Political Economy + Equity in Transition

Imports account for a significant share of India’s overall energy consumption, particularly fossil fuels, making India one of the largest net-importers in the world.

For instance, India imports more than 88% of its oil and 80% of the industrial coking coal, and this dependence is expected to increase due to the expected energy demand growth in the transportation and industrial sectors. In 2021 alone, India’s oil import cost was over $100 billion (INR 750,000 crores) per year — about 3% of its GDP that year (The Economic Times, 2022). Therefore, fluctuations in the international fuel market, especially oil, have a major impact on India’s consumer inflation, industrial energy costs, and the country’s foreign trade balance/currency. Considering such high fuel imports, Prime Minister Modi has announced an aspirational goal for an Energy Independent India, or “Atmanirbhar Bharat,” by 2047 — the 100th year of India’s independence (Times of India, 2021).

For energy independence by 2047, India would need to rapidly reduce oil consumption in transport and natural gas & coal imports for industry. At the same time, additional electricity demand from these sectors as they decarbonize would need to be met by clean energy sources, especially solar and wind. Innovative policies would be required to address a novel set of challenges thrown up by scale of deployment needed to meet the growing energy demand from industries, residential and commercial buildings. The IECC  works closely with the Indian policymakers to devise solutions to these challenges.

The energy transition will have existential impacts for coal mine workers, people employed in oil extraction, refining, and maintenance & repair supply chain of ICE vehicles, etc.

As these sectors move away from fossil fuels, towards renewable energy sources and EVs, it would be critical to keep the impacted communities at the center of the transition strategy. If India is successful in developing domestic manufacturing of clean technologies, those jobs could potentially offset coal and oil-related job losses, though re-investing in impacted communities would need targeted measures.

Considering the political economy at the state level would be key, as the states would feel tax revenue shifts, employment changes and impacts on their industrial strategy. Hence, the bulk of transition planning would be undertaken at the state level, e testing industrial and economic re-development strategies in concert with coal-dependent communities.

IECC would undertake policy research on how this transition can be made more equitable and collaborate with stakeholders to understand where there are workforce gaps along the EV and battery supply chain, and how policy can facilitate re-skilling for newer job opportunities such as electricians, battery chemists, and in manufacturing.

The IECC aims to keep equity as a horizontal pillar of our strategy, by placing just transition considerations at the core of all the work we undertake.