Economic Implications of Climate Policies in India, Brazil, and South Africa – COP 2024 Insights
Aarushi Mahajan, Sarabel Odero, V S Bharadwaj, Anil Tamsoy Introduction Climate change, although a global challenge, often imposes a dual problem on developing nations where the need for economic growth often conflicts with a move towards environmental sustainability. Today, major emerging economies such as those of India, Brazil, and South Africa are confronting difficult trade-offs owing to their heavy reliance on carbon-intensive industries, such as agriculture, coal, and manufacturing which complicates their efforts to reduce emissions and embrace sustainable measures. Additionally, such a shift towards sustainability often involves significant economic costs such as the disruption of traditional industries, which in turn leads to a slowing GDP growth and the creation of short-term job losses. This article aims to examine the economic implications of climate change and climate policies introduced to mitigate this change. The analysis ultimately underscores the need for strategic investments, effective policy frameworks, and international cooperation to help these nations achieve climate goals without compromising their economic development. India As of 2024, India is the nation responsible for one-third of global emissions annually per capita. By avoiding carbon-intensive activities, it has set an example for economic development in emerging economies. Eleven years ahead of the 2030 deadline, it has already met the Nationally Determined Contributions (NDC) target of reducing emission intensity (Mohapatra, 2024). The proper separation of GDP growth rate and greenhouse emissions is a sign of sustainable development (Ministry of Finance, 2024). India has committed to using 50% of its installed capacity for electricity generation from non-fossil fuels by 2030 (Government of India, 2022). Sectoral Analysis As of May 2024, the non-fossil power capacity for the energy sector stands at 45.4%. The energy demand is expected to go up by double or triple times because of the increasing energy demands by the growing economy, especially the cement and steel industries (UNDP, 2024). To fulfil the sustainable energy objectives, India needs to increase renewable energy investments (Prasad, 2024). By 2047, India aims to eliminate energy poverty and energy objectives through a people-centred strategy (Chowdhary, 2024). Additionally, particularly in the wake of the Paris Agreement, India’s climate policies have shown to be quite effective and successful (Wahengbam, 2024). Reducing emission intensity is on track to meet the NDC Goal 3 of reducing overall emission intensity by 33–35% from 2005 (Vishwanathan et al., 2023). The Climate Compatible Development (CCD) scenarios for India predicted a 0.8% loss in Indian GDP in 2030 and a 1.1%–1.8% decline in 2050 because of the aggressive push for climate policies. However, India’s NDC targets and net-zero action plans may coexist with healthy economic growth, provided the implications of climate change on population health and well-being are taken into account. On the other hand, this effect will cause global employment to decline by 0.5% in 2030 and by 1% in 2050. However, jobs lost in fossil fuel industries will be offset by the jobs created by the renewable energy sector supplemented by specialized retraining programs (Vishwanathan et al., 2023). Climate Finance One of the key results of COP29 was the agreement to increase the climate finance for developing nations from USD 100 billion to 300 billion by 2035 under the New Collective Quantified Goal (NCQG) (UNFCCC, 2024). India set an annual goal of USD 1.3 trillion for the NCQG to support it, with USD 600 billion coming from grants or similar funds. The nation expressed concerns about the allocation and deficiency of climate funding, particularly the need for poor nations (Desk, 2024). Public-private partnerships (PPPs) allow the government to allocate funds for sustainable development from corporate and other income taxes. This financing will translate into new energy infrastructure by facilitating the transfer of knowledge, capital, technology and skills from the private to the public sector (Trivedi, 2023). The Green Climate Fund (GFC) highlights the significance of concentrating climate finance on the rural sector, where low-emission development and adaptation measures are desperately needed (Grants From Green Climate Fund, 2024). Brazil Brazil, as one of the largest economies in Latin America, is deeply impacted by climate change, with deforestation posing the biggest threat to key sectors of the country’s economy. Brazil’s economic vulnerability stems from its dependence on agriculture, hydropower and natural resources. The agricultural sector – vital for domestic food security and international exports – is especially vulnerable to droughts and temperature extremes that damage crops and reduce water availability for irrigation. Similarly, the energy sector, which relies heavily on hydropower, faces risks from reduced water availability and fluctuating rainfall patterns. The World Bank estimates that extreme weather events have led to an annual output loss of 0.13% of GDP in Brazil over the past 20 years (“The Economics of Climate Change in Brazil,” n.d.). Deforestation, particularly in the Amazon rainforest, exacerbates Brazil’s vulnerability to climate change. The destruction of this critical ecosystem not only disrupts water cycles but also threatens to push the Amazon to a tipping point, with severe consequences for the climate system. The Amazon’s collapse could reduce Brazil’s GDP by as much as 10% by 2050, with profound effects on agriculture, hydropower, and industry (Giz, 2024). Given that the Amazon plays a crucial role in carbon sequestration, its degradation also undermines global efforts to mitigate climate change. In response to these challenges, Brazil has developed and begun to implement a national climate policy. Since ratifying the Paris Agreement in 2016, Brazil has committed to reducing its greenhouse emissions by 50% in 2030, to achieve climate neutrality by 2050 (Chen et al., 2024). This ambitious agenda requires a comprehensive restructuring of national climate governance and a series of policy initiatives. Brazil’s national climate policy is built on several key areas, including enhancing transparency, climate finance and green growth. A monitoring system to track the impacts and progress of its Nationally Determined Contributions (NDCs) is being developed, along with mechanisms to reduce emissions from deforestation and forest degradation (REDD+) (Brazil Climate Change Country Profile | Climate | U.S. Agency for International Development, 2024). These measures aim to support Brazil’s low carbon transition and strengthen
