India will need massive amounts of investments from the developed world if it is to stave off the worst effects of climate change without hurting its citizens’ cost of living, a new study by Standard Chartered has said.
The country needs $12.4 trillion worth of investments to transition to net zero, the ‘Just In Time’ report by Standard Chartered said. But if it has to self-fund the transition, that will lead to its households losing almost $144-billion spending power annually till 2060.
That would amount to a total of $5.8-trillion loss in household spending during the period.
“Emerging market self-financing would lead to higher taxes and an increase in government borrowing, meaning that some of the world’s poorest people will have less to spend on their everyday needs,” Standard Chartered said. “Emerging markets being able to reach net-zero without hampering their growth or prosperity would represent a just transition.”
In India’s case, if the developed markets provide financing for its net-zero transition then that can help increase household spending by $197.7 billion annually on average—or $7.9 trillion by 2060.
India has set a target of net-zero emissions by 2070, the latest target among any Group of 20 nation. The country is still heavily reliant on fossil fuels for its energy needs and will need significant funding to increase renewable capacity and efficiency.
Who pays for the transition has been a contentious question at global climate negotiations. The unequal exposure of poorer countries to climate risks raises concerns about growth and inequality, an issue that has plagued the climate policy debate over the years.
Rich countries that had pledged an annual $100 billion for lower-income countries to help their transitions have not lived up to that promise. That has been a sticking point for Indian lawmakers in climate negotiations.
Last year at the climate summit in Glasgow, Scotland, Environment Minister Bhupender Yadav said climate finance isn’t a charity and that rich nations had an “obligation” to fulfill their pledge. Earlier in March, Union Minister Piyush Goyal urged developed countries to help India meet its climate ambitions through “practical” funding programmes.
According to a report by the World Resources Institute, the U.S. should be contributing 40-47% of the $100 billion a year, taking into account wealth, past emissions and population. But its annual contribution between 2016 and 2018 has been around $7.6 billion. Other countries that fall short of their “fair share”, according to WRI, include Australia and Canada.
