Increased Investment in Renewable Energy Could Propel India’s Growth to 8%, Says Economist Nicholas Stern

Nicholas Stern, the IG Patel Professor of Economics and Government at the London School of Economics (LSE), has stated that India’s transition to renewable energy and sustainable infrastructure can significantly boost its economic growth — potentially raising the nation’s GDP from the current 6.5% to an impressive 7.5–8%. Stern emphasized that there is no trade-off between economic growth and green energy adoption; instead, renewable investments can strengthen both sustainability and prosperity.

Addressing a long-held misconception, Stern asserted that developing countries do not have to choose between climate action and economic progress. In an exclusive interview with The Indian Express, he explained, “It’s crucial that we make it clear — there is no trade-off.” He added that India’s journey to becoming a developed economy by 2047 would serve as a model for the world, provided the country boosts its investment-to-GDP ratio by five percentage points, eliminates investment barriers, and embraces modern technologies like artificial intelligence (AI) and green innovations.

Trade Policies and the Global Green Shift

Commenting on global trade dynamics, Stern criticized policies such as those of former US President Donald Trump, which disrupted international trade frameworks and hindered renewable advancements. “Trump caused disruptions across various sectors — from global commerce and tariffs to public health and environmental aid,” Stern noted.

He urged global unity and encouraged trade partnerships among nations with aligned interests. “If the US undermines the WTO, then countries should pursue balanced trade agreements — such as the forthcoming EU-India trade deal. The world benefits when trade barriers are minimized and agreements are symmetrical,” he said.

The Climate Challenge: Time Is Running Out

Stern compared climate challenges to trade and health crises, highlighting that despite rapid progress in solar and battery technologies — whose costs have fallen nearly a thousandfold since 1975 — the pace of climate action remains insufficient. “We are currently on track for a 2.5°C to 3°C temperature rise, while already at 1.4°C today,” he warned.

Referencing findings from the IPCC’s Third Assessment Report (2001) and his own Stern Review, he cautioned that climate tipping points, once believed to activate beyond 4°C, may now trigger around 2°C — or even 1.5°C. Melting ice sheets, coral loss, and disruption of the Atlantic Meridional Overturning Circulation could cause catastrophic global effects, including rising sea levels and agricultural collapse.

Next 20 Years Critical for India’s Green Future

“The next two decades will determine India’s climate destiny,” Stern said, emphasizing that over half of India’s 2047 infrastructure is yet to be built. He urged the government to invest in clean transport, efficient power generation, and resilient urban systems. “If India builds like the past, the planet will face severe consequences,” he warned.

Stern highlighted that India’s rise to a developed economy by 2047 could make it a major player in global emissions, but also a global leader in sustainable development. “Twenty years from now, India’s per capita emissions must remain low. Given its deep understanding of climate issues, I believe this is achievable,” he said.

No Trade-off Between Growth and Sustainability

“Development, clean energy, and sustainable infrastructure are not rivals,” Stern explained. He noted that investing in metros, renewable grids, and electric transport creates long-term economic resilience and social welfare. “This isn’t a short-term policy; it’s a story of growth into the 21st century,” he stressed.

Reaffirming his views in a letter to the UK Prime Minister, Stern maintained that growth and climate action must go hand in hand. “Investments in metros, energy systems, and electric vehicles will drive productivity. AI can amplify efficiency — we don’t need to choose between climate and growth, we can achieve both,” he said.

Energy Security and the Renewable Push

Stern recognized India’s concerns over energy security and its gradual phase-out of fossil fuels. “New green infrastructure must replace old systems before decommissioning fossil fuel plants,” he advised. Highlighting India’s rapid expansion in renewables, he added, “Solar and wind give true energy independence.”

Currently, India spends nearly 5% of its GDP on oil and gas imports — a vulnerability that renewables can address. “Use what’s free — the sun and the wind,” he said. “Solar energy now rivals coal in cost while avoiding pollution that harms people and stunts children’s growth.”

India’s Path to Clean Growth

When asked if India could accelerate its renewable transition, Stern confidently replied, “Absolutely.” He projected India’s growth could climb to 7.5–8% with increased investments and efficiency improvements. “India should boost its investment by 5% of GDP — particularly in clean energy, metro systems, and power generation. By 2050, its power demand may be five times higher,” he explained.

He described India’s clean growth model as an opportunity to create a “very different type of development,” built on strong investment incentives and breakthroughs in AI and green tech. “This is not just growth — it’s transformation,” he added.

China, Africa, and the Global Renewable Landscape

Praising China’s role in driving down solar costs to under 10 cents per watt, Stern urged global cooperation to expand renewable energy in Africa. “Africa holds over half the world’s solar potential. Let’s help it invest — it benefits everyone,” he said.

He emphasized that India must also ramp up domestic solar production and innovation. “India has sunlight, talent, investors, and engineers. With the right policies, it can lead the next renewable revolution,” he said, while encouraging more R&D and local investment in energy technology.

Viksit Bharat Through Green Growth

Concluding his remarks, Stern envisioned a clean, prosperous, and developed India (Viksit Bharat) by 2047 — powered by green cities, sustainable infrastructure, and reduced emissions. “If the world continues high-carbon growth, India’s children in 2050 will face grave dangers. But with clean growth, India can achieve hope, health, and prosperity,” he said.

He also praised economists NK Singh and Larry Summers for their advocacy in strengthening global finance institutions to support developing nations’ green transitions. “The wealthy countries have a moral obligation to fund this global transformation,” Stern concluded.