As India accelerates the electrification of mobility and industry, questions around what truly constitutes “green” energy are becoming more complex. While the country continues to scale up renewable capacity, its power mix remains dominated by coal. In Season 1 of the Renewable Watch Podcast, Sarthak Takyar, Associate Director, and Mohammed Ali Siddiqui, Research Analyst, Renewable Watch, had a conversation with Dr Rahul Tongia, Senior Fellow, Centre for Social and Economic Progress (CSEP), on greenwashing trends, the challenges of accurate carbon accounting and how market mechanisms in India must reform. The podcast covered topics such as green tariffs, energy banking, carbon markets, the additionality of renewable projects and export-linked compliance. Edited excerpts…
As India electrifies mobility and industry faster than it greens its grid, what do you think about the idea of “greenness” in these sectors?
I think it is a false dichotomy to treat electrification and grid greening as an either-or proposition. Both must advance together. Yes, decarbonising the power sector is comparatively easier than decarbonising industry or transport. But we cannot wait for a fully green grid before electrifying these sectors, because the transition will take years, if not decades.
If we take mobility as an example, defining how “green” an EV truly is depends entirely on how we benchmark and measure emissions. Most analyses focus only on end-use emissions, not system-wide or embedded emissions. In the EV context, consumers either use liquid fuels (petrol/diesel) or electricity from the grid. Calculating the grams of carbon dioxide per km sounds simple, but accounting choices matter. India’s grid is still roughly 75 per cent coal-based, which limits greenness today – but that figure will only improve over time as renewables grow.
Greenness also depends on the duty cycle. Urban driving tends to favour EVs because regenerative braking and start-stop efficiency perform far better than ICE vehicles. High annual kilometres also improve an EV’s carbon advantage, because embedded emissions in battery manufacturing get amortised over more kilometres.
Consumers ultimately care about rupees per km. Those who drive less are reluctant to pay an EV’s upfront premium because they may never get the economic payback. So, the answer to “is an EV green?” is complicated. It depends on usage, accounting boundaries, grid mix and time-of-day for charging. If incremental charging is from coal power, the emissions are almost 50 per cent higher than the average.
Your team’s analysis of green tariffs noted that the current regulatory structure may push high-paying industrial consumers away from discoms, worsening their finances. How do the green tariff design and grid economics interact?
This study was led by my colleagues, Dr Sharath Rao and Nikhil Tyagi, and it highlights two risks. One, large consumers may leave traditional tariffs in favour of green tariffs. Two, they may set up their own renewable assets, and partially or fully exit the discom. The issue lies in how retail tariffs are designed. Indian tariffs are socialised averages. Regulators determine the aggregate revenue requirement and then set tariffs such that cross-subsidisation takes place – with commercial and industrial consumers overpaying to subsidise agricultural and residential consumers.
Green tariffs are envisaged by the Ministry of Power to be slightly cheaper, partly reflecting lower solar costs. However, they currently lack any time-of-day component. And time-of-day consumption determines how green one actually is.
The Central Electricity Authority has specified an average grid emissions intensity of a little over 700 gCO2 per kWh. But this varies strongly by hour. Midday power is greener due to solar; night-time power is far more carbon-intensive. Our tool
carbontracker.in shows five-minute resolution data for fuel mix and emissions, which makes this very clear. Then comes the issue of additionality. If consumers shift to green tariffs without additional renewable supply, the grid as a whole does not become greener. It becomes a zero-sum game: if one consumer becomes greener on paper, someone else becomes browner, unless new renewable capacity is added.
Globally, the emerging standard is hourly matching. That is, entities claiming greenness should have renewable supply that matches their consumption profile at least hourly, not just annually or monthly. Because renewables have nearly zero marginal cost and are must-run, adding demand does not automatically add renewable energy output to the grid. In India today, the marginal generator is almost always coal. So additional consumption without additional renewable energy supply simply increases fossil generation. These are the structural weaknesses in the current green tariff design.
A related topic is energy banking. Developers still prefer banking their surplus renewable generation with discoms instead of building storage. But this often means injecting power when the grid is green and withdrawing when it is coal-heavy. How do we balance supporting renewables while preventing greenwashing?
Banking is fundamentally an accounting instrument. A good example is Cochin airport, the world’s first “100 per cent solar-powered airport”. It has a large solar plant but no storage. It feeds excess solar to the discom during the day and withdraws energy later, paying a nominal banking charge.
In the short term, banking seems harmless – it is a zero-sum exchange. But it fails both the additionality test and the scaling test. For the discom, banking creates a financial burden: daytime power is cheap while night-time power is expensive. Discoms must buy costly night power and supply it to the banked consumer at a neutralised cost, pushing the burden on-to other consumers. From a carbon perspective, if the airport uses coal-based power at night while a factory consumes its daytime solar, both cannot claim greenness. Only one can. Banking can lead to double-counting and attribution issues.
Banking also assumes the grid has no surplus renewable energy in the middle of the day. This assumption is breaking down. Surplus solar and curtailment are already visible in many states. Finally, if a factory has daytime load, nothing stops it from building its own solar plant and aligning generation with consumption. Banking distorts incentives in such cases.
We must recognise that instruments that worked in early renewable energy deployment may create distortions when scaled up. If discoms lose revenue, or if accounting is flawed, utilities begin resisting open access or green programmes. We have seen similar behaviour with open access in the past. Therefore, banking must be redesigned, not continued in its current form.
Given these accounting and additionality issues, is India ready for an efficient carbon market? And should renewable energy projects qualify for carbon credits?
As of now, the power sector is not a part of India’s Carbon Credit Trading Scheme. Current notifications cover only large industrial sectors. The government seems to want to observe the system’s behaviour, price formation and compliance patterns before deciding when to add the power sector.
If the power sector were included, modelling studies, including ours at CSEP and those at CEEW, show that most early decarbonisation would shift to the power sector because it is cheaper to abate emissions there than in hard-to-abate sectors. But this delays innovation and decarbonisation in other sectors.
For renewables, inclusion would certainly push up demand for renewables. But it could also raise electricity prices across sectors. For coal power plants, a European-style carbon price of Euro 60-80 per tonne of carbon dioxide would translate into a carbon price of more than Rs 6 per kWh – an unmanageable burden. So, before expanding carbon markets to the power sector, India must model these implications transparently.
In global discussions, forestry projects are often seen more as “additional” than renewable projects. How valid is this comparison?
Forestry and renewables are not apples-to-apples comparisons. Carbon accounting for forests has several complications. First, time frames. Forest credits often assume upfront value for carbon that will accrue only over decades. Second, additionality is difficult to determine – protecting a forest that may not actually have been under threat is not additional. Third, permanence is a major issue: a single fire can wipe out decades of carbon gains. Fourth, leakage occurs when protecting one forest simply shifts logging to another area. Global evidence on the quality of forestry offsets is not encouraging. While forests may seem cheaper on paper, they are not necessarily better.
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