25-Jan-2023: India may lose on the journey towards clean energy
A study published in the Global Environmental Change journal states that, India’s financial sector is highly exposed to the risks of the economy transitioning from being largely dependent on fossil fuel to clean energy.
Negative Impact on Financial Sector
- India's financial sector heavily exposed to fossil fuel activities
- Transition to clean energy will have negative impact on financial sector
Shortage of Experts
- Lack of expertise in financial institutions for advising on transition
- Only 4 of 10 major financial institutions collect ESG risk information
Less Capacity to Respond to Shocks and Stresses
- High-carbon industries have 10% of outstanding debt
- Heavily indebted industries have less financial capacity to respond to shocks
More Polluting and More Expensive Energy Supply
- Financial decisions locking India into more polluting, expensive energy supply
- Only 17.5% of bank lending to power sector for pure-play renewables
- Coal accounts for 44% of India's primary energy sources and 70% of its power
- 91,000 MW of proposed coal capacity in works, second only to China
Potential
- Heavy exposure to potential transition risks
- Tremendous opportunity to move finance towards sustainable assets
- India committed to reach net-zero emissions by 2070
- Plans to source 50% of electricity needs from non-fossil fuels by 2030
- At least a trillion dollars financing needed to meet commitments