Economic Impacts of Low-Carbon Policies

Meeting India’s short- and long-term climate commitments made at COP26 entails a complete economic transformation, which can have considerable developmental tradeoffs. Many long-term energy and climate models that project low-carbon pathways for the country consider the gross domestic product (GDP) to be exogenously driving growth in various sectors. However, low-carbon policies or technologies will also impact GDP, as well as other economic variables like employment and income. To ensure an equitable transition to net zero, without compromising on the development objectives, it is important to understand the multiplier impacts (or spillover effects) of low-carbon interventions on the economy.