Renewable energy sources play a crucial role on environmental and sustainable development issues, such as mitigating environmental degradation, improving traditional primary energy-related carbon dioxide (CO2) emissions, growing efficiency, and increasing economies of scale. Given that traditional ways of using primary energy sources in the production process have detrimental effect on the environment and cause climate change all over the world. Therefore, according to sustainable development goals and international treaty agreements on climate change such as the Paris agreement, countries have begun to prioritize environmental sustainability and increase the share of renewable energy generations in the energy mix by investing more in their potential renewable energy sources (IRENA, 2020; BP Energy Outlook, 2020; Rahman et al. 2022). In this context, the integration of new generation renewable energy sources into power generation systems has rapidly increased in the world. According to International Energy Agency (IEA, 2019), the power generation system which uses traditional energy sources accounts for almost 40% of carbon emissions throughout the world, and, nowadays, it continuously declining depending on increasing the investment in renewable energy generation. In 2019, renewable energy generations accounted for 26.2% of total generation globally. This proportion raises in the energy mix of the countries mainly depending on the rapid increase in the investment in solar and wind energy capacities. Solar power generation becomes the most utilized power generation in the world and in 2021, it was accounted for around over 50% of total renewable energy expansion and followed by wind power generation. Furthermore, it is predicted that these renewable energy sources will take over the place of using traditional energy sources for power generation by 2035 (IEA, 2018; REN21, 2019; IEA, 2019; BP Energy Outlook 2020; IEA, 2021).
As the third-largest CO2 emitter country in the world, India emitted 6.8% of the global CO2 level in 2019. Besides, it was also positioned as the third-largest energy consumer due to rapid population and economic growth with high industrialization level. Rapid growth and intensive industrialization have created enormous demand for energy in the country. Hence, India satisfies 80% of its energy needs by heavily utilizing traditional fossil fuels such as coal and oil (Franco et al 2017; Crippa et al 2020; IEA, 2021). On the one hand, although India is the second-largest coal-abundant market in the world, its coal reserves are insufficient to satisfy its increasing energy demand. The domestic demand for coal rose more than double and reached to 60% in 2019, up from 25% in 1990 in its energy mix. Consequently, more than 80% of coal-fired plants in India faced with critical stock availability level in 2021. Thus, increasing demand for energy and facing with the scarcity of coal resources have led India to invest in its potential alternative energy sources for power generation (Kumar and Majid, 2020; IEA, 2021; Arshian et al 2021; IEA, 2022). On the other hand, utilizing coal-fired technologies for power generation deteriorate the environmental sustainability and air quality in India. The level of GhG emissions caused by these technologies is accounted for almost 45% of total energy-related CO2 in India (Sholapurkar and Mahajan, 2015; Crippa et al 2020). Consequently, energy policies in India plays vital role to mitigate the GhG emissions and improve local and global environmental quality in line with global environmental agreements and its own sustainable development goals.
Although coal-fired generations still have massive share in India’s energy mix, India is highly endowed with the remarkable potential of renewable energy sources such as wind and solar power. In this regard, India aims to increase the utilization of solar and wind power to reduce the rising dependency on importing coal and accordingly try to mitigate environmental problems created by coal (Wang and Liu, 2021). Besides, they are fully cost-competitive and cost-effective green energy resources compared to fossil-fuel fired technologies. Especially, wind power approximately costs 35% cheaper compared to the coal-fired power plant, where this number is accounted as 30% for solar power generations. (GWEC, 2020; Indian Institute of Science, 2021). Accordingly, the Indian government intensified its project developments and investment in increasing the capacity of power generation from its potential renewable energy incorporation with the Ministry of New and Renewable Energy (MNRE) (IRENA, 2019; REN21, 2021; Shekhar et al 2021). Since 2014, the share of renewables in terms of installed capacity has doubled while the share of coal capacity regressed. Owing to the remarkable progress of India’s energy transition by renewables deployment, the total installed capacity of solar and wind power reached 49 GW in the 2015–2019 period (IEA, 2021). Moreover, according to a report by the Indian Institute of Science (2021), the total installed capacity in renewable energy reached to 86 GW, of which solar power accounted for 34 GW, with wind power adding a further 37.5 GW by the end of 2019. Additionally, in 2020, wind power installed capacity accounted for 43.3% of the total energy mix, that is followed by solar power with a share of 39.8%. According to the Renewable Global Status Report (2020), India become one of the world’s top leading investor economies on renewable energy. At the end of 2020, India was ranked 4th according to its wind power installed capacity and 5th country according to solar power installed capacity (Energy Statistics, 2021).
Acceleration in investment and rapid increase in installed capacity of renewables has led the Indian government to set a target to raise its renewable energy generation capacity to 450 GW by 2030 under the conditions of the Paris Agreement (IEA, 2022). In addition, they committed to an emission mitigation target to reduce harmful GhG emissions and their intensity by 43% and 60% in 2030, respectively. According to the IEA report published in 2018, the share of renewable energy sources in India is expected to rise to 38% by 2040 due to the priority given to new power generations, led by solar and wind power in particular. Aside from this, the coal-fired power generations are targeted to decline from 74% in 2017 to 57% by 2030 (IEA, 2020). To this end, according to 2030 development goals, the upward trend of solar and wind power generation systems will keep growing in near future. Therefore, depending upon these expectations, it is important to see how far India can go beyond its targeted level to make the new power generation pathway consistent.
Based upon the given information above, this paper contributes to the existing energy economics literature with several novelties: initially, to date, according to the best knowledge of authors, this is the first attempt to answer the question of how environmental sustainability varies depending on the use of renewable (solar and wind generations) and non-renewable (coal consumption) energy sources in India. This is important to be determined to assess whether the intensive investments done for renewable energy sources work for reducing environmental deterioration level in India to reach its sustainable development goals and raise environmental quality. To this end, the exhaustive indicator, i.e. ecological footprint, was firstly used for environmental sustainability for India and regressed on different renewable energy potentials. Secondly, India is one of the biggest contributors to the world’s GhG emissions and environmental deterioration due to its dependence on fossil-fuels fired based generation system and CO2 emissions from fossil-fuel generation which grew ten-fold from 181 MtCo2 in 1971 up to 2161 MtCo2 in 2017 (IEA, 2019). Therefore, mitigating carbon emissions in India in fact is very important globally. Also, the findings of this study could be especially useful for the continuity of renewable generation target and to lessen the adverse environmental effect of fossil fuels in India on the world. Thirdly, although few studies have investigated the wind power-carbon emissions nexus in the literature, no studies yet examined the wind power-ecological footprint nexus for India. Fourth, this is the very first study that employs the newly developed Fourier ADL cointegration test to empirically analyze the steady-state association among ecological footprint and renewable and non-renewable energy sources. This empirical technique differs from traditional cointegration techniques by considering the number of structural breaks and gives robust results accordingly. Lastly, this study extends the data set used in the literature and covers the years from 1995–2018 that is also the whole available data.
The organization of this paper is listed below: After the introduction, Section 2 introduces the previous studies and their findings in the literature and followed by Section 3 which assesses the data and the econometric methodology applied. Section 4 discusses the findings of the study and Section 5 delivers the conclusion and policy implication.