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India Commits To Aggressive Climate Action With International Financing

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Climate advocates are asking themselves whether the globe can hit its net-zero targets when the developing nations rely on coal to fuel their energy needs. While China and India power their economies mainly using coal, the Asian giants are committed to using far cleaner electricity and ultimately becoming carbon neutral.

These are not platitudes meant to quell the developed nations. Achieving net zero is a must — to improve living conditions while reducing climate emergencies and attracting multinational corporations. Asia will remain the world’s biggest consumer of coal, but Bloomberg New Energy Finance predicts it will peak there in 2027. After that, renewables will eat into its market share.

“The central government sets the overall direction, and the state governments implement it,” says Rajiv Ranjan Mishra, co-chair Confederation of Indian Industry National Committee. “In this system, we often go two steps forward and one step back. But there’s a realization that climate change is man-made, and India is more susceptible than the richer countries. It is in our interest to do what we can.”

He spoke last month during the International Renewable Energy Agency meeting in Abu Dhabi. He explained that India now relies on coal to fuel 55% of its energy mix, but the country has a long-term blueprint to procure much more renewable energy. Specifically, it is a $1.3 trillion plan to secure 450 gigawatts of wind, solar, and hydro by 2030 and to hit net zero by 2070.

Consider the steel sector, which accounts for 8% of CO2 emissions globally and is produced from iron oxide and “metallurgical” coal. Green hydrogen can decarbonize the industry, however, the price to make it must nosedive.

More government support is required to reduce costs. Germany’s Thyssenkrupp, Japan’s Nippon Steel, and Sweden’s SSAB are already making carbon-free steel. And Australia’s Fortescue Metals Group wants to generate 45,000 megawatts of green hydrogen by 2027 — enough hydrogen to power 45 average-sized steel mills. Meanwhile, Nucor
NUE
says that its proprietary brand — Econiq — is carbon-neutral and mass-produced, serving the automotive, construction, and renewable industries. Its first customer is General Motors
GM
.

The Race Against Time

As China and India prosper, they will need more steel — integral to new buildings, infrastructure, and renewable power plants. A DNV study says that green hydrogen made from wind and solar will start to meet 5% of the global energy demand in 2050 — a figure that needs to hit 13% to realize the goals of the Paris agreement. The International Energy Agency predicts it will be 10% by 2050. In the early going, it will add 20% to 30% to the price of steel.

“Governments can create an environment to develop this technology,” Rajiv Mangal, former president of Tata Steel in India, told reporters at IRENA. “If they put a price on carbon, it would happen.” Right now, the standards to make steel using green hydrogen differ depending on geography, increasing the cost of production. With standardization, the market may support a small premium.

China’s energy shift is further along than India’s. It relies on coal to fuel 56% of its electricity needs but has pledged carbon neutrality by 2060. BloombergNEF says that China will be the world’s largest wind and solar market, growing from 8% of the international fuel pie today to 48% by 2050 — a function of falling prices and economic development. The research firm says that the Chinese invest more in renewables than most other countries.

To that end, China’s President Xi said that his country’s total amount of wind and solar power will rise from 500 million kilowatts to 1.2 billion kilowatts in a decade. He also says China will hit peak emissions by 2030.

Paris aims to keep temperature rises to no more than 1.5 degrees Celsius
CEL
by mid-century compared to pre-industrial levels to mitigate such things as droughts, floods, and food and water shortages. Scientists say we are nearing the 1.2 degrees mark and on track to hit 2.7 degrees. Before Paris, the trend was 4 degrees Celsius. But 138 countries with less than 1% of annual CO2 emissions are at the mercy of 20 nations that make up 80% of those releases.

Shri Raj Kumar Singh, minister of Power and Renewable Energy in India, told reporters that his country has no “philosophical opposition to the energy transition,” provided the financing to do so is forthcoming. He says that developing countries lack the money and know-how to make this leap, pointing specifically to the cost of battery storage and the production of green hydrogen.

“We are losing a race against time,” says Achim Steiner, administrator for the UN’s Development Program, at the conference. “Before the 2000s, the developing states had fewer than 10 climate-related disasters a year, and now it is 20.” He says that wind and solar power generate jobs and energy access, pointing out that Kenya and Costa Rica produce 90% to 100% of their electricity with renewables. The issue is political leadership — not technology.

Indeed, China and India are case studies. While both rely on coal, they also lead the clean energy challenge necessary to mitigate pollution and attract global business. Addressing climate change is a universal need — a phenomenon that exempts no country or no people, whether rich or poor.

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