India will need $12.4 trillion to meet long term net zero goals: Report

India will require $12.4 trillion to transition to net zero and help the world in its efforts to stave off the worst of climate change, according to a latest study by Standard Chartered.

It said that emerging markets, overall, would need an additional $94.8 trillion – a sum higher than annual global GDP – if they were to meet climate goals without hitting citizens’ cost of living. This is on top of the capital already allocated by governments under their current climate policies.

StanChart said in its report that private investors can contribute $83 trillion of the $94.8 trillion that is required.

According to the study titled ‘Just in Time’, developed market funding, where capital is provided through grants and loans, would be critical to ensure that emerging markets are able to transition without impacting their growth or household spending.

The study, which investigates the transition financing gap for emerging markets and how to close, found that if the finance India needs is provided by developed markets, Indian household spending could increase by $7.9 trillion compared to self-financing.

“Indian household spending could fall by a total of $5.8 trillion if it has to self-fund its journey to net zero,” it added.

It said that if emerging markets fund their own transition, without help from developed markets, household consumption in these markets could fall by 5 per cent on average each year.

“Emerging markets need a great deal of investment to transition to net zero and the stakes have never been higher. Without the help from developed markets, improvement in emerging market prosperity could be halted or reversed, which would not only be unjust but would have a hugely negative impact on the world economy,” said Bill Winters, group chief executive, Standard Chartered.

He, however, added that even more crucially, failure to deliver emerging market transition finance could mean climate goals are missed, triggering an environmental catastrophe.

“Developed market funding could help prevent the worst of global warming, as well as stimulating global GDP,” he added.

The study looks at two pathways to closing the emerging market transition finance gap, self-financing by emerging markets and developed market financing, where capital is provided through grants and loans.

“Emerging market self-financing would lead to higher taxes and an increase in government borrowing… In total, between now and 2060, emerging market household consumption could be reduced by $79.2 trillion,” it said.

However, developed market financing could see emerging market household spending increase by $1.7 trillion on average each year, compared to self-financing, and would also stimulate global growth, the study added.