The 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNCC), known as COP27, started in Egypt on November 6. It has greater corporate participation this year, signalling the realisation that while governments make the policies, it will be up to the companies to execute the plans, ReNew Power founder Sumant Sinha said.
Sinha, who is attending COP for the third time, spoke exclusively to Moneycontrol’s Rachita Prasad on energy security and how there is some degree of despondency towards meeting global targets to curb climate change.
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Closer home, Sinha said there is a need to “turbocharge” energy policy initiatives that are crucial for global decarbonisation plans. Edited excerpts:
COP27 is taking place amid a global energy crisis. What’s the mood like on the ground? What are the discussions on the side-lines?
There are many things that are buffeting global energy systems. Climate, of course, was one of the most important things. But now, with the war in Europe, the whole issue of energy security is also becoming front and centre.
It is heartening that there is a more significant participation from corporates around the world. While the corporates don’t get involved in the main negotiations, there are lots of discussions on the side-lines that are actually very useful. People have recognised that while governments have to set policy and make mandates, eventually it’s the corporate sector that has to carry it out.
It is very critical to know what’s happening on the user-industry side. What are different carbon emitters – like the steel and cement industries – thinking. What are they doing and how can we help them? Participation of the corporate sector is a welcome addition to the COP framework. It is not formalised yet, but I hope that in future COPs, the organisers will formalise it.
In terms of the general mood, there is a lot of debate about whether it’s even sensible to keep the 1.5 degrees target alive or whether we should give up the goal and start looking at a new target, like 2 degrees Centigrade or something. There is a bit of despondency around that issue. (The Paris Agreement seeks to limit the rise in average global temperature to 1.5°C above the level in the Industrial Age.)
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Also, energy security is now becoming more critical as countries think about supply chains. There are lots of these imponderables that are creating a slightly more uncertain environment.
And then the Federal Reserve is increasing interest rates, so that is causing its own mayhem. So it’s a bit of an uncertain environment from that standpoint. And while the Egyptian government is saying that this is a COP for implementation, it’s not immediately clear what exactly that means beyond getting more financing lined up.
After Russia invaded Ukraine, many European countries are restarting coal-based power plants or looking to hoard coal. Will this set back clean energy targets globally?
I won’t say it’s a setback for clean energy, but I would say it’s a setback for global climate change mitigation efforts. Emissions have risen by 6 percent last year, when we are actually supposed to bend the trajectory downwards. And every year that we continue to have more emissions, the task becomes harder. So any enhanced use of fossil fuels is not great for the environment or climate change and it should be prevented.
Having said that, European countries currently are totally scrambling because they have winter setting in. This year, they seem to have adequate gas in their reserves, but next year, apparently, is going to be much tougher. So they are looking for anything that they can get to bolster their energy supplies. Unfortunately, coal is enjoying a bit of a renaissance as a result of that – that’s really not good news.
The problem is there are many implementation problems on clean energy and those have to be sorted out relatively rapidly as well – that is an area where I think more governments need to do whatever they can.
Over the years, India has emerged as a strong voice. What is your assessment of India’s stance at COP27 this time?
India is a very big country; it is the third- or fourth-largest carbon emitter in the world. Our development timeline is just starting, so going forward, India will become a more significant actor in the whole carbon emission space.
The decisions that India takes from now on are going to be fundamental to whether we are able to meet the carbon emissions aspirations of the world or not. India is already doing a lot, more than what the Western world could have expected. India has actually taken a very strong leadership position, born out of our own actions and our own steps.
How can India use that voice? India should continue to push for more climate finance. The $100 billion is much smaller than what is required and we require potentially trillions of dollars of capital every year.
The second issue is that of loss and adaptation. Countries like India will suffer as a consequence of carbon emissions by other countries in other parts of the world. So if there are impacts on the Indian economy or on India’s people, how will the Western world compensate for that?
The third area is implementation, that’s an area that India should look at very carefully.
You were one of the signatories to the Alliance of CEO Climate Leaders’ open letter for world leaders at COP27. The letter talks about how climate targets can be realised only with the support of governments. What more can the Indian government do?
One of the things needed now is the speeding up of the distribution sector, which we have talked about for years. The government has obviously put a lot of effort behind it, but state governments are just not on the same page. This issue needs to be tackled because, ultimately, it’s the electricity sector that is the basis for decarbonising the broader energy sector as well.
The second issue that the government will have to think very deeply about is that while we were encouraging green hydrogen in a big way, the final policies have not yet come out. What’s going to happen on the demand side?
And is what has been done on the supply side adequate now in light of what’s happening in other parts of the world? Every country in the world is now recognising that green hydrogen is the future and everybody is trying to develop that industry within their borders.
We need faster auctions because we have been going at about 10 to 15 gigawatts every year for the last several years; we need to set that up to 30 to 40 gigawatts.
The last thing is the issue of indigenising the supply chain – from importing solar modules, which I think is a very unhealthy dependence on China, to really getting the manufacturing going in India. There are quite a few things the government is already doing, there are several things the government can do more to turbocharge the sector.
Has there been any change in ReNew Power’s strategy, given the volatility in the global energy market?
Our core business is and will continue to be our renewable energy capacity addition in India. Currently, we have about 5.5 gigawatts of capacity that we are executing and will get done in the next 18 months. It took us almost the first nine years of our existence to add that much capacity. Now we are going to do the same capacity in 18 months, so our own growth has been turbocharged.
The other thing we are looking at is green hydrogen. Our sense is that hydrogen will be a globally traded commodity so you have to go to locations which offer you the best cost base. The third area we are looking at is getting backward integration into manufacturing. We are setting up a 6 gigawatt module plant and a 2 gigawatt cell plant.
What is the biggest challenge the world faces now in terms of climate action?
The biggest issue is people not realising that the effort required in adding thousands and thousands of megawatts of renewable energy is not a trivial issue. We talk about financing and about trillions of dollars going into the sector, but where is that money going? It has to ultimately go into equipment, which is not there, into land, which is incredibly hard to source and get. The power has to go into transmission lines, which don’t exist for the most part, and people are not there to do all this. So we need a lot of work in the entire renewable energy value chain for us to meet the great targets we need to meet. We don’t have a choice.
India has a 450 gigawatt target for renewable energy by 2030. It will be multiples of that if you add the green hydrogen requirements. This is not just India, this is a global issue. Who’s going to do all this? The creation of that economy and the physical work of doing that is what bothers me because there is just not enough work going on in that area. I don’t think enough people are focused on that. We need land. We need local permits. We need so many things to happen. The execution is going to take a lot out of all of us, but could be an opportunity.
