India’s Green Transition In A Chokehold

Over the past week, Indian capital New Delhi — the world’s most populous city — has choked on astonishing levels of air pollution.

At its peak, the air quality index (AQI) of the city hovered between the 500 to 700 mark. To put that in context, AQI measures air pollution levels in an area and only readings below 50 indicate a lack of risk. Anything above the 301 mark indicates “hazardous” levels of toxicity in the air. And pollution levels in the Indian capital have breached that mark for about 15 to 16 hours a day in each of the last seven days.

But that’s not the worst of it… because the levels seen in Delhi are not India’s worst by any measure.

At the time of publication, at least 24 other Indian cities are reporting worse levels of pollution than Delhi. One of them, Siktaur, has an AQI reading nearing 1000 and at least another 20 cities have pollution levels that are just as bad as Delhi or only slightly less worse… but “hazardous” nonetheless.

A Lancet study reported that 1.7 million people died in India in 2022 from exposure to toxic air pollutants – and that number is only set to rise as the air quality continues to deteriorate.

So what keeps these cities so polluted?

A vast majority of India’s most polluted cities are lined up in the north, which is nestled within the vast Indo-Gangetic Plain. The plain has a unique topography, with mountains to the north and a hill range to the south — which work together to trap polluted air. In the summer, hot and dry winds carry in dust from the Thar Desert in the west and this too adds pollutants to the air. In the winter, still air traps pollutants above the surface creating a toxic smog. But geography is only one part of the puzzle.

Another is a rising economy, with a vast population. India is currently the world’s fastest growing major economy, with an ambitious agenda of becoming a manufacturing powerhouse. Its growth is driven primarily by domestic demand — which is booming as more and more people on the margins begin to urbanise. Both those factors put industries at the front and centre of India’s growth story. North India, in particular, is an important industrial hub, home to countless factories producing everything from textiles and sugar to cars, chemicals and cement. And, together, these factories are responsible for emitting at least 40% of the pollutants that choke the region.

The high population and industrial activity also translate to an ever-increasing energy demand. Much of that is still generated from thermal power plants often powered by coal, which is the worst emitter of greenhouse gases among all fossil fuels.

Aside from industrial activity and power generation, vehicular emissions are another significant source of pollution in the region. A higher population translates to more cars on the road, the vast majority of which are powered by fossil fuels.

Then there’s the huge amounts of waste that languishes in landfills that have become so vast they’re called trash ‘mountains’ – because that’s what they are. That waste produces methane. Sometimes it also catches fire, and sometimes it is deliberately set on fire, all of which adds to pollutants in the air.

The onset of winter also brings with it very specific factors that add to the damage – farmers burning crop residues; the celebration of India’s biggest festival, Diwali, with copious amounts of fireworks; and the use of low cost fuel like wood and coal by low-income communities to keep warm as temperatures drop.

In sum, there is no single culprit behind the toxic air that smothers north India year-on-year. There is, however, one that is continually making the problem worse. A study published in June by a government-funded university in Delhi showed that while crop residue fires and vehicle registrations had sharply declined in recent years, emissions from the power sector had steadily increased, hitting record levels in 2023 — the most recent year for which official data is available.

It also found that while renewable energy generation had increased and had helped to marginally reduce the amount of emissions per unit of electricity generated, it made no dent in the power sector’s larger emissions trajectory. “Overall industrial and energy demands have outpaced the benefits of renewable energy growth,” the study stated.

Other researchers have, in recent months, similarly noted that “the true culprit” behind north India’s toxic air is “persistent background pollution”, which stems from, among other factors, rapid, unchecked growth of heavy industries in a region that is geographically unsuited to hold them.

So clearly, a truly sustainable solution for India to solve its pollution crisis would be to fundamentally transform its energy generation and industrial structures. And while the Narendra Modi-government has made grand plans to do so, its efforts have yielded little results.

Last month, a report by a clean‑industry alliance, Mission Possible Partnership, found that while India had one of the largest pipelines of green industry projects, a slow regulatory environment, weak demand and significant lack of funds meant the majority of those projects were yet to kick off. Of the 61 projects in development only two managed to reach a final investment decision this year.

The Mission Possible report says these projects are focussed on setting up clean industrial plants across chemicals, steel, cement, aluminium, and aviation — some of the top polluting sectors – and together they have the potential to abate roughly 5–6% of the country’s total emissions.

Despite the potential, however, the Indian government has been unable to frame clear rules or issue necessary permits to get them started. Regulators, meanwhile, have failed to put in place regulations or incentives to ensure manufacturers use clean raw materials, such as technologies like biochar instead of coal for steelmaking. Infrastructural issues, such as gaps in technology, grid capability and transmission readiness have also slowed down these projects. Many of the projects also face a financing crunch, as investors perceive them as high risk and capital-intensive.

In effect, while India has an ambitious agenda to make a green transition it appears to be without a roadmap to chart how it can actually get there.

A similar story is also hobbling India’s clean energy growth. Complex tender structures and an underdeveloped transmission infrastructure have forced project cancellations within the renewables sector, which is already struggling with weak demand. Those challenges, coupled with regulatory delays and legal disputes over land and environmental permissions, have left projects “worth billions of dollars” stranded, industry officials told Reuters in August.

Meanwhile, a new policy that would impose penalties on renewable producers if they do not meet their green energy supply commitments to the grid could also pile on losses for existing projects. Critics told Reuters the policy could eat into 48% of the revenue for some wind energy projects, as their generation depends on "unpredictable" weather, further deterring future investments in India's clean energy.

Taking stock

While those challenges are significant India could still be uniquely placed to make a green transition.

The growth levels – both current and expected – should give Indian officials the financial scope to fund the shift to clean industries and energy.

India has also already succeeded in making quick advances in renewable energy production and adoption. As of this year, it has the capability to produce half of its electricity from renewables, which marks a historic shift for the country… a shift it has made five years earlier than planned. Some state subsidy programs, like one to encourage households to install rooftop solar, have also helped to make India one of the world’s most cost-competitive solar markets.

There also seems to be a strong willingness within India Inc to make the green shift. The country’s fossil fuel giant Reliance, for instance, plans to build the world's largest clean energy hub to meet its net-zero targets by 2035. The company’s chief said last year he was confident that clean energy could earn the company just as much as its $70 billion worth of refineries. That’s a stark contrast from global oil majors like Shell and BP that have hit the brakes on their renewables plans to preserve revenues.

Similarly, some legacy steelmakers in the country have already begun experimenting with substituting their coal use with greener alternatives like biochar to produce green steel.

Another major impetus for India to develop cleaner industries would be stricter trade policies in markets like Europe. The EU’s Carbon Border Adjustment Mechanism (CBAM) will, in about 7 weeks, start hurting Indian exporters that have yet to transition to low-emission production. Indian steel producers could face a $25 million hit from CBAM next year, according to the Mission Possible Partnership report.

But perhaps the most critical consideration for India will be its critical vulnerability to the impacts of pollution and the changing climate. The country is already witnessing more extreme weather events than ever, including gruelling heatwaves and devastating spells of rain. A report unveiled at the COP30 climate summit this week listed India among the ten countries most affected by extreme weather events in the past three decades. It said India’s economic losses within that period amounted to $170 billion.

Meanwhile, the toxic air that choked the north this week also puts millions of lives at risk, especially within communities that cannot afford to buy air purifiers and face masks.

The Indian government will need to face up to the fact that in key cities like New Delhi, anger is already brewing among residents who are taking to the streets to demand clean air as a basic human right. One such protest last week brought hundreds to Delhi’s iconic India Gate. Students spoke of fighting for their cities, participating parents expressed worry about the future of their kids and environmentalists called on the government to announce a health emergency.

One protestor’s placard read: “breathing is killing me”.

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