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India Can Accelerate Green Investments to USD 12.1 Trillion by 2050, Says Mckinsey

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Clean Energy Finance and Investment Roadmap of India: OEDC Report

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McKinsey and Company, a consulting firm, said that India can increase green investments up to USD 12.1 trillion by 2050 and reap many benefits.

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According to Mckinsey & Co, India’s net Green House Gases (GHG) emissions will continue to rise at a steady rate of 11.8 gigatons of CO2 equivalent per year by 2070. This is up from the 2.9 gigatons in 2019.

The report stated that India could create 287 gigatons carbon space for the globe if it intensifies its efforts to combat climate change. This amounts to nearly half of the global carbon budget, which is necessary to limit warming to 1.5 degrees celsius.

It stated that India’s decarbonization will require USD 12.1 trillion (5.9% of GDP) in green investments to achieve the “accelerated” scenario.

India has pledged to zero net emissions by 2070. According to earlier estimates, USD 10 trillion investment is required to shift to net zero emissions by 2070.

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Mckinsey stated that there are tailwinds that would help a country such as India. These include reducing the cost of electric vehicles and progressive policies.

It added that there are also challenges, such as the increase in renewable capacity from 10 GW to 40-50GW per year and the decrease in hydrogen and battery costs.

According to the consultancy, more than 80 per cent of India of 2070 is yet to be built. It also stressed the need to act immediately in the upcoming decade to secure the right type of investments in the 2030s and 2040s to ensure a smooth transition.

The report stated that India could have cumulative forex savings of USD 1.7 trillion by 2070 due to reduced energy imports of crude and coking coal, if it makes the transition well.

It said that the country could also be a manufacturing and research-and-development base for cleantech including electrolysers and batteries.

Rajat Gupta, senior partner at the firm, stated that the upsides of a well-planned and ordered, accelerated transition outweighs the risks, given India’s growth outlook.

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Gupta stated that it would be necessary for India to take action within the next decade and use its growth momentum to build India over the coming decades. He added that although the journey can seem difficult, most of the actions are financially viable.

The firm suggested a ten point agenda to accelerate de-carbonization. It started with the creation of a detailed medium term decarbonisation plan that includes sector-specific priorities as well as policy frameworks that provide demand signals and a steady hand.

It suggested that the implementation of Compliance Carbon Markets be accelerated within three years. This would allow banks to support the transition supported by a green bank, higher renewables adoption in the power sector, and empower a nodal authority for defining a national land-use planning.

The consultancy advised corporates to be on the “front foot”, assess investment opportunities and align with India’s national plans.

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