Economic and environmental implications of India's industry transition to net zero

Abstract

In line with global mitigation ambition and the domestic target of achieving net zero emissions by 2070, India's industrial sector is expected to undergo a major transition. This transition is not trivial given the rapid growth of industrial output, dependence on fossil fuels, high emission intensity, and complicated emission abatement processes. In this paper, we provide a whole systems analysis of the manufacturing industries- iron & steel, aluminium, cement, chemical and petrochemical, textile, residual- for achieving net zero by 2070. The methodology combines the qualitative inputs from stakeholders with the energy-economy modelling using IMACLIM-IND and AIM/Enduse models. We develop four scenarios: Business-As-Usual (BAU), Development First (DFS), Carbon Neutral (CNT) and Synchronous (SYNCH). For each of these scenarios, we assess impacts of the structural transformation on sustainable development mainly through impacts on economy (gross value added and material imports), environment (material resource savings), and investment needs. The SYNCH scenario achieves 63 % emission reduction and requires an investment of 1.7 trillion USD by 2050 compared to BAU. The key policy insight is that new investments should go towards decarbonizing electricity, recycling infrastructure, and Carbon Capture and Storage. Clear standards and regulations for emission reporting by the production firms should be stipulated by the government.