India needs to recognise and address challenges posed by its dependence on China for critical minerals and examine the implications of phasing down coal on bank balance sheets as it accelerates its green transition, the government's Economic Survey 2023-24 tabled in Parliament on Monday said.
As part of its national plan to contribute to meeting the global goal of limiting the average temperature rise to 1.5 degrees Celsius, India has committed to reducing emissions by 45 per cent below 2005 levels by 2030, achieving 50 per cent cumulative electric installed capacity from non-fossil fuel-based energy resources, and creating a carbon sink of 2.5 to 3 gigatons of CO2 equivalent through additional forest and tree cover.
The consolidated report on the state of the economy in the previous year highlighted the need to "recognize and deal with challenges posed by dependence on China for critical minerals, which are crucial raw materials needed for e-mobility and renewable energy generation."
It also emphasised the need to examine the implications of phasing down coal for balance sheets and estimate the impact of phasing out coal-fired thermal plants on the freight revenues of the Indian Railways.
Over the years, India has faced increased pressure from some developed countries to rapidly "phase down" unabated coal power at international forums, especially the annual UN climate conferences.
In Glasgow in 2022 and Dubai in 2023, India strongly defended the coal interests of the Global South, arguing that developed nations historically responsible for climate change should not hinder the development of the Global South.
India relies on coal for about 70 per cent of its power generation.
The economic survey said India needs to develop or acquire storage technology at affordable costs for renewable energy in power generation, and to increase and account for the opportunity cost of land and capital being used for such energy, given that the country's "needs for land and capital far exceed their availability."
The country also needs to decide on the role and share of nuclear energy in its energy mix, it said.
"Geopolitically, the thrust on renewable energy and electric vehicles has set off a race to secure critical minerals and rare earths.
"China has positioned itself as an indispensable source of several of these materials.
"Securing supply in crunch times is a matter of concern," the document said.
The economic survey quoted Ed Conway, author and Economics Editor of Sky News, who said that the world might need more copper in the next few decades than it has ever used since the metal was discovered.
"Not just copper, but other metals will also be in short supply.
"The price of energy transition will be too much for most nations. It will only get worse."
According to the International Energy Agency, China commissioned as much solar PV in 2023 as the entire world did in 2022, while its wind additions also grew by 66 per cent year-on-year.
The government emphasised that nuclear energy is the cleanest and safest option.
"However, some nations are reluctant to consider it given that their public overestimates the probabilities of rare events, as humans tend to do.
"Three Mile Island, Chernobyl, and Fukushima loom large in people's minds," it said.
"The economic survey said that India should ensure the consistency of the e-mobility policy with the required and optimal energy mix between traditional and renewable sources and ensure grid stability for e-mobility to become widespread.
It should also study the implications of replacing internal combustion engine vehicles with e-vehicles, particularly on the sale of petrol and diesel and the tax revenues that such sales generate for the Union and state governments.
