Ladies and Gentlemen, good morning! It’s a pleasure to be speaking at this prestigious event today. We have a long-standing partnership with TERI, and I want to congratulate you very much on your 50th anniversary. There is no better place today than India to talk about financing climate action and sustainable development. In the limited time, I want to address three dimensions of this vast agenda: growth and carbon emissions, climate adaptation, and financing the transition to a green, sustainable development model.
India’s growth and carbon emissions
India’s development record is impressive: it grew six-fold in the past two decades, lifting just shy of 300 million people out of poverty. India’s carbon emissions record is not bad either: although India has seen carbon emissions grow rapidly as average incomes have increased, on a per capita basis, India today emits only 2.8 tons of CO2e/year, a quarter of China’s, one-sixth of the US’s, and less than half of the global average.
India is likely to continue on this high growth – low emission path for two reasons: (i) because it is likely to remain an economy driven by low emission services – even if demand for industrial goods increases as India urbanizes and builds more infrastructure to service a fast-growing economy; and (ii) because technological progress will allow India to increasingly decouple energy supply from carbon emissions.
India has already made significant inroads in the power sector. It is currently the world’s fourth largest renewables market, and home to 3 percent of the global solar manufacturing capabilities. In addition, in the past five years, India has consistently invested close to US$10 billion every year into renewables and ranks among the world’s five emerging and mid-income economies with the largest public investment in renewable energies.
India’s industrial sector is more challenging to decarbonize and thus projected to grow to 50 percent of total GHG emissions by 2050. Building on the success in renewable energy, India’s policy could further encourage investments in green technologies to decarbonize its industrial sector to advance towards net zero. In the short term, industrial decarbonization should be driven by energy efficiency and electrification where possible. Over the medium-term, green hydrogen and carbon capture, utilization, and storage technologies will play a critical role.
The right policies could help India accelerate its energy transition. In the power sector, the reform of DISCOs is probably the most urgent. To encourage the deployment of new technologies, performance-based incentives can be used. Smart procurement policies and offtake agreements can further incentivize investments at scale, as recently demonstrated for e-buses being rolled out for green hydrogen. With the right policies, India’s energy transition is an investment opportunity, and should be able to attract commercial financing.
India’s adaptation challenge
If mitigation is India’s opportunity, climate adaptation is an imperative. India is among the top-10 most climate vulnerable countries globally. Planning for climate resilience is thus essential. But here, too, investment opportunities can be found. One example is urban cooling. India launched a Cooling Action Plan in 2019, the first initiative of its kind globally. We estimate that the market for affordable cooling solutions in India represents a $1.6 trillion investment opportunity. Importantly, nature-based solution such as passive design can generate cooling benefits and cut energy consumption. Considering the substantial health and productivity benefits, urban cooling investments generate triple dividends: economic, social, and environmental.
Searching for such triple dividends will be key to financing India’s sustainable development. Two more examples: mangroves, seagrass beds, and salt marshes have a substantive potential for carbon storage while protecting coastal communities from climate disasters, supporting fisheries, and promoting tourism and jobs. Investments in air quality management can yield significant health benefits, supporting productivity, while reducing emissions. The increases in asset value associated with safer, cleaner, and more livable cities can be leveraged to mobilize private investment and complement public funding. More research is needed to find similar solutions also in agriculture and food systems, both highly vulnerable to climate change.
Can India finance the transition to a low emission, climate resilient development model?
Public sources alone cannot meet the financing needs of development on a livable planet. Private capital and climate finance must be leveraged more efficiently. India’s renewable energy expansion has predominantly relied on private investment thanks to appropriate regulatory policies and is likely to continue to do so. India has also made progress in carbon pricing with the introduction last year of the Carbon Credit Trading Scheme (CCTS) and Green Credit Program (GCP). While the caps so far are not highly binding, the program nonetheless lays the foundation for blended finance solutions that combine private investment, public funds, and carbon finance. In adaptation, green, blue, and sustainability linked bonds and other forms of impact investment could complement insurance and other commercial risk-mitigation tools to drive sustainable development finance.
Let me conclude. India’s development trajectory matters globally. Its track record to date puts it on a much lower carbon emissions path than other major economies before it. Its climate vulnerability, deep domestic capital markets and its innovation capacity may position it also as a leader in developing and funding smart climate adaptation.
India’s international partners, including the Multilateral Development Banks have the responsibility to support these efforts. Following the call of India’s G20 Presidency, we at the World Bank are revamping our operating model to be fit for this important goal. Globally, we have committed to reach 45 percent climate finance, half of which on adaptation. We look forward to our continued partnership with the authorities at the union and state level and with all of you in helping India realize its ambitious goals of reaching high income by 2047 and net zero emissions by 2070.
Thank you very much.