What caused India’s CO2 emission decline for the first time in 40 years?
The emissions are bound to increase once the lockdowns are lifted. But how we move out of the lockdowns and how we plan the economic relief/stimulus packages will decide whether India is choosing a pathway to future leadership through the green stimulus package
An economic slowdown, renewable energy growth and the impact of Covid-19 have led to the first year-on-year reduction in India’s CO2 emissions in four decades. Emissions fell by around 1% in the fiscal year ending March 2020, as coal consumption fell and oil consumption flatlined.
The major reason for the decline in CO2 emissions in the country was a decline in the quantum of coal-based power generation in the country which was growing at an average 7.5% growth rate in the decade preceding the last financial year (2009-10 to 2018-19) and saw a decline of approx. 2.6% during 2019-20. On the contrary, as a positive development, electricity generation from renewable energy sources increased by approximately 10% during the same period.
The reduction in coal demand also implied that coal production and offtake by Coal India Limited (CIL) -- which is responsible for more than 80% of coal production in the country -- fell by about 0.8% while the offtake/selling of coal fell by more than 4.3% in 2019-20 compared to the previous year. This happened for the first time in the last two decades. Coal imports during the year increased by 3.2%, implying that total coal deliveries overall fell by 2% in 2019-20.
As we anticipated in an earlier article in October 2019 that India might see the slowest growth in carbon emission this year, the decline was expected even without the COVID led closedown of the economy. But the COVID-19 crises definitely led to a sharp decline in March 2020, taking the overall CO2 emission for the fiscal year below the previous year.
During the COVID-19 led lockdown, coal-fired power generation fell 15% in March and 31% in the first three weeks of April, as per the daily data from the national grid. In contrast, renewable energy (RE) generation increased by 6.4% in March and saw a slight decrease of 1.4% in the first three weeks of April.
Low demand for petroleum products
The second big factor for lower CO2 emissions in India last year was that low demand for petroleum products due to the coronavirus outbreak and a slower demand growth earlier in the year. The consumption of total petroleum products during the fiscal grew only at 0.2%, the slowest in at least 22 years.
Using the indicators for coal, oil and gas consumption, we estimate that CO2 emissions fell by 30 million tonnes of CO2 (MtCO2, 1.4%) in the fiscal year ending March 2020, in what is likely to have been the first annual decline in four decades.
Looking at the electricity sector scenario in India over the past year, it is highly evident that the electricity demand has declined and most of the growth in demand has been met by growth in renewable energy replacing expensive and polluting coal.
Favourable economic conditions (lower cost per unit), less polluting nature, climate friendliness, must-run status for renewable energy projects and increasing installed capacity are the primary reasons for renewable energy taking up a larger percentage of India’s electricity demand over the past year.
With India’s ambition to install 175 GW renewables by 2022 and 450 GW by 2030 with an existing surplus power generation capacity, it makes no sense to put in new investments in the coal sector or in keeping the polluting older coal-based power plants running.
We hope that the relief package for the power sector would mandate reforms to move distribution companies away from expensive Power Purchase Agreements (PPA) they have signed with old coal-based power plants as well as with the plants which are still in early development or pre-development stages.
Having surplus (higher than the demand capacity) PPAs signed leads to loss for the Discoms as they would be paying huge amounts as fixed costs (a cost which has to be paid by Discom to power plants irrespective of whether it buys power prom it or not as mandated part of PPA) even without really needing to buy electricity from them.
Also, for the transport sector, BSVI norms have come into force, so those should be implemented with stringency; as well as there should be more investments made into transition to better public transportation facilities and renewable energy run electric vehicles and in building robust NMT (Non-Motorised Transport) infrastructure for cycling and walking.
The emissions are bound to increase once the lockdowns are lifted but how we move out of the lockdowns and how we plan the economic relief/stimulus packages will decide whether India is choosing a pathway to future leadership through green stimulus package and will keep the emission below past levels or we will be spiralled into another cycle of wasteful investments and choices which will keep haunting public health and our economic well being as a country.
(Author is an analyst with the Centre for Research on Energy and Clean Air (CREA). He was formerly associated with Greenpeace India)