Net zero is net positive for profits, people, and planet

Pursuing green technologies will result in much faster GDP growth

Most Indians worry that decarbonisation will impede the country’s development. They believe that coal-based energy cannot be replaced by solar, electric cars are too expensive, and people will not switch from animal to plant proteins. Simply put, they consider low-carbon emissions (green) technologies to be worse than high-carbon, fossil-fuel based (brown) technologies. But what if this is wrong? If green technologies are more cost-effective than brown technologies, then development pathways that take us to net zero emissions will be good for India. Better still, market-driven approaches will power these pathways. Net zero will be net positive for profits, people, and the planet.

Current policies are likely to lead to a 2-3 degrees centigrade rise in global mean temperatures by 2100. India will be devastated by such rapid warming. Droughts, floods, coastal flooding, glacial melting, and heat waves will damage our economy and stall job creation. Extreme weather events will destroy vital infrastructure and require massive investments in disaster management. Sea level rise will threaten many of our coastal cities. Comparing a 2-3 degree warming to 1.5 degree warming, Swiss Re has estimated that India’s gross domestic product could be 10-20 per cent lower. In addition, fossil fuels are leading to highly destructive air pollution across our cities, which is killing 1-2 million people per year.

India’s net zero pathways have to be compared against these 2-3-degree global warming baseline pathways. To date, net zero pathways have been compared to developmental pathways that do not factor in these dire climate change impacts. Moreover, our baseline pathways have assumed that fossil fuel prices are going to remain low. However, fossil fuel prices could rise dramatically due to continued underinvestment and geopolitical factors. This year alone, India will import close to $250 billion of crude oil, natural gas, and coal representing more than a third of our total imports.

While the world is pursuing net zero emissions by 2050, India’s fossil fuel-dependent economy is likely to cross 7 billion tonnes of carbon-equivalent emissions by 2050. Our net zero pathways require massive and immediate investments in green technologies such as solar and wind power, electric mobility, green hydrogen, and plant proteins. Green technologies are believed to be more expensive than brown technologies. Bill Gates has termed this the green premium. However, innovative Indian businesses have transformed the green premium into a green discount.

Round-the-clock solar power is now being delivered at prices 20-30 per cent cheaper than coal-fired baseload thermal power plants. More than 90 per cent of auto-rickshaws being sold in India are now all-electric. Not only is it much cheaper to operate these electric rickshaws, they also cost less than fossil fuel-based rickshaws. Meanwhile, all-electric fleets using Indian electric vehicles (EVs) are providing much cheaper rides to commuters than diesel and petrol cabs. India’s top business groups are working with leading technologists around the world to drive the cost of green hydrogen down to a dollar per kg. Sugarcane mills are being repurposed to produce ethanol that will be mixed with imported fossil fuels to bring down prices. Soy milk, made from locally grown soybeans, is now cheaper than dairy milk.

India is already pricing carbon with high excise taxes on petrol, diesel, and coal. An emissions trading scheme for industrial emissions has been announced. Significant subsidies are available for rooftop solar, electric vehicles, and charging networks. These incentives ensure that green technologies will become even more cost-effective spurring India’s vibrant start-up ecosystem to develop even better solutions. As we begin to foal more and more green unicorns, entirely new green industries will emerge that will enable rapid decarbonisation.

Adoption of cost-effective green technologies, accelerated by supportive government policies, will lead to massive technology shifts across the Indian economy. In the past few decades, digital technologies replaced analogue technologies. Market forces drove investments, technology development, and massive entrepreneurial activity spurring the rise of large IT, telecom, financial, and media industries. Now green industries will spring up.

Detailed modelling studies have shown that India needs to invest $50-100 billion per year to get to net zero emissions by mid-century. Private sector capital will spur green entrepreneurship. These return-generating investments will drive even more capital deployment into green technologies, and market forces will then drive India’s net zero pathway. Pursuing net zero will therefore result in much faster GDP growth, more job creation, lower air pollution, better balance of payments, and a more resilient economy for India. Net zero development becomes even more net positive when compared to 2-3 degrees baseline pathways.

India is reaching a tipping point. Green technologies are indisputably more cost-effective than brown technologies now. G7 countries must support our net zero development with appropriate financing mechanisms. Our companies and entrepreneurs will then have the resources to build new green businesses and transform existing businesses. Market forces and return-seeking capital will drive rapid decarbonisation. Net zero will be net positive for India’s economic growth, job creation, and public health.

The writer is the chairman of the Standing Committee on Finance in Parliament and a Lok Sabha MP from Hazaribagh, Jharkhand. The views are personal