didi Scheme) can optimize resource usage and reduce crop losses.
7. Establishing a National Carbon Pricing Framework:
   India should implement a comprehensive carbon pricing mechanism, including an Emission Trading Scheme (ETS), to encourage industries to adopt low-carbon technologies.
   Expanding ETS pilots in Gujarat and Maharashtra to a national level could generate significant funds for renewable energy and climate adaptation while aligning India with global trade frameworks like the EU’s CBAM.
8. Integrating Circular Economy into Industrial Processes:
   Adopting circular economy principles across sectors such as construction, electronics, and textiles can reduce waste and promote sustainability.
   For instance, mandating 30% recycled materials in construction projects under the Smart Cities Mission can lower emissions.
   Encouraging startups in waste management through the Startup India Seed Fund Scheme can drive innovation and job creation.
9. Strengthening Urban Green Infrastructure:
   India should expand urban green initiatives, such as green roofs, solar rooftops, and waste-to-energy plants, under the Smart Cities Mission.
   Integrating the mission with the National Solar Mission can incentivize rooftop solar adoption in metropolitan cities.
   For example, Surat’s combined waste-to-energy and solar initiatives demonstrate successful urban emission reductions

India’s transition to a green economy is not merely an environmental imperative but also a strategic pathway to sustainable development, aligning closely with the United Nations Sustainable Development Goals (SDGs). In particular, Goal 7: Affordable and Clean Energy and Goal 13: Climate Action are integral to India’s green economy vision. By expanding renewable energy capacity, advancing green hydrogen technologies, and encouraging sustainable agricultural practices, India not only supports SDG 7 but also addresses agricultural challenges and mitigates climate-related risks.

The End of the Blog- Climate Change: Opportunities for India to become of Green Economy