$35 trn loss or $11 trn gain: India must choose climate action impact
If no action is taken then the average global temperatures could rise by 3 degree Celsius or more by the end of the century
- Aug 23, 2021,
- Updated Aug 23, 2021 4:01 PM IST
India could lose as much as $35 trillion in economic potential or gain as much as $11 trillion in economic value depending on the trajectory it sets on now. A report titled ‘India’s turning point: How climate action can drive our economic future’ by the Deloitte Economics Institute shows that India must act now to prevent losses of $35 trillion economic potential. However, if India can limit rising global temperature and realise its potential to ‘export decarbonisation’ to the world then the fortunes could turn around to garner as much as $11 trillion economic value.
Atul Dhawan, Chairperson at Deloitte India said that India has a narrow window of 10 years to make the decisions that could alter the trajectory of climate change. “No one is immune to the impact of climate change, but for India this is a window of opportunity to lead the way and show how climate action is not a narrative of cost but one of sustainable economic growth,” said Dhawan.
If no action is taken then the average global temperatures could rise by 3 degree Celsius or more by the end of the century. This will, in turn, make it tougher for people to live and work as sea levels would rise, crop yields would fall, infrastructure would be damaged among other things.
Services (government and private), manufacturing, retail and tourism, construction, and transport are expected to be the most impacted industries in terms of economic activity in the next 50 years. These currently account for more than 80 per cent of India’s GDP. The report estimates that these five industries alone would experience an annual loss in the value added to GDP of more than $1.5 trillion per year.
Not all is lost yet. The report suggests that if governments, businesses and communities act rapidly and strongly to address climate change then the average global temperature hike could be limited to around 1.5 degree Celsius by 2050. This would minimise the impact of climate change, not only for India but also globally. India could supply products, services, and financing the world would need to limit temperature increases and achieve significant economic growth.
Accelerated decarbonisation could bring significant benefits to India as well as the world, the report states. It could be used by India to transition to a low-emission footing and restructure the economy and leverage lower cost clean energy export markets.
Transformation to low-emission footing is going to be complex as India is a developing nation. It will have to strike a balance between need for economic development and the subsequent rise in energy demand, as well as investing in and transitioning to emerging, low-emission technologies. The report suggests that economic benefits would be visible from the first year of bold climate policy implementation. In 2070 alone, this could equate to GDP growth of 8.5 per cent.
Bold climate change strategies could see economy starting to decarbonise between now and 2030. From 2030 to 2040, large and coordinated shifts to reduce carbon emissions would need to be complete. From 2040 to 2055 is when the world will start seeing climate impact as it would avoid locking in temperature increases of 3 degree Celsius or more. By then decarbonising high-emission industries would be almost complete and cost of green solutions would start to fall, with wider net economic gains. After 2055, India’s economy would have been radically transformed and be producing near-zero emissions, it said, further adding that there would have been a rapid gain in economic dividends from global decarbonisation. Global temperature increases would be restricted to 1.5 degree Celsius by end of the century.
Also read: Green bonds: India's best bet against climate change Also read: How climate change can be tackled through executive compensation
India could lose as much as $35 trillion in economic potential or gain as much as $11 trillion in economic value depending on the trajectory it sets on now. A report titled ‘India’s turning point: How climate action can drive our economic future’ by the Deloitte Economics Institute shows that India must act now to prevent losses of $35 trillion economic potential. However, if India can limit rising global temperature and realise its potential to ‘export decarbonisation’ to the world then the fortunes could turn around to garner as much as $11 trillion economic value.
Atul Dhawan, Chairperson at Deloitte India said that India has a narrow window of 10 years to make the decisions that could alter the trajectory of climate change. “No one is immune to the impact of climate change, but for India this is a window of opportunity to lead the way and show how climate action is not a narrative of cost but one of sustainable economic growth,” said Dhawan.
If no action is taken then the average global temperatures could rise by 3 degree Celsius or more by the end of the century. This will, in turn, make it tougher for people to live and work as sea levels would rise, crop yields would fall, infrastructure would be damaged among other things.
Services (government and private), manufacturing, retail and tourism, construction, and transport are expected to be the most impacted industries in terms of economic activity in the next 50 years. These currently account for more than 80 per cent of India’s GDP. The report estimates that these five industries alone would experience an annual loss in the value added to GDP of more than $1.5 trillion per year.
Not all is lost yet. The report suggests that if governments, businesses and communities act rapidly and strongly to address climate change then the average global temperature hike could be limited to around 1.5 degree Celsius by 2050. This would minimise the impact of climate change, not only for India but also globally. India could supply products, services, and financing the world would need to limit temperature increases and achieve significant economic growth.
Accelerated decarbonisation could bring significant benefits to India as well as the world, the report states. It could be used by India to transition to a low-emission footing and restructure the economy and leverage lower cost clean energy export markets.
Transformation to low-emission footing is going to be complex as India is a developing nation. It will have to strike a balance between need for economic development and the subsequent rise in energy demand, as well as investing in and transitioning to emerging, low-emission technologies. The report suggests that economic benefits would be visible from the first year of bold climate policy implementation. In 2070 alone, this could equate to GDP growth of 8.5 per cent.
Bold climate change strategies could see economy starting to decarbonise between now and 2030. From 2030 to 2040, large and coordinated shifts to reduce carbon emissions would need to be complete. From 2040 to 2055 is when the world will start seeing climate impact as it would avoid locking in temperature increases of 3 degree Celsius or more. By then decarbonising high-emission industries would be almost complete and cost of green solutions would start to fall, with wider net economic gains. After 2055, India’s economy would have been radically transformed and be producing near-zero emissions, it said, further adding that there would have been a rapid gain in economic dividends from global decarbonisation. Global temperature increases would be restricted to 1.5 degree Celsius by end of the century.
Also read: Green bonds: India's best bet against climate change Also read: How climate change can be tackled through executive compensation