Balancing Climate Change and Economic Growth in India

Posted by Reading Time: 4 minutes

By Kangkyu Lee

climate change indiaOn November 2nd, the International Panel on Climate Change (IPCC) released a report to the United Nations indicating that India is one of the most vulnerable countries to the effects of climate change.  The conclusions are the same as the study conducted in 2007: climate change remains irreversible and the continued use of fossil fuels will have a massive impact on the world.

Since India is one of the top 20 nations at risk from extreme impacts of climate change, the panel recommended India internalize its development strategy with energy efficiency and reduce greenhouse-gas emissions (GHG).  While this appears to impugn on Prime Minister Narendra Modi’s economic advocacies, there are ample opportunities to take advantage of.

India is a nation well-accoutered to tackle the climate change problem and still economically develop. Modi has recently freed diesel prices from control of the state and signed an executive order that will open India’s coal industry to private companies both domestically and internationally.  This comes in tandem with dipping global oil prices in order to attract potential buyers to one of India’s most expensive subsidies. In addition, the US-India partnership on nuclear power is a valuable connection structured to better relations between the two and get India on track in reducing greenhouse-gas emissions.

RELATED: India’s Coal Industry Moves Towards Privatization Amidst Trade Union Protests

Plans to roll out nuclear power in India may be implemented by 2020. The prime minister also plans to invest more in renewable energy (particularly solar) and fix the unreliability of India’s energy sector. The need to do so is now particularly pressing, with scientists recently finding that India’s yields of crops are being cut by almost half due to its air pollution levels.

The “Make in India” campaign and Modi’s international visits have focused on attracting foreign investors to the energy sector. Decarbonizing the world is a daunting task but, at least for India, there is a litany of different options to take. Foreign investors need not worry about collateral damage from any change in development strategies: experts on the IPCC have stated that energy transition in India would have minimal impact on the country’s economy and it is possible to safely incubate the renewable energy industry.

The IMF has forecasted that India will become a US $2 trillion economy this year, and will surpass the US $3 trillion boundary by 2019.  Even in the face of climate change, India is scientifically and economically equipped to handle the challenges of global warming whilst opening up new avenues for investors to take advantage of. Indeed, India has the potential to be a model nation that combines renewable energy and sustainable economic development.

RELATED: China and India Set to See Boom in Energy Efficient Vehicles

With Modi’s initiatives, India is an alluring business and investment location and many should feel comfortable with its emerging markets and industries. Even now there are signs of salient economic recovery, with credit ratings firm Moody’s declaring that it may improve its rating of India in the near future. There are also forecasts that India will soon surpass China as the wealthiest BRIC nation.

In the face of the challenges that climate changes poses, foreign investors can therefore still be confident in India’s repertoire of unique advantages and imminent reforms.

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