India will require an additional investment of about $467 billion between now and 2030 to significantly decarbonise four of its most emission-heavy sectors, according to a new study.
The study, conducted by Janak Raj and Rakesh Mohan of the Centre for Social and Economic Progress (CSEP), is the first sector-specific, bottom-up analysis of India’s climate finance needs. It examines the power, steel, cement, and road transport sectors, which together account for more than half of the country’s carbon dioxide emissions.
Among these, steel and cement, considered two of the hardest sectors to decarbonise, would require the bulk of fresh capital to get rid of their carbon footprint through installation of technologies like carbon capture and storage. The study estimates investment needs of $251 billion for steel and $141 billion for cement by 2030. This scale of capital expenditure, over and above what the industries are already putting in, would ensure the mitigation of not just existing emissions from these two sectors, but also the incremental emissions that are likely to arise as a result of the expected growth of these industries by 2030, the study said.
The power sector, already shifting rapidly towards renewable energy, would require an additional $47 billion, while road transport would need about $18 billion, the study said.
Though focused on only four sectors, the $467 billion estimate is significantly lower than previous projections that pegged India’s climate finance requirement at over a trillion dollars by 2030. The authors argue that this amount, if mobilised, would not only ensure India meets its Paris Agreement targets but also push the country further along the path to low-carbon growth. They estimate that decarbonising power, steel, and cement alone could avoid 6.9 billion tonnes of CO2 emissions over the next six years. Road transport reductions were excluded due to insufficient data.
India has already met one of its 2030 climate targets – ensuring that 50 per cent of installed electricity capacity comes from non-fossil sources – earlier this year. Another target, creating 2.5 to 3 billion tonnes of additional carbon sinks through forests and trees, is likely achieved but awaits fresh data confirmation. The third goal – cutting emissions intensity by 45 per cent from 2005 levels – is also expected to be met ahead of schedule, before 2030.
India has maintained that it can do much more on decarbonisation if it was assisted by international finance from developed countries as was provided for in the Paris Agreement. This money has been difficult to come by.
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The authors said their assessment of climate finance requirements was of an order which could be raised internally with the help of the private sector. They said they had also done a macroeconomic consistency check on their climate finance estimates, and found that this much money could be easily absorbed in the system without having adverse impacts on critical indicators like export competitiveness or inflation.
