India’s green transition gains momentum with $386 billion in funding commitments

India has been asking investors to back its green transition for several years, and its renewable energy industry seems to be finally gaining momentum. The South Asian country continues to rely heavily on fossil fuels, with no possibility of a rapid transition from oil, gas and coal to renewable alternatives. However, the government aims to achieve net zero carbon emissions by 2070, meaning it will need to accelerate the growth of its green energy capacity in line with rapid population growth.

The Government of India produced “Roadmap to India’s 2030 Decarbonisation Target” ahead of the COP26 climate change summit, announcing a goal to reduce carbon emissions by 50% and reach 500 GW of fossil fuel-free generation capacity by 2030. These goals are more ambitious than the commitments made under the Agreement in Paris since 2015, demonstrating the government’s ambitions. for an eventual green transition.

Prime Minister Narendra Modi has repeatedly called on the international community to support India’s green transition goals by funding the development of a strong renewable energy and clean technology sector. In 2023, at the G20 Leaders’ Summit, Modi highlighted the large investments that are needed to support an inclusive energy transition to combat climate change. modified he stated“Given the challenge of climate change, the energy transition is an important need of the 21st century world. Billions of dollars are needed for an inclusive energy transition. Of course, developed countries play a very important role in this.”

Speaking at the Global RE-Invest summit in September, Modi redoubled his efforts to attract investment. modified he stated“India is a guarantee for better returns if you want to expand. There is no better place for investment and innovation (in renewable energy) … I invite you all to invest in India’s green transition.” He based this claim on the fact that “India is the only country among the G20 nations to have met all its Paris climate commitments nine years ahead of schedule. A developing nation has achieved what developed nations could not.” Although in reality, India is still 13% short of Modi’s pledge at the UN climate talks in Paris in 2015 to increase its renewable energy capacity to 175 GW by 2022.

However, after years of persistence, India is finally attracting the funding it needs to accelerate the development of its renewable energy capacity. India is expected to connect a record 35 GW of solar and wind power on its grid by the end of March 2025. The South Asian country is the third largest producer of solar energy in the world. However, commissioning of large solar farms has slowed in recent years as more solar capacity is needed to meet growing energy demand in place of dirtier alternatives such as coal.

To help India meet its 2030 climate goals, financial institutions have pledged $386 billion in financing for renewable energy projects by 2030. India will need to install a minimum of 44 GW of clean energy capacity per year between now and the end of the decade to meet its renewable energy targets. Indian Renewable Energy Minister Pralhad Joshi he stated, “We have received overwhelming commitments from States and Union Territories as well as developers, manufacturers and financial institutions to support our target of 500 GW by 2030.”

In addition to financial institutions, several private companies are increasing their investments in India’s green energy and cleantech sector. In September, India’s Tata Power announced it would invest almost $9 billion to expand the country’s renewable energy capacity. The Indian power company said it would invest the money over the next five to six years to add 15 GW of renewable energy by the end of the decade to support a green transition. Praveer Sinha, CEO of Tata Power, he stated “We see renewable energy as the future, and this investment will significantly strengthen our capacity in that direction.”

Last year, the Avaada Group secured $1.3 billion in funding to advance its green hydrogen, green methanol, green ammonia, solar generation and renewable energy operations in India. Meanwhile, Indian infrastructure lender REC recently announced that it has signed deals worth about $13.37 billion with renewable energy developers. The funding will go towards the development of several industries, including solar, wind, hydro, battery power and green ammonia.

While this is a positive start, the Government of India is promoting more investment opportunities to support the country’s green transition. In June, at the Indo-Pacific Economic Prosperity Framework (IPEF) Clean Economy Investor Forum, India’s Commerce Secretary Sunil Barthwal announced 500 billion dollar investment opportunities in New Delhi, particularly in renewables, green hydrogen and electric vehicles. This reflects a government-wide goal to raise funds to ensure that India can gradually shift its reliance on coal to green alternatives as its energy demand continues to grow. With COP29 climate summit In a few weeks, we can expect to hear more about India’s progress and see greater commitment from high-income countries to expanding the renewable energy capacity of the developing world, including India.

By Felicity Bradstock for Oilprice.com

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