How much will it cost India to achieve a net zero emission target by 2070? While different numbers are being bandied about at various platforms, one thing is clear: the number is staggering. A report titled “Getting India to Net Zero” by the High-Level Policy Commission by Asia Society Policy Institute in August 2022 pegs the amount at US$ 10.1 trillion. And if India wants to accelerate the goal—to achieve net zero by 2050—the total investment required will be $ 13.5 trillion. A massive amount by any standard, especially for a country that needs to prioritise its spending depending on its immediate needs.

Similarly, the global consulting firm McKinsey in its report “Decarbonizing India: Charting a Pathway for Sustainable Growth” in October 2022, argues that India will need US$ 7.2 trillion by 2050 in green investments to decarbonise the country if it continues with existing policies, rules and regulations. This would translate to an average annual investment of US$ 240 billion, and 70% of the funding would be needed for capital investment in the power and automotive sector. “It will be primarily driven by an expansion in renewable energy (RE) capacity and the electrification of the automotive industry,” says the report.

A detailed analysis of the McKinsey report shows that the amount suggested will be more than two-thirds of the total Indian tax revenue or twice the total government spending on education in India. The High-Level Policy Commission report acknowledges that significant resources are needed for India to transition to a clean economy. “If such finances are unavailable, there would be a considerable strain on the domestic economy.”

The World Bank Group 2021-22 report called ‘Climate and Development: An Agenda for Action” says climate change poses a significant threat to the long-term development objective, especially poverty reduction and accelerated emission reduction in developing and low-income countries. Developing countries must spend 1.4% of their gross domestic product (GDP) on reducing greenhouse gas emissions by 70% by 2050. This can be done without significantly impacting their growth trajectory. “But in lower-income countries, financing needs can exceed 5%, which will require more support from high-income countries, including increased concessional resources,’’ says the report.

Whether the promise of US$ 100 billion in 2009 or other pledges made at Glasgow, Scotland, last year will be met at COP 27 or in the near future is still debatable. The ongoing Russia-Ukraine War has resulted in high food and energy prices worldwide, especially in Europe, hurting their economies. According to the World Resource Institute’s recent report, European countries will spend billions of dollars this winter on expanding fossil fuel infrastructure and supplies while simultaneously taking unprecedented steps in reducing energy consumption and speeding up renewables.

However, India has much to gain from the decarbonisation exercise. According to the “Getting India to Net Zero” report, achieving net zero emissions by 2070 could boost India’s economy by 4.7% above the projected baseline growth in GDP terms by 2036. Beyond that, it will maintain a 3.5% growth above baseline by 2060.

This transition offers other benefits like localisation of India’s energy requirements and moving away from fossil fuels to renewable energy, green hydrogen and biomass. According to the McKinsey report, it could also result in foreign savings of US$ 2.4 to US$ 3 trillion by 2070.