India will strive to reach net-zero emissions by 2070. While this is commendable, it is essential to follow through with short-, medium- and long-term guiding strategies to ensure that India can maximize developmental gains in this transition. A coherent national transition strategy is important in a global context where industrialised countries are discussing the imposition of carbon border taxes while failing to provide developing countries the necessary carbon space to grow or the finance and technological assistance necessary to decarbonise.
- Green industrialisation strategy combines laws, policy instruments, and new or reformed implementing institutions to steer its decentralised economic activities to become climate-friendly and resilient.
- A market-steering approach rather than a hands-off approach would encourage patient private sector investments in technologies needed to industrialise under climate constraints.
- While India has provided high level of policy support to deploy renewable energy, its industrial policy efforts to increase the domestic manufacturing of renewable energy technology components have been affected by policy incoherence, poor management of economic rents, and contradictory policy objectives. India managed to create just a third of jobs per megawatt that China has managed to in its efforts to promote solar PV and wind technologies.
- Aligning existing RD&D investments with the technologies needed for green industrialisation is crucial for realising quantum jumps.
- Besides, India also needs to nurture private entrepreneurship and experimentation in clean energy technologies rather than be indifferent to it as we are today or stifle it as we did in the License Raj era.
- Policy incoherence, inadequate management of economic rents, and contradicting policy objectives have hampered India’s industrial policy initiatives to expand local manufacture of renewable energy technology components.
- In its efforts to promote solar PV and wind technology, India has created just one-third of the employment that China has.
- Manufacturing solar and wind components for export has produced more employment in China than domestic deployment.
- If India had been more savvy in pushing these technologies, it may have kept some of those employment.
- The technologies required to decarbonize the transportation and manufacturing sectors present a tremendous potential for India.
- However, India makes little R&D expenditures in these new green technology.
- India’s energy transition should be squarely development-focused and aim to extract economic and employment rents from decarbonisation.
- The government should neither succumb to international pressure to decarbonise soon nor should it postpone its investment in decarbonisation technologies and lose its long-term competitiveness in a global low-carbon economy. Instead, India should set its pace based on its ability to capitalise on the opportunities to create wealth through green industrialisation.
- The production-linked incentives (PLIs) under ‘Aatmanirbhar Bharat’ are a step in the right way for localising renewable energy manufacturing activity.
- Focus on R&D: Aligning existing R&D expenditures with the technology required for green industrialization is critical for achieving quantum leaps in economic activity.
- Encourage private enterprise: India should also encourage private entrepreneurship and experimentation with renewable energy solutions.
- India should follow a path where it can negotiate carbon space to grow, buying time for the hard-to-abate sectors; push against counterproductive WTO trade litigations on decarbonisation technologies; all while making R&D investments in those technologies to ensure that it can gain economic value in the transition.
How to structure
- Give an intro what green industrial policy is
- Explain its features and basic tenets
- Mention the need in current scenario as to how its helps becoming climate friendly and created growth
- Suggest way forward