Post-COP30: India’s Commitment to Net Zero by 2070
Context and Challenges Post-COP30
The withdrawal of the US from the Paris Agreement has led to uncertainties in global climate finance, particularly affecting developing countries, who now face reduced external assistance commitments, initially set at $300 billion per year by 2035.
India's Strategic Reasons for Commitment to Net Zero
- Decarbonisation versus Economic Growth:
- Contrary to popular belief, decarbonisation does not necessarily hinder economic growth. The health hazards from air pollution in Indian cities justify a transition away from fossil fuels.
- Technological advancements mean decarbonisation in major sectors is possible without significant additional costs, preventing stranded assets in fossil fuel infrastructure.
- Decarbonisation can stimulate economic growth and job creation, especially in manufacturing and potential exports.
- Economic Models and Emission Trajectories:
- Models like REMIND-India suggest a targeted GDP growth of 6.25% p.a. from 2025-2050, outlining alternative emissions trajectories.
- The "business-as-usual" (BAU) scenario indicates emissions will rise until 2045, while a proactive policy approach can curb emissions post-2035.
Overcoming Financial Constraints
- Domestic Financing Over Reliance on External Aid:
- India, with its growing economic capabilities, is expected to mobilize investments domestically, reducing dependency on scarce concessional funds.
- External financing could be supplemented by foreign private flows, such as FDI, and non-concessional public flows like MDB lending.
- Need for Policy Reforms:
- Reforms in electricity distribution companies to ensure financial viability and selective privatisation are essential.
- Regulatory reforms to allow pricing variability can encourage private sector investment.
- Establishing a swift legal framework for resolving state-investor disputes will enhance FDI flows.
Role of Multi-lateral Development Banks (MDBs)
MDBs should expand long-term lending and facilitate private capital influx through risk-sharing and credit enhancements, a topic underlined for the upcoming G20 summit hosted by the US.
