By Supriya Srivastava
As India charts its course towards achieving net-zero carbon emissions by 2070, the nation finds itself at the forefront of a historic transformation. The scale of this ambition is matched only by the sheer magnitude of investment required—USD 10.1Trillion, according to the Council on Energy, Environment and Water (CEEW). This staggering figure encapsulates the financial, technological, and social shifts necessary to position India as a global leader in climate action while offering an unparalleled opportunity for investors to secure high-impact returns.
The stakes couldn’t be higher. As the world grapples with the worsening effects of climate change, India’s role is critical—not only as a fast-growing economy but also as a country home to some of the world’s most vulnerable populations. The nation’s roadmap to decarbonization is an intricate web of renewable energy, sustainable mobility, green hydrogen, industrial transformation, and advanced storage solutions. Each thread is essential, not just to mitigate climate risks but to create a resilient, future-ready economy.
$2 Trillion and Counting: The Green Economy’s Ascent
Global energy investment is set to exceed $3 Trillion for the first time in 2024, with over $2 Trillion directed towards clean energy and infrastructure. This surge in investor sentiment reflects the growing recognition of the green economy’s potential. In fact, if the green economy were a standalone sector, it would have a revenue pool of $5 Trillion in 2023 and a market capitalization exceeding $7 Trillion.
The green economy’s financial performance has been second only to the technology sector over the past decade, with its market capitalization expanding at a CAGR of 13.8% – outpacing the global equity markets by a significant margin. This growth trajectory is underpinned by the rapid advancements in key technologies, such as solar photovoltaics (PV).
Powering the Green Shift
The power sector is the cornerstone of India’s green transformation, requiring a lion’s share of the investment—USD 11.2 Trillion. The focus is firmly on renewable energy, with solar, wind, biomass, and hydropower leading the charge. Of this, USD 7.1 Trillion will be directed toward generation infrastructure, encompassing massive solar farms and offshore wind turbines. Another USD 3.2 Trillion is earmarked for overhauling transmission and distribution systems, incorporating cutting-edge technologies like high-voltage direct current (HVDC) systems and smart grids to ensure seamless energy flow.
Solar PV: Workhorse of the Green Shift
Solar PV investments are expected to exceed $500 Billion in 2024, surpassing all other generation sources combined. The sector has witnessed remarkable progress, with each dollar invested in wind and solar yielding 2.5 times more energy output than a decade ago. Factors such as record-low module prices of $0.14/watt, economies of scale, and reductions in raw material costs like polysilicon have fueled this transformation, making solar a cornerstone of India’s net-zero ambitions.
Electrifying India’s Mobility Sector
The transportation sector is experiencing a significant shift, requiring an estimated USD 277 billion in investments for sustainable mobility. Electric vehicles (EVs), from affordable two-wheelers to high-performance cars, are central to this transition. Charging infrastructure is expanding rapidly to accommodate this growth. Additionally, hydrogen fuel cells and alternative fuels like bioethanol are emerging as sustainable options for heavy-duty transport. With India aiming for 30% EV penetration by 2030, there are substantial opportunities for innovation and economic development in the sector.
Green Hydrogen: The Next Big Leap
India is positioning itself as a global leader in green hydrogen, with USD 2.1 trillion in expected investments. This renewable energy-derived fuel could significantly decarbonize challenging industries like steel, cement, and ammonia production.
Geopolitical Relevance of India: An Alternative to Monopoly
The green economy is increasingly influential in global geopolitics as countries address climate change, energy security, and development. India is positioned as a viable alternative to China’s dominance, particularly following the US and EU’s hefty tariffs on Chinese EV imports. India’s National Hydrogen Mission, launched in 2021, aims to boost green hydrogen production and export, with essential infrastructure for storage and distribution being developed. This could establish India as a global export hub for climate tech and sustainable, circular-economy products.
Storing the Future: Energy Storage and Grid Modernisation
The intermittent nature of renewable energy sources like solar and wind requires a strong energy storage system infrastructure. Advanced battery technologies, such as lithium-ion and flow batteries, along with pumped hydro storage, are essential for balancing supply and demand.
Smart grids powered by second-life batteries are also crucial as they improve resilience, optimize energy use, and better integrate renewables. Investments in these areas are vital for supporting India’s goal of achieving 500 GW of non-fossil fuel capacity by 2030, highlighting the importance of advanced storage and grid modernization.
Industrial Decarbonisation: A New Era for Manufacturing
India’s industrial sector, a major contributor to greenhouse gas emissions, needs significant upgrades to meet climate goals. Implementing carbon capture and sequestration (CCS), enhancing energy efficiency, and electrifying processes are essential for competitiveness in low-carbon global markets. These innovations not only ensure compliance but also offer attractive financial returns through energy savings and carbon credits.
The Circularity Imperative: Investing in the Future
Achieving net zero by 2070 will require a significant increase in investments across the climate tech ecosystem. Global investments in renewable capacity addition reached $570 billion in 2023, a 27% increase from the previous year. However, this is still not enough to limit global warming to 1.5 degrees above pre-industrial levels. An additional $500 billion per year is required to reach this critical target.
The Untapped Potential: Opportunities Abound
India’s climate tech ecosystem is ripe with opportunities beyond traditional sectors. The demand for energy-efficient technologies, like power management semiconductors and data center cooling systems, creates attractive investment prospects. Moreover, the green bond market’s growth, with $540 billion in new issuances in 2023, allows investors to finance sustainable projects.
The choices made today will shape the world of tomorrow. For those ready to act, India’s climate tech ecosystem presents the perfect confluence of impact and returns. It is time to seize the moment and fund the future.
The author is Director – HR & Finance, LOHUM CLEANTECH.
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