India faces important phase in its climate journey. A recent study by the Centre for Social and Economic Progress (CSEP) reveals that India needs approximately $467 billion by 2030 to decarbonise four major sectors. These sectors – power, steel, cement, and road transport – contribute over half of the country’s carbon dioxide emissions. The study offers a sector-wise breakdown and marks the challenges and investment priorities for India’s low-carbon transition.
Sector-Specific Investment Needs
The steel and cement sectors require the largest investments – $251 billion and $141 billion respectively. Both are hard-to-abate sectors due to their energy-intensive processes. The study emphasises the need for technologies like carbon capture and storage to reduce emissions. The power sector, which is already expanding renewable energy capacity, requires an additional $47 billion. Road transport needs about $18 billion, although its emission reduction potential was not fully quantified due to limited data.
Decarbonisation Goals and Emission Reductions
Decarbonising power, steel, and cement could prevent 6.9 billion tonnes of CO2 emissions by 2030. This effort aligns with India’s commitments under the Paris Agreement. India has already met its target of 50% electricity capacity from non-fossil sources ahead of schedule. The country is also on track to increase carbon sinks through forests and reduce emissions intensity by 45% from 2005 levels before 2030.
Financial Feasibility and Economic Impact
The $467 billion investment is less than earlier estimates exceeding one trillion dollars. The study’s authors argue this amount can be mobilised largely through domestic resources and private sector participation. They conducted a macroeconomic analysis showing that the investments would not harm export competitiveness or cause inflationary pressures. This suggests India can finance its climate goals without major economic disruptions.
Challenges in International Climate Finance
India has brought into light the importance of international climate finance as part of its Paris Agreement commitments. However, funds from developed countries have been slow to materialise. The study’s findings underline the possibility of reducing dependence on external finance by leveraging internal capital. This shift could accelerate India’s climate actions and support sustainable growth.
Implications for India’s Climate Strategy
Focusing on four key sectors provides a clear roadmap for targeted climate finance. The study’s bottom-up approach offers detailed vital information about sectoral needs and investment priorities. It also emphasises the importance of technological innovation in hard-to-abate industries. India’s progress in renewable energy and emission intensity reduction demonstrates the potential for scaling up climate action.
Questions for UPSC:
- Discuss the role of sector-specific climate finance in achieving India’s Nationally Determined Contributions under the Paris Agreement.
- Critically examine the challenges and opportunities in decarbonising hard-to-abate sectors like steel and cement in developing economies.
- Explain the significance of domestic resource mobilisation in climate finance. How can private sector participation enhance India’s low-carbon transition?
- With suitable examples, discuss the impact of international climate finance on developing countries’ climate actions and the reasons for its limited availability.
