By Professor Neelam Rani and Jatinder Handu
India’s recent budget announcements to promote energy transfer and climate-friendly policy initiatives include strengthening its commitment to a 100% net-zero economy by 2070 and reducing its reliance on fossil-based energy for renewable energy by 50% by 2030. China and the United States, the world’s first and second largest producers of greenhouse gases (GHG), are committed to achieving net-zero emissions by 2060 and 2050, respectively. India’s commitment to the Global Commons (climate), its leadership, determination and sensitivity to mitigate the adverse effects of global warming and decarcinism. ) Progress towards. India’s action at the Conference of the Parties 26 (CoP26) in Paris in 2015 or in Glasgow in November 2021 demonstrates just how important India is to taking collective global responsibility into its own economic growth goals.
Global Commitment to Net Zero and National Policy Initiatives:
The Prime Minister of India, Shri Narendra Modi, presented the Panchamrit Mantra (Five Nectar) of India to world leaders at CoP26 in Glasgow in November 2021, to mitigate the risks posed by climate change. He further strengthened India’s commitment to further limiting global warming to 1.5 degrees Celsius in the pre-industrial era, urging developed countries to support India financially by providing USD 1 trillion in funding.
Prime Minister Modi has assured world leaders that India will voluntarily make the following changes by 2030.
উন্ন Upgradation of non-fossil energy to 500 gigawatts (GWs),
ব্যবহার Using renewable sources to meet 50 percent of energy needs,
45 45% reduction in carbon emissions of the economy,
Reduce carbon emissions by 01 billion tons
Budget of India 22:
In line with Glasgow’s commitment, Indian Finance Minister Mrs. Sitharaman in her Annual Budget (FY2022-23) speech announced some much-needed policies to strengthen the Government of India’s (GoI) commitments to mitigate the adverse effects of climate change. As a policy tool, he chose to announce an investment worth INR 195 billion as production linked incentives (PLIs) to boost internal make-in-India production of high-efficiency photovoltaic (PV) modules to meet the target of installing 280 gigawatts. Solar energy by 2030. Clean-tech complements the transition to public transport use in urban areas, special mobility zones with zero fossil-fuel policy, and the promotion of electric vehicles (EVs) through the implementation of a battery swap policy through ‘a service as a battery’. The Business (BaaS) model is a welcome step.
Another notable announcement is the introduction of Sovereign Green Bonds (SGBs). Although issuing green bonds is not a completely new concept. In India, many companies in the corporate sector have already issued green bonds, but the announcement to issue SGBs in 2022-23 to raise funds for green investment in infrastructure (INR 240 Bn. Bloomberg reports) is a policy announcement that shows green and climate-tolerant infrastructure. According to a survey of sovereign bonds (Sovereign Green, Social, and Sustainability (GSS) bonds) conducted by the London Climate Bond Initiative in November 2020, about 22 countries have already issued sovereign GSS bonds. Total USD96Bn. The same report further states that at least 14 sovereign governments around the world have expressed a desire to issue GSS bonds.
Currently, there is no single ministry in the country responsible for leading India to a net zero, with the Ministry of Environment, Forests and Climate Change (MoEFCC), the Ministry of New and Renewable Energy (MNRE), and the Ministry of Heavy Industries (which implements) the promotion of electric vehicles. Rapid Adoption and Production of Hybrid and Electric Vehicles in India (FAME INDIA Project), is the main driving force behind India’s efforts in this direction. But a single “Net Zero Ministry” would be highly desirable.
Why it tweaks to be green: The challenge of sitting at home implementing green prescriptions
Although the whole climate narrative aims to achieve net-zero status, is it relevant for an ordinary person in India (and elsewhere) to understand what net-zero emissions mean and what it takes to get there? Why Net-Zero is so important to us in India, the costs associated with it and, finally, the desire to absorb a pinch of green.
According to a Deloitte document presented at the 2021 Sustainable Development Impact Summit of the World Economic Forum, if left unchecked, the Indian economy could lose USD 35 trillion by 2070 (equivalent to 12 times India’s nominal GDP (2020). World Bank data). Needless to say, it will have adverse political, social and economic impact on the livelihoods and lives of millions of Indians, exacerbating and exacerbating socio-economic inequality. However, at the same time, if India goes ahead with climate measures, it could gain USD 11 trillion in economic value. So it is clear that it is the third largest pollutant and emitter of GHGs. It is not a matter of choice, it is mandatory for India to lead by the way.
Critical Role of India’s Financial Sector in Facilitating Transformation to Net-Zero – Public Policy Announcement for Action Finance.
Converting to Net-Zero Economy is easier said than done. According to a recent report published by ODI, an independent London-based think tank, when we look at India’s energy-intensive sectors, mainly coal-based power generation, energy-intensive manufacturing (petroleum, cement, chemical and primary metals), mining Excavation etc. All these activities add up to 60% of GHG emissions. Not just emissions, these sectors together account for about 12% of all bank loans in India. More surprisingly, about half of these loans flow to some large companies, thus increasing the risk. On top of that, there is an additional ঋ 76 billion in external debt, which further strengthens the concentration of investment in the GHG emissions sector. This is rare, however, if emissions are mapped in proportional investment, a clear picture can be obtained. It is unfortunate that on the one hand, Indian policy makers are making tough announcements, but on the ground, only 17% of debt in power generation goes to pure-play renewable energy companies.
It is important to realize that the cost of DIET is directly related to the exposure to the fossil intensive sector in the Indian financial sector. In India, the power and other coal ghazal sectors are heavily dependent on fossil fuels for power generation, production, etc. The proportional investment of the Indian banking sector in the financing of mega projects will be immediately risky, if change is to be talked about let alone change. The multi-year effectiveness of the project will be reduced like a pack of cards.
Commercial banks are not the only ones facing conversion risk. Even independent power generating companies, including oil, manufacturing, and power sector firms, issue corporate bonds promising profitable returns to retail and institutional investors, with investors holding such bonds facing similar risks. If this happens at any moment during a change, it could shake investor confidence in the economy.
And, when we discuss the role of the financial sector, it is important to look at the steps taken by the banking regulator of India – the Reserve Bank of India (RBI). On 20 December 2007, for the first time, for all scheduled commercial banks (excluding regional rural banks), the RBI issued a notification on corporate social responsibility, sustainable development, and non-financial reporting to ensure that sustainable development is not lost sight of by finance. Institutions pursuing related financial goals. The RBI has in fact advised banks to focus on the triple bottom line approach. However, until recently most of the focus has been on nurturing opportunities in green financing rather than risk-linked fund management in the exit of large projects such as energy or manufacturing sector. The first meeting of the Sustainable Financial Task Force, set up by the Department of Economic Affairs, Ministry of Finance, Government of India, took place in January 2021 to adopt an overall framework for sustainable finance and to raise new sustainable funds for infrastructure projects. As part of the Global Alliance and Cross-Learning, the RBI became an official member of the Central Banks and Supervisors Network of Greening the Financial System (NGFS) on 21 April. Immediately after May 21, the RBI established a Sustainable Finance Group (SFG) to lead regulatory initiatives on climate risk and investments associated with sustainable financing.
Ultimately, achieving DIET requires an interconnected, interconnected effort. A developing country like India will need external support for access to Clintech and Green Finance, especially from advanced adversaries to meet its climate obligations despite all good intentions. As India moves towards adopting a DIET economy, the pinch of green space needs to be reduced through multilateral and bilateral cooperation in climate change. As Prime Minister Modi summed it up during his speech in Glasgow, discussions are underway on climate change; Must have responsibility in the same vein. He called on developed countries to allow immediate access to climate finance and technology needed to implement a net-zero emission economy within the promised year.
(Professor Neelam Rani is an Associate Professor and Jatinder Handu is a Scholar at the Indian Institute of Management, Shillong.