The potential of India’s net-zero carbon emissions: Analyzing the effect of clean energy, coal, urbanization, and trade openness

Abstract

India is facing challenges on its pursuit to carbon neutrality and energy security. This paper analyzes the long- and short-run dynamics of clean energy, coal consumption, trade openness, and urbanization on CO2 emissions in India. The findings suggest that: (1) the Environmental Kuznets Curve (EKC) hypothesis can be verified for India in the time period from 1990 to 2020, and the long-run elasticities for per capita income on CO2 emissions have strengthened compared to previous studies. (2) The long-run coal consumption increased CO2 emissions by 0.75%–0.78%, while clean energy consumption potentially decreases long-run CO2 emissions by 0.08%–0.14%. (3) Urbanization and trade openness seem to have an adverse impact on CO2 emissions. The study suggests that India, to reach net-zero carbon emissions in 2070 can (1) accelerate the utilization of higher efficiency and low CO2 emissions technology in coal-fired plants, increase the share of hydropower and nuclear energy use, which would help alleviate the current tradeoff between energy security and carbon neutrality, (2) seek more opportunities for cooperation with countries that are further ahead in the deployment of clean energy technologies, such as China, to accelerate clean energy technology utilization and thus achieve mutual benefits, (3) Lastly it is suggested that India’s carbon trading market should be further developed to allow for carbon pricing in practice.