Context

• The United Nations Environment Programme (UNEP) has warned that the world could cross the 1.5°C global warming threshold within the next few years, increasing pressure for faster decarbonisation.
• India must balance economic growth with climate commitments, but its unfinished infrastructure development offers an opportunity to adopt low-carbon growth from the beginning.
• According to NITI Aayog, 86% of India’s building stock in 2070 is yet to be constructed. Total floor space is projected to rise from 18 billion square metres in 2020 to 42 billion by 2070.
• Steel capacity is targeted to reach 300 million tonnes by 2030–31, while cement production could increase to 660 million tonnes by 2030.
• These projections demonstrate the need to integrate sustainability into infrastructure planning to prevent long-term environmental damage.

The Advantage of Choice

• India’s Infrastructure Opportunity
  • India’s infrastructure deficit is often considered an obstacle to decarbonisation because demand for steel, cement and electricity will continue to grow.
  • However, much of its future infrastructure remains a choice rather than an inheritance.
  • India can incorporate energy efficiency and cleaner technologies into new investments, avoiding costly retrofits and stranded assets.
  • The International Energy Agency (IEA) estimates that approximately 80% of the building stock advanced economies will use in 2050 already exists.
  • In the European Union, 85% of buildings predate 2000, around three-quarters perform poorly in energy efficiency, and only about 1% are renovated annually.
• Strengthening Building Regulations
  • India can avoid similar problems by adopting sustainable building designs from the outset.
  • The Bureau of Energy Efficiency (BEE) reports that 27 States have notified the Energy Conservation Building Code (ECBC) 2017, but only 21 have legally incorporated it.
  • The Energy Conservation and Sustainable Building Code (ECSBC) 2024 and Eco-Niwas Samhita (ENS) 2024 provide updated standards for commercial and residential buildings.
  • States should integrate these codes into building permits, occupancy certificates and grid connections, making compliance enforceable rather than voluntary.

The Issue in the Power Sector

• Expanding Transmission and Storage
  • India has expanded renewable-energy generation rapidly, but transmission infrastructure has not kept pace.
  • The IEA estimates that transmission bottlenecks have constrained approximately 60 GW of renewable capacity.
  • Meanwhile, the Ministry of Power plans around 590 GW of generation additions between 2023 and 2032.
  • Without adequate transmission and storage, renewable electricity may not reach consumption centres reliably.
  • Electrification of transport, cooling and industry will further increase demand.
  • Therefore, transmission networks and energy storage must be developed alongside, or sometimes ahead of, new generation capacity.
• Decarbonising Steel and Cement
  • Decarbonising steel and cement is more difficult because technologies such as hydrogen-based green steel and large-scale carbon capture remain economically or technologically challenging.
  • Premature technology mandates could increase costs and lock industries into inefficient processes.
• Using Public Procurement to Encourage Green Industry
  • Instead, public procurement can create demand for low-emission materials.
  • Government agencies, Indian Railways and the National Highways Authority of India purchase substantial quantities of steel and cement, giving them considerable influence over industrial practices.
  • India’s green-steel taxonomy and proposed aggregated procurement through competitive bidding offer a practical approach.
  • Tenders can establish emissions-intensity thresholds without prescribing production methods.
  • Competition would encourage innovation, reveal the additional cost of greener materials and allow standards to become progressively stricter.
  • Aligning these thresholds with the Carbon Credit Trading Scheme (CCTS) would ensure consistent policy incentives and encourage industrial decarbonisation.

Costs and Risks

• Addressing High Financing Costs
  • The IEA estimates that India’s cost of capital for grid-scale renewable projects is about 80% higher than in advanced economies.
  • High upfront costs and expensive borrowing can make otherwise viable clean-energy projects unattractive.
  • Targeted support through payment-security mechanisms, partial credit guarantees and concessional debt can reduce financing and payment risks, encouraging private investment.
• Balancing Public Support and Financial Risks
  • Public finance must be used carefully. Subsidising unproven technologies could transfer commercial risks to taxpayers.
  • Governments should distinguish between mature technologies requiring financial support and emerging technologies that still face significant technical and economic uncertainty.
  • A balanced financing strategy can promote clean infrastructure while protecting public resources and maintaining financial discipline.

Conclusion

• India must invest heavily to build its future economy, but the environmental consequences will depend on the choices made today.
• Efficient infrastructure, renewable energy and sustainable construction should be prioritised wherever technologies are mature.
• By making informed investment decisions today, the country can reduce future costs, strengthen energy security, limit emissions and achieve sustainable economic growth.