- India would have to dedicate 5.9% of its GDP towards climate finance.
- A key challenge for India would be land availability as the report pegs that it will need 45 million hectares of land than it has, towards its green initiatives.
- Over three-fourths of India of 2050 is yet to be built, thus green policies need to be proactively put in place, the report says.
“India will need an estimated $7.2 trillion of green investments until 2050 to decarbonise in the LoS (line of sight) scenario and an additional $4.9 trillion for the ‘Accelerated’ scenario (about 3.5 percent and 2.4 percent of India’s GDP through this period respectively). 50 percent of the investment required for decarbonisation is economically viable, particularly across renewable energy, auto and agriculture; others would need policy support,” the report said.
The report comes on the heels of the 27th Conference of the Parties (
Over three-fourths of India of 2050 and 80% of India of 2070, is yet to be built. The next set of policies across key sectors like power, cement and agriculture will determine whether India can effectively contribute to a carbon-free world.
India is the world’s third largest emitter, creating 2.9 gigatonnes of carbon dioxide every year, which is 4.9 percent of annual global emissions, the report states. If this goes unchecked, India has the potential to generate 11.8 gigatonnes of carbon dioxide per year by 2050.
“Right policies, set up now, will enable India to add low carbon capacity in the next two decades thereafter,” claimed McKinsey.
Five sectors which contribute to roughly 70 percent of India’s overall emissions are power, transportation, steel, cement and agriculture.
The primary driver of carbon emissions in India is the power sector (coal, oil, gas) which accounted for 34% emissions. This was followed by agriculture (18%), primarily methane from cattle and rice cultivation. Other key emitters include transport (9%), water waste (6.2%) and buildings (4.5%).
“Boldness in sustainable investments helps. This is what happened with the gradually increasing adoption of electric vehicles and solar energy. Even though coal mining districts of India will lose employment, construction jobs will increase and new renewable energy sectors will pop up, generating at least 30 million jobs,” said Rajat Gupta, Asia leader of the Sustainability Practice, McKinsey & Company, who was also part of the core team that contributed to the national solar mission.
Indian sustainability initiatives have also reaped results. “Tailwinds like reducing costs of renewables, EVs and progressive policies exist, e.g., the implicit carbon tax on transportation fuels of $140 to 240/tCO₂e is helping the electrification of mobility,” the report said.
Key challenges towards India’s green future
The plan has many challenges that go beyond policies and investments. India will need 45 million hectares more land than that’s available to drive its green initiatives. There is an increasing need to optimise current land use.
In automotive, 100% of two wheelers, three wheelers and light truck sales may need to be electric early in the next decade. All car sales would have to be electric by 2035 and trucks by 2050.
The pace of renewable capacity addition needs to pick up – from 10 gigawatts to 40-50 gigawatts per year and green steel needs to become competitive.
Moreso, battery costs will have to decline by 40% by 2030, green hydrogen by two-thirds by 2035. Farmers have to adopt new practices for rice cultivation, the report reveals.
The shift to sustainable-farming practices however could help generate additional farmer income of ₹3,400 per hectare per year, as per the line of sight scenario, the report calculated.
“We need to intensify our efforts towards building more urban forests but also make our current forest more dense. Higher adoption of electric vehicles and green hydrogen are needed. Use of carbon tax especially in the steel sector is needed towards making greener investments in India,” said Divy Malik, Associate Partner at McKinsey & Company.
The shift towards greener alternatives however will help it reap monetary benefits too. India can save $1.7 trillion in forex which would otherwise be spent on energy imports (oil and coking coal) till 2070, adds the report. Moreover, it also holds the potential to become a manufacturing and R&D base for cleantech like EVs, batteries and electrolysers.