A consequence of India’s plan to reduce its dependence on oil imports – currently standing at around 90 per cent – has been to increase attention on the role of ethanol blending, and to bring forward the target for the sale only of gasoline with 20 per cent ethanol brought forward by five years: to 2025.15
Achieving that will require a more than doubling of the 8.5 per cent today, and the rapid upscaling of investment in the infrastructure needed to allow the production and blending of ethanol domestically. Should it do so, the opportunity exists for India to rise to become the third largest market for ethanol worldwide, behind the United States and Brazil.16
One obstacle is the necessary recalibration of existing motor vehicles to use the blended fuel if they are to maintain their efficiency. The use of E20 fuel by newer vehicles (those manufactured after 2008) requires new engine specifications.
Traditional fuels such as biomass are used by roughly half of all Indian households – with the predominance being in rural areas – for cooking purposes, even though the country has near-universal electrification. Achieving full transition to cleaner cooking (such as by providing better access to LPG or electric cookstoves) will require concerted action to address the unaffordability of alternatives, which remains a key dampener of their growth.
Whilst adoption of electric vehicles (EVs) is making prime-time headlines elsewhere, India remains in the very early days of adoption. Though a participant in EV30@30, a campaign launched by the Clean Energy Ministerial with an ambitious objective of reaching 30 per cent sales share for EVs by 2030, penetration in India remains slow and hindered by the lack of charging infrastructure (with the exception of three-wheelers where EVs account for 50 per cent of sales in 2020)17. Government plans are in play to install chargers in several cities and highway corridors, as well as to provide capital subsidies and other incentives to EV manufacturers and expand private sector involvement in the infrastructure rollout. India’s annual EV charger market could be worth $US5.2bn by 2030 if it achieves the EV30@30 target, which would see an ~7-8 million electric cars on Indian roads by the end of this decade.
India’s ‘Hydrogen Energy Mission’ was launched in 2021 and aims to scale up the production and use of green hydrogen – that produced from renewable electricity – and increase its role in India’s energy transition. India’s low costs of renewable energy make it well placed to be a global leader in green hydrogen. The government plans to spend $US200 million over the next five to seven years18 to promote its use and position the country as a global hub for green hydrogen production and exports.
The high dependence on imports and cost of gas and the emissions tied to coal consumption, combined to low clean energy cost, make India one of the more attractive markets for producing and utilising green hydrogen. In the near term, this is particularly true for industry and heavy duty transport, but green hydrogen could become an alternative to gas to provide balancing on the power grid as cost decline.
Its potential as a transport fuel is currently being explored through various initiatives, including an 18 per cent hydrogen-enriched compressed natural gas (HCNG) as an automotive fuel, and promoting projects for hydrogen-powered vehicles such as six-fuel cell buses by Tata Motors and the rollout of HCNG buses in Delhi.
Supporting India in achieving net zero
“Opportunities and partnerships with the private sector can play a vital role in closing the funding cap and enabling new opportunities,” Gupta says.
Macquarie has a strong track record of developing and operating renewable energy assets and working with government utilities, industries, and companies to support their decarbonisation, and we are playing a key role in helping India achieve its net zero ambitions.
From developing solar assets to transformational intervention in India’s electric mobility space where we have mobilised large commercial capital to power India’s drive to de-carbonise its transport sector, our involvement is both direct, cross sector, and at the international level.
Earlier this year Blueleaf Energy, a portfolio company of Macquarie’s Green Investment Group, acquired majority stake in Vibrant Energy with a pipeline of over 400MW solar plants across India.
Macquarie Asset Management is currently working with portfolio companies in India on reaching their net zero emission targets by 2040. One example being Macquarie’s toll road portfolio. As one of the largest international investors in Indian toll roads, Macquarie is working with Gujarat Road And Infrastructure Company Limited (GRICL) in Gujarat on reducing emission. Thus far they have installed 108 kW roof top solar in two of the toll plazas. This has reduced 246 tonnes of CO2 emissions and electricity costs. These initiatives not only help us get to our net zero target but also deliver clear business improvements.
Bringing together leading private sector actors and the government to identify actions that can help accelerate private capital investment in the energy transition is also essential to meeting India’s ambitions.
Macquarie’s CEO, Shemara Wikramanayake, alongside Natarajan Chandrasekaran, Chairman of Tata Group, co-chairs CFLI India, an initiative led by Bloomberg’s Climate Finance Leadership Initiative (CFLI). CFLI India has been established with an objective to mobilise capital to enable and meet the funding gap in India’s ambitious national climate plan, and Macquarie is actively working with various public and private corporations to accelerate financing across renewables, water, waste infrastructure, electric mobility, and hydrogen, amongst other energy transition sectors.
The UK Climate Investments (UKCI) is another partnership which was established in 2015 as a joint venture between Macquarie’s Green Investment Group (GIG) and UK Government’s Department for Business, Energy and Industrial Strategy. The UKCI has been targeting transformational green energy investments in India and helping commercial and industrial business across India rethink how they produce and consume electricity via its investment in Cleanmax Solar.
With India’s renewable power capacity growing six-fold over the past 10 years, the country’s quest for more sustainable energy sources and a lower-carbon economy is ambitious yet achievable.
“Proactive and ongoing government policy decisions and falling technology costs making renewable power cost competitive with thermal-installations may put the world’s third largest economy on track to net zero and deliver positive global repercussions in the process,” says Aditya Suresh, Macquarie’s Head of India Research.