Energy demand to double by 2070; net zero needs $15 trillion investment : FICCI-Deloitte

India's energy demand is expected to double to about 1,200 Mtoe (millions tonnes of oil equivalent) by 2070 while transition to a net-zero scenario by that time will require investments worth $15 trillion, says a study by FICCI and Deloitte India.

The study titled 'India's energy-transition pathway: A net-zero perspective,' says three fundamental pillars - grid decarbonisation, industrial decarbonisation, and transport transition - to collectively anchor India's energy transition ambitions and are expected to address approximately 90% of the nation's current emissions.

Grid decarbonisation aims for a transformative shift in the share of electricity in the final energy mix, from 18% in 2020 to over 50% by 2070. The roadmap to grid decarbonisation requires more than 2000 gigawatt (GW) of grid scale renewable energy (wind and solar) and around another 1,000 GW of renewable energy for green hydrogen production. This transition will demand an ambitious capacity addition of approximately 50 GW/year of renewable energy, compared to the historical average of 15–20 GW annually, says the analysis.

Industrial decarbonisation primarily focuses on hard to abate sectors like steel, cement, aluminum, and fertilisers and specifies on Green Hydrogen (GH2), which is anticipated to find broad applications across these industries. As per Deloitte's analysis, GH2 is projected to satisfy a substantial portion of energy demand, more than 50 million tonnes (MT) by 2070.

The transport transition focuses on India's strategic shift towards low-emission technologies. The spectrum ranges from Battery Electric Vehicles (BEVs) to Hydrogen Combustion Engines to Fuel Cell Electric Vehicles (FCEVs).  As per the report, a robust Public-Private Partnership (PPP) to establish charging infrastructure and hydrogen refueling systems is essential for the transport transition. Both, central and state governments need to prioritise efficient urban planning strategies that can reduce travel distances and motorised travel demand, by investments in railways, including their augmentation and modernisation, as well as in freight corridors and mass public transit. It is crucial for future policy formulations to consider the potential supply chain and geopolitical risks that come with the import dependence on critical minerals, such as lithium and cobalt, says the report.

"It's important that we embrace the energy transition levers and focus on creating an ecosystem which enhances domestic manufacturing, foster global partnerships and attract investments," says Anish Mandal, Partner, Consulting, Deloitte India.  The report recommends that the central and state governments expedite the bidding process for procurement of renewables. State governments must ensure swift land allocation/acquisition and accelerate statutory clearances for project development. There is an urgent need to bolster domestic manufacturing capacity for renewables. In the interim, while the domestic supply chain is being fortified, the government may consider relaxing trade barriers. Hydro and nuclear resources along with regional trade of electricity will play a critical role in the supply-side transition.

To address the economic implications of GH2, the report suggests that measures be taken to reduce its cost and foster an environment that promotes its broad acceptance. It is crucial to support early-stage demonstration projects, particularly in the cement and steel industries. Studies need to be initiated to map out potential CO2 storage areas, and to identify regional clusters that would optimise the implementation of carbon capture technologies.

The report also highlights the instrumental roles of the government, private sector, and Multilateral Development Banks (MDBs) and recommends the introduction of innovative mechanisms, such as Contracts for Differences (CfDs), as a move to incentivise investments in new energy projects.

In terms of implementation, the report suggests the importance of strategic long, intermediate, and short-term planning, combined with diligent monitoring. A collaborative approach encompassing the central government, state governments, and industry experts is deemed crucial. States are poised to play an essential role in tailoring energy policies that align with national targets, and sector-specific targets are projected to guide corporate emission reduction efforts, says the report.