Powering the future: India’s role in global energy transition

India's renewable energy potential, green hydrogen strategy and climate action plan drive its pivotal role in the global energy transition

In brief

• India aims for net zero by 2070 with 50% non-fossil electricity by 2030 and ranks fourth globally in renewable energy capacity, supported by a 36.5% CAGR in solar over 11 years.
• The country raised INR16,000 crore (US$2 billion) through sovereign green bonds in FY23, introduced green deposits, and mandated ESG disclosures for its top 1,000 firms.
• Over US$550 million raised for EVs, US$2 billion for solar rooftops, and US$9 to US$10 billion annually for BESS highlight India's push for sustainable technologies.

India, the world’s fastest-growing large economy, showcased impressive growth rates of 7% and 8.2% in FY23 and FY24, respectively. The country is steadfast in its ambition to achieve the status of a developed nation by 2047.  At the same time, it also recognizes the dual challenge and opportunity posed by rising global temperatures and climate risks, making significant strides in new energy sectors to foster sustainable development. 

Under the United Nations Framework Convention on Climate (UNFCCC), all countries are tasked with defining energy transition pathways tailored to their unique needs. India has embarked on such a path, ensuring alignment with its economic needs.

To tackle climate change, India has set an ambitious target of becoming net zero by 2070. Additionally, its 2030 Nationally Determined Contributions (NDCs) under the UNFCCC highlight five key objectives: 

• Promoting sustainable lifestyles under the “LIFE” initiative, reducing emissions intensity of GDP by 45% from 2005 levels

• Achieving 50% electric power capacity from non-fossil fuel sources

• Creating an additional carbon sink of 2.5 to 3 billion tons of CO₂ equivalent through forest and tree cover

• Enhancing investments in climate-vulnerable sectors like agriculture, water, and disaster management

The financial and policy landscape of India’s energy transition

Rapid decarbonization requires access to technology and funding. It is estimated that India would need US$150 to 200 billion of investments annually. Implementation of policy measures such as green bonds, green deposits, proposals on green taxonomy, disclosure requirements under the securities law, etc., will have a bearing on the flow of resources for energy transition. Indian financial regulatory bodies have implemented policies and issued guidelines to encourage investments. While these are at early stages and under development, successful usage of these instruments will impact the energy transition journey. Some examples are discussed below:

Green deposits: The RBI has issued a framework for banks to accept green deposits from customers, protect the interests of the depositors, aid customers in achieving their sustainability agenda, address greenwashing concerns, and help augment the flow of credit to green activities/projects. In the framework, the RBI has also listed a few sectors and activities, such as renewable energy, clean transportation, and green buildings, which qualify as eligible for the funds raised through green deposits. This would safeguard the interest of retail investors in meeting sustainable goals.

Sovereign green bonds: The Government of India has successfully mobilized INR16,000 crore (approximately US$2 billion) through the issuance of sovereign green bonds in FY23. This strategic financial initiative is aimed at bolstering green infrastructure development and funding public sector projects that contribute to the reduction of the economy’s emission intensity.

Green bonds: India’s securities regulator, i.e., the Securities and Exchange Board of India (SEBI), has established a clear framework for the issuance of green bonds, outlining the eligibility criteria for green projects, disclosure requirements, and verification procedures. SEBI has also issued guidelines to combat greenwashing of the proceeds raised through green debt securities by mandating issuers to continuously monitor the projects to ensure that the path undertaken reduces adverse environmental impact and contributes to a sustainable economy.

Green taxonomy: In the recent budget speech by the Finance Minister, the government has committed to bringing India’s green taxonomy for climate finance to enhance the availability of capital for climate adaptation and mitigation. The taxonomy will guide businesses in raising funds in a more specialized manner, as defined by the taxonomy under different categories/activities.

SEBI’s Business Responsibility and Sustainability Reporting (BRSR) mandate: BRSR requires top Indian companies to disclose detailed information about their environmental, social, and governance (ESG) performance. The BRSR applies to the top 1,000 listed companies in India by market capitalization. The mandate requires companies to disclose quantifiable metrics on sustainability-related factors, including factors related to energy transition such as electricity consumption, water usage, air emissions, waste management, and biodiversity conservation.

Progress in renewable energy and clean technologies

Fossil fuels have dominated India’s energy sector, but the commitment to derive 50% of electricity from non-fossil sources by 2030 signals a transformative shift. India ranks fourth globally in renewable energy installed capacity and wind power capacity and fifth in solar power capacity. With its geographical advantage of 300 sunny days annually, India can generate 5,000 BU of electricity per year from solar power. The country’s solar energy sector has grown at a CAGR of 36.5% over 11 years, driven by government policies and robust project uptake.

India’s clean energy sectors—solar, wind, green hydrogen, electric vehicles (EVs), and battery energy storage systems (BESS)—have seen robust investment activity. In solar, over $2 billion has been raised for residential rooftop installations since 2015. Wind energy companies like Inox Wind and Suzlon Energy secured significant equity funding, while green hydrogen projects such as Hygenco and Ayana Renewable Power attracted large-scale investments. EV firms like Ola Electric and Ather Energy collectively raised $550 million, and BESS investments now total US$9 to US$10 billion annually, driven by venture capital and government-backed tenders.

A promising path to net zero

India's energy transition presents vast opportunities, supported by strong economic incentives, government commitment, technological progress and growing investor interest. With strong progress across renewable energy sectors and innovative financing mechanisms, the country is well-positioned to potentially achieve net zero ahead of its 2070 target.