India will need investments amounting to US$7.2 trillion (A$10.7 trillion) to US$12.1 trillion by 2050 to achieve its net zero ambitions, a think tank said.
The South Asian country has committed to decreasing its carbon emissions to below 45 percent by 2030 and reaching net zero emissions by 2070.
However, according to the Institute for Energy Economics and Financial Analysis (IEEFA), India’s renewable energy capacity additions decreased by 20.3 percent from 16 gigawatts (GW) in 2022 to 13GW in 2023.
This is despite the country needing power generation capacity to increase to 900GW from the current 445GW to reach the forecasted power demand by fiscal year 2031-32, which may be revised due to recent temperature anomalies.
Over the 12 months to June this year, India witnessed a significant power demand increase, attributed to its severe summer with a prolonged heatwave, with the temperature in New Delhi soaring to 52 degrees Celsius, the highest in 60 years.
While India was able to add about 16.4GW in the first seven months of this year and is likely to add a further 25GW, this still falls short of the current requirement of 45GW per year.
“Public finance can play a big role in helping India achieve its net zero target. However, most public sector banks have crossed their lending limit to the energy sector and are constrained in terms of lending to renewable energy plants,” said Vibhuti Garg, Director for South Asia at IEEFA.
“While renewable energy comes under priority sector lending, the limit for this sector needs to be increased.”
Garg noted that philanthropic funds are also being invested in pilot projects to boost their commercial viability and make them scalable.
The Indian government has also included in its budget provisions to fast-track the shift to clean energy.
These include reducing custom duty on solar panels and cells, introducing a credit guarantee scheme for MSMEs, and developing a taxonomy to improve the availability of “climate finance.”
ADB to Support Green Bonds in India
Earlier this month, the Asian Development Bank (ADB) said it will invest US$25 million in Vivriti Capital Limited’s certified climate bond issue, proceeds of which are aimed to provide financing to companies engaged in electric vehicles, solar and wind energy, and waste management.“Climate bonds can bridge the large market gap for climate finance in India while supporting the development of the capital market,” said Suzanne Gaboury, Director General for Private Sector Operations at ADB.
“This partnership with Vivriti Capital Limited allows ADB to support scalable and commercially viable renewable energy projects and promote decarbonization of road transport, which accounts for up to 30 percent of urban air pollution in India.”
