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India faces significant risks due to climate change, as noted by the Global Climate Risk Index 2021. The Reserve Bank of India estimates that the cumulative expenditure required to adapt to climate change will be Rs 85.6 lakh crore by 2030. This amount is equivalent to at least 2.5% of India's annual GDP, highlighting the urgent need for green financing.
The RBI's Report on Currency and Finance suggests that sector-specific climate mitigation strategies are necessary to address the crisis. The chart above shows several policy-driven scenarios for achieving net-zero or zero carbon emissions by 2070. However, without policy action, India's carbon dioxide emissions will rise from 2.7 gigatonnes in 2021 to 3.9 gigatonnes by 2030.
Renewable energy, electric vehicles, and energy-efficient appliances can cater to 55% of India's future energy requirements. Hard-to-abate sectors like heavy industries, animal husbandry, and agriculture can use a combination of renewables and efficient carbon pricing to reduce emissions.
Performance analysis
Policy-wise, India is the highest-performing G20 country, but the NITI Ayog's State Energy and Climate Index reveals significant variations among the Indian states. Gujarat and Punjab are the best performers, while Chhattisgarh, Madhya Pradesh, and Jharkhand are lagging behind. Among the smaller states and Union Territories, Chandigarh, Goa, and Delhi are the highest performers. The Indian government remains committed to a net-zero deadline of 2070, despite diplomatic pressure from developed countries to revise it to 2050.
At the upcoming UN Framework Convention on Climate Change's annual summit, COP28, India will submit its report on how it has fared in comparison to the climate pledges made under the Paris Agreement. The global stocktake process will evaluate countries' progress and suggest further measures to mitigate climate change.
According to a recent report by think tank Ember, India needs $400-500 billion of capital to meet its 2030 clean energy target. However, the International Forum for Environment, Sustainability, and Technology (iFOREST) estimate that at least $900 billion will be required for a just energy transition in India over the next 30 years, accounting only for coal mines and thermal power plants. Policy certainty is key to boost investor confidence and ensure India's clean energy transition is successful.
iFOREST, a think tank, estimates that at least $900 billion will be required for a just energy transition in India over the next 30 years, with this figure accounting only for coal mines and thermal power plants. The think tank also recommends an equitable approach to the energy transition, one that considers the impact on marginalized communities and the creation of new green jobs to offset any loss of jobs in the fossil fuel industry.