India to see huge global capital flows in clean energy: IEA Exec Director

In a Q&A, Fatih Birol dwells on India's future in renewables, Reliance's aggressive green energy foray and how advanced countries should support the emerging world in its net-zero emission drive

At a time when India is moving rapidly towards electric vehicles, the International Energy Agency (IEA) believes that the country should quickly be part of the next chapter of the automotive industry. Fatih Birol, IEA’s Executive Director talks about India’s future in renewable energy, Reliance’s aggressive entry into the green energy space and how advanced countries should support the emerging world in its net-zero emission drive in an interview with Shine Jacob. Edited excerpts:

1. India has set an ambitious renewable energy target of 450 Gw. What is your view on this?

If you look at all the power plants installed in the world last year, 90 per cent were renewable—solar and wind. Only 10 per cent included coal, natural gas and oil. This was the trend across the globe, including Asia, Europe, America and Africa. There are two reasons for this shift. One is the environmental problems that the world is facing, including climate change. Pollution in cities is also a factor.

More than that, renewables are getting cheaper and cheaper, due to which many utilities and governments are opting for them. When I look around the world, there are successful, less successful and very successful ones in terms of renewable shifts. I would put India in the very successful category. It has set ambitious targets and is doing very well especially in solar.

2. Mukesh Ambani-led Reliance Industries announced massive renewable plans last month, including an addition of 100 Gw solar capacity. Is it a positive for India?

It is a big thing (RIL's aggressive foray). It will not just be a source of inspiration for India, but for many other countries globally.

I believe that clean energy projects in India and global capital are going to meet each other soon in a big way. The reason I am saying this is because the government is showing its readiness to get foreign capital and, in the process, it is making India a lucrative capital market. Most importantly, market dynamics in India are strong with rising electricity demand. I believe in years to come, there will be a much stronger flow of international capital to India's clean energy projects.

3. What is your take on the roadmap for net-zero emission for the emerging world?

Climate change and reaching net-zero as a target is critical for our world. Because the emission from one part of the world can affect everybody. From that angle, the most important thing in the world's fight against climate change will be through financing clean energy investments in the emerging world. In my view, rich countries should have the economic rationale to help the emerging world because reducing emission in the emerging world costs only half of it compared to the advanced economies. The climate change we are facing today is not only because of the emissions we are releasing today but also because of the emissions released in the last 100 years, of which industrialised countries have a big share. So, it is a moral responsibility.

In this context, I believe that India will continue to be a part of the solution for climate change. In our recent report, we have mentioned that advanced economies need to reach the target before emerging countries in order to leave room for the emerging world. The nature of climate change is that unless all the countries finish the race, nobody is safe. Therefore, it is important that emerging countries enjoy the support of advanced economies.

4. India’s Conventional production is declining. When you look at new sectors like electric vehicles or using hydrogen as a source, is viability still a concern?

India is today a leading country in terms of renewable energy investments. But renewable energy alone is not enough to reduce emissions. We need to do every other things—including improving energy efficiency, and we need to look at electric cars, hydrogen energy. The country has great plans to be a driver in the clean energy transitions in the emerging world.

When you compare with the internal combustion engine, electric cars are more expensive today. The electric cars battery costs are declining sharply and we expect in a few years time it will be equal to that of traditional cars. Many governments are pushing electric cars and infrastructure. What is most important is that 18 out of the 20 large car manufacturers of the world have included electric cars in the heart of their business strategy. The issue with countries like India is when to be part of the next chapter of the automotive industry. In my view, the sooner India is part of it, the better it is.

5. Do you see further recovery in the energy demand scenario globally?

In normal times, we talk about various issues that lead to demand. Now, the key driver for demand is Coronavirus. There will be issues like whether we are going to see a new wave and whether or not vaccination is successful. There are already indications that the next wave may be affecting demand recovery putting the downward pressure on the price expectation. The key determinant here will be whether or not we are going to see a new wave of the virus.