Context:
A NITI Aayog report states that India can achieve net-zero emissions by 2070 while becoming a developed economy by 2047, but this transition requires significant international financial support, including $6.5 trillion from developed countries.
Key Highlights:
- Investment Requirements for Net-Zero Transition
- Achieving net-zero emissions by 2070 will require $22.7 trillion in cumulative investment.
- Under current policies, projected investments are about $14.7 trillion.
- Therefore, an additional $8.1 trillion investment is required to meet net-zero targets.
- Role of Developed Nations
- India estimates that $6.5 trillion of the additional investment should come from developed countries.
- This demand aligns with the principle of Common but Differentiated Responsibilities (CBDR) under global climate agreements.
- Sector-wise Investment Needs
- The power sector will require the largest investment for decarbonization.
- Other major sectors include:
- Industry
- Transport
- Energy infrastructure and storage systems.
- Current Climate Finance Scenario
- India currently attracts around $135 billion annually in climate investment.
- Around $80–90 billion is directed toward clean energy projects.
- However, this level is insufficient to meet long-term climate goals.
- Domestic Financial Mobilization Strategy
- India aims to increase the share of international climate finance to 42% by 2070, compared to 17% in FY2023.
- Around $16.2 trillion could be mobilized domestically through financial reforms and global capital integration.
- Proposed Institutional Reforms
- Establishment of a National Green Finance Institution to mobilize and deploy climate capital.
- Expansion of corporate bond markets from 16% of GDP (2023) to 30% by 2070.
- Increasing the financialization of household savings from 60% to 75%.
Relevant Prelims Points:
- Net-Zero Emissions
- A state where greenhouse gas emissions released are balanced by removal from the atmosphere.
- Achieved through emission reductions and carbon sinks such as forests and carbon capture technologies.
- Nationally Determined Contributions (NDCs)
- National climate action plans submitted under the Paris Agreement.
- Countries set targets for emission reduction and climate adaptation.
- Emission Intensity of GDP
- The amount of greenhouse gas emissions per unit of economic output.
- India’s Climate Achievements
- Reduced emissions intensity of GDP by 36% from 2005 levels.
- Achieved 50% non-fossil fuel power capacity ahead of schedule.
Relevant Mains Points:
- India’s Climate Development Challenge
- India must balance economic growth, energy demand, and climate commitments.
- As a developing country, it faces developmental priorities such as poverty reduction and industrial expansion.
- Climate Finance Gap
- Developing countries face significant financial constraints in transitioning to low-carbon economies.
- Developed countries historically contributed the majority of global emissions, strengthening the argument for financial and technological support.
- Importance of Climate Finance for India
- Supports renewable energy expansion, green hydrogen, electric mobility, and sustainable infrastructure.
- Helps reduce dependence on fossil fuels and improve energy security.
- Way Forward
- Strengthen international climate finance mechanisms and green investment flows.
- Promote public–private partnerships for green infrastructure.
- Expand green bonds and sustainable finance frameworks.
- Accelerate clean technology transfer and international cooperation.
UPSC Relevance:
• GS Paper 3 – Environment & Economy: Climate change mitigation, net-zero transitions, and green finance.
• GS Paper 2 – International Relations: Global climate negotiations and climate finance responsibilities.