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The AIGCC report highlights the urgent need for India to balance its rapid shift to renewable energy with social equity.
As the world's third-largest emitter, India faces significant challenges in ensuring a just transition for its 27 million fossil-fuel workers.
The report calls for place-based solutions to prevent economic shocks and deepen inequality in coal-dependent states.
As the global economy accelerates its shift away from fossil fuels, India and South Asia are under growing pressure to ensure that the energy transition is not only fast but also fair.
The Asia Investor Group on Climate Change (AIGCC) Place-Based Just Transition Report 2025 warned that without community-level planning, the move to cleaner energy could deepen inequality, spark labour unrest and leave vulnerable regions behind.
“Climate action and social justice cannot be pursued separately,” the report stated. “A just transition requires policies that protect workers, empower local communities, and direct investment to where it is most needed.”
India, the world’s third-largest emitter and a country with 27 million people directly or indirectly employed in fossil-fuel industries, stands at the heart of the challenge. States like Jharkhand, Chhattisgarh, and Odisha — rich in coal but poor in alternative industries — face outsized risks of job losses and economic shocks.
“Coal-dependent states risk becoming stranded economies unless proactive strategies are deployed,” said AIGCC executive director Rebecca Mikula-Wright. “Investors are looking for clarity on how India will balance decarbonisation with social stability.”
The report highlights India’s massive renewable push, with 251.5 gigawatts (GW) of non-fossil capacity already installed, but warns that clean energy growth is unevenly distributed. “Solar hubs in Gujarat or Rajasthan cannot automatically replace coal jobs in eastern states,” the report cautioned.
South Asia as a whole faces overlapping vulnerabilities:
Labour displacement: Millions in coal mining, transport, and thermal power are exposed to sudden livelihood shocks.
Energy security vs. equity: While countries like Bangladesh and Sri Lanka depend heavily on imported fossil fuels, they also lack the fiscal room to cushion workers through retraining or income support.
Climate vulnerability: Low-lying coastal areas face both rising seas and stranded infrastructure risk, amplifying the social cost of energy shifts.
“Transition strategies in South Asia must contend with a dual reality: decarbonisation is urgent, but so too is poverty alleviation,” the report noted.
The AIGCC called for a place-based approach, emphasising local economic diversification, reskilling and social dialogue. It recommended establishing dedicated transition funds by central and state governments, backed by international climate finance; prioritising regional planning covering affected districts, not just national averages, with clear roadmaps for economic diversification; and strengthening social dialogue by engaging with trade unions, women’s groups and local governments to avoid top-down plans that ignore ground realities.
“Investors can play a catalytic role, but they need credible government signals and frameworks,” said AIGCC’s Just Transition programme manager, Emily Chew.
Furthermore, the report noted that India has pledged Net Zero by 2070, but the real test lies in how it navigates the next decade, when fossil fuels will still dominate energy supply. A disorderly transition could deter foreign capital, while a socially inclusive approach could attract green investment at scale.
“India has the chance to define what a just transition looks like for emerging economies,” said Mikula-Wright. “If successful, it could set a precedent for the rest of the Global South.”