UN Secretary-General offers starkest criticism yet of the outlook for the coal sector, as he calls on India to end support for fossil fuels
Pressure is mounting on India over its continued support for coal, with both UN Secretary-General António Guterres and the CEOs of major Indian corporates uniting in calls for Prime Minister Narenda Modi to increasingly focus investment on clean energy and electric vehicles in the wake of the Covid-19 crisis.
India is the world's third largest greenhouse gas emitter after China and the US, as well as one of biggest producers and users of coal. As part of a Covid-19 economic recovery package announced in June, the Modi government revealed ambitions to open a further 41 coal mines.
But in a speech later today, Guterres is set to argue that India has a "crucial role to play" in cutting support for fossil fuels and further stepping up investment in renewables, adding that on top of their health and environmental impacts fossil fuels represent "a human disaster and bad economics".
In his most starkly critical comments yet on the outlook for the global coal sector, Guterres will point out that as much as 50 per cent of India's coal plants are set to be uncompetitive by the end of this year, rising to 85 per cent by 2025, as markets increasingly turn towards cleaner and cheaper forms of energy.
"This is why the world's largest investors are increasingly abandoning coal," he will say. "They see the writing on the wall. It spells stranded assets and makes no commercial sense. The coal business is going up in smoke."
The UN chief has long called on nations to halt their subsidies for fossil fuels and to stop building coal-fired power stations, but today's speech marks some of the clearest direct calls so far for India - the world's fifth largest economy - to back away from high carbon energy.
"Renewable energy needs to grow, and coal use must be phased out," Guterres is set to say. "Today is the time for bold leadership on clean energy and climate action. I call on India to be at the helm of the ambitious leadership we need."
As many as 64 million Indians still have no access to electricity, but Guterres will argue renewables - particularly solar - offer a "recipe" for solving the twin challenges of energy access and poverty alleviation in the country, highlighting the plummeting costs and job creation benefits of green energy.
"Clean energy and closing the energy access gap are good business," Guterres will say. "They are the ticket to growth and prosperity. Yet, here in India, subsidies for fossil fuels are still some seven times more than subsidies for clean energy. Continued support for fossil fuels in so many places around the world is deeply troubling."
However, Guterres will also broaden his demands for all governments to step up their climate efforts, highlighting his increasing concerns over research showing twice as much Covid-19 recovery money has been spent on fossil fuels than clean energy by G20 countries - an approach he said would "only lead to further economic contraction and damaging health consequences".
"I have asked all G20 countries, including India, to invest in a clean, green transition as they recover from the Covid-19 pandemic," he is expected to say. "This means ending fossil fuel subsidies, placing a price on carbon pollution and committing to no new coal after 2020."
India has stepped up its clean energy ambitions in recent months. Last month India's Power and New and Renewable Energy Minister RK Singh said he expected around 60 per cent of India's electricity would come from renewable sources by 2030 "and that is on the conservative side". The country has set a target to ramp up clean power capacity to 500GW by the end of the decade.
Yet India also faces severe threats from climate change, with increasingly volatile weather patterns and changes to annual monsoon season already impacting the country. On Tuesday India's central bank the Reserve Bank of India (RBI) released its annual economic outlook, warning that the country urgently needed a framework for managing the financial risks posed by climate change.
But at the same time investment in coal infrastructure has continued, with the government's backing, despite growing competition from increasingly cost-competitive renewables.
The UN chief's comments came as more than 20 CEOs from leading companies in India signed a 'call to action' open letter yesterday urging businesses to prioritise a green recovery from the pandemic, by investing in green manufacturing, renewable power, green hydrogen, and EV adoption.
Spearheaded by green NGO the We Mean Business Coalition and Indian think tank TERI, the letter includes signatories from leading firms such as Amplus Energy, Dalmia Cement, Delhi International Airport, Flipkart India, Tata Steel and Tata Chemicals.
"Through this statement, major companies in India are making clear the economic and social imperative to build back better from Covid-19," said Dr Maria Mendiluce, CEO of the We Mean Business Coalition. "Ambitious climate action from corporate India, alongside government policies that can stimulate green growth, will drive competitiveness, create jobs, support healthy communities and provide the route to resilient, long-term economic growth."
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