India’s Annual Green Financing: According to a report by the Reserve Bank of India, India will require at least 2.5% of its GDP annually till 2030 to meet its green financing requirement. This comes as the country aims to achieve a net zero emission target by 2070. The report covers four dimensions of climate change, including the unprecedented scale and pace of climate change, its macroeconomic effects, implications for financial stability, and policy options to mitigate climate risks.
The report suggests that an accelerated reduction in the energy intensity of GDP by around 5% annually, along with a significant improvement in its energy mix in favour of renewables to around 80% by 2070-71, will be necessary to achieve the net zero goal.
The report states that India’s diverse topography makes it highly vulnerable to climate risks, including rising temperatures, erratic monsoon patterns, and extreme weather events. Furthermore, the report indicates that delayed climate policy actions could be costlier in terms of larger output losses and higher inflation, with inflation rising and output falling in the medium-term under a lenient mitigation plan.
The financial sector also faces the challenge of recalibrating its operations and business strategies to support the green transition process, while also strengthening resilience to rising vulnerability to adverse climate events so as to safeguard financial stability.
The report suggests that a comprehensive decarbonisation strategy encompassing all carbon emitting sectors of the economy and all available policy levers, such as fiscal, technology, regulatory, trade, and monetary, is required to mitigate climate risks. Estimates suggest that a balanced policy intervention can lower carbon emissions to 0.9 gigatonne by 2030 compared with a no policy action scenario that could increase India’s carbon emissions to 3.9 gigatonnes by 2030.