Renewables put India on track to decouple growth from emissions: RBI Study

Renewables and improved energy efficiency in industrial sectors have put India on track to decouple economic growth from emissions, according to an analysis by Reserve Bank of India (RBI) researchers.   

The researchers analysed the factors driving India’s carbon emissions growth from 2012 to 2022. During this time, energy-related CO₂ emissions increased by 706 million tons with economic growth as main contributor. However, gains in energy efficiency, structural changes, and improvements in emission intensity of electricity due to increased use of renewables helped curb emissions.

“India’s energy efficiency improved by 1.9% annually, exceeding the global average. India has achieved weak decoupling during this period, with a decoupling elasticity of 0.59, which is similar to that of other lower-middle-income countries (LMICs),” said the analysis published in the recent RBI Bulletin.

The negative emission factor effect is primarily driven by the deployment of renewables, with additional contributions from improvements in the efficiency of existing thermal power plants. The large-scale deployment of renewables is a relatively recent development, which explains why the emission factor effect during 2012-2017 was minimal and only became significant in the latter half of the study period.

In its updated nationally determined contributions (NDCs) to the United Nations Framework Convention on Climate Change (UNFCCC), India has committed to significantly decouple emission from growth by reducing the emission intensity of its GDP by 45% by 2030, from 2005 level.

The analysis further notes that India has made considerable strides in decoupling emissions from economic growth, but further efforts are essential to accelerate progress toward achieving net zero.

“To this end, India should intensify its focus on expanding renewable energy. Solar and wind power tariffs are now lower than those for new coal power plants, dispelling earlier concerns about the high costs of renewables. The levelised cost of electricity (LCOE) for solar PV combined with battery storage in India is already more competitive than that of new coal-fired plants and is expected to continue decreasing,” it concluded.

In addition to scaling up renewable energy, maintaining a strong emphasis on improving energy efficiency is crucial, as it remains a powerful tool for reducing carbon emissions, it added.