For several countries, access to energy is an important and immediate concern than climate change. However, the current global approach to climate change runs the risk of making the low income status of several countries permanent, warns the Finance Ministry’s review of the Indian economy.

Development is key in building resilience and enabling effective mitigation action as, in the medium to long run, development would generate resources and capacity for effective climate action, said The Indian Economy: A Review released by the Department of Economic Affairs (DEA) on Monday.

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“However, the current global approach to climate change is set on a course that runs the risk of making the low-income status of several nations permanent. For several of them, access to energy is a more important and immediate concern. Globally, there is a need to strike the right balance between development and emissions mitigation, and that begins with the realisation that wishing away the trade-off is the wrong place to start,” it added.

Fortunately, near-term pragmatism blended with a clear long-term goal of reducing dependence on fossil fuels is shaping India’s policies towards energy transition.

Climate change policies

Ambitious climate policies that are not pragmatic to factor in the need for energy security have socio-economic costs in the short to medium term, even if they may benefit in the very long-term, the review said.

The benefits could be smaller than the costs, and the uncertainties associated with the benefits of climate policy are larger than the uncertainties around their costs, it added.

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Further, limited access to the critical minerals, alternative green technologies and concessional finance needed for transition adds more uncertainties, concerning the perceived benefits of such policies.

India’s efforts

“On its part, the government holds the achievement of the developmental priorities as central to this effort. The goal of reaching net zero by 2070 and enhanced NDC for 2030 is being pursued with a wide array of policy and regulatory measures, as well as incentives to weave production and consumption patterns in the country with mindful and deliberate utilisation instead of mindless and destructive consumption - under Mission LiFE,” the review said.

India’s significant climate actions have resulted in a path to achieving its nationally determined contributions (NDC) well before 2030, establishing India as a climate leader and the only G20 nation in line with 2°C warming compared to its fair share contribution to climate action, it added.