Maintaining its edge over Britain as the fifth largest economy of the world, India at the G20 is likely to push for the global green development agreement which will include climate finance, besides Lifestyle for the Environment (LiFE), circular economy, accelerating progress on SDGs, energy transitions and energy security, a report by think-tank Strategic Perspectives said on Wednesday.

It compares the performance of five major economies — India, the US, China, the EU and Japan on zero-carbon technologies.

G20 is a moment where India with its strong presidency can set a chance to seize the demographic dividend and herald its emergence as an economic powerhouse of the future.

India will be a $3.7 trillion economy in 2023, maintaining its edge over the UK as the fifth largest economy of the world.

The report, ‘Competing in the new zero-carbon industrial era’, compares the performance of these five major economies on manufacturing, deployment and investment in key decarbonisation technologies like renewables, electric vehicles, as well as the economic transition to net zero for the first time.

The report shows that the net-zero transition policies have significantly strengthened competitiveness, energy security and future economic prosperity. The group of countries includes three largest emitters as well as the host of this years’ G7 and the G20.

The report notes: “Due to the massive scale up of renewables China alone accounts for 55 per cent of the world’s additional renewable energy installed capacity and more than half of electric cars in the world run in China; in the EU wind and solar account for 22 per cent of electricity mix in 2022 surpassing gas at 20 per cent although the energy security crisis has created challenges which must be met by more investments in clean energy; the clean energy win for the US is coming from the Inflation Reduction Act and the country is a leader in innovation and fiercely competitive to China; and despite high potential, Japan is missing out on leadership opportunities towards investment opportunities in the new industrial era.”

While India’s starting position is not comparable to the fiscal space of the other four economies, it stands out in its ability to position itself well in the new industrial era.

The analysis shows a significant potential to grow its importance in the global new industrial transition where it must scale up investments in research and development and not solely rely on technology transfer and Chinese imports.

As an emerging economy, India aims to position itself in the global “net-zero” supply chain.

The report also observes that India still faces a different set of challenges, however, with committed financial support from the developed economies, India can meet its net-zero commitments faster.

The positive developments indicate India is among few countries which are on track to meet its Nationally Determined Contributions or NDCs target. However, it will need to invest $12.7 trillion to reach net-zero emission by 2050.

India remains one of the fastest growing major economies, especially as China’s post-pandemic recovery has slowed and India has become the fifth largest economy in the world.

India is making progress in incorporating solar and wind into its electricity generation, almost doubling its share from 2017 figures (5 to 9 per cent).

The electric vehicle industry is expected to grow at a compound annual growth rate of 49 per cent between 2022 and 2030 creating 50 million jobs by 2030.

Pro-transition policies like the Energy Conservation Act are giving the impetus to investors and industry in India.

Regarding international public financial flows, for 2020-21, India was the top recipient for the past two years ($2.9 billion, with 66 per cent for solar energy).

While China and EU continue to lead in the wind sector, the US and India are following each other closely in terms of manufacturing capacities and could continue gaining market shares as their respective domestic policies are implemented.

According to the report, the potential hurdles which can slow down India’s transition include while adopting an “industrial policy” approach to growing the decarbonisation sectors seem to be the preferred approach in general, India appears to favour developing individual sectors rather than a broader, economy-focused plan to expand its industrial base.

Given a starting point with lower financial means, India has much less capital to spend on research and development in absolute and relative terms.

The report says, “It is clear that India cannot be compared on equal footing with the other economies given its different entry position on economic development.”

“As India has strong ambitions to become an integral part of the global net-zero supply chain, the foundations are there for it to benefit from the transition in the near future — if additional investments can be secured.”

Responding to the report, Aarti Khosla, Director, Climate Trends, said, “Coming ahead of the G20, the analysis is a comprehensive assessment of policies and sentiments towards sustainable and zero-carbon technologies.”

“The significant progress in India towards green goals shows commitment to scaling up renewable energy, implementation across several state EV policies, and wins in energy efficiency.”

“As a country which will witness massive industrial growth over the next few decades, it must focus on innovation, research and development, as well as creating an enabling environment that draws in faster investments whilst reducing dependence on China.”

As the G20 presidency it has a responsibility to balance its role to lead this growth and transition agenda amid the tough geopolitics to ensure that it can claim its leadership and be the voice of the Global South, Khosla added.

Vibhuti Garg, Director, South Asia, The Institute for Energy Economics and Financial Analysis (IEEFA), said, “India is looking at massive requirements of deployment of renewable energy for decarbonisation of not only the power sector but the government has big plans for adding electric vehicles and also promoting green hydrogen as a clean energy solution for transport and other industries.”