IMF Report Warns of Climate 'Ambition Gap,' Urges Policy Alignment for Energy Security
SDG 13: Climate Action | SDG 7: Affordable and Clean Energy
Institutions: Ministry of Environment, Forest and Climate Change (MoEFCC) | Ministry of Power | NITI Aayog
This IMF Working Paper, “Cutting Emissions, Securing Energy: A Macroeconomic Assessment for COP30,” provides a stark analysis: global temperatures are highly likely to overshoot the 1.5℃ target this decade and would exceed 2℃by 2050, even if current national climate targets are met. This is due to a massive Ambition Gap and Implementation Gap. Current Nationally Determined Contributions (NDCs) target just a 7 percent cut in global Greenhouse Gas (GHG) emissions, far short of the 30 to 45 percent cut needed by 2035. Closing this gap would require measures equivalent to a global average carbon price rising to $75 to $125 per tonne of CO2e by 2035.
The paper emphasizes that the required structural adjustment offers a major opportunity to enhance national energy security and improve energy efficiency by reducing dependence on volatile fossil fuel imports. New electric technologies are significantly more efficient than conventional systems, with Electric Vehicles (EVs) being five to six times more efficient than Internal Combustion Engine (ICE) vehicles.
India-Specific Findings: Co-Benefits and Ambition Gap
Mitigation Costs and Benefits: The analysis confirms that the costs of mitigation are generally macroeconomically manageable (around 0.7 percent of GDP for the G20 average). For India, implementing an accelerated decarbonization pathway results in significant domestic welfare co-benefits (from reduced air pollution mortality) that outweigh the abatement costs, even before counting global climate benefits.
Target Shortfall: Under illustrative scenarios for achieving the 1.85℃ peak, India’s required GHG emissions cut in 2035 would need to be around 35 ppts higher than its current extrapolated NDC target, highlighting a significant need to raise ambition. India currently falls under the lower-middle and low-income country group that is 4 ppts away from the illustrative 2℃ peak alignment target.
Grid Challenge: The primary domestic challenge is maintaining grid stability as the share of variable renewable energy (VRE)—solar and wind—rises, necessitating massive investments in storage and enhanced grid infrastructure.
The IMF assessment necessitates that India accelerate its energy transition planning by: 1) Proactively capitalizing on domestic welfare co-benefits to drive mitigation, which provides an immediate net economic gain. 2) Prioritizing fiscal resources toward comprehensive grid modernization, energy storage, and long-term transmission infrastructure to manage the growing intermittency challenge of VRE penetration and secure future economic stability.
What is the Climate Change “Ambition Gap” and “Implementation Gap”? The Ambition Gap is the difference between the emissions cuts countries have collectively promised in their Nationally Determined Contributions (NDCs) and the much deeper cuts required globally to align with the Paris Agreement’s temperature goals 1.5℃ or 2℃. The Implementation Gap is the difference between the mitigation measures countries have put in place (measured by the current global average carbon price of $5 per tonne) and the higher price level required to actually achieve their ambitious targets.
Follow the full report here: Cutting Emissions, Securing Energy: A Macroeconomic Assessment for COP30