By 2030, India may offer green investment potential of $3 trillion, says IFC report

India, which has pledged to significantly reduce the emissions intensity of its GDP, offers a climate-smart investment potential of $3 trillion between 2018 and 2030, said a report released by International Finance Corporation (IFC) on Wednesday.

India’s efforts to fulfil its commitment to low carbon growth would require large investments in diverse fields such as agriculture, energy, infrastructure and transport, according to an analysis by the multilateral agency.

The world’s third largest economy has said that by 2030 it will reduce its carbon emissions intensity by 35 per cent from 2005 levels, as part of the ambitious Paris agreement targets.

Green buildings represent the largest investment opportunity, as 70 per cent of buildings needed by 2030 have not yet been built in India.

This includes 20 million urban homes and 10 million rural homes that are required to meet the government’s ambitious ‘Housing for All by 2022’ plan.

IFC has estimated that the housing sector offers an investment potential of $1.4 trillion, of which $1.25 trillion would come from the residential sector and $228 billion from commercial buildings.

Another green technology that could attract a lot of attention from investors is electric vehicles. The government recently announced that all new car sales in 2030 in the country should be electric. At current capital costs, this could mean an investment opportunity of about $667 billion between 2018 and 2030.

Renewable energy, which has taken off significantly in the last few years, has the potential of attracting $448 billion in investments, followed by transport infrastructure ($250 billion), agriculture ($198 billion) and urban water ($128 billion), it said.

The IFC report, however, said India has to iron out several bottlenecks to meet its climate targets.

Investors and developers of renewable energy projects, for instance, are constrained by tender cancellations, delayed signing of power purchase agreements and lack of pipeline visibility. The sector is also facing risks such as falling tariffs, uncertainty about grid availability and removal of incentives, it pointed out.

The analysis is part of a regional study that examined the climate investment opportunities in countries in the sub-continent other than Pakistan. These countries together represent 7.38 per cent of global CO2 emissions.

According to the report, Bangladesh offers an climate-smart investment opportunities of $172 billion, Nepal $46 billion, Bhutan $42 billion, Sri Lanka $18 billion and the Maldives $2 billion.

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