Economic growth is key to energy transition, says CEA Anantha Nageswaran

The carbon budgets available to developing countries are inadequate to meet the energy requirements needed to fuel economic growth, V Anantha Nageswaran, chief economic adviser to the government of India, has said. He added that economic growth gives the confidence to countries to continue on the journey of energy transition.

Delivering the keynote address at Indian Venture and Alternate Capital Association (IVCA)’s GreenReturns Summit in Delhi on December 2, Nageswaran said that countries which have high per capita emission and have historically contributed to the carbon footprint, should have the responsibility to ensure enough finance to fund energy transition measures of developing countries.

“The carbon budget was fixed before it became part of the discourse. The carbon budget we are permitted today is inadequate. For India to be able to meet the energy required for energy transition, the countries that have overdrawn the carbon budget will have the obligation”, he said.

Nageswaran also emphasised the role of public funding in energy transition as private capital has always been risk averse. “In general, when we look at public goods, which are infrastructure, clean environment, air, water, etc., private capital has deferred early stage investments. We should also be aware of the reality that renewable energy technology or initiatives that we are contemplating today themselves require a huge amount of energy to be spent in the first place,” he said.

Nageswaran pointed out that the materials needed for renewable energy generation also require a high amount of energy. He wanted private capital to take a holistic view of what such a transition entails, rather than staying at a superficial level. “We all know about the issue of intermittency. The investment shouldn’t focus on setting up solar power plants or wind energy plants as we need to take into consideration the increasing cost of recycling solar panel waste and wind turbine waste. That is an area to invest in. The other areas to invest in are the area of grid capabilities and technologies which will be able to withstand the intermittency of supplies from these renewable energy sources,” he said.

Recognising the importance of carbon markets, he said that for them to function well, transparency of information, trust and integrity in the processes are essential. He also called for caution against greenwashing and stressed the need for innovative financial solutions to fund the energy transition.