According to a new Standard Chartered study, India will require $12.4 trillion in spending on the transition to net-zero emissions and aid the rest of the world in its efforts to avert the worst effects of climate change. According to StanChart's report, private investors can contribute $83 trillion of the required $94.8 trillion.
According to the 'Just in Time' study, developed market funding, in the form of grants and loans, would be critical to ensuring that emerging markets can transition without negatively impacting their growth or household spending.
The study, which looks at the transition financing gap for emerging markets and how to close it, discovered that if developed markets provide the finance India requires, 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 fund its own journey to net zero," the report added.
According to the report, if emerging markets fund their own transition without assistance from developed markets, household consumption in these markets could fall by 5% on average each year.
"Emerging markets require significant investment to achieve net-zero, and the stakes have never been higher." Without the assistance of developed markets, the improvement in emerging market prosperity could be halted or reversed, which would not only be unjust but would have a significant negative impact on the global economy," said Bill Winters, group chief executive of Standard Chartered.
He added, however, that failure to deliver emerging market transition finance could mean that climate goals are missed, resulting in an environmental disaster. "Developed market financing could help prevent the worst effects of global warming while also stimulating global GDP," he added.
The study examines two approaches to closing the emerging market transition finance gap: self-financing by emerging markets and developed market financing, which includes grants and loans.
"Emerging market self-financing would raise taxes and increase government borrowing... "In total, emerging market household consumption could be reduced by $79.2 trillion between now and 2060," it said. However, compared to self-financing, developed market financing could increase emerging market household spending by $1.7 trillion per year, stimulating global growth, according to the study.
