India faces $6.5 trillion funding gap to achieve Net Zero target by 2070: Report

New Delhi, Nov 9 (SocialNews.XYZ) India faces a funding gap of $6.5 trillion to achieve its target of Net Zero emissions by 2070, with international capital needing to find a way to fund 40 per cent of the gap at a minimum, according to a report compiled by Australian economist Nicki Hutley.

The report, released just ahead of the COP31 UN conference on climate change, highlights the NITI Aayog analysis, which suggests India has a cumulative need of $22.7 trillion by 2070 to fund its Net Zero transition, with the energy sector accounting for about half of this.

NITI Aayog estimates that domestic capital can provide just over 70 per cent of financing needs, but significant reforms are required to achieve this. Reforms should include expanding corporate bond markets, mobilising pension savings, encouraging insurance investment, and increasing green bond issuance. On this front, collaboration with more established capital markets in advanced economies may help India make these reforms, the report stated.

It points out that the concept of international climate finance was written into the text of the UNFCCC in 1992, which states that developed nations should provide financial help to developing countries. In other words, climate finance has been a key pillar of discussions for more than 30 years. Despite this, progress on delivering that finance, at scale, has been stymied.

"Where we stand now, debate on climate finance, and what is required, has increased in prominence in recent years, as the subject of research, on a range of sectoral conference agendas, and as a key thematic at COPs. This increased focus reflects the urgency of the Net Zero transition and the need to financially support developing economies," the report said.

Stalled action on emissions mitigation means that developing economies now also need adaptation finance in addition to mitigation dollars. Nevertheless, copious talk has produced insufficient new commitments from either the public or private sector, and funding remains well below required levels, it lamented.

It observes that advanced economies are not walking the walk.

Following the 2009 Copenhagen Accord, in 2010 developed countries committed to provide $100 billion per annum by 2020 to "address the needs of developing countries". This goal was reached, albeit two years late, in 2022, and with approximately half coming from multilateral development banks (MDBs) rather than individual developed economies. Some finance also represents a reallocation of developed economy funds from aid budgets, meaning the overall pool of finance available has not increased. However, by 2022, even $100 billion per annum was considered well below the actual mitigation finance needs of developing economies, the report added.

Source: IANS