India Needs More Than $10 Trillion to Achieve Net Zero by 2070

India Needs More Than $10 Trillion to Achieve Net Zero by 2070

India needs more than $10 trillion to achieve its goal of net zero emissions by 2070, as stated by Finance Minister Nirmala Sitharaman. She highlighted the need for a carbon credit market in Gujarat’s GIFT City, which is a new financial hub being built in Gujarat. This market will help India get the money it needs to switch to environmentally friendly technologies.

GIFT City: A Beacon for Economic and Environmental Progress

GIFT City is not just any city; it’s India’s first major smart city and international financial center. Sitharaman believes that GIFT City will be crucial for India’s economic growth, potentially boosting the economy to over $30 trillion by 2047. She envisions GIFT City as a center for financial technology, aiding India’s economic development.

Opening Doors for Indian Companies

At present, Indian companies face restrictions in listing directly on foreign stock markets. They can only access international investors through specific financial instruments and after launching in India. Sitharaman plans to change this by allowing direct listings in GIFT City’s financial center, which will enable companies to raise funds for environmentally friendly projects more easily.

Trading Green Credits in GIFT City

Prime Minister Narendra Modi has proposed a platform in GIFT City for trading ‘green credits.’ These credits are earned through eco-friendly activities like tree planting and can be sold to fund environmental efforts. 

“According to certain estimates, India will need at least $10 trillion to achieve its net zero targets by 2070. This will need to be financed through global sources. Therefore, we must make IFSC a global hub for sustainable finance.”

The PM specifically stated that:

The Role of Carbon Credits in Emission Reduction

Trading carbon credits is vital for achieving emission reduction targets. Businesses can buy and sell these credits, which represent a tonne of carbon either removed or reduced from the atmosphere. As more global firms commit to net-zero targets, the demand for carbon credits is expected to rise, playing a significant role in reducing India’s emissions.

India’s Ambitious Climate Goals

India, the world’s third-largest polluter, has set ambitious goals to combat climate change. These include reducing emissions per unit of GDP by 45% from 2005 levels by 2030 and ensuring that half of its electricity comes from non-fossil fuel sources by the same year. The Paris Agreement acknowledges the varying capacities of countries to reduce emissions, and India’s strategy reflects this understanding.

Setting Industry-Specific Emission Targets

To meet its objectives, India could establish specific emission targets for high-polluting industries like steel, aluminum, cement, and power plants. These targets would be based on global best practices but tailored to India’s unique context.

Gujarat’s Initiative and the Carbon Credit Trading Scheme

Gujarat has already taken steps by signing deals worth over $266 million to earn carbon credits through mangrove planting and agroforestry. Additionally, the Indian Government has introduced the Carbon Credit Trading Scheme (CCTS) under the Energy Conservation Act, 2001. This scheme aims to create a regulated market for trading carbon credits in India, with the Bureau of Energy Efficiency (BEE) setting targets and the Central Electricity Regulatory Commission (CERC) overseeing trading.

A New Opportunity for Indian Companies

This development opens up significant opportunities for Indian companies to participate in the global carbon trading market. As India seeks the necessary funds to achieve its net-zero goals, the growth of GIFT City and innovative financial strategies offer a beacon of hope. With initiatives like carbon credit deals, India is steadily advancing towards a more sustainable future.