India will need $12.4 tn to meet long-term net zero goals: Standard Chartered report

India will need $12.4 trillion to transition to net zero emission and help the world in its efforts to stave off the worst of climate change, a study by banking and financial services company Standard Chartered has said.
 
If the finance needs of India are provided by developed markets, then Indian household spending could increase by $7.9 trillion compared to self-financing, the study titled 'Just in Time' said.
 
Developed market funding, where capital is provided through grants and loans, will be critical to ensuring emerging markets are able to transition without impacting their growth or household spending, it added.
 
The spending by Indian households would fall by a total of $5.8 trillion if India has to self-fund its journey to net zero, it said.
 
Overall, the emerging markets will need an additional $94.8 trillion, a sum higher than annual global gross domestic product (GDP), if they are to meet climate goals without hitting citizens' cost of living, the study said.  This is in addition to the capital already allocated by governments under their current climate policies.
 
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.
 
Self-financing by emerging markets would lead to higher taxes and an increase in government borrowing, meaning that some of the world's poorest people will have less to spend on their everyday needs.
 
Also Read: Corporate tax collection stood at Rs 7.20 lakh cr in FY22: Nirmala Sitharaman 

Households in these markets would be $2 trillion poorer on average each year. In total, between now and 2060, emerging market household consumption could be reduced by $79.2 trillion, the report argued.
 
"Private investors can contribute $83 trillion of the $94.8 trillion that is required - underscoring the urgent need for financial institutions to fulfil green and transition finance pledges," the study said.
 
However, citing one of its earlier reports, Standard Chartered said that encouraging investment in emerging markets is a difficult task. The world's top 300 investment firms with total assets under management of more than $50 trillion, have just 2 per cent, 3 per cent and 5 per cent of their investments in the Middle East, Africa and South America, respectively, it said.
 
If developed markets finance the transition to net zero goal, emerging market household spending will increase by $1.7 trillion on average each year (compared to self-financing) and would also stimulate global growth -- GDP could be $108.3 trillion higher cumulatively between now and 2060.
 
To transition in the fairest way possible, greater collaboration is required in strategy, policy, and financing, Just in Time said. "More importantly, banks need to live up to the pledges made during COP26 if ordinary households are to avoid bearing the costs of their market's transition to net-zero."
 
Commenting on the study, Standard Chartered Group Chief Executive Bill Winters said that without 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.
 
"However, even more crucially, failure to deliver emerging market transition finance could mean climate goals are missed, triggering an environmental catastrophe. Governments and the financial sector need to come together to help facilitate the flow of investment into emerging markets urgently. Developed market funding could help prevent the worst of global warming, as well as stimulating global GDP," Winters added.

Also Read: Govt blocks 22 YouTube channels for spreading disinformation