How India’s sustainable development goals are powering its growth while striving for net zero

The transport sector in India contributes 18% of the total GHG emission, with the road transportation segment alone accounting for 87% of the emissions. If the current consumption trend continues, India will need approximately 200 million tons of oil equivalent energy supply annually by 2030 to meet transportation demands. The energy transition in this sector is being pursued through measures such as blending biofuels with petroleum products, promoting electric vehicles (EVs), and electrifying Indian Railways by progressively replacing diesel traction with electric traction.

In addition to India’s renewable energy, significant advancements have been made in bioethanol. The National Policy on Biofuels notified by the Government of India in 2018 mandates oil marketing companies to blend 20% ethanol, sourced from agricultural inputs, into petrol by 2030. To support this, the government determines the price at which ethanol is procured by the oil marketing companies and offers financial incentives to establish ethanol manufacturing capacity in India. Similarly, the Ministry of Power mandates 5% biomass co-firing in Thermal Power Plants (TPPs) from FY 2024-25.

Building on these achievements, our recent report, Energy transition: India’s journey to net zero, suggests that compressed bio-gas (CBG) be blended with compressed natural gas for transportation and piped natural gas for domestic use. While CBG blending obligations will remain voluntary until FY 2025, they may become mandatory thereafter. Similar proposals are being considered for aviation fuel. According to a recent government release, a 1% target for sustainable aviation fuel blending may be introduced for international flights by 2027.

India is undergoing a transformative shift towards sustainable transportation. The government has implemented a series of measures to promote India electric vehicles, including demand side incentives, supply side incentives for EVs and Advance Chemistry Cell (ACC) batteries, funding of charging stations and lower indirect taxes on the manufacture and sale of vehicles. In addition, various state governments provide financial incentives, reduced or waived road taxes, and subsidies for establishing charging stations. The sector is witnessing strong investment interest, with significant participation from both start-ups (focused on two wheelers) and traditional automotive players. The further adoption of electric vehicles in India will depend on indigenizing battery manufacturing, expanding charging infrastructure, and innovating to offer competitive and appealing products to Indian consumers.

Indian Railways is actively pursuing its ‘Mission 100% Electrification’ plan to achieve net zero carbon emissions by 2030.  Key initiatives include adopting energy-efficient technologies such as three-phase electric locomotives with regenerative features, head-on generation technology, LED lighting in buildings and coaches, and using star-rated appliances. The railways also focus on afforestation to further reduce emissions. This plan is expected to save INR14,500 crore (US$1,725 million) annually once complete. Indian Railways' comprehensive approach reflects its commitment to becoming a sustainable, energy-efficient transport backbone for the country.

India is leveraging its abundant sunshine to position green hydrogen as a competitive energy source to decarbonize hard-to-abate sectors. The government has launched the National Green Hydrogen Mission with a total outlay of INR19,744 crore (US$2.4 billion) up to 2029-30. Five states have already introduced independent India green hydrogen policies to accelerate production and attract investments, with others drafting their respective policies.

Simultaneously, the government is promoting offshore wind and battery storage technologies through viability gap funding to support incremental capacity expansion. As these clean technologies mature and achieve financial sustainability, government fiscal support will gradually diminish, paving the way for accelerated private investments.

India’s Renewable energy and bio-fuel growth has been fueled by mandates and market instruments, with minimal reliance on subsidies. The government plans to introduce an Emission Trading System (ETS) through the Carbon Credits Trading Scheme (CCTS), likely following a cap-and-trade model. This mandatory system will be complemented by a voluntary carbon market, allowing non-obligated entities to trade credits. India is also aligning CCTS with international standards to enable participation in global carbon markets.

India Renewable energy and biofuel expansion are driven by mandates and market instruments, with limited reliance on subsidies. The government plans to launch an Emission Trading System (ETS) under the Carbon Credits Trading Scheme (CCTS), likely adopting a cap-and-trade model. This mandatory system will work alongside a voluntary carbon market, enabling non-obligated entities to trade credits. Efforts are underway to align the CCTS with global standards, fostering India's participation in international carbon markets.

The Securities and Exchange Board of India (SEBI) has mandated Business Responsibility and Sustainability Reporting (BRSR) for the top 1,000 listed companies. This requires disclosure of energy use, water consumption, emissions, waste, and biodiversity metrics, encouraging businesses to embed sustainability into their core strategies.

India will require US$150 to US$200 billion in annual investments to achieve its climate targets. Recognizing the importance of decarbonization, the Reserve Bank of India (RBI) and other regulators are facilitating capital flow. The RBI has introduced a framework allowing banks to accept green deposits, targeting sectors like renewable energy, clean transportation, and green buildings.

In FY23, the Indian government raised INR16,000 crore (US$2 billion) through sovereign green bonds to finance green infrastructure projects. Additionally, SEBI has established clear guidelines for issuing green bonds, including eligibility criteria, disclosure requirements, and verification standards. Despite these efforts, only 25% of the required investment is currently being met, highlighting the need for additional private capital and government support.

To reach India net zero by 2070, we will need over US$10 trillion in investments. However, the combination of favorable policies, strong economic drivers, technological advancements, and growing investor interest positions India as a global leader in the energy transition. With this momentum, India might achieve net zero even before 2070, unlocking immense opportunities across the value chain.