India needs $12.4 trillion for net-zero transition, says report

INTERNATIONAL DESK: India will need investments worth $12.4 trillion, nearly half of U.S. GDP, from developed nations and investors to help its economy transition to net-zero carbon emissions by 2060, according to a report.

Without capital inflows and grants from the developed world, emerging economies including India’s will see household consumption fall by 5% on average each year, according to a study by Standard Chartered Plc.

Eight emerging markets — India, China, Indonesia, Kenya, South Africa, UAE, Nigeria and South Africa — will together need $94.8 trillion in transition finance from developed markets if they are to meet climate goals without affecting their citizens’ cost of living, the report said. China alone will need $35.1 trillion, the calculations show.

Developing economies have raised concerns about richer nations not meeting their climate finance commitment of $100 billion, made in Paris in 2015. India sought $1 trillion in funding from the developed world to help meet its net-zero goal by 2070, during the global climate talks in November.

If India’s financial needs are provided by developed markets, household spending in its economy could increase by $7.9 trillion. Instead, if India were to self-finance its transition costs, the average Indian household spending could fall by as much as $5.8 trillion, according to the report.

The study suggests a mix of blended finance or joint spending by the public and private sectors to subsidize the cost of capital to cut investments risks, coupled with issuing sovereign green bonds by emerging markets as possible solutions to bridge the funding gap for climate change.

“If developed markets fail to channel net-zero investment into emerging markets while working on their own transition, there will be devastating implications for the planet,” the report said. (Business Standard)