Inflection Point: Before net-zero, comes the peak

March 25, 2021 7:15 AM

In developed countries, emissions have already peaked. Their decision is only about the path to net-zero. Emerging economies like India, instead, will go through a high-growth phase with rising energy demand and emissions. So, before a net-zero year can be targeted, India must discuss options for its peaking year

These comparisons are not excuses for India to not act. What matters is the atmospheric concentration of GHGs that causes climate change.These comparisons are not excuses for India to not act. What matters is the atmospheric concentration of GHGs that causes climate change.

By Arunabha Ghosh & Vaibhav Chaturvedi

Buzzwords are double-edged swords. They grab attention quickly, but when they take a life of their own, we tend to overlook the implications. The same is happening with ‘net-zero’, the aim to eliminate greenhouse gas (GHG) emissions by a chosen date or, if some gases were still being emitted then, to be able to remove an equivalent share from the atmosphere. There are growing calls for India to declare a ‘net-zero’ year. What would that entail? So far, this debate has been devoid of analytics.

For the world, net-zero by 2050 is critical to have a reasonable chance of keeping global average temperature to under 2-degree Celsius. Several countries have net-zero ambitions, including China, the EU, Japan, South Korea and the UK. President Joe Biden is expected to declare 2050 as the target year for the US. With the world now looking to India, the pressure and temptation to make an announcement is rising. Policymakers taking that call today are unlikely to be around three decades from now. It is imperative that we understand the implications.

Let’s unpack some definitions. Net-zero includes all GHGs. But the phrase is sometimes (incorrectly) interchanged with ‘carbon neutrality’ (only carbon dioxide), ‘zero carbon’ (again only carbon dioxide, but without offsets) and ‘zero emissions’ (all GHGs, but without offsets). These definitional differences have implications for pathways for different economic sectors. A region dependent primarily on tourism revenues would have a very different outlook for lowering emissions compared to another known for its coal mining and steel industry. For example, should steel be produced with renewables-derived hydrogen and some sequestration (net-zero) or should standards be raised impossibly such that there are no emissions at all? Should aviation aim to switch to mandatory offsets to get to net-zero or use biofuel-blended jet fuel for carbon neutrality? Any country contemplating net-zero should understand the economic structure at a sectoral level to make informed choices about technology, costs and time horizons for the transition.

After prose comes mathematics. In order to get to net-zero, emissions must peak first and then decline. For this to happen, energy intensity (energy per unit of GDP) and emission intensity (emissions per unit of primary energy) must fall. As long as GDP growth rates are higher than the sum of the reduction in energy intensity and emission intensity, emissions will not peak. The faster an economy grows, energy intensity and/or emissions intensity must drop more steeply. Put simply, we need more energy efficiency and more of that energy to come from cleaner sources.

With economic advancement, GDP growth rates eventually dip in the future, making it easier to bridge the emissions gap. In developed countries, this is why emissions have already peaked. Their decision is only about the path to net-zero. Emerging economies like India, instead, will go through a high-growth phase with rising energy demand and emissions. So, before a net-zero year can be targeted, India must discuss options for its peaking year.

Suppose India aimed for a 2050 peak with net-zero emissions by 2080. Our calculations show that the effort gap (between GDP growth rates and combined decline in energy and emission intensity) would be 1.7%. This gap would jump to 3.9% if we aimed for a 2030 peak with net-zero by 2060. To compare, for a 2030 peak, China’s effort gap is only 0.6%. China has enjoyed four decades of high growth. It can now peak by 2030 at a much higher level of development with lesser effort.

How would this translate into transformations in different sectors? Given our best understanding of the evolution of mitigation technologies, if India peaked in 2050, the share of renewable energy in electricity generation (excluding large hydropower) would have to be 28% then (compared to 10.1% in 2019). If, instead, emissions peaked in 2040, renewables’ share must rise to 65%; and exponentially rise to 83% in 2050 if emissions peaked in 2030. Similarly, share of electricity in industrial energy would have to go from 20.3% now to 30% in 2050 for a 2050 peak, but 70% in 2050 for a 2030 peak. And biofuel share in liquid fuels must reach 6% for 2050 peak emissions, but 98% in 2050 for a 2030 peaking target. These calculations illustrate why sectoral pathways are critical.

How does India compare with other major polluters (see table)? Between peaking emissions and net-zero targets are long transition periods. It is 46 years for Japan, 71 years for the EU and 77 years for the UK. The slow motion road to net-zero in the developed world contrasts with the much more rapid transition India must undergo. In their respective peaking years, per capita carbon dioxide emissions were above 9 tonnes for China, the EU and Japan, and 19.2 tonnes for the US. If India peaked in 2030, per capita emissions would be 2.2 tonnes. China’s per capita income in its peaking year of 2030 would be $29,438 (in purchasing power parity terms); India’s would be $8,779. When the US peaked emissions, each citizen was earning $55,916.

These comparisons are not excuses for India to not act. What matters is the atmospheric concentration of GHGs that causes climate change. As a highly climate-vulnerable country, for its own sake India cannot delay the peaking year too long. If it peaked in 2030 with net-zero in 2050, its cumulative energy sector carbon dioxide emissions (2021-2100) would be 63 Gigatonnes of carbon dioxide (GtCO2) and 215 GtCO2 for a 2050 peak with 2080 net-zero.

Again, for comparison, even with their stated net-zero ambitions, China will emit 349 GtCO2, the US 104 GtCO2 and the EU will release 69 GtCO2 by 2100. Historically (1900-2010), these countries emitted 129, 344 and 292 GtCO2, respectively, compared to 31 by India.

With rising climate vulnerability and shrinking carbon space, India must act decisively, from a lower level of per capita incomes and cumulative emissions—and much more rapidly than others have promised. This is not impossible, but will need a different order of effort. India needs to do its homework to determine a peaking year. It must recognise the trade-offs (such as rising electricity prices, rising rail tariffs, fiscal challenges for coal-dependent states, or jobs transition for coal workers). Then, to tap opportunities in a green economy, it must design detailed sectoral roadmaps, strengthen institutions, attract international capital, co-develop disruptive technologies, and ensure that it always aims for jobs, growth and sustainability.

Discretion, not bravado, is the better part of valour. The planet’s future and India’s development prospects cannot be left to chance: Let’s bet on a date and hope it all works out! Without an informed debate, we have only buzzwords.

Ghosh is CEO and Chaturvedi is fellow, Council on Energy, Environment and Water
@GhoshArunabha @CEEWIndia

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