Assessing the decarbonisation pathways of India's power sector giants: transition to clean energy companies requires more ambitious targets to improve credibility with ESG investors

Indian power sector giants NTPC and Tata Power require massive capital to fund their transformations into clean energy companies. New avenues of fundraising in foreign capital markets, such as sustainability-linked bonds and loans, are available to support companies transitioning to low-carbon business models. However, to unlock this transition finance NTPC and Tata Power will need to establish formal, outcome-based sustainability-linked finance frameworks that align with globally accepted science-based emissions reduction targets to limit global warming to 1.5˚C. Under science-based net zero targets, NTPC would need to accelerate decommissioning of coal mines and existing coal-fired power plants and stop building new ones, while Tata Power would need to accelerate decommissioning of its coal-fired power plants prior to their contractual obligations and also disclose and outline plans to exit its investments in Indonesian coal mines.