India’s cost of adapting to climate change needs seen at $1 trillion: RBI

Context

India needs to spend an estimated 85.6 trillion rupees ($1.05 trillion) by 2030 to adapt its various industries to be compliant with climate change norms, a report by the Reserve Bank of India.

The Report

Title: Reserve Bank of India’s (RBI) Report on Currency and Finance
Report theme: Towards a Greener Cleaner India
The report is written by contributors from the Department of Economic and Policy Research.

Key Highlights of the Report

India’s goal of achieving the net zero target by 2070 would require-
- an accelerated reduction in the energy intensity of GDP by about 5% annually
- a significant improvement in its energy mix in favour of renewables to about 80% by 2070-71
Financing requirement: The green financing requirements in India could be at least 5% of GDP annually to address the infrastructure gap caused by climate events.
Vulnerability of financial institutions: Results of a climate stress test reveal that public sector banks (PSBs) may be more vulnerable than private sector banks. Globally, however, the measurement of climate-related financial risks remains a work in progress.
Requirement of sector-centric approach: Different sectors of the economy have different emission intensities, so it is advisable to not have a uniform climate mitigation strategy across sectors.
Without any policy action, India’s carbon dioxide emission levels may rise to 3.9 gigatonnes by 2030, from 2.7 gigatonnes in 2021.

India’s Climate Finance Strategy

Long-Term Low Emission Development Strategy(LT-LEDS): In November 2022, at COP27, India submitted its Long-Term Low Emission Development Strategy (LT-LEDS) to the United Nations Framework Convention on Climate Change.
- Issue: This requires trillions of dollars of investment. Yet India currently lacks a comprehensive climate finance strategy for mobilizing the capital required to execute the LT-LEDS.
Green Bonds: India’s maiden issue of green bonds, within the broader green bonds framework outlined by the government is commendable.
- Issue: India may issue $3 billion of green bonds in the financial year 2023–2024, but still this will amount to only 1.6 per cent of its overall annual borrowing.