India May Face Financial Difficulties as it Switches from Fossil Fuels to Renewable Energy, Says Research
Given their substantial reliance on fossil fuel earnings, major developing nations like India and Russia, Brazil, and China may face financial difficulties as a result of the worldwide shift to renewable energy sources, according to a report by the International Institute of Sustainable Development (IISD).
Despite being a net importer of petroleum products, India makes a sizable profit from the use of petrol, diesel, and oil through cesses and taxes.
The study reveals that by 2050, total fossil fuel earnings in Brazil, Russia, Indonesia, India, and China might be as much as $570 billion less than in a business-as-usual scenario in which governments fail to phase down fossil fuels sufficiently to avoid the most severe climate impacts.
India ($178 billion), China ($140 billion), and Russia ($134 billion) are anticipated to have the largest discrepancies.
Currently, 34 per cent of Russia's general government revenue is derived from fossil fuel production and consumption, 18 per cent in India, and 16 per cent in Indonesia. In Brazil, the percentage stands at 8%, South Africa at 6%, and China at 5%. This only accounts for direct, first-order government revenues; fossil fuel reliance would be far greater if private incomes and flow-on effects in these economies were included.
Compared to other revenues, they constitute a lesser proportion of Gross Domestic Product (GDP) in developed nations. A policy document by the organisation Resources for the Future projects that fossil fuels will generate $138 billion in money for the U.S. government in 2019, or roughly 4.5 per cent of the government's $3.46 trillion in revenue that year.
According to the IISD analysis, fossil fuel revenue sources were "unreliable and erratic" and undermined by the negative economic effects of fossil fuel consumption, such as health expenditures owing to air pollution and climate change damage.
Tara Laan, a Senior Associate at IISD and lead author of the report, said: "To prevent devastating climate change, the world has to phase out the production and consumption of fossil fuels, which will inevitably erode related revenues. Emerging economies have an enormous opportunity to build more resilient and economically sustainable energy systems as they decarbonise, but they must plan to avoid shortfalls in public revenues that could reverse progress on poverty eradication and economic development."
Approximately 70% of India's energy is derived from fossil fuels. On the other hand, it has pledged to achieve net-zero emissions by 2070. According to an estimate conducted by the Council for Energy, Environment, and Water last year, India needs at least $3.5 trillion and roughly $1.4 trillion in concessional financing from industrialised economies to mobilise foreign capital to close the gap.
Source: The Hindu