Will it be RIP for fossil fuel plants?
As the world deliberates ways to achieve climate change goals ahead of the Conference of Parties (COP 26) of the United Nations in Glasgow in November, the International Energy Agency (IEA) has kicked off discussions on the need to drift away from fossil fuel power projects and focus more on renewables. Even if the pledges made by governments are fully met, the report, Net Zero by 2050: A Roadmap for the Global Energy Sector, highlights that it would be difficult to meet the required changes needed to reduce global energy-related carbon dioxide emissions to net zero by 2050 and limit the global temperature rise to 1.5 degrees Celsius. The Glasgow meet assumes importance with G7 countries deciding to stop unabated coal finance before the end of 2021. It sets out a cost-effective pathway dominated by renewables like solar and wind. The report examines uncertainties in bioenergy, carbon capture and behavioural changes in reaching net-zero. In it, Fatih Birol, IEA Executive Director, states, The IEAs pathway to this brighter future brings a historic surge in clean energy investment that creates millions of new jobs and lifts global economic growth. It calls for new policies and international cooperation.  With energy modelling tools, IEA has charted a roadmap of over 400 milestones to guide the global journey to net-zero by 2050. These include no investment in new fossil fuel supply projects, and no further final investment decisions for new unabated coal plants. By 2035, it wants to ensure there are no sales of new internal combustion engine passenger cars, and by 2040 the global electricity sector reaches net-zero emissions. An extremely stiff call! The pathway calls for annual additions of solar PV to reach 630 gigawatts (GW) by 2030, and those of wind power to reach 390 GW. Together, this is four times the record level set in 2020. For solar PV, it is equivalent to installing the worlds current largest solar park roughly every day. Investing in clean energy  A June 9 IEA report, Financing Clean Energy Transitions in Emerging and Developing Economies, prepared with the World Bank and the World Economic Forum, again highlighted the need to fund renewable energy projects. It said that annual clean energy investment in emerging and developing economies needs to increase from less than $150 billion last year to over $1 trillion by 2030, to put the world on track to reach net-zero emissions by 2050. Coal-fired power simply cannot compete with the ongoing cost reductions of renewables. Solar tariffs in India are now below even the fuel costs of running most existing coal-fired power plants, points out Kashish Shah, Research Analyst at Institute for Energy Economics and Financial Analysis (IEEFA). Much of Indias 33 GW of coal-fired power capacity currently under construction and another 29 GW in the pre-construction stage will end up stranded. In the last 12 months, no new coal-fired power plants have been announced, and there has been no movement in the 29 GW of pre-construction capacity, Shah adds. Many more experts agree that full decarbonisation of our energy systems is the only solution to climate stabilisation. Abhay Laijawala, MD, Avendus Capital Public Markets Alternate Strategies LLP, feels that, with regard to Indias commitments, it will need to progressively reduce coals share in electricity generation, which is currently at about 65 per cent, and remove it altogether by 2050. A local time frame  While India has not yet made its net-zero pledge, it may have to soon articulate its own time frame for it, says Laijawala. The move will also need huge financial resources, which are contingent on ushering in shifts in regulatory policy such as Indian green taxonomy, which would be a massive enabler for green finance, he says. Meanwhile, Ritu Mathur, Director, Integrated Assessments and Modelling, TERI, points out that the countrys energy demands are expected to at least double by 2050 as compared to 2020. Developing countries like India may continue to need a higher carbon space in the next couple of decades to pursue its development objective while operating within the principle of common but differentiated responsibilities, she argues. A recent TERI-Shell study, in fact, highlighted the lack of adequate technological solutions, especially in hard-to-abate industries, for complete decarbonisation of Indias energy sector by 2050. But with global capital shifting away from fossil fuels, India is also experiencing a similar shift, explains IEEFAs Energy Economist, Lead India, Vibhuti D Garg. She points to the absence of international players and investors in the bids for the public auction of 41 coal blocks in 2020. In the last few years, states like Maharashtra, Gujarat, Chhattisgarh, and public and private sector developers like NTPC, Tata Power have announced coal exit policies, she says. That, to keep pace, the country needs to hasten its transition to renewable energy, green hydrogen, and electric mobility.