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  <front>
    <journal-meta>
      <journal-id journal-id-type="publisher-id">115</journal-id>
      <journal-id journal-id-type="index">urn:lsid:arphahub.com:pub:32e1b97d-7003-598d-92e7-0ceb44416cc9</journal-id>
      <journal-title-group>
        <journal-title xml:lang="en">BRICS Journal of Economics</journal-title>
        <abbrev-journal-title xml:lang="en">brics-econ</abbrev-journal-title>
      </journal-title-group>
      <issn pub-type="ppub">2712-7702</issn>
      <issn pub-type="epub">2712-7508</issn>
      <publisher>
        <publisher-name>BRICS Journal of Economics</publisher-name>
      </publisher>
    </journal-meta>
    <article-meta>
      <article-id pub-id-type="doi">10.3897/brics-econ.7.e168509</article-id>
      <article-id pub-id-type="publisher-id">168509</article-id>
      <article-categories>
        <subj-group subj-group-type="heading">
          <subject>Research Article</subject>
        </subj-group>
        <subj-group subj-group-type="scientific_subject">
          <subject>(Q) Agricultural and Natural Resource Economics • Environmental and Ecological Economics</subject>
        </subj-group>
      </article-categories>
      <title-group>
        <article-title>Challenges and prospects of achieving India’s 2070 Net Zero Target</article-title>
      </title-group>
      <contrib-group content-type="authors">
        <contrib contrib-type="author" corresp="yes">
          <name name-style="western">
            <surname>Tabakova</surname>
            <given-names>Elena</given-names>
          </name>
          <email xlink:type="simple">tabakovaelena040@gmail.com</email>
          <uri content-type="orcid">https://orcid.org/0009-0008-7717-2077</uri>
          <xref ref-type="aff" rid="A1">1</xref>
        </contrib>
      </contrib-group>
      <aff id="A1">
        <label>1</label>
        <addr-line content-type="verbatim">National Research University – Higher School of Economics, Moscow (Russia)</addr-line>
        <institution>National Research University – Higher School of Economics</institution>
        <addr-line content-type="city">Moscow</addr-line>
        <country>Russia</country>
      </aff>
      <author-notes>
        <fn fn-type="corresp">
          <p>Corresponding author: Elena Tabakova (<ext-link xlink:href="mailto:tabakovaelena040@gmail.com" ext-link-type="uri">tabakovaelena040@gmail.com</ext-link>)</p>
        </fn>
        <fn fn-type="edited-by">
          <p>Academic editor: Sheresheva M.</p>
        </fn>
      </author-notes>
      <pub-date pub-type="collection">
        <year>2026</year>
      </pub-date>
      <pub-date pub-type="epub">
        <day>10</day>
        <month>06</month>
        <year>2026</year>
      </pub-date>
      <volume>7</volume>
      <issue>2</issue>
      <fpage>21</fpage>
      <lpage>47</lpage>
      <uri content-type="arpha" xlink:href="http://openbiodiv.net/CD31F995-0694-52D0-8F21-BFDAF27392C5">CD31F995-0694-52D0-8F21-BFDAF27392C5</uri>
      <history>
        <date date-type="received">
          <day>12</day>
          <month>08</month>
          <year>2025</year>
        </date>
        <date date-type="accepted">
          <day>24</day>
          <month>11</month>
          <year>2025</year>
        </date>
      </history>
      <permissions>
        <copyright-statement>Elena Tabakova</copyright-statement>
        <license license-type="creative-commons-attribution" xlink:href="http://creativecommons.org/licenses/by/4.0/" xlink:type="simple">
          <license-p>This is an open access article distributed under the terms of the Creative Commons Attribution License (CC BY 4.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.</license-p>
        </license>
      </permissions>
      <abstract>
        <label>Abstract</label>
        <p>When addressing the issue of global climate change, it is crucial to focus on the energy strategies of developing nations, which are predominantly aimed at fostering economic development. India, a major emerging economy and one of the world’s largest greenhouse gas emitting countries, represents a crucial case for climate change policy research. This study examines India’s prospects of reaching carbon neutrality by 2070 and the obstacles to achieving this goal by looking at main socio-economic and institutional factors. Although existing studies provide extensive qualitative analysis of the phenomena in question, the quantitative assessment of their external drivers remains limited. The study addresses this gap by conducting an econometric analysis of selected factors and by introducing middle-class income as a new explanatory variable for India’s long-term emission trends. Methodologically, the research employs the Autoregressive Distributed Lag (<abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev>) model to examine the dynamic impact of the selected factors on the intensity of India’s aggregate emissions. The proposed explanatory variables include: the share of forest cover; the share of renewable energy in electricity generation; and the income of the middle-class in India. The analysis shows that each of these factors has a significant impact on the dependent variable. This impact can be immediate or delayed, and it can vary in magnitude and direction. The influence of middle-class income dynamics seems to be the least consistent, while the expansion of renewable energy in electricity generation shows the most pronounced delayed effect. The findings reveal contradictions between national climate policies and socio-economic priorities. They highlight the challenge of balancing low-carbon goals with rapid economic growth and demographic change.</p>
      </abstract>
      <kwd-group>
        <label>Keywords</label>
        <kwd>ARDL model</kwd>
        <kwd>Climate policy</kwd>
        <kwd>Energy transition</kwd>
        <kwd>India</kwd>
        <kwd>Middle class</kwd>
        <kwd>Socio-economic development.</kwd>
      </kwd-group>
      <custom-meta-group>
        <custom-meta>
          <meta-name>JEL</meta-name>
          <meta-value>Q4, Q42, Q58</meta-value>
        </custom-meta>
      </custom-meta-group>
    </article-meta>
    <notes>
      <sec sec-type="Citation" id="sec1">
        <title>Citation</title>
        <p>Tabakova, E. (2026). Challenges and prospects of achieving India’s 2070 Net Zero Target. BRICS Journal of Economics, 7(2), 21–47. <ext-link xlink:href="10.3897/brics-econ.7.e168509" ext-link-type="doi">https://doi.org/10.3897/brics-econ.7.e168509</ext-link></p>
      </sec>
    </notes>
  </front>
  <body>
    <sec sec-type="Introduction" id="sec2">
      <title>Introduction</title>
      <p>The far-reaching economic implications of climate change have recently become more apparent and more accurately assessed. Since 2000, climate-related natural disasters have caused global economic losses exceeding $3.6 trillion. According to the <xref ref-type="bibr" rid="B61">World Economic Forum (2024)</xref>, the economic damage has risen from approximately $450 billion in 2000–2004 to over $1 trillion between 2020 and 2024. Given the global scope of the issue, increased attention is focused on the long-term effects, advantages, and constraints of national climate policies.</p>
      <p>In middle-income countries, limited financial resources make it more important to implement economic development strategies than to contribute to global climate change mitigation efforts. (<xref ref-type="bibr" rid="B38">Mohseni-Cheraghlou &amp; Evans, 2023</xref>). Broadly defined, these strategies aim to promote economic growth and reduce poverty, which may conflict with goals of climate change mitigation. Moreover, development priorities frequently rely on industrial production, and the high carbon intensity of manufacturing in developing countries may cause rather strong resistance to implementing emission-reduction measures (<xref ref-type="bibr" rid="B37">Mattoo &amp; Subramanian, 2013</xref>).</p>
      <p>Overall, middle-income countries play an important role in the global climate agenda but it is essential to be aware of their internal diversity. For some countries, mainly upper-middle income ones, addressing fundamental economic development challenges has led to a shift towards adapting climate policies to new realities. China is a notable example of this: between 1980 and 2022, the country accounted for about 75% of the global reduction in extreme poverty. Over this period, the number of people in China living on less than $1.90 per day fell by 770 million (<xref ref-type="bibr" rid="B60">World Bank &amp; Development Research Center of the State Council, 2022</xref>). The remarkable progress has served as a catalyst for broader policy discussions regarding China’s long-term commitments to achieving carbon neutrality by 2060.</p>
      <p>For other countries, where the primary emphasis remains on economic development, the climate implications of growth-oriented policies are yet to be fully assessed. At the same time, economic growth accompanied by rising incomes and improved living standards inevitably leads to increased consumption, higher energy demand and a subsequent rise in greenhouse gas emissions.</p>
      <p>India, one of the world’s fastest-growing large economies, presents a compelling case for studying. As of 2023, it accounted for 18% of the global population but contributed only 5% to the increase in global temperatures (<xref ref-type="bibr" rid="B58">United Nations Environment Programme, 2023</xref>). Classified as a lower-middle-income country, India has made significant strides in poverty reduction: the number of people living in extreme poverty fell from 431 million in 1990 to 129 million in 2024. However, the number of people living on less than 6.85 dollars per day was higher in 2024 compared to 1990, due to population dynamics (<xref ref-type="bibr" rid="B59">World Bank, 2024</xref>).</p>
      <p>Population growth, coupled with economic expansion, inevitably leads to increased energy demand, primarily met by fossil fuels. More specifically, the rapid expansion of the Indian middle class as a proportion of the large and growing population of the country is a significant contributor to the rise of global temperatures. The government’s targeted government policies, including National Food Security Mission, National Rural Livelihood Mission, National Maternity Benefit Scheme, have supported this growth but the problem of rural poverty has remained largely unresolved (<xref ref-type="bibr" rid="B54">Simmons et al, 2014</xref>). A successful elimination of poverty in India, as it happened in China at the beginning of the XXI century would imply a significant rise in energy consumption. As empirical evidence suggests, different income groups have different impact on emissions. There is a positive correlation between emissions growth and increasing income concentration in higher-income segments, where consumption tends to be more carbon-intensive (<xref ref-type="bibr" rid="B6">Cappelli, 2024</xref>).</p>
      <p><xref ref-type="bibr" rid="B22">Janardhanan (2017)</xref> points out that over 60% of India’s population resides in rural areas with limited access to electricity. At the same time, one of the dominant trends in recent years has been urbanization. It is projected that by 2030, approximately 609 million people will live in urban areas, leading to increased electricity demand for air conditioning, lighting, and household appliances (<xref ref-type="bibr" rid="B48">Sartori &amp; Bianchi, 2018</xref>).</p>
      <p>Against this backdrop, India’s commitment to achieving net-zero emissions by 2070 announced by Prime Minister N. Modi at the 2021 Climate Summit in Glasgow represents a significant contribution to global climate mitigation efforts. This study aims to examine the obstacles and opportunities to India’s achieving carbon neutrality by 2070 taking into account key socioeconomic and institutional factors.</p>
      <p>Despite extensive theoretical research into the factors behind India’s climate policy, some aspects remain underexplored through quantitative analysis. Notably, the dynamics of India’s forest cover, a critical component of national climate strategy, have received limited empirical attention. This study attempts to systematize specific external variables for econometric evaluation. The research seeks to move beyond an initial qualitative review of India’s climate policy and to provide a more in-depth analysis of selected drivers using modeling techniques.</p>
      <p>Methodologically, the study employs an Autoregressive Distributed Lag (<abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev>) model to identify dynamic relationships between dependent and independent variables drawing on the data provided by the World Bank Open Data platform and the Energy Institute Statistical Review of World Energy. Time series data for selected external factors serve as independent variables, while India’s total emissions intensity functions as the dependent one. The variables are selected based on India’s nationally determined contributions (<abbrev xlink:title="nationally determined contributions">NDCs</abbrev>) submitted in 2022, the period of analysis covers 1990–2023.</p>
      <p>The study tests the following hypothesis: in the context of India achieving its 2030 goal of reducing emissions, renewable energy’s contribution to electricity production has both immediate and long-term impacts, while increased forest cover and decreased middle-class income have a longer term effect over a longer time frame.</p>
      <p>The study results may provide insights into the role of socio-economic factors in the energy transition processes of other developing countries. India’s climate policy challenges possess specific features that make the findings applicable to the wider context of developing countries. The research methodology is adaptable for analyzing alternative indicators, and calculations can be updated for future time periods.</p>
    </sec>
    <sec sec-type="Literature review" id="sec3">
      <title>Literature review</title>
      <p>India’s strategy for achieving carbon neutrality has been shaped in alignment with its national objective of attaining developed country status by 2047 (<xref ref-type="bibr" rid="B16">Garg et al., 2024</xref>). The complexities of India’s energy transition have been explored in a number of studies, highlighting economic, social, and institutional challenges as central obstacles.</p>
      <p>As noted by <xref ref-type="bibr" rid="B27">Kalghatgi (2024)</xref>, one of the key economic challenges is formed by the trajectory of India’s economic growth, which continues to drive a steady increase in national energy demand. Primary energy consumption has significantly increased since the 1990s, spurred by economic reforms aimed at accelerating growth (<xref ref-type="bibr" rid="B21">Janardhanan, 2012</xref>).</p>
      <p><xref ref-type="bibr" rid="B1">Alekseeva (2022)</xref> points out that the rise in energy consumption has been accompanied by increasing carbon intensity within the energy sector largely because coal remains the most accessible energy source and thus a cornerstone of the national energy balance (Fig. <xref ref-type="fig" rid="F1">1</xref>). The coal industry continues to meet the majority of the country’s energy needs: according to The Energy Institute Statistical Review of World Energy (<xref ref-type="bibr" rid="B57">The Energy Institute, 2024</xref>), coal accounted for more than 56% of primary energy consumption and over 75% of electricity generation in 2023. <xref ref-type="bibr" rid="B12">Dorokhina and Sakharov (2023)</xref> note that a critical challenge stems from the more rapid increase in coal demand relative to supply. These production–consumption imbalances lead to adjustments in the country’s climate policy. Despite the earlier intentions to phase out several coal–fired power plants, it is expected that India will commission additional generating capacity in the coming years and enhance the efficiency of existing energy facilities.</p>
      <fig id="F1">
        <object-id content-type="doi">10.3897/brics-econ.7.e168509.figure1</object-id>
        <object-id content-type="arpha">1D5AF5C9-B819-53F5-A04B-F6D67F14B12B</object-id>
        <label>Figure 1.</label>
        <caption>
          <p>Primary Energy Consumption by Fuel, 1980-2023. <italic>Source</italic>: The Energy Institute Statistical Review of World Energy, 2024: <ext-link xlink:href="https://www.energyinst.org/statistical-review" ext-link-type="uri">https://www.energyinst.org/statistical-review</ext-link></p>
        </caption>
        <graphic xlink:href="brics-econ-07-021-g001.jpg" id="oo_1675008.jpg">
          <uri content-type="original_file">https://binary.pensoft.net/fig/1675008</uri>
        </graphic>
      </fig>
      <p>The sustained growth of the industrial sector, according to projections of <xref ref-type="bibr" rid="B36">Mastepanov and Sumin (2020)</xref>, will continue to serve as a major driver of rising energy consumption in India. This long-term trend highlights one of the main challenges of India’s energy policy: the need to develop a strategy that ensures an adequate supply of energy to support the country’s economic growth goals (<xref ref-type="bibr" rid="B20">Isoaho et al., 2016</xref>). At the same time, <xref ref-type="bibr" rid="B3">Bhandari and Dwivedi (2022)</xref> argue that the transition period is seen as a crucial phase for India’s economic policy, which requires sustained and robust growth.</p>
      <p>Another widely recognized economic challenge concerns the financing of the transition towards net-zero emissions by 2070. India has chosen 2070 as its target year for achieving net-zero emissions, which is later than the target dates of many other countries. This is largely due to the financial constraints that the country faces (<xref ref-type="bibr" rid="B16">Garg et al., 2024</xref>). Despite abundant renewables potential, the capital-intensive nature of the RE sector makes financial conditions crucial for its large-scale deployment (<xref ref-type="bibr" rid="B23">Jaspal, 2023</xref>). Moreover, as <xref ref-type="bibr" rid="B3">Bhandari and Dwivedi (2022)</xref> point out, fossil fuels currently represent a significant share of public revenue in India, necessitating fiscal reform in tandem with energy transition efforts.</p>
      <p>Substantial investments are required across various domains, including technological upgrades and infrastructure development. In particular, there is a need to support Indian manufacturers throughout the entire value chain, from the production of core components to the finished product. This was emphasized by <xref ref-type="bibr" rid="B56">Swarnkar and Chauhan. (2022)</xref>. India remains heavily reliant on imported inputs—including silicon wafers and critical minerals essential to RE manufacturing processes (<xref ref-type="bibr" rid="B19">Indian Institute of Management Ahmedabad, 2024</xref>). At the same time, high import duties on components sourced from China and Malaysia, combined with the government’s policy of limiting subsidies and public procurement of domestically produced components, have led to a sharp increase in component prices (<xref ref-type="bibr" rid="B12">Dorokhina &amp; Sakharov, 2023</xref>). Overall,<xref ref-type="bibr" rid="B16"> Garg et al. (2024)</xref> suggest that from 2020 to 2070, India will require $2–2.5 trillion in climate finance (approximately $40–50 billion annually). Projections of the <xref ref-type="bibr" rid="B2">Asia Society Policy Institute (2022)</xref> put the total investment needed to meet net-zero goals at $10.1 trillion.</p>
      <p>The social dimensions of India’s transition appear to have a dual character. One of the key factors shaping India’s growing energy demand is the projected demographic growth (<xref ref-type="bibr" rid="B50">Shchedrov, 2022</xref>). Another important driver, emphasized by <xref ref-type="bibr" rid="B36">Mastepanov and Sumin (2022)</xref>, is the ongoing effort to address rural energy poverty through the electrification of underserved areas. At the same time, possible regional employment disparities, especially in the eastern “coal belt”, where large-scale job losses are expected, pose serious risks (<xref ref-type="bibr" rid="B50">Shchedrov, 2022</xref>). The coal industry is not only a foundation of India’s energy infrastructure; it also has an important social role by providing employment opportunities to large segments of the low-skilled workforce. <xref ref-type="bibr" rid="B41">Pai and Zerrifi (2021)</xref> point out that coal mining directly employs more than 700,000 people. The total number, including informal employees, is estimated to be around 2.6 million people (<xref ref-type="bibr" rid="B2">Asia Society Policy Institute, 2022</xref>).</p>
      <p>A strategically managed and consistent transition policy is likely to contribute to India’s long-term benefits, outweighing its socio-economic costs. Specifically, carbon neutrality scenarios project labor force reallocation: according to <xref ref-type="bibr" rid="B2">Asia Society Policy Institute (2022)</xref>, the loss of approximately 5 million fossil fuel jobs is expected to be offset by employment growth in manufacturing and services. Positive employment effects are expected in sectors that are part of the green technology supply chain, including construction and infrastructure development, certain extractive industries providing equipment and material supply, and services such as supply chain coordination. Overall, India’s employment gains could amount to around 12 million new jobs by 2060 (<xref ref-type="bibr" rid="B2">Asia Society Policy Institute, 2022</xref>) but, to ensure a smooth transition, the country will need targeted investments in social protection and worker retraining (<xref ref-type="bibr" rid="B49">Sharma and Loginova, 2023</xref>).</p>
      <p>From an institutional standpoint, questions arise regarding the effectiveness of India’s multi-level governance, particularly in the context of energy policy being shaped at both central and state levels. While policy on coal, oil, gas, and nuclear energy is formulated at the national level, electricity policy is under the jurisdiction of individual states. The quality of India’s energy transition is thus shaped by the effectiveness of multi-level governance. <xref ref-type="bibr" rid="B48">Sartori and Bianchi (2018)</xref> as well as <xref ref-type="bibr" rid="B56">Swarnakar and Chauhan (2022)</xref>, emphasize that the main challenge is the lack of oversight mechanisms, and absence of adequate coordination between central and regional governments. Besides, Shukla and Pachour (2023) pointed to the difficulties associated with the timely implementation of delegated legislation. Many of the legislative acts governing the energy sector are outdated and have not been revised in recent years.</p>
      <p><xref ref-type="bibr" rid="B36">Mastepanov and Sumin (2020)</xref> reinforce this point and draw attention to the significant institutional fragmentation that continues to shape India’s energy transition. The country’s energy policy is determined by an assemblage of legislative acts, government programs, planning schemes and other documents. These include the Energy Conservation Act (2001), the Electricity Act (2003), updated editions of the National Electricity Plan, the National Action Plan on Climate Change (2008), and the Hydrocarbon Vision 2025 program.</p>
      <p>Institutional fragmentation of India’s climate policy relevant to this analysis is a significant challenge. Thus, forest protection in India is implemented through several mechanisms, which include the National Afforestation Programme (2000), the National Mission for a Green India (2014), and the Forest Fire Prevention and Management Scheme (2017). As concerns the growing share of renewable energy in India’s electricity generation, there are several strategic development programmes that stand out. These include the Jawaharlal Nehru National Solar Mission launched in 2010, the Ujwal Discom Assurance Yojna or UDAY started in 2015, and the PM Kusum Scheme promoting the use of solar power in rural areas (2018).</p>
      <p>Regulatory gaps are a common occurrence in low- and middle-income countries (<xref ref-type="bibr" rid="B40">Odegedbe, 2023</xref>). Today, India has an urgent need for more integrated state-level planning to deal with climate change. However, <xref ref-type="bibr" rid="B43">Radtke, Renn (2024)</xref> and <xref ref-type="bibr" rid="B55">Singh (2022)</xref>, <xref ref-type="bibr" rid="B5">Bhatia (2023)</xref>, who refer to this situation as a manifestation of resistance to the regime, argue that newly created transition-oriented organizations often find themselves at odds with established bureaucracies and interests that traditionally support specific energy sectors, especially the coal industry.</p>
      <p>The challenges related to financial constraints, socio-economic pressures and institutional issues raise the question of how India, one of the world’s largest CO₂ emitters, can design a long-term climate strategy that is economically viable and socially inclusive. The qualitative analysis serves as the foundation for the subsequent quantitative assessment of India’s prospects for reaching carbon neutrality by 2070.</p>
    </sec>
    <sec sec-type="Methodology" id="sec4">
      <title>Methodology</title>
      <p>India’s cumulative emissions have still not reached their projected peak, as shown in Fig. <xref ref-type="fig" rid="F2">2</xref>. This indicates considerable uncertainty about several major external factors over the long term. As discussed earlier, one of these factors is the issue of international climate finance, which complicates direct quantitative assessments of the prospects for India achieving net-zero emissions by 2070. Comparatively, more reliable insights can be drawn about India’s Nationally Determined Contribution (<abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev>) targets for 2030. These targets are closer in time and represent intermediate steps towards the long-term goal of net zero emissions.</p>
      <fig id="F2">
        <object-id content-type="doi">10.3897/brics-econ.7.e168509.figure2</object-id>
        <object-id content-type="arpha">A913C86B-2A52-5AE3-8186-B0F8E1461B8C</object-id>
        <label>Figure 2.</label>
        <caption>
          <p>Dynamics of Greenhouse Gas Emissions in India. <italic>Source</italic>: The Energy Institute Statistical Review of World Energy (<xref ref-type="bibr" rid="B57">The Energy Institute, 2024</xref>)</p>
        </caption>
        <graphic xlink:href="brics-econ-07-021-g002.jpg" id="oo_1675009.jpg">
          <uri content-type="original_file">https://binary.pensoft.net/fig/1675009</uri>
        </graphic>
      </fig>
      <p>One of the key elements of India’s Net Zero 2070 pathway is its <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev> target of reducing emissions intensity by 45% relative to 2005 levels. Emissions intensity is defined as the ratio of India’s total greenhouse gas emissions to its gross domestic product. Our study aims to identify the external factors and climate policy measures that may significantly influence this indicator and bring India closer to meeting its 2030 <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev> targets. For this purpose, the study assesses the dynamic relationship between a dependent variable and a set of external factors. Specifically, the emissions intensity at time <italic>t</italic> is influenced by both the current values of explanatory variables and past values of the dependent variable (emissions intensity) and explanatory variables (i.e<italic>., t–1, t–2, …, t–l</italic>, where <italic>l</italic> is the lag length indicating delayed effects on the dependent variable).</p>
      <p>To model such dynamics, the Autoregressive Distributed Lag (<abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev>) approach is employed. The <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> (<italic>p, q₁, q₂, …, q</italic>) model, where <italic>p</italic> is the number of lags for the endogenous variable, and <italic>q<sub>i</sub></italic> is the number of lags for the <italic>i</italic> exogenous variable, is specified as:</p>
      <p>
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          <mml:msub>
            <mml:mi>ϑ</mml:mi>
            <mml:mi>t</mml:mi>
          </mml:msub>
        </mml:math>
      </p>
      <p>where <italic>y</italic> is the vector of endogenous variables, <italic>x</italic> is the vector of exogenous variables, θ and <italic>φ</italic> are coefficient matrices, and <italic>υ(t)</italic> is a white noise error term.</p>
      <p>Due to data availability, the time frame is limited to 1990–2023. The dependent variable and the external explanatory variables are presented in Table <xref ref-type="table" rid="T1">1</xref>.</p>
      <table-wrap id="T1" position="float" orientation="portrait">
        <label>Table 1.</label>
        <caption>
          <p><abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> Model: Variable Descriptions</p>
        </caption>
        <table>
          <tbody>
            <tr>
              <td rowspan="1" colspan="1">
                <bold>Variable Name</bold>
              </td>
              <td rowspan="1" colspan="1">
                <bold>Model Notation</bold>
              </td>
              <td rowspan="1" colspan="1">
                <bold>Variable Type</bold>
              </td>
              <td rowspan="1" colspan="1">
                <bold>Justification</bold>
              </td>
              <td rowspan="1" colspan="1">
                <bold>Data Source</bold>
              </td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">India’s aggregate emissions intensity per unit of GDP, kg CO₂ equivalent per USD</td>
              <td rowspan="1" colspan="1">
                <italic>int_ts</italic>
              </td>
              <td rowspan="1" colspan="1">dependent</td>
              <td rowspan="1" colspan="1">The choice is based on the <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev> target for 2030, which is considered an intermediate step toward achieving Net Zero by 2070. Conceptually, the selected indicator is a close alternative to total emissions, which are not included directly in the analysis due to their persistent upward trend as of 2024 except for a single year during the pandemic—2020. This trend complicates the assessment of emission reduction prospects by 2030.</td>
              <td rowspan="1" colspan="1">Derived from The Energy Institute - Statistical Review of World Energy (<xref ref-type="bibr" rid="B57">The Energy Institute, 2024</xref>), World Bank Open Data.</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">Forest area, % of total land area</td>
              <td rowspan="1" colspan="1">
                <italic>forest_ts</italic>
              </td>
              <td rowspan="1" colspan="1">independent</td>
              <td rowspan="1" colspan="1">The indicator is selected in alignment with India’s <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev> target of achieving additional carbon sequestration of 2.5–3 billion tons of CO₂ equivalent by 2030 through increased forest cover. Based on the FAO methodology, the indicator excludes agricultural plantations and urban tree cover.</td>
              <td rowspan="1" colspan="1">World Bank Open Data, Forest area (% of land area) – India.</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">Share of electricity generated from RE sources, %</td>
              <td rowspan="1" colspan="1">
                <italic>renew_ts</italic>
              </td>
              <td rowspan="1" colspan="1">independent</td>
              <td rowspan="1" colspan="1">The indicator is based on another <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev> target, which aims to achieve approximately 50% of the total installed power generation capacity from non-fossil fuel sources by 2030. It combines electricity generated from hydropower, solar, wind, geothermal, tidal energy, and bioenergy.</td>
              <td rowspan="1" colspan="1">The Energy Institute - Statistical Review of World Energy (<xref ref-type="bibr" rid="B57">The Energy Institute, 2024</xref>).</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">Share of national income held by the middle class in India, %</td>
              <td rowspan="1" colspan="1">
                <italic>middle_ts</italic>
              </td>
              <td rowspan="1" colspan="1">independent</td>
              <td rowspan="1" colspan="1">The selection of this indicator is based on a previously proposed thesis: the unpredictable growth of the middle class within India’s rapidly expanding population is a significant factor influencing the future dynamics of total emissions. The World Inequality Lab (WIL) dataset was chosen as it provides the most comprehensive time series for India, covering the analyzed period. The dataset reports the per-adult pre-tax national income share for the Middle 40% group, providing insight into the extent to which income inequality is determined by the economic system itself prior to redistributive effects.</td>
              <td rowspan="1" colspan="1">
                <xref ref-type="bibr" rid="B4">Bharti et al. (2024)</xref>
              </td>
            </tr>
          </tbody>
        </table>
        <table-wrap-foot>
          <fn>
            <p><italic>Source</italic>: compiled by the author</p>
          </fn>
        </table-wrap-foot>
      </table-wrap>
      <p>According to the WIL methodology, the middle class is defined as the population group in the “Middle 40%” segment of the income distribution — 6th, 7th, 8th, and 9th deciles. To further substantiate the rationale for including the middle-class variable, it is essential to highlight the underlying mechanism through which this factor influences emissions. India’s current trajectory of economic growth, combined with sustained efforts to reduce high poverty level, is expected to facilitate a substantial expansion of the middle class (<xref ref-type="bibr" rid="B13">Eggimann &amp; Kendzia, 2022</xref>; <xref ref-type="bibr" rid="B39">OECD, 2025</xref>) (Fig. <xref ref-type="fig" rid="F3">3</xref>). The growth of the middle class implies rising demand for electricity and carbon-intensive goods, such as household appliances and private transport. This, in turn, places upward pressure on aggregate emissions. The claim that middle-class expansion drives emissions is well supported by the studies at both the global (<xref ref-type="bibr" rid="B14">Fuhr, 2021</xref>; <xref ref-type="bibr" rid="B26">Kartha et al., 2020</xref>; <xref ref-type="bibr" rid="B30">Kharas, 2017</xref>) and country levels (<xref ref-type="bibr" rid="B17">Grunewald et al., 2012</xref>; <xref ref-type="bibr" rid="B42">Pang et al, 2024</xref>). Considering India’s large and rapidly growing population and the high carbon intensity of the national economy, the dynamics of the middle-class income share represent a theoretically meaningful predictor of the country’s long-term emissions trajectory.</p>
      <fig id="F3">
        <object-id content-type="doi">10.3897/brics-econ.7.e168509.figure3</object-id>
        <object-id content-type="arpha">CA32AB72-7476-5736-904B-8050DA9ED0D4</object-id>
        <label>Figure 3.</label>
        <caption>
          <p>Forecasted Dynamics of the Middle-Class Share in India’s Population. <italic>Note</italic>: Destitute: &lt; Rs 125000 per annum (~1400 USD); Aspirers: Rs 125,000-500,000 (~1400-5600 USD); Middle class: Rs 500000-3000000 (~5600–34000 USD); Rich: &gt;Rs 3000000 (&gt;34000 USD). <italic>Source</italic>: CRISIL Market Intelligence &amp; Analytics, 2024</p>
        </caption>
        <graphic xlink:href="brics-econ-07-021-g003.jpg" id="oo_1675010.jpg">
          <uri content-type="original_file">https://binary.pensoft.net/fig/1675010</uri>
        </graphic>
      </fig>
      <p>The following hypothesis is tested: regarding the 2030 emissions intensity reduction target, the share of renewables in electricity generation has both immediate and sustained effects, while forest cover expansion and changes in the income share of the middle class have a long-term impact that takes place over a longer time frame. In this context, the delayed effect can be attributed to the time required for forest growth and the gradual increase in income levels until a certain threshold is reached, at which point the factor begins to have a significant impact on consumption patterns. The scientific novelty of this approach lies in its consideration of the evolving income dynamics of the Indian middle class and its specific influence on emission trends related to it.</p>
      <p>In practice, <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> models are typically limited to two or three variables, since they incorporate lags of both dependent and all independent variables. Adding more regressors or lags rapidly increases the number of parameters, which can compromise statistical reliability when the available observations are limited. Accordingly, this analysis focuses on indicators directly linked to India’s climate strategy as outlined in the <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev> commitments, along with a measure of the middle class, which holds particular research interest. For potential extensions of the model, the dynamics of the coal industry could represent a relevant factor.</p>
      <p>Preliminary time-series analysis (Fig. <xref ref-type="fig" rid="F4">4</xref>) reveals pronounced trends, confirmed by the Dickey-Fuller test: the null hypothesis of non-stationarity is not rejected at the 5% significance level for any of the variables (Table <xref ref-type="table" rid="T2">2</xref>).</p>
      <fig id="F4">
        <object-id content-type="doi">10.3897/brics-econ.7.e168509.figure4</object-id>
        <object-id content-type="arpha">D47B81FA-386C-541E-B3D4-56DE7B6FB6DA</object-id>
        <label>Figure 4.</label>
        <caption>
          <p>Graphs of Variables Used in the <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> Model. <italic>Source</italic>: complied by the author based on The Energy Institute Statistical Review of World Energy (<xref ref-type="bibr" rid="B57">The Energy Institute, 2024</xref>); World Bank Open Data; <xref ref-type="bibr" rid="B4">Bharti et al. (2024)</xref>.</p>
        </caption>
        <graphic xlink:href="brics-econ-07-021-g004.jpg" id="oo_1675011.jpg">
          <uri content-type="original_file">https://binary.pensoft.net/fig/1675011</uri>
        </graphic>
      </fig>
      <table-wrap id="T2" position="float" orientation="portrait">
        <label>Table 2.</label>
        <caption>
          <p>Testing variables for non-stationarity using the Dickey–Fuller test</p>
        </caption>
        <table>
          <tbody>
            <tr>
              <td rowspan="1" colspan="1">
                <bold>Variables</bold>
              </td>
              <td rowspan="1" colspan="1">
                <bold>p-value from the Dickey–Fuller test</bold>
              </td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">int_ts</td>
              <td rowspan="1" colspan="1">0,519</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">forest_ts</td>
              <td rowspan="1" colspan="1">0,078</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">renew_ts</td>
              <td rowspan="1" colspan="1">0,566</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">middle_ts</td>
              <td rowspan="1" colspan="1">0,559</td>
            </tr>
          </tbody>
        </table>
        <table-wrap-foot>
          <fn>
            <p><italic>Source</italic>: compiled by the author based on output data from modeling in RStudio.</p>
          </fn>
        </table-wrap-foot>
      </table-wrap>
      <p>This emission intensity indicator has exhibited a downward trend since 1992, when emissions intensity peaked. A plausible factor in the subsequent decline is the acceleration of India’s economic growth, whereby GDP growth began to outpace the increase in CO₂ emissions. In recent years, the rate of decline in emission intensity has slowed down, except for the slight increases in that rate observed in 2021 and 2022.</p>
      <p>The forest cover in India has shown a steady increase in its share of the total land area, which appears to contradict reports of forest resources depletion. This trend reflects several opposing forces: population growth and urbanization have increased demand for wood and land, while afforestation policies including the Compensatory Afforestation Act of 2016 have supported reforestation efforts. However, official statistics do not capture the changes in forest type and quality: moderate-density forest areas have declined, while open forest areas have expanded, demonstrating possible degradation of Indian forest ecosystems (<xref ref-type="bibr" rid="B33">Kumari et al., 2019</xref>).</p>
      <p>The share of renewable energy in electricity generation decreased until the early 2000s, mainly due to a decline in the share of hydropower. (<xref ref-type="bibr" rid="B52">Shukla et al., 2007</xref>). The expansion of natural gas use during India’s economic reforms in the 1990s involving the New Exploration License Policy and the development of the KG-D6 natural gas field contributed to this trend (<xref ref-type="bibr" rid="B8">Corbeau 2010</xref>). However, the composition of India’s energy mix was largely determined by the dominance of coal and the volatility of gas prices.</p>
      <p>The income share of the Indian middle class shows a persistent downward trend. The term “middle class” refers to the middle 40% income group, the segment between the bottom 30% and the top 30% of the population in the national income distribution. Previously, from 1951 onward, this share remained stable between 40–46% (<xref ref-type="bibr" rid="B4">Bharti et al., 2024</xref>). The current pattern of rising inequality is largely due to income shifts in favor of the wealthiest 10%, 10th decile, whose share has increased from 33.5% in 1990 to 55.7%.</p>
      <p>The <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> approach typically requires transforming non-stationary time series into stationary form through differencing of order <italic>d</italic>. According to <xref ref-type="bibr" rid="B28">Kalugin, Kim and Petrusevich (2020)</xref>, this preserves short-term relationships among variables. In this study, second-order differencing (<italic>d = 2</italic>) is required for most variables to meet stationarity conditions based on the Dickey-Fuller test. The transformed variables are: <italic>detr_int_ts, detr_renew_ts</italic>, and <italic>detr_middle_ts</italic> (Table <xref ref-type="table" rid="T3">3</xref>).</p>
      <table-wrap id="T3" position="float" orientation="portrait">
        <label>Table 3.</label>
        <caption>
          <p>Identification of non-stationarity in transformed variables using the Dickey–Fuller test</p>
        </caption>
        <table>
          <tbody>
            <tr>
              <td rowspan="1" colspan="1">
                <bold>Transformed variable</bold>
              </td>
              <td rowspan="1" colspan="1">
                <bold>p-value from the Dickey–Fuller test</bold>
              </td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">detr_int_ts</td>
              <td rowspan="1" colspan="1">0,000</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">detr_forest_ts</td>
              <td rowspan="1" colspan="1">0,314</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">detr_renew_ts</td>
              <td rowspan="1" colspan="1">0,075</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">detr_middle_ts</td>
              <td rowspan="1" colspan="1">0,000</td>
            </tr>
          </tbody>
        </table>
        <table-wrap-foot>
          <fn>
            <p><italic>Source</italic>: compiled by the author based on output data from modeling in RStudio. <italic>Note</italic>: In this modeling, the null hypothesis of non-stationarity is not rejected at the 10% significance level.</p>
          </fn>
        </table-wrap-foot>
      </table-wrap>
      <p>However, second-order differencing did not fully eliminate non-stationarity in <italic>detr_forest_ts</italic>, presenting a potential modeling risk. This statistical assumption is nevertheless accepted for the following reasons:</p>
      <list list-type="bullet">
        <list-item>
          <p>Integrity and comparability: to maintain uniform data dimensions and relational structure, the same differencing is applied across all variables. If second-order differentiation is required for most variables, especially for the dependent one, this transformation is applied equally to all variables. Applying further transformations only to <italic>forest_ts</italic> would distort inter-variable relationships.
                </p>
        </list-item>
        <list-item>
          <p>Data constraints: reliable, consistent data on India’s forest cover for the required period are limited, and substitution is not feasible. At the same time, the indicator is substantively important for the analysis because forest regeneration remains a central pillar of India’s emissions reduction strategy alongside RE development.
</p>
        </list-item>
        <list-item>
          <p>Trend interpretability: given the persistent upward trend in forest cover, pure detrending would obscure substantial interpretability and undermine the analytical value of the variable.
</p>
        </list-item>
      </list>
      <p>The chosen transformations strike a practical balance between achieving stationarity and preserving interpretability and data integrity. The <italic>forest_ts</italic> variable is conceptually harmonized with the broader dataset. Subsequent model outcomes will be evaluated for validity and justification.</p>
      <p>It is important to note that the <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> model accommodates the <italic>I (0)</italic> and <italic>I (1)</italic> variables. Since the original variables exhibit integration of order higher than <italic>I (1)</italic>, differencing is necessary to include them in the <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> framework. However, differencing removes information about long-term equilibrium relationships, therefore cointegration is not tested. This <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> application focuses on capturing short-term dynamics, which, given the inclusion of multiple lags, still offer valuable insights for the analysis.</p>
      <p>Two points complicate the interpretation of the resulting model coefficients. Firstly, as second-order differences are used, the model is presented in “differenced form” (<xref ref-type="bibr" rid="B18">Hyndman &amp; Athanasopoulos, 2018</xref>). Coefficients reflect shifts in the rate of change, rather than direct changes in the variables themselves. For instance, if both <italic>x</italic> and <italic>y</italic> are upward-trending, a positive coefficient for <italic>x</italic> implies that an acceleration in the growth of <italic>x</italic> is associated with an acceleration in the growth of <italic>y</italic>; a negative coefficient implies that <italic>x</italic>’s acceleration leads to a deceleration in <italic>y</italic>. Thus, positive coefficients indicate synchronous movement, while negative ones suggest divergence. This interpretation is particularly useful for assessing India's <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev> goals. Assuming the emissions intensity continues to decrease, the model identifies the factors that could most effectively reduce emissions intensity within the target timeline of 2030.</p>
      <p>Secondly, emissions intensity is the ratio of total emissions to gross domestic product (GDP), hence the need to identify which is the target of the influence, either emissions or GDP. In this paper, we interpret the regression results as primarily influencing emissions dynamics, and, secondarily, as potentially affecting GDP. With these interpretive considerations in place the modeling results can now be examined.</p>
    </sec>
    <sec sec-type="Results and discussion" id="sec5">
      <title>Results and discussion</title>
      <p>The <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> modeling framework allows for the selection of the optimal number of lags for each variable, enabling a more flexible approach to capturing the dynamics of relationships between the variables. Based on the minimum value of the AIC criterion and the selection of the optimal number of statistically relevant regressors, the resulting model takes the form <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> (3, 3, 4, 1). The residuals of the model were tested for autocorrelation, heteroskedasticity, and normality (Table <xref ref-type="table" rid="T4">4</xref>, Fig. <xref ref-type="fig" rid="F5">5</xref>). The stability of the model coefficients was verified using the CUSUM test: the null hypothesis—the model coefficients remain stable over time—is not rejected at any conventional significance level (p-value = 0.987).</p>
      <fig id="F5">
        <object-id content-type="doi">10.3897/brics-econ.7.e168509.figure5</object-id>
        <object-id content-type="arpha">1382333C-27D7-58DB-8952-54017009B177</object-id>
        <label>Figure 5.</label>
        <caption>
          <p>ACF and PACF plots constructed for the residuals of the <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> (3,3,4,1) model. <italic>Source</italic>: compiled by author based on output data from modeling in RStudio.</p>
        </caption>
        <graphic xlink:href="brics-econ-07-021-g005.jpg" id="oo_1675012.jpg">
          <uri content-type="original_file">https://binary.pensoft.net/fig/1675012</uri>
        </graphic>
      </fig>
      <table-wrap id="T4" position="float" orientation="portrait">
        <label>Table 4.</label>
        <caption>
          <p>Diagnostic testing of residuals in the <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> (3,3,4,1) model</p>
        </caption>
        <table>
          <tbody>
            <tr>
              <td rowspan="1" colspan="1">
                <bold>Characteristic</bold>
              </td>
              <td rowspan="1" colspan="1">
                <bold>p-value</bold>
              </td>
              <td rowspan="1" colspan="1">
                <bold>Interpretation</bold>
              </td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">Absence of heteroscedasticity in the residuals</td>
              <td rowspan="1" colspan="1">0,431</td>
              <td rowspan="1" colspan="1">According to the Breusch-Pagan test, the null hypothesis of homoscedasticity in the residuals is not rejected at any reasonable significance level.</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">Normality of residual distribution</td>
              <td rowspan="1" colspan="1">0,249</td>
              <td rowspan="1" colspan="1">According to the Shapiro-Wilk test, the null hypothesis​ of normality of the distribution is not rejected at any reasonable significance level.</td>
            </tr>
          </tbody>
        </table>
        <table-wrap-foot>
          <fn>
            <p><italic>Source</italic>: compiled by the author based on output data from modeling in RStudio.</p>
          </fn>
        </table-wrap-foot>
      </table-wrap>
      <p>The absence of autocorrelation in the residuals is checked visually: the values on the ACF and PACF plots for the model residuals do not exceed the designated corridor of insignificant fluctuations.</p>
      <p>The estimated model is statistically significant at any reasonable level: p-value = 0.001, with an F-statistic of 5.913 (degrees of freedom: 14 and 13). Thus, the null hypothesis — that all regressors have coefficients equal to zero — is rejected. The model demonstrates a relatively high explanatory power, with R² = 0.864, the proportion of variance in the dependent variable explained by the model, and the adjusted R² = 0.718, which penalizes for including potentially irrelevant regressors. Therefore, the chosen specification <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> (3, 3, 4, 1) is accepted, allowing for further interpretation of the estimated relationships.</p>
      <p>The results suggest the presence of statistically significant regressors (current or lagged values) across all three external factors. This analysis primarily focuses on the influence of external factors rather than on the autoregressive dynamics of the dependent variable itself. For the regressors discussed below, the levels of significance range from 10% to 0.1% (Table <xref ref-type="table" rid="T5">5</xref>). Given the nature of the data, the interpretation of significant regressors emphasizes the signs of the coefficients, i.e. the presence and direction of the effect, and not the precise magnitude of the estimates.</p>
      <table-wrap id="T5" position="float" orientation="portrait">
        <label>Table 5.</label>
        <caption>
          <p>The Estimated <abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> (3,3,4,1) Model</p>
        </caption>
        <table>
          <tbody>
            <tr>
              <td rowspan="1" colspan="1">
                <bold>Regressor</bold>
              </td>
              <td rowspan="1" colspan="1">
                <bold>Coefficient</bold>
              </td>
              <td rowspan="1" colspan="1">
                <bold>St. error</bold>
              </td>
              <td rowspan="1" colspan="1">
                <bold>t-value</bold>
              </td>
              <td rowspan="1" colspan="1">
                <bold>p-value</bold>
              </td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">Const</td>
              <td rowspan="1" colspan="1">-0,0004</td>
              <td rowspan="1" colspan="1">0,004</td>
              <td rowspan="1" colspan="1">-0,086</td>
              <td rowspan="1" colspan="1">0,933</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">L (detr_int_ts, 1)</td>
              <td rowspan="1" colspan="1">-0,3791</td>
              <td rowspan="1" colspan="1">0,181</td>
              <td rowspan="1" colspan="1">-2,094</td>
              <td rowspan="1" colspan="1">0,056 .</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">L (detr_int_ts, 2)</td>
              <td rowspan="1" colspan="1">-0,9854</td>
              <td rowspan="1" colspan="1">0,193</td>
              <td rowspan="1" colspan="1">-5,109</td>
              <td rowspan="1" colspan="1">0,000 <bold>***</bold></td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">L (detr_int_ts, 3)</td>
              <td rowspan="1" colspan="1">-0,8597</td>
              <td rowspan="1" colspan="1">0,215</td>
              <td rowspan="1" colspan="1">-3,991</td>
              <td rowspan="1" colspan="1">0,002 <bold>**</bold></td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">detr_forest_ts</td>
              <td rowspan="1" colspan="1">2,9158</td>
              <td rowspan="1" colspan="1">0,630</td>
              <td rowspan="1" colspan="1">4,628</td>
              <td rowspan="1" colspan="1">0,000 <bold>***</bold></td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">L (detr_forest_ts, 1)</td>
              <td rowspan="1" colspan="1">-1,3149</td>
              <td rowspan="1" colspan="1">0,562</td>
              <td rowspan="1" colspan="1">-2,339</td>
              <td rowspan="1" colspan="1">0,036 <bold>*</bold></td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">L (detr_forest_ts, 2)</td>
              <td rowspan="1" colspan="1">-0,9139</td>
              <td rowspan="1" colspan="1">0,602</td>
              <td rowspan="1" colspan="1">-1,517</td>
              <td rowspan="1" colspan="1">0,153</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">L (detr_forest_ts, 3)</td>
              <td rowspan="1" colspan="1">-0,9711</td>
              <td rowspan="1" colspan="1">0,502</td>
              <td rowspan="1" colspan="1">-1,933</td>
              <td rowspan="1" colspan="1">0,075 .</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">detr_renew_ts</td>
              <td rowspan="1" colspan="1">-0,0117</td>
              <td rowspan="1" colspan="1">0,003</td>
              <td rowspan="1" colspan="1">-3,390</td>
              <td rowspan="1" colspan="1">0,005 <bold>**</bold></td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">L (detr_renew_ts, 1)</td>
              <td rowspan="1" colspan="1">-0,0023</td>
              <td rowspan="1" colspan="1">0,004</td>
              <td rowspan="1" colspan="1">-0,616</td>
              <td rowspan="1" colspan="1">0,549</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">L (detr_renew_ts, 2)</td>
              <td rowspan="1" colspan="1">-0,0069</td>
              <td rowspan="1" colspan="1">0,004</td>
              <td rowspan="1" colspan="1">-1,669</td>
              <td rowspan="1" colspan="1">0,119</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">L (detr_renew_ts, 3)</td>
              <td rowspan="1" colspan="1">0,0096</td>
              <td rowspan="1" colspan="1">0,004</td>
              <td rowspan="1" colspan="1">2,324</td>
              <td rowspan="1" colspan="1">0,037 <bold>*</bold></td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">L (detr_renew_ts, 4)</td>
              <td rowspan="1" colspan="1">0,0151</td>
              <td rowspan="1" colspan="1">0,004</td>
              <td rowspan="1" colspan="1">3,986</td>
              <td rowspan="1" colspan="1">0,002 <bold>**</bold></td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">detr_middle_ts</td>
              <td rowspan="1" colspan="1">-0,0140</td>
              <td rowspan="1" colspan="1">0,016</td>
              <td rowspan="1" colspan="1">-0,891</td>
              <td rowspan="1" colspan="1">0,389</td>
            </tr>
            <tr>
              <td rowspan="1" colspan="1">L (detr_middle_ts, 1)</td>
              <td rowspan="1" colspan="1">0,0291</td>
              <td rowspan="1" colspan="1">0,014</td>
              <td rowspan="1" colspan="1">2,065</td>
              <td rowspan="1" colspan="1">0,060 .</td>
            </tr>
          </tbody>
        </table>
        <table-wrap-foot>
          <fn>
            <p><italic>Source</italic>: output data from modeling in RStudio. <italic>Notes</italic>: Interpretation of the significance level by p-value: [0 ; 0,001] – ***; (0,001 ; 0,01] – **; (0,01 ; 0,05] – *; (0,05 ; 0,1] – . Regressors with the L designation determine the lag order included for each explanatory variable.</p>
          </fn>
        </table-wrap-foot>
      </table-wrap>
      <sec sec-type="Forest Cover Share" id="sec6">
        <title>Forest Cover Share</title>
        <p>The modeling results suggest the presence of both immediate and delayed effects. The impact is characterized by relative persistence and unstable direction, as reflected in the varying signs of the coefficients on significant regressors. In the case of significant lagged effects, negative coefficients indicate that reductions in the emissions intensity tend to occur more rapidly when the rate of forest cover expansion had accelerated in previous periods. In other words, over time, the dynamics of afforestation in India exert a meaningful constraining influence on carbon intensity and, by extension, on total emissions.</p>
        <p>At the same time, part of the effect appears to be immediate: the positive coefficient for the current period suggests that the current acceleration of forest cover growth is slowing the decline of the emissions intensity. A possible explanation lies in the delayed environmental benefits of afforestation which may initially be accompanied by intensified economic activities, such as land preparation using fertilizers, burning of biomass, transportation, and use of planting machinery, which may temporarily contribute to higher emissions.</p>
      </sec>
      <sec sec-type="Share of Renewables in Electricity Generation" id="sec7">
        <title>Share of Renewables in Electricity Generation</title>
        <p>The analysis also reveals both immediate and lagged effects with unstable directional responses across significant regressors. The lagged impact emerges with a longer delay but is more persistent in duration: lags 3 and 4 are statistically significant.</p>
        <p>The negative coefficient for the immediate effect indicates that an accelerating rise in the share of renewables in electricity generation speeds up the reduction in carbon intensity over the same period. This confirms the anticipated climate benefits of green energy development.</p>
        <p>In contrast, a reversed effect is observed for longer-term lags: a more substantial increase in the share of renewables over several prior periods is associated with a deceleration in the decline of emissions intensity. A possible explanation lies in side effects that accompany long-term growth in the renewables share. For instance, beyond a certain point, the environmental returns of green energy expansion may diminish. Moreover, given the inertia of India’s coal-based energy sector, an accelerated shift toward renewables — at the expense of coal industry — may lead to a slowdown in economic activity, GDP growth and, consequently, a rise in emissions intensity.</p>
      </sec>
      <sec sec-type="Share of National Income Held by the Middle Class" id="sec8">
        <title>Share of National Income Held by the Middle Class</title>
        <p>The response of the dependent variable to changes in the final factor exhibits the highest inertia, with the effect being both singular and delayed. Given the observed decline in the Indian middle-class income, a positive coefficient suggests that the socially adverse phenomenon of accelerated income reduction among the middle class is associated with a faster decline in carbon intensity. The lagged effect reflects a gradual shift in household expectations and behavior, including a slowdown in energy consumption growth and, as a result, decrease in aggregate emissions. At the same time, the impact of middle-class income may be felt over a longer time horizon than what is currently captured in the model.</p>
        <p>The presence of gaps between statistically significant coefficients is also significant. On the one hand, this may reflect limitations of the analysis, such as the unique dynamics of the forest cover variable and the constraints imposed by the size of the dataset. On the other hand, the uneven distribution of effects may reflect the actual data structure and the distinct characteristics of each factor.</p>
        <p>The hypothesis put forward in this study has been partly confirmed. Changes in the share of renewables indeed have both immediate and delayed effects on the pace of decline in the carbon intensity over the period up to 2030. These changes differ from the middle-class income dynamics, which appears to have no significant immediate effect. The lagged effects of the changes in the share of renewables are more persistent than those of the changes in forest cover. However, the assumption of a more prolonged and deferred influence from afforestation and changes in middle-class income was not supported.</p>
      </sec>
      <sec sec-type="Challenges Across Key Areas" id="sec9">
        <title>Challenges Across Key Areas</title>
        <p>The quantitative analysis confirms that the pace of afforestation and the increase in the share of renewables in electricity generation in India have significant lagged effects on the dynamics of the emissions intensity. This influence was assessed in the short-term perspective, within the context of India’s commitments under the <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev>. However, short- and medium-term measures under the <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev> are also crucial for achieving India’s long-term goal of carbon neutrality by 2070 (<xref ref-type="bibr" rid="B16">Garg, 2024</xref>). Therefore, the country’s prospects for reaching this target largely depend on the consistency and balance of climate policies implemented in these key areas.</p>
        <p>Regarding forest protection measures, the India State of Forest Report 2023 prepared by the Ministry of Environment, Forest and Climate Change, highlights positive trends: an increase in forest area, a reduction in the number of forest fires, progress toward <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev> targets and broader achievements in sustainable development. Yet, despite the progress made and expected, there are significant issues and contradictions with the implementation of forest conservation measures.</p>
        <p>One of the most criticized institutions is the Compensatory Afforestation Management and Planning Authority (<abbrev xlink:title="Compensatory Afforestation Management and Planning Authority">CAMPA</abbrev>) operating under the National Afforestation Programme (2000). This case illustrates the major problems plaguing India’s forest restoration policy. <abbrev xlink:title="Compensatory Afforestation Management and Planning Authority">CAMPA</abbrev> was established to manage funds contributed by public and private entities in order to compensate for the deforestation and associated damage caused to local communities as a result of infrastructure development. If an entity engages in deforestation, they are required to fund reforestation in other areas through <abbrev xlink:title="Compensatory Afforestation Management and Planning Authority">CAMPA</abbrev>. However, several issues hinder the agency’s proper functioning.</p>
        <p>First, there is a lack of effective oversight of the use of funds and outcomes achieved. Although compensatory afforestation is an official national program, obtaining reliable and systematic data from the involved government bodies is complicated. According to <xref ref-type="bibr" rid="B62">World Rainforest Movement (2019)</xref>, in Maharashtra, there has been non-target use of <abbrev xlink:title="Compensatory Afforestation Management and Planning Authority">CAMPA</abbrev> funds since 2013. Poor official reporting makes it difficult to determine the exact amounts spent on reforestation; the national auditing authority’s report mainly listed <abbrev xlink:title="Compensatory Afforestation Management and Planning Authority">CAMPA</abbrev>-sponsored spending on office buildings, cars, and other irrelevant items.</p>
        <p>Second, implementation is often purely formal. In Andhra Pradesh, 11 areas designated for compensatory afforestation were located in floodplains, which means that any new trees planted there would be washed away (<xref ref-type="bibr" rid="B62">World Rainforest Movement, 2019</xref>). This formal approach aligns with a broader issue that was noted earlier: forest degradation in India continues, despite reported gains in forest cover. Meanwhile, a lack of transparency in the official methodology has also been noted. These problems create serious corruption risks, exacerbated by the fragmented nature of climate programs in India. Confirmed cases in Arunachal Pradesh, Chhattisgarh, Odisha, and Jharkhand show that plantations listed in <abbrev xlink:title="Compensatory Afforestation Management and Planning Authority">CAMPA</abbrev>’s official records were not found during inspections.</p>
        <p>Forest protection, as a crucial component in achieving India’s climate goals, requires a more transparent and systematic funding approach. In the absence of an adequate approach, mechanisms such as compensatory afforestation could become a way to license deforestation, leading to misuse of public funds.</p>
        <p>The problems that slow down the implementation of measures to expand renewable energy in electricity generation often coincide with those in forestry programs. <xref ref-type="bibr" rid="B32">Kumar and Majid (2020)</xref> point out that the major issue is poor interagency coordination across institutions at various levels. The lack of clear communication between the implementing bodies and those monitoring budget expenditures is delaying program execution and hindering investor interest.</p>
        <p>Although achieving Net Zero largely depends on national policies, success also relies on how effectively low-carbon solutions are integrated into the economic development plans of individual countries. As with afforestation programs, the limited availability of consistent, detailed statistics impedes progress in RE development. Many states lack real-time data on solar and wind generation, essential for accurate forecasting and better investment decisions.</p>
        <p>Poor operational efficiency and the inability to attract private investment are serious challenges, but perhaps the worst problems are financial instability in state-owned distribution companies, like DISCOMs, and difficulties with their support mechanisms. Up to 90% of India’s population relies on these companies for their electricity needs but these organisations are the most vulnerable element in the energy supply chain (<xref ref-type="bibr" rid="B44">Raizada, 2024</xref>). Chronic funding shortfalls for electricity procurement, maintenance and infrastructure upgrades have forced them to take out costly short-term loans, which jeopardize long-term sustainability and increase debt. <xref ref-type="bibr" rid="B44">Raizada (2024)</xref> further points out that, by the fall of 2015, their total debt exceeded $49 billion with frequent contract renegotiations and delays in RE project implementation.</p>
        <p>Despite the 2015 launch of UDAY, a financial recovery program for DISCOMs aimed at improving their operational efficiency by enabling states to take over up to 75% of DISCOMs’ debt, operational issues persisted: by 2020, DISCOMs’ annual gross losses amounted to over $930 million — up $200 million from 2015 — while their total debt to participating states exceeded $24 billion (<xref ref-type="bibr" rid="B44">Raizada, 2024</xref>). This program exemplifies a broader pattern in India’s support schemes for energy companies where responsibility is delegated to the states, which often lack the capacity to implement federal programs effectively.</p>
      </sec>
      <sec sec-type="The Socio-Economic Dimension" id="sec10">
        <title>The Socio-Economic Dimension</title>
        <p>The analysis also offers an additional perspective for evaluating India’s transition to carbon neutrality:</p>
        <list list-type="bullet">
          <list-item>
            <p>the change in the sign of the coefficient for the share of renewable energy in electricity generation indicates a delayed negative effect on economic growth
</p>
          </list-item>
          <list-item>
            <p>the effect observed for the middle-class income factor suggests a unidirectional dynamic between income growth and total emissions.
</p>
          </list-item>
        </list>
        <p>Taken together, these findings raise the broader unresolved issue of the compatibility of climate policy with the government’s priority for socio-economic development.</p>
        <p>In the global context, <xref ref-type="bibr" rid="B47">Rodrik (2024)</xref> proposes a "trilemma" framework suggesting the mutually incompatible nature of three concurrent goals: addressing climate change, strengthening middle-class incomes in developed countries and reducing global poverty. When applied to a large developing country such as India, where reducing poverty is still an urgent priority and the growing middle class plays a crucial role in shaping global emissions, the trilemma poses a compelling analytical challenge.</p>
        <p>At the national level the relationship between climate policy and socio-economic development remains ambiguous. In the absence of a unified methodological approach the nature and direction of this relationship depend on various factors including the country’s development stage and average income level, the time period under analysis and the specific empirical methods employed. <xref ref-type="bibr" rid="B10">Csereklyei, Rubio-Varas and Stern (2016)</xref> argue that variations in these parameters can potentially reverse the conclusions drawn from such assessments.</p>
        <p>Among developing countries, India has shown evidence to support the hypothesis that RE expansion has a negative impact on economic growth, contrary to findings in developed countries, where no significant relationship was identified (<xref ref-type="bibr" rid="B34">Kustova et al., 2021</xref>). One possible explanation is that the relatively limited scale of RE deployment in India still implies higher operating costs compared to inexpensive fossil fuels. Consequently, increasing the share of renewables may constrain economic growth which is still largely driven by fossil energy. A similar conclusion was reached by <xref ref-type="bibr" rid="B7">Chinda (2014)</xref> for Nigeria, a country with comparable economic and demographic characteristics, where both short-term and long-term growth in CO₂ emissions were found to potentially contribute to economic growth.</p>
        <p>Regarding the impact of middle-class dynamics on emissions, <xref ref-type="bibr" rid="B11">De Coninck and Byrne (2014)</xref> confirm that this large and growing segment of the population in developing countries is a major driver of global carbon intensity, particularly considering its evolving consumption patterns. Attention is often drawn to the urban middle class, which is expected to experience a sharp increase in energy demand, and has the greatest potential to reduce emissions.</p>
        <p>Much of the global discussion on low-carbon development still focuses on average national incomes. In some cases, rising average incomes are found to have negative climate consequences (<xref ref-type="bibr" rid="B35">Lal, 2006</xref>). In others, cross-country studies report ambiguous correlations, or find no correlation at all. (<xref ref-type="bibr" rid="B10">Csereklyei et al, 2016</xref>).</p>
        <p>Similarly, no consensus has been reached on how changes in middle-class incomes affect emissions. Most related studies concentrate on the effects of income inequality, both between and within countries, on climate indicators. For instance, in middle-income countries, the growing inequality resulting from erosion of the middle class is associated with reductions in carbon emissions (<xref ref-type="bibr" rid="B24">Jorgenson &amp; Knight, 2016</xref>). This aligns with theories suggesting that low-income households have higher marginal propensity to consume. Assuming this to be true, reducing inequality and expanding the middle class could result in increased consumer demand and, consequently, higher emissions (<xref ref-type="bibr" rid="B25">Jorgenson et al., 2015</xref>).</p>
        <p>In the case of India, the contradiction is evident between SDG 10 of reducing inequality and SDG 13 of taking climate action (<xref ref-type="bibr" rid="B46">Rej et al., 2024</xref>). Moreover,<xref ref-type="bibr" rid="B29"> Kavya and Vamsi (2015)</xref> consider the inter-country inequality from an environmental viewpoint, emphasizing that this dimension has been largely overlooked in India’s energy and climate policy frameworks.</p>
        <p>According to preliminary estimates of <xref ref-type="bibr" rid="B45">Rajashekariah (2014)</xref>, the expansion of India’s urban middle class may increase its share of the country’s consumer market to 62% by 2025 and help establish India as the fifth-largest consumer market in the world by 2030. The emerging lifestyle of India’s urban middle class is already signaling a shift toward consumption practices that remain largely unsustainable in environmental terms (<xref ref-type="bibr" rid="B15">Ganguly, 2017</xref>). Similar conclusions are drawn by <xref ref-type="bibr" rid="B51">Short and Martinez (2019)</xref> regarding countries of the Global South, where the middle class is responsible for a significant increase in private consumption, often inspired by the lifestyles of the wealthy and serving as a marker of upward social mobility. These evolving patterns are crucial for understanding the trajectory of energy use and the carbon footprint of the middle class.</p>
        <p><xref ref-type="bibr" rid="B15">Ganguly (2017)</xref> distinguishes between the “old” and “new” Indian middle class in the context of the country’s socio-economic development. While the consumption behavior of the traditional middle class has been relatively well documented, the lifestyle and preferences of the new middle class, whose rapid expansion began with the economic liberalization of the 1990s, remain underexplored (<xref ref-type="bibr" rid="B31">Krishnan &amp; Hatekar, 2017</xref>).</p>
        <p>Notably, the growth of India’s new economic system has prompted the middle class to shift employment from the public to the private sector especially within transnational corporations and service industries. This emerging middle class is highly diverse in terms of income, cultural identity and professional affiliation. Its urban segments are characterized by high levels of consumerism, thereby reshaping India’s carbon footprint in new ways.</p>
        <p>The tension between ambitious climate policies and India's socio-economic development strategy reflects a persistent dilemma. The main question is whether it is possible to harmonize these two policy areas in a country that is currently experiencing rapid growth and a demographic boom. The potential resolution seems to lie in improving the quality of the integration between low-carbon solutions and state-level economic development strategies, which is an essential factor in the overall success of the Indian climate agenda. Identifying effective mechanisms and tools for such integration could be a promising area for future research.</p>
      </sec>
    </sec>
    <sec sec-type="Conclusion" id="sec11">
      <title>Conclusion</title>
      <p>The energy policy of large developing countries is primarily focused on creating conditions for their successful socio-economic development, even in the face of the global climate crisis. India's growing population, the need to overcome widespread poverty, and rapid economic expansion based on carbon-intense production may cause a significant increase in greenhouse gas emissions. That is why it is crucially important to assess the prospects of achieving the country’s declared goal of carbon neutrality by 2070, as articulated in its climate commitments.</p>
      <p>The analysis of the conditions that shape India’s energy policy has helped identify its core objective: to ensure sustainable energy security for a rapidly developing economy with high energy intensity of production. The country’s climate policy focuses on increasing the share of renewables in the national energy mix while maintaining and reforming traditional energy sectors. The development of green energy is seen as a tool not only for enhancing energy security and independence but also for stimulating domestic production and addressing energy poverty.</p>
      <p>Analysis of the framework of India’s climate policy revealed the key external factors that influence the feasibility of achieving carbon neutrality by 2070. These include financing limitations, socio-economic impacts, and institutional quality.</p>
      <p>In the quantitative analysis the carbon intensity indicator was evaluated based on India's updated <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev> which represent the intermediate step toward the Net Zero 2070. A set of external factors were proposed that influence the dynamics of this indicator and may be critical for meeting the 2030 <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev> commitments. These include the share of forest cover, the share of renewables in electricity generation and the income share of India’s middle class. The first two variables were drawn from the official <abbrev xlink:title="Nationally Determined Contribution">NDC</abbrev> targets of the country, and the third was based on an analysis of the current study.</p>
      <p><abbrev xlink:title="utoregressive Distributed Lag">ARDL</abbrev> modeling was employed to determine dynamic relationships among the selected variables. The results demonstrate that all three factors significantly affect the dynamics of carbon intensity. However, the direction and duration of their impact vary across variables and may be either immediate or lagged. Specifically, the influence of middle-class income dynamics appears the least conclusive while the impact of increasing renewables share in electricity generation exhibits the most pronounced delayed effect. The original hypothesis is only partly confirmed: although RE expansion does have an immediate and relatively sustained impact on the dependent variable, the anticipated longer-term effects of increased forest cover and declining middle-class income were not supported by the data.</p>
      <p>The study shows that India’s climate policy faces considerable constraints in its two key priority areas — expansion of forest cover and development of renewables in power generation. To address challenges of the energy transition, policy recommendations should be grounded in a clearer understanding of the institutional constraints limiting the effectiveness of India’s climate governance. The analysis highlights the four key issues: (1) fragmented climate governance; (2) regime resistance; (3) limited institutional capacity of state governments manifested in weak communication channels both between central and state authorities and between the states; and (4) insufficient oversight over the use of funds and lack of adequate monitoring of program outcomes, seen in forest restoration and renewable energy initiatives.</p>
      <p>The institutional environment for India’s energy transition can be strengthened along several feasible lines. These include: (a) enhancing subnational climate planning mechanisms by introducing mandatory annual reporting cycles and creating a unified digital platform to track state-level goals; (b) establishing a formal coordination mechanism for reviewing and aligning policies, plans, and programs across different energy sectors and relevant agencies, supported by periodic cross-sectoral consistency assessments for identifying overlaps or contradictions; and (c) reforming the management of climate-related public finance by creating a transparent national registry of government-managed climate expenditures with clear classification rules, project-level disclosure, and outcome-based performance indicators. In general terms, the main elements of institutional support should include establishing a more transparent and coherent system of financing and monitoring climate initiatives, and strengthening inter-agency coordination, particularly between the central government and state authorities.</p>
      <p>As our analysis shows, achieving the 2070 Net Zero Target appears highly challenging given the current trajectory of India’s socio-economic development and institutional performance. The quantitative analysis of external factors confirms a contradiction between India’s national climate ambitions and its socio-economic development strategy. In the context of rapid economic growth and demographic expansion, the question remains: can these policy domains be effectively integrated into a unified strategy? One promising approach involves embedding low-carbon solutions directly into the economic development strategies at the state level. This may allow India to move beyond the forced choice between environmental and socio-economic priorities. The identification of the tools and mechanisms needed for such integration provides a direction for future research.</p>
    </sec>
  </body>
  <back>
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