McKinsey Suggests 10-point Decarbonizing Action Plan for India’s ‘Orderly’ Transition


Consulting firm McKinsey announced its recommendations on how India could smartly accelerate decarbonization at scale this decade and achieve both growth and sustainability. Titled Decarbonizing India: Charting a pathway for sustainable growth, the report, launched in October 2022, observed: “There is an urgency to prepare India for an orderly and accelerated decarbonization within the current decade….If policies are set in place to create the right demand signals within this decade, then India could add low-carbon capacities in the next two decades thereafter.

  1. Lay out a detailed medium-term decarbonization plan with sector-specific priorities and policy frameworks that account for interdependencies across sectors and provide demand signals to guide corporates to invest.
  2. Accelerate implementation of a compliance carbon market (within three years). This would also require the creation of demand signals, especially in hard-to-abate sectors, and incentives linked to investments in newer technologies like CCUS.
  3. Enable banks to support the transition, catalyzed by a green-transition bank. Banks could be asked to come up with their investment glide paths within one to two years and build the necessary capability for assessing risks in these new spaces.
  4. Accelerate renewable adoption in the power sector to scale up capacity addition by four times and to deepen market reforms with a 30-year outlook in a manner that ensures a stable grid fed predominantly by infirm power.
  5. Empower a nodal authority to define a national land-use plan. Lay clear land-use guidelines for optimized use across urbanization, industrial needs, carbon sinks, agriculture, and renewables.
  6. Create a resilient indigenous manufacturing capability and increase investment in cleantech R&D. Efforts would be needed to develop local raw-material resources (such as rare earths), secure materials from elsewhere in the world, and produce equipment locally through mechanisms like production-linked incentive (PLI).
  7. Evaluate five carbon capture and storage hubs in Gujarat (Jamnagar), Odisha (Paradeep), Rajasthan (Barmer), Maharashtra (Pune), and Andhra Pradesh (Vizag) potentially in public–private partnership for utilization and storage of captured carbon.
  8. Create a national circularity mission with recycling hubs in the top 20 Indian cities (contributing 35 percent of municipal solid waste), mandated targets on recycling rates, recycled raw-material use (for example, blending norms), and landfill levies.
  9. Enhance the National Hydrogen Mission with government playing a key role in accelerating demand through blending mandates, boosting cost competitiveness via capital subsidies and R&D investments, and enabling export opportunities via international trade agreements.
  10. Empower companies to play on the front foot, evaluating investment opportunities that this green trend will unlock, aligned with India’s national plans or opportunities opened up by decarbonization of other countries (for example, green-hydrogen derivative exports).

The report urges India to: “Take thoughtful actions now to set itself up for an accelerated and orderly transition. Looking beyond the short term and laying the foundation for this transformation within this next decade is the imperative for a decarbonized India and world.”

Decarbonising India: Charting a pathway for sustainable growth | McKinsey

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