First estimate pegs cost of India’s net zero goal at $10 trillion

NEW DELHI: India’s 2070 net-zero goals would need cumulative investments of more than $10 trillion, which is more than three times the current size of the country’s economy, but could face a investment shortfall of $3.5 trillion, according to the first-ever investment estimates for the country’s climate pathway prepared by climate energy think-tank CEEW Centre for Energy Finance (CEEW-CEF). In a report titled ‘Investment Sizing India’s 2070 Net-Zero Target’, CEEW-CEF estimates India would need investment support of $1.4 trillion in the form of concessional finance from the developed economies to mobilise foreign capital that bridges the gap. Prime minister Narendra Modi announced India’s commitment to achieving net-zero emissions by 2070 at the recently-concluded Glasgow COP26 climate meet amid a tussle over financing of transition costs of the developing economies. According to the report, the investments are primarily required to help decarbonise India’s power, industrial, and transport sectors. The majority of the investments would be needed to transform the power sector, which still depends heavily on coal, the most-polluting fuel. The report says $8.4 trillion would be required to significantly scale up generation from renewable energy and associated integration, distribution and transmission infrastructure. Another $1.5 trillion would have to be invested in the industrial sector for setting up green hydrogen production capacity to advance the sector’s decarbonisation. “Developed countries must ramp up hard targets for climate finance over the coming years. On the domestic front, financial regulators like RBI and SEBI need to create an enabling ecosystem for financing India’s transition to a green economy,” CEEW chief executive Arunabha Ghosh said. “Given the size of the investments required, private capital, from both domestic and international institutions, should form the bulk of investment, while public funds should play a catalytic role by de-risking investments in existing and emerging clean technologies,” he added. The study reckons the $1.4 trillion concessional finance requirement would not be uniformly spread across the five decades till 2070. The average annual concessional finance requirement would vary from $8 billion in the first decade to $42 billion in the fifth decade. According to Vaibhav Pratap Singh, programme lead for the report, Traditional domestic and foreign sources such as domestic banks and non-banking financial companies (NBFCs), and debt capital markets – both local and international – would not be able to fund the massive investments needed by themselves. Therefore, access to foreign capital, on concessional terms, would have to play a key role.” The study follows CEEW’s study on ‘Implications of a Net-zero Target for India’s Sectoral Energy Transitions and Climate Policy’. According to that study, India’s total installed solar power capacity would need to increase to 5,630 gigawatts by 2070. The usage of coal, especially for power generation, would need to peak by 2040 and drop by 99% between 2040 and 2060. Further, crude oil consumption across sectors would need to peak by 2050 and fall substantially by 90% between 2050 and 2070. Green hydrogen could contribute 19% of the total energy needs of the industrial sector.

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