India’s Renewable Energy Policies: Post-Copenhagen Climate Action Plan

The 2009 Copenhagen Climate Summit marked a turning point in India’s approach to climate action. While the summit itself produced no binding global agreement, it prompted India to take significant unilateral steps toward building a low-carbon economy. In the years following Copenhagen, India introduced a suite of innovative policies targeting renewable energy expansion, industrial energy efficiency, and forest restoration. These initiatives laid the groundwork for India’s current position as a major player in global climate negotiations.

India’s Copenhagen commitment and the low carbon strategy 🔗

At Copenhagen, India pledged a 20-25% reduction in the emissions intensity of its GDP by 2020 compared to 2005 levels. This was a voluntary commitment, distinct from the binding targets required of developed nations. To translate this pledge into action, the Planning Commission established an Expert Group on Low Carbon Strategies for Inclusive Growth.

This group was truly multi-disciplinary, comprising 26 representatives from think tanks, industry, government departments, academia, and civil society. The eclectic composition was crucial given the interconnected nature of climate change challenges. The group’s mandate was to develop a roadmap demonstrating that India could maintain 8-9% GDP growth while still achieving meaningful emissions reductions.

A key innovation was the adoption of a “multi-benefits” framework. Rather than viewing emission reductions as economic burdens, the group emphasized that a stronger push on renewable energy would bring greater energy security through reduced dependence on coal and petroleum imports. This approach framed low-carbon development as an opportunity rather than a concession to international pressure.

The clean energy cess on coal 🔗

One of India’s most significant post-Copenhagen measures was the introduction of a carbon tax mechanism through the Clean Energy Cess, which came into effect on 1 July 2010. This levy applied to coal, lignite, and peat, targeting both domestically produced and imported varieties.

How the cess worked 🔗

When initially implemented, the cess was set at Rs. 50 per tonne, roughly equivalent to USD 1 at the time. The rate underwent several increases over subsequent years, reaching Rs. 100 per tonne in 2014, Rs. 200 in 2015, and Rs. 400 per tonne by 2016. This progressive increase demonstrated India’s intent to transform what began as a symbolic levy into a substantive environmental fiscal tool.

The revenues collected went into the National Clean Energy Fund (NCEF), which was designed to support research and innovative projects in clean energy technology, environmental remediation programmes, and renewable energy infrastructure development. The fund was built on the “polluter pays” principle, holding carbon dioxide emitters responsible for the pollution they cause.

Outcomes and challenges 🔗

Between fiscal years 2010 and 2018, India collected approximately INR 86,440 crore (nearly USD 12 billion) through the coal cess. However, not all revenue reached its intended destination. Competing development needs meant that in some years, only about 24% of coal cess receipts actually went to the NCEF. The fund supported critical projects under the Jawaharlal Nehru National Solar Mission and various energy efficiency initiatives, though utilization remained below expectations.

A significant turning point came in 2017 when the Goods and Services Tax reform subsumed the Clean Energy Cess into the GST Compensation Cess. While coal continued to be taxed at the same rate, the revenue was redirected toward compensating states for GST-related losses rather than supporting clean energy development.

Perform, Achieve and Trade mechanism 🔗

India’s cabinet approved the National Mission on Enhanced Energy Efficiency (NMEEE) in June 2010, introducing one of the world’s most innovative approaches to industrial energy efficiency. At the heart of this mission was the Perform, Achieve and Trade (PAT) scheme.

Understanding the PAT mechanism 🔗

The PAT scheme is a regulatory instrument designed to reduce specific energy consumption in energy-intensive industries. It functions through a market-based mechanism where facilities that exceed their energy efficiency targets can earn tradable Energy Saving Certificates (ESCerts), which can then be sold to facilities that fall short of their targets.

The first PAT cycle (2012-2015) covered 478 industrial units across eight sectors: aluminum, cement, chlor-alkali, fertilizer, iron and steel, paper and pulp, thermal power plants, and textiles. These designated consumers were assigned energy efficiency targets based on their baseline energy consumption, with more efficient units receiving lower reduction targets and less efficient units facing higher targets.

Results and expansion 🔗

PAT Cycle I delivered impressive results. Implementation resulted in energy savings of 8.67 million tonnes of oil equivalent (MTOE), translating into avoided emissions of approximately 31 million tonnes of CO2. This exceeded the original target of 6.686 MTOE by about 30%.

The success prompted expansion. Subsequent PAT cycles broadened coverage to include railways, petroleum refineries, and electricity distribution companies. The scheme targets were originally established based on annual specific energy consumption for each facility in 2010, adjusted for factors such as product mix, capacity utilization, and changes in fuel quality. Trading of ESCerts began at power exchanges in September 2017, creating a functioning market for energy efficiency.

Jawaharlal Nehru National Solar Mission 🔗

Among the eight National Missions under India’s National Action Plan on Climate Change, the Jawaharlal Nehru National Solar Mission (JNNSM) emerged as perhaps the most transformative. Launched by the Ministry of New and Renewable Energy on 11 January 2010, its objective was to establish India as a global leader in solar energy.

Ambitious targets 🔗

The mission set a target of 1,000 MW of grid-connected solar power by 2013, an additional 3,000 MW by 2017, and 20,000 MW by 2022. Beyond grid-connected capacity, the mission also aimed for 2,000 MW of off-grid solar power, 20 million square meters of solar thermal collector area, and 20 million solar lighting systems for rural areas by 2022. The rural lighting component alone was expected to save approximately 1 billion liters of kerosene annually.

The mission adopted a three-phase approach. Phase 1 (2010-2013) focused on promoting off-grid systems and modest grid capacity addition. Phase 2 (2013-2017) aimed for accelerated deployment, while Phase 3 (2017-2022) targeted large-scale grid-connected generation.

Scaling up the vision 🔗

The initial targets, ambitious as they seemed in 2010, were dramatically revised upward. In 2015, the Union Cabinet approved stepping up India’s solar power capacity target by five times, reaching 100,000 MW by 2022. This expanded target comprised 40 GW from rooftop installations and 60 GW from large and medium-scale grid-connected projects.

The transformation was remarkable. Solar energy prices in India dropped from Rs. 17.90 per unit in 2010 to under Rs. 7 per unit within five years. India reached the 100 GW solar milestone in January 2025, demonstrating the power of sustained policy support combined with technological advancement and market competition.

Green India Mission for carbon sequestration 🔗

Recognizing that emission reductions alone would be insufficient, India also launched initiatives to enhance carbon sinks. The Green India Mission (GIM) was launched in 2014 as one of the eight core missions under the National Action Plan on Climate Change.

Goals and approach 🔗

The mission aimed to increase forest and tree cover by 5 million hectares and improve the quality of existing forest cover on another 5 million hectares. Additional targets included expanding agroforestry on 3 million hectares of marginal agricultural lands and fallows, improving forest-based livelihood income for approximately 3 million households, and increasing annual carbon dioxide sequestration by 50 to 60 million tonnes by 2020.

What distinguished GIM from conventional afforestation programs was its holistic approach. The mission focused on multiple ecosystem services including biodiversity, water, and biomass preservation alongside carbon sequestration. It emphasized restoring mangroves, wetlands, and critical habitats rather than simply planting trees. Community participation was central, with local populations who depend on forests for livelihoods actively involved in planning and implementation.

Implementation structure 🔗

The Ministry of Environment and Forests implemented GIM at the national level, with State Forest Development Agencies providing guidance at state level and Forest Development Agencies handling district-level implementation. At the village level, gram sabhas and various committees served as key institutions for planning and implementation, while urban areas relied on ward-level committees like Resident Welfare Associations linked to municipalities.

Between 2015-16 and 2020-21, GIM supported afforestation activities across 11.22 million hectares through central and state schemes. The mission has since been revised to align with India’s updated climate commitments, including creating an additional carbon sink of 2.5-3 billion tonnes of CO2 equivalent by 2030.

Building blocks for India’s climate future 🔗

The post-Copenhagen initiatives established institutional frameworks that continue to shape India’s climate policy. The Expert Group’s approach of framing low-carbon development as beneficial for energy security and economic growth became embedded in policy thinking. The coal cess demonstrated that India could implement carbon pricing mechanisms, even if implementation faced challenges. The PAT scheme proved that market mechanisms could drive industrial energy efficiency at scale. The National Solar Mission showed that aggressive targets, when backed by consistent policy support, could transform entire sectors.

These early initiatives also informed India’s subsequent commitments. When India submitted its Nationally Determined Contribution under the Paris Agreement, it pledged to reduce emissions intensity by 33-35% below 2005 levels by 2030, building directly on the Copenhagen-era 20-25% target. The renewable energy targets expanded from 20 GW of solar to 500 GW of non-fossil capacity by 2030.

India’s experience demonstrates that meaningful climate action need not wait for binding international agreements. The policies developed after Copenhagen created institutional capacity, market mechanisms, and technological capabilities that now position India as a significant force in global climate efforts. As renewable energy deployment continues to accelerate and coal’s share in power capacity has fallen below 50%, the foundations laid in those early post-Copenhagen years continue to bear fruit.

What do you think? How can developing nations balance rapid economic growth with meaningful climate action? Should carbon taxes be earmarked exclusively for clean energy, or can governments justify redirecting such revenues to other development priorities?

References

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