India's long overdue low-carbon development plan likely to see light

India is planning to announce its first nationwide long-term, low-carbon development strategy later this year, something that major emitters like China, Europe, and the United States have in place, according to a senior official involved in the climate plan. 

The country’s emission-mitigation plan, which begins in 2040 and stretches till 2070, the deadline for “zero emission”, will be underpinned by the first set of official numbers to be released by a top committee constituted by the NITI Aayog in April last year, offering multiple scenarios for transitioning to net zero by 2070 from 2040 onwards, the official said. 

The climate strategy may pave the path to a national carbon budget, an element critical in achieving net zero, but increase costs for companies transitioning to low-emission strategies, industry officials said. 

“India has an opportunity to turn its climate goals into engines of economic growth — but to do so, it needs enabling policies supported by a clear national carbon budget,” said Viral Thakker, partner and leader (sustainability and climate), Deloitte South Asia. 

“Such a budget would provide a long-term signal to industries and investors, helping to prioritise resources and scale up solutions like green hydrogen, sustainable aviation fuels, and low-carbon manufacturing.” 

A carbon budget also allows the government to allocate scarce carbon resources to states and sectors more effectively, devolving carbon responsibilities for a more credible net zero. But Indian officials must accelerate developing low-carbon policies because of its unenviable position as the fastest-growing major emitter on an absolute basis, a senior official from the United Nations Framework Convention on Climate Change (UNFCCC), the UN’s climate change department, told Business Standard at the Asia Climate Summit in Bangkok. 

India’s carbon-dioxide emission from energy production jumped over 4 per cent in 2024 from a year earlier to around 3 billion tons, translating into around an 8.3 per cent share of global emission during the period, according to the EI Statistical Review of World Energy 2025. In absolute terms, India emitted less than China’s 11 billion tons and America’s 4.6 billion tons but its emission was at faster rate than China’s 1.2 per cent and America’s decline of 0.8 per cent, according to the report published this month by United Kingdom think tank The Energy Institute in collaboration with global consultants Kearney and KPMG. “The EI Statistical Review of World Energy 2025 shows an energy-intensive India relying its growth predominantly on fossil fuels,” said Romain Debarre, partner at Kearney. “Although India’s per capita and per GDP (gross domestic product) emission remain relatively low, growth must increasingly rely on low-carbon energy to mitigate global climate impact,’’ Debarre said. 

It has taken over two years for the NITI Aayog, through a top-level committee created in April last year, to chart various low-carbon scenarios, the official said. The long-term emission trajectory would look at the scale of emission in 2040, 2050, 2060, and 2070 and its implications in terms of jobs and growth, GDP, income, so that the Prime Minister’s climate change council can plan policies and decide which sectors to prioritise and which policies to adopt. 

The NITI Aayog did not provide official comments. 

“Considering the growing demand for energy relying on coal, emission is likely to increase in 2025,” Debarre said. 

Developed nations have carbon budgets to meet the temperature goal of 2 degree or 1.5 degree Celsius, the UN official said. “At present, the Indian carbon market (ICM) and initiatives led by the Bureau of Energy Efficiency (BEE) promote carbon-intensity reduction across key sectors. In contrast, many developed countries use national carbon budgets — legally binding plans that set economy-wide emissions limits over time,” said Saunak Saha, partner, climate change and sustainability services, EY India. This helps create policy certainty and align investment decisions with climate goals. 

Disjointed strategies 

The lack of a carbon budget comes even as India’s primary energy consumption growth, at 4.6 per cent, last year more than doubled the global average of 1.8 per cent. This relied predominantly on coal, according to the EI report. 

Energy-related carbon emission increased around 1 per cent in 2024, exceeding the record level set the previous year to reach 40.8 GtCO2e (giga tonnes of carbon dioxide equivalent). The Energy Institute (UK) calculates emission from 2024, based on official declarations from governments, administrations, and agencies. 

Until now, India has had haphazard low-carbon policy measures like creating the Carbon Credit Trading Scheme (CCTS), Renewable Energy Certificates for utilities, and Perform & Trade Schemes for Energy Efficiency but has lacked a countrywide plan to arrest emissions, lacking a national carbon budget, the official said. 

“CCTS is not designed to reduce emissions of the country,” said R R Rashmi, distinguished fellow, The Energy and Resources Institute. It can be seen as a response to the Carbon Border Adjustment Mechanism, but it covers most of the energy-consuming industrial sectors which are contributing largely to emission. A short-term climate strategy is currently under way in the Ministry of Environment to present Nationally Determined Contributions to the UNFCCC by year end.  Only 20-25 countries have done it so far. 

“India doesn’t need restrictive caps. Instead, it needs a calibrated carbon budget that supports development while gradually reducing emissions. Such a road map would prevent a long-term lock-in to high-carbon infrastructure, attract green investment, and guide sustainable growth,” Saha said.