Key Takeaways

India has scaled up its renewable energy capacity by 250% between 2014 and 2021. It now ranks fourth in renewable energy capacity in the world. Nevertheless, India is further embarking on a sweeping energy transition effort to replace fossil fuel use in the industrial sector. Focused on investing in energy efficiency, expanding renewable energy generation, and the use of green hydrogen for energy storage, India expects to reduce its dependency on fossil fuels in the medium term.

The Government of India will actively pursue these goals through initiatives such as the proposed solar cities and parks, National Green Hydrogen Mission, and the Green Energy Corridor. It is also rolling out policy measures and incentives that enable the uptake of green energy and technology, including the production-linked incentive (PLI) scheme for entities that set up manufacturing facilities for clean technology.

Challenges to ensuring the energy transition

Attempting clean energy transition at the scale that India requires faces many challenges. These include access to affordable financing, lack of institutions that can deploy financing effectively in new low-carbon growth areas, and technology risks. Another key consideration, which has far-reaching impact, is ensuring a just transition.

  • Around 150 million people in Asia and the Pacific lack access to electricity, while many more cook using unhealthy, polluting fuels, stunting economic growth and social development

    Around 150 million people in Asia and the Pacific lack access to electricity, while many more cook using unhealthy, polluting fuels, stunting economic growth and social development.

  • The adverse impact of climate change requires an urgent just transition to clean energy.

    The adverse impact of climate change requires an urgent just transition to clean energy.

Ensuring a Just Transition

The transition away from fossil fuels usage can have both positive and negative impacts on consumers, workers, communities, regions and countries. On the one hand, this transition can support new livelihoods, expand job opportunities, distribute economic activity away from fossil fuel production centers, and decentralize and “democratize” energy production by allowing consumers to also produce energy through, for example, solar rooftop plants. On the other hand, energy transition can exacerbate the economic vulnerabilities of communities reliant on fossil fuel supply chains or increase the financial insecurity of those involved in extracting crucial minerals.

The need for just transition cannot be overemphasized.

The Just Transition Declaration agreed at the UN Climate Change Conference in Scotland (COP26), recognizes the need to ensure that no one is left behind in the transition to net zero economies – particularly those working in sectors, cities and regions reliant on carbon-intensive industries and production.

The International Renewable Energy Agency’s Global Energy Transition Outlook1 estimates that 43 million people could be employed in the renewable energy sector by 2050. Other global studies project similar large increase in employment from the energy transition while also noting instances of loss of employment due to renewable energy adoption.

More localized case studies such as the solar photovoltaic (PV) park in Rewa, Madhya Pradesh, point to a solar park employing a handful of full-time employees for operation compared to a large coal-fired power plant that typically employs hundreds of employees, contractors, and businesses, all along the supply chain.

A recent EU auditor report2 found that the bulk of the just transition funding to coal-reliant regions in Europe had neither led to improved economic opportunities for communities nor to an expanded uptake of clean energy technologies. Significant net jobs losses have been reported in the coal sector in the United Kingdom, the United States, Germany and Poland.

Governments clearly need to design policy mechanisms and targeted programs to realize the social opportunities of the transition including quality green jobs, and improvement in working conditions and improvement of gender equality, while supporting impacted communities.3

Skills development

Just transition in Asia and the Pacific
ADB supports Just Transition in the Asia-Pacific region through capacity building for a socially and gender inclusive transition to net zero.

ADB entered the skills sector in India in 2011, starting with technical assistance programs at the national level. Since 2013, ADB has approved six loans for India’s skills development initiatives in states—Meghalaya, Kerala, Himachal Pradesh, Madhya Pradesh, Odisha, and Assam. ADB’s support focuses on improving the states’ capacity and augmenting state-level skilling initiatives in responding to changing skilling requirements. 

The energy transition will alter most existing occupations in terms of task compositions, structural changes and a transformation of existing jobs and require new skills. Skills development measures are thus integral to preparations for these changes to enable individuals and communities to be ‘future ready’. In India’s case, the good news is that the government has already put in place resources and institutions that can be leveraged to initiate work on supporting the just transition including skills development.

The District Mineral Foundation Funds (DMF), which was introduced in 2015 as a benefit-sharing scheme with the mining-affected communities, is one such resource. While the Mines and Minerals (Development and Regulation) Amendment Act 2015 stipulates utilization of 60 percent of the funds for high-priority areas including skill development, a recent evaluation4 indicates that most states have low disbursement levels of their DMFs and the funding for skills development and education is nowhere close to mandated levels. There is scope to scale up fund utilization for skills development under the DMF.

As a crucial element of its support for the country’s energy transition, ADB is partnering with the Ministry of Skills Development and Entrepreneurship to develop a Just Transition Worker Support Facility for coal-mining reliant districts and states. The facility will provide a structured approach through physical and virtual means, and integrate existing resources across skilling and reskilling, entrepreneurship, livelihood development, and relevant social protection initiatives to make available bespoke assistance. The states will have access to a one-stop provider and curator of solutions for planning or implementation of skilling and livelihoods programs.

As India and other emerging economies strive to accelerate their energy transition, it is imperative that they scale up efforts to ensure a just transition that would avoid creating an ‘energy transition divide’.

This article was written by Pradeep Tharakan, Regional Advisor (Energy Transition and Financing), and Praveen Manikpuri, Senior Project Officer (Skills Development), South Asia Department, ADB

3 It is noteworthy that the Government of Jharkhand has formed a Just Transition Task Force comprising officials from 13 different departments to study the effects of transition from fossil fuel-based to non-fossil-based ecosystems. The Task Force will assess the impacts of accelerated phase-out of coal mines and industries on the state’s economy as well as on the communities that are directly or indirectly dependent on these industries.