For emerging economies, the road to net-zero may be expensive but not unattainable. A new analysis finds that nine G20 countries, including India, will need US$ 2.2 trillion by 2030 to decarbonize which only accounts for a manageable 0.6% of GDP with the right policy and financial backing.
A fresh analysis finds that nine major emerging G20 economies will need about US$ 2.2 trillion through 2030 to shift their energy and industrial systems onto a low-carbon path. That total equals roughly 0.6% of their combined GDP, a share the authors argue is manageable if cheaper finance and international cooperation are available.
The paper — Climate Finance Needs of Nine G20 Emerging Market Economies: Well Within Reach by the Centre for Social and Economic Progress examines Argentina, Brazil, China, India, Indonesia, Mexico, Russia, South Africa, and Turkiye. Together these countries account for roughly 30% of world GDP, 47% of global population, and 30% of global carbon emissions. Using a bottom-up method, the study estimates an average requirement of about US$ 255 billion a year between 2022 and 2030 to decarbonize four high-emission sectors: power, transport, steel and cement which together produce nearly half of emissions in these economies.
If China is excluded, the funding need for the other eight economies (including India) falls to US$ 854 billion, or about 0.5% of their combined GDP.
The biggest capital calls are in industries where emissions are hardest to cut. Steel requires around US$ 1.2 trillion and cement about US$ 453 billion through 2030 — reflecting the limited low-carbon alternatives and the likely role for technologies such as carbon capture and storage. Road transport needs US$ 459 billion, mainly to roll out EV charging infrastructure at scale. The power sector requires the least — US$ 149 billion — as solar and wind costs have fallen sharply, making clean generation cheaper to scale.
The authors, Janak Raj and Rakesh Mohan, estimate that investments across power, steel and cement could avert roughly 33 billion tonnes of CO₂ by 2030 at an average mitigation cost near US$ 53 per tonne. Sector-level mitigation costs vary: power is about US$ 66/tonne, steel US$ 53/tonne, and cement US$ 49/tonne. (The road transport figure was excluded from the per-tonne calculation due to data limits.)
Can emerging economies afford the energy transition?
The study stresses that the issue is not only the headline price tag but the ability of countries to manage large capital inflows without upsetting macro stability. Multilateral development banks (MDBs) could be pivotal, yet their present contribution is small: MDB climate finance to these nine economies was about US$ 12 billion in 2022, projected to rise to US$ 34 billion by 2030 enough to cover only 7–9% of the estimated requirement. Excluding China, MDBs might meet 15–25% of the remaining gap.
Given this shortfall, the authors argue MDBs should treat decarbonising steel and cement – high-emission, largely private sectors – as global public goods deserving direct concessional support. Using scarce public resources strategically, they say, can help leverage far larger private capital flows into transformative projects.
The report also flags that some countries have limited headroom to absorb external climate finance. Turkiye, China, Mexico and Russia are identified as having comparatively greater capacity to manage inflows; others will need careful sequencing of funds to avoid balance-of-payments or monetary strains.
Released ahead of COP30 in Belem, Brazil, the analysis feeds into a central negotiating point: finance for developing countries. Longstanding demands from India and other developing economies that rich countries honour and scale up their climate finance commitments resonate through the paper. The authors note that beyond 2030 the requirement grows estimating that developing nations may need at least US$ 1.3 trillion a year by 2035 to stay on a broad decarbonisation pathway.
The bottom line from the study is pragmatic – which is – with smarter finance, better cooperation, and stronger use of concessional capital to mobilise private investment, the cost of a cleaner future for emerging economies is not an insurmountable burden but a solvable investment challenge.
FAQs:
1. How much climate finance do emerging economies need to achieve their net-zero targets?
Most estimates — including the recent CSEP report — place the requirement at around $2.2 trillion by 2030 for nine G20 emerging economies, or roughly 0.6% of their combined GDP.
2. Which sectors in emerging economies need the most investment for decarbonisation?
The steel ($1.2 trillion) and cement ($453 billion) industries require the largest funding, followed by transport ($459 billion) and power ($149 billion), due to the complexity and cost of clean technology adoption.
3. What role do multilateral development banks (MDBs) play in climate finance?
MDBs are expected to provide affordable finance and mobilize private investment, but currently meet only 7–9% of the total requirement. Experts urge MDBs to classify heavy-industry decarbonisation as a public good eligible for direct support.
4. Why is climate finance so crucial for emerging economies like India?
For developing countries, access to low-cost, long-term climate finance ensures a smooth transition without compromising growth or stability. India, for example, needs significant green funding to meet its 2070 net-zero goal while sustaining economic expansion.
5. How can emerging economies attract private investment into green sectors?
Experts recommend policy stability, blended finance models, and public–private partnerships that de-risk projects. Strengthening domestic carbon markets and clear emission targets also help crowd in private capital.
