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<keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword> requires an investment support of USD 1.4 trillion — an average of USD 28 billion per year — to become a net-zero economy by 2070 and raising <keyword id="20260327" type="General" weightage="20" keywordseo="financial-resources" source="keywords">financial resources</keyword> for adaptation and mitigation action of this scale is an "unprecedented challenge", according to the <keyword id="20613906" type="General" weightage="20" keywordseo="Economic-Survey" source="keywords">Economic Survey</keyword> 2023-24 tabled in Parliament on Monday. Reaching net zero means achieving a balance between greenhouse gas emissions and the amount of these gases removed from the atmosphere by either natural processes, such as photosynthesis, or by other methods of carbon capture and storage. The consolidated report on the state of the economy in the previous year said India's climate action has been largely financed through domestic resources and the flow of international finance has been "very limited". Citing the Reserve Bank of India's (RBI) data, the report said bridging the "substantial funding gap" necessitates allocating 2.5 per cent of India's annual Gross Domestic Product (GDP) to <keyword id="20018880" type="General" weightage="20" keywordseo="green-finance" source="keywords">green finance</keyword>. "Preliminary estimates indicate that the aggregate investment support required by India to achieve its 2070 net-zero target will be USD 1.4 trillion at an average of USD 28 billion per year. Raising financial resources for <keyword id="19907392" type="General" weightage="20" keywordseo="climate-change" source="keywords">climate change</keyword> adaptation and mitigation actions of this scale is an unprecedented challenge," the document read. A 2022 report by the Climate Policy Initiative found that domestic sources accounted for the majority of green finance in India, at 87 per cent and 83 per cent in financial years 2019 and 2020 respectively. While international sources are increasing (from 13 per cent in FY 2019 to 17 per cent in FY 2020), the economic survey said they are still insufficient to meet India's net-zero target. "Mobilising substantial capital from traditional sources presents multifaceted challenges in emerging economies like India. The perceived sovereign risks associated with emerging market and developing economies (EMDEs) and the capital-intensive nature of such projects, coupled with lengthy gestation periods and evolving regulatory frameworks, can create misalignment between investor expectations and project timelines," the government said. The economic survey also noted that the flows of global capital to <keyword id="20200084" type="General" weightage="20" keywordseo="developing-countries" source="keywords">developing countries</keyword> have been impeded by high costs of capital. Despite securing a good rating on its green-bond framework, Indian sovereign <keyword id="20177085" type="General" weightage="20" keywordseo="green-bonds" source="keywords">green bonds</keyword> have hardly received any "greenium" from private investors. It is more a "wall of capital" than a "flood of capital" that is waiting to fund energy transition in EMDEs. It is just not mobile. All of these together have severely hampered the flow of finance for green-transition projects, the survey said. "Greenium" or green premium refers to the savings an issuer of a green bond realises on the associated coupon payment because the bond is green. Financial support to help middle-income and poor countries fight climate change will be at the centre of this year's UN climate conference in Baku, Azerbaijan, where the world will reach the deadline to agree on the New Collective Quantified Goal (NCQG) -- the new amount developed nations must mobilise every year starting 2025 to support climate action in developing countries. But achieving consensus will not be easy, given the disappointing progress made on major conflict points at the mid-year UN climate talks in Bonn, Germany. At the 2009 UN climate conference in Copenhagen, rich nations pledged to provide USD 100 billion annually from 2020 to help developing countries mitigate and adapt to climate change. However, delays in achieving this goal have eroded trust between developed and developing nations and have been a continual source of contention during annual climate negotiations. In May, the Organisation for Economic Cooperation and Development (OECD) claimed that developed countries had met the long-standing USD 100 billion-a-year promise by providing nearly USD 116 billion in <keyword id="20000757" type="General" weightage="20" keywordseo="climate-finance" source="keywords">climate finance</keyword> to developing countries in 2022, with nearly 70 per cent of the money given in the form of loans. However, international non-profit organisation Oxfam last week said climate finance provided by rich countries in 2022 totalled no more than USD 35 billion. Developing nations argue that they cannot be expected to reduce carbon dioxide (CO2) emissions faster if developed countries -- historically responsible for climate change -- do not provide enhanced financial support. Rich countries are now expected to raise more than USD 100 billion, with developing countries, including India, demanding trillions of dollars to tackle climate change.

Raising massive financial resources for net-zero goal unprecedented challenge: Economic Survey

<ul class="summary-list"><li>A dearth of key <keyword id="11895968" type="UNKNOWN" weightage="60" keywordseo="metals" source="Orion">metals</keyword> important for future technologies will prevent countries from meeting the Net Zero global <keyword id="12152918" type="UNKNOWN" weightage="60" keywordseo="emissions" source="Orion">emissions</keyword> target by 2050, says Bank of America. </li><li>The bank has identified 27 so-called MIFTs including lithium, cobalt and copper. </li></ul>Global climate ambitions set in the landmark <keyword id="14091082" type="UNKNOWN" weightage="60" keywordseo="paris-accord" source="Orion">Paris Accord</keyword> will be knocked off course if shortages of key raw materials persist and the mining industry doesn't ramp up investment, Bank of America said Wednesday. The agreement reached in 2015 between nearly 200 countries to drastically cut down greenhouse-gas emissions had a target to limit global warming to 1.5 degrees Celsius by 2050 in the pursuit of Net-Zero emissions. "Mined raw materials are key to the energy transition but a dearth of many metals important for future technologies (MIFTs) is putting Net Zero at risk. The world is only slowly waking up to this threat," Michael Widmer, head of metals research at Bank of America, said in a note from the bank's <keyword id="11895969" type="UNKNOWN" weightage="60" keywordseo="commodities" source="Orion">commodities</keyword> research team. The bank identified 27 MIFTs — including lithium, cobalt, manganese, iridium, molybdenum and copper, and nickel and aluminum — with uses ranging from energy storage to powering electric vehicles and wind applications. A global warming limit level of 1.7 to 1.8 degrees Celsius looks likely based on current resource endowment and market balances. "One solution to resolving shortages and constraints, as ever, lies in investment." The mining industry may need to nearly double capital expenditures to $160 billion a year for the world to hit the Net Zero goal by 2050. Global mining capex averaged around $99.5 billion per year in the past decade, it said. "This may sound expensive, but from a financial standpoint, boosting investment in MIFTs could be highly rewarding," said Widmer, noting the United Nations estimates adaption expenses of $140 billion to $300 billion per year by 2030 in developing countries alone. "Based on the mining CAPEX required to achieve Net Zero, although this may simplify it a bit, the return on that investment could be somewhere between +94-317%. So, moving towards Net Zero would require investment in mining, but this would potentially save on adaptation costs." BofA said China stands out as the largest producer of many critical resources, raising some concerns over supply risks. The country is the largest producer of cadmium, gallium, graphite, iridium, and other metals. <div type="image" title="A Bank of America chart shows figures for global mining capital expeditures." height="1130" width="2208" msid="91948528" hostid="261"></div>

Global emissions goals won't be met by 2050 if metal shortages aren't addressed and mining firms don't ramp up investment, Bank of America says

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Raising massive financial resources for net-zero goal unprecedented challenge: Economic Survey

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Global emissions goals won't be met by 2050 if metal shortages aren't addressed and mining firms don't ramp up investment, Bank of America says

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