India will require $20 trillion of capex to meet the ambitious 2070 Net Zero target and that would be led mostly by the private sector.New Delhi:Indiawill need capital expenditure to the tune of a whopping $20 trillion in order to achieve its ambitious target to achieveNet Zeroby 2070, according to a new report.
“We developed an in-house India energy model — identifying need for solar, battery and hydrogen — to estimate the total capex needed to achieve net-zero, which we estimate at $20 trillion over the next 50 years,” research firm UBS said in a report.
Since India’s commitment last year to net-zero carbon by 2070, investors have debated the implications for global commodities given India’s status as a top-five importer of oil, LNG and coal.
“In that period, we expect India to stop importing 3%/3% of current global coal/oil demand and expand its solar generation capacity by 100x. By 2040, we see global trade flows and supply chains rearranging to accommodate India’s changing status from primary energy importer to an exporter ofrenewablesupplies,” the report said.
India’s primary energy demand is likely to nearly double by 2070, with renewables share rising to 72 per cent by 2070, from just 1 per cent in 2019, and 9 per cent of energy from bioenergy and 9 per cent from green hydrogen.
“We estimate $20 trillion capex to achieve this — 1.2 per cent of GDP over the period — mainly led by private investment. But in the short to medium term, India’s dependence on fossil fuels will rise, peaking around 2040, further complicating the dynamics of the global energy transition,” the report said.
Significantly, India is expected to overtake China as the leading growth market for oil during this period and continued import dependence would mean sustained pressure on India’s import bill, with current account deficit to last at least till 2045.
Commenting on whether India can achieve self-reliance in solar cells, batteries and electrolysers, the report points out that although India’s entry into solar PV and battery manufacturing is later than China’s, past experience — example, in 4G implementation — suggests fast-tracking is possible, assuming we see supportive government policies, financing incentives and large corporates backing the transition.
“India’s 265GW/1000GW of renewables installations and 600/7400GWh of battery additions by 2030/40E could support domestic manufacturers, as we expect Indian utilities and OEMs to invest $2 trillion by 2040,” the report stated.
India can achieve manufacturing capacities of 80 GW per annum of solar PV and 190 GWh per annum of batteries by 2030, placing it among the world’s top-three producers. The country’s solar PV manufacturing capacity target, if achieved, could reposition it in the next decade as a net exporter versus a net importer now.