Indias policy challenges to hinder net-zero progress: Moodys

19 Apr 2022 , 03:12 PM

Moodys Investors Service said that Indias 2070 net-zero target and intermediate goals through 2030 present significant policy implementation challenges for the government, carving a more central role for private companies and investors to drive the transition.

Nishad Majmudar, a Moodys assistant vice president and analyst, said: The countrys high growth potential, significant economic development needs and large agricultural sector will likely weaken the governments policy resolve and financial capacity to drive the economys carbon transition. As such, Indias planned emissions reductions will be conditioned upon low-cost, long-term private capital.

Many of the countrys large private companies have announced net-zero targets that are well ahead of Indian authorities goals, while government-linked companies are comparatively behind. Additional policy signals to encourage transition would drive higher private investment.

The pace of Indias carbon transition will depend on the extent to which the government can balance energy affordability and reliability needs against its emissions reduction commitments, Moodys vice president and senior credit officer Abhishek Tyagi said.

Reduced storage costs and the scalability of renewable projects with storage would support a faster transition, he added.

Finally, Indian banks significant loans to carbon-intensive sectors expose them to transition risks, and they will face pressure to decarbonize their loan books. At the same time, green financing presents a significant lending opportunity, given banks dominant role in credit intermediation in the country.

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