By PTI | New Delhi
A new study has revealed that India will need to mobilise USD 467 billion in climate finance by 2030 to transition its four most carbon intensive sectors –power, steel, cement, and transport –onto a low carbon pathway. The working paper, titled, “India’s Climate Finance Requirement: An Assessment,” was authored by eminent economists Janak Raj and Rakesh Mohan for the Centre for Social and Economic Progress (CSEP) and the Task Force on Climate, Development and the IMF.
Departing from conventional top-down models, the study employs a bottom – up sector by sector methodology to provide a “granular understanding” of the financial challenge. It found that decarbonising these sectors, which collectively contributed over 50 per cent of India’s CO2 emissions in 2023, will require an average of USD 54 billion annually from 2022 to 2030, equating to roughly 1.3 per cent of the country’s GDP.
Contrary to popular belief, the study identifies steel and cement, not power, as the sectors requiring the largest share of finance, accounting for over 80 per cent of the total need.This is due to their start as “hard to abate” industries that currently rely on expensive carbon capture storage (CCS) technology. The power sector’s estimated requirement is a lower USD 57 billion, aided by falling renewable energy costs.
The authors emphasise that while the sum is substantial, it is achievable. They call for urgent policy action, including incentivizing private investment, accelerating electric vehicle adoption, and strengthening the power grid. The report warned that delays could lock India into a high-emission pathway but concluded that with a carefully calibrated strategy, the country can achieve its climate goals and offer a model for other developing countries.
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