When it comes to tackling climate change by drastically slashing CO2 emissions, cold, hard figures can sometimes work as incentives for governments to act. A new report by the global consultancy Deloitte does just that, by analysing India’s long-term economic prospects through the lens of decarbonisation.
The report, India’s Turning Point, How Climate Action Can Drive Our Economic Future, states that India must act decisively to decarbonise now, or risk losing almost $35 trillion in economic potential over the next 50 years, with global temperatures rising by 3 degrees Celsius above pre-industrial levels. According to the report, this would mean a lost economic potential totalling 12.5% of India’s current GDP in 2070 alone. On the other hand, if India sets into motion the process of decarbonisation now and reaches close to zero fresh emissions by 2055, the economy stands to gain $11 trillion in a world that would have managed to limit temperature rise to 1.5 degrees Celsius above pre-industrial levels.
The report states that five specific industries, which together account for 80% of India’s present GDP, will be badly hit if global temperatures continue to rise unchecked. These are services, manufacturing, retail and tourism, construction, and transport. According to the report, climate inaction would result in losses in 2070 to the tune of $11 trillion for services, $5 trillion for manufacturing and $8 trillion for retail and tourism. The other two sectors would account for losses worth another $11 trillion combined. These losses would arise from lower levels of labour productivity due to heat stress and worsening human health, and India’s severe exposure to extreme climate events.
This need not be the case. As other reports have pointed out, the costs of decarbonisation are far outweighed by the gains. In an ideal situation, decarbonisation policies would lead to India’s GDP suffering losses in the short term, till about 2040. In this time, the GDP would contract 1.5-3.1%. However, in a post-2050 world of near zero emissions where temperature rise peaks at 1.5 degrees Celsius and then stabilises, India’s GDP could grow by 8.5% by 2070. The report states that near-term stress to the economy is worth enduring to avoid an otherwise nightmarish scenario.
It has long been clear that the policy decisions India makes over the next 10 years are going to be crucial in shaping the country’s resilience to climate change. The report makes it clear that the time for bold policies to drastically rein in emissions is now. The report essentially repeats the warnings of other such analyses in the past, but in putting concrete numbers to gains and losses, it does the ongoing tussle for policy direction an important service. Ultimately, even if you take away the numbers, the choice is clear. What is required now is a structured and strategic policy framework that would, in effect, rebuild India’s economy from the ground up—an economy that has no space for fossil fuels. If we plan our energy transition right, India’s economy will be a resilient one.