Opinion: Is India’s contingency on international climate finance reasonable?

Ziyue Zhu, MPP

As one of the fast-growing and largest developing countries, India has a  responsibility to tackle climate change. It is also one of the key players in the  international commitment to confront climate change. Early this year, Prime Minister Narendra Modi underscored India’s commitment  to scale up renewable energy development. Modi stressed the country’s ambition to  increase its renewable energy capacity from the current installation of 35 Gigawatts (GW) to 175 GW by 2022, including 60 GW from wind and 100 GW from solar energy. In India’s Intended Nationally Determined Contributions (INDC) — climate actions that a country intends to take after 2020 — India also has pledged (contingent on international funding) by 2030 to:

  • Reduce its emissions intensity per unit GDP by 33% to 35% below 2005 levels;
  • Achieve about 40% cumulative electric power installed capacity from non-fossil fuel based energy resources;
  • Create an additional carbon sink of 2.5 to 3 billion tons of CO2 equivalent through additional forest and tree cover; and
  • Focus on climate adaptation actions, especially in poor communities.

While these commitments are promising, India requires considerable international financial support to achieve these targets. In the INDC, the Indian government has emphasized the importance of international finance to support climate mitigation and adaptation actions, including renewable energy development and climate-resilient infrastructure construction. India has long stressed the need for funding from the Green Climate Fund (GCF), where developed countries have pledged to raise $100 billion annually by 2020, for accomplishing climate action goals.

India will need $2.5 trillion (at 2014-15 prices) to meet the country’s climate goals. Specifically, India will need around $206 billion to implement adaptation actions in agriculture, forestry, fisheries, infrastructure, water resources, and ecosystems. Mitigation activities for moderate low carbon and sustainable development will cost around $880 billion. 

These numbers are both enormous and overwhelming, so much so that we should question their validity and accountability. By comparing India’s climate targets and financial needs with other large emerging economies- including China, Brazil, and Mexico- it becomes apparent that India’s contingency on international climate finance is not reasonable.

China

As the world’s biggest CO2 emitter, China is under significant pressure both domestically and internationally to curb its carbon emissions and move toward a low-carbon and sustainable energy and economy. Since last year, China has taken  unprecedented steps in  committing to climate policies and has become one of the world’s leaders in the global climate arena. In China’s INDC, it has pledged, by 2030 to:

  • Peak its total CO2 emissions (halt the CO2 emission growth), or earlier if possible
  • Increase the share of non-fossil energy sources in the total primary energy supply to around 20 %
  • Lower the carbon intensity of its GDP by 60% to 65% below 2005 levels
  • Increase the forest stock volume by around 4.5 billion cubic meters, compared to 2005 levels.

In September 2015, President Xi Jinping confirmed that China would launch a national cap-and-trade program in 2017, and a “green-dispatch” system to prioritize power generation from renewable and more efficient sources.

Rather than seeking international climate financial aid, China has pledged to provide $3.1 billion to South-South Cooperation, a broad framework for collaboration among developing countries, in assisting other developing countries to combat climate change. China’s overall progress on green development and pre-emptive engagement in climate partnership is political game-changer, which has injected momentum to the historical success in the 2015 Paris Climate Conference (COP21).

Brazil

According to Brazil’s INDC, the country  has committed to reducing greenhouse gas (GHG) emissions by 37% below 2005 levels by 2025, with the aim of further reducing GHG emissions by 43% below 2005 levels by 2030. In line with limiting  global temperature rise to 2 degrees Celsius above pre-industrial levels, Brazil intends by 2030 to:

  • Increase the share of sustainable biofuels in its energy mix from 5.6%   in 2014 to around 18%
  • Achieve zero illegal deforestation and to reforest 12 million hectares   
  • Achieve 45% of renewable energy in the energy mix
  • Restore an additional 15 million hectares of degraded pasturelands and 5 million hectares of cropland-livestock-forestry systems.

While Brazil emphasizes the importance of historical responsibilities of developed countries and climate fairness, Brazil points out that the implementation of its INDC is not contingent on international finance. Brazil is assessing different carbon pricing instruments in order to tentatively build a national policy framework for carbon tax or a cap-and-trade system in 2017. Moreover, Brazil is willing to foster strong collaboration around the South-South Cooperation and support other developing countries in tackling climate change.

Mexico

Mexico has put forward two types of emission reduction targets in its INDC:  unconditional and conditional.

  • Unconditional: Mexico commits to reduce 25% of its GHG and Short Lived Climate Pollutants (SLCPs) emissions below Business As Usual (BAU) level for the year 2030.
    • This commitment implies a reduction of 22% of GHG and a reduction of 51% of Black Carbon, a component of particulate matter from incomplete fossil fuel combustion.
  • Conditional: Mexico commits to reduce up to 36% of GHG and 70% of Black Carbon below BAU by 2030.
  • Mexico will also strengthen its adaptation capacity building and reach a rate of zero deforestation by 2030.  

In order to comply with its climate targets, Mexico introduced a carbon tax on fossil fuels and a cap-and-trade system in the energy sector in 2014. Additionally, the Mexican government has been actively working with the World Bank and other countries and international organizations to catalyze the implementation of Mexico’s carbon pricing policies and reshape the country’s policy framework to a green future.

Table 1. The responsibilities and finance needs of emerging economies in climate change (2014)  (Source: The World Bank and European Commission Joint Research Center)
Country
GDP (Current USD, trillion USD)
GDP per capita (Current USD)
CO2 Emission (million tons)
CO2 Emission per capita (ton)
Contingency on international financial support (0-5, 0: not at all; 5: strong)
India
2.07
1,595.7
2,341
1.8
5
China
10.36
7,593.9
10,540
7.6
0
Brazil
2.35
11,384.6
501
2.5
0
Mexico
1.28
10,230.2
456
3.7
3

Analysis and Conclusion

From the perspective of emissions, India and China should take more responsibilities to address climate issues, due to their extensive current CO2 emissions. Additionally, from an economic point of view, China and Brazil should be more capable of achieving their domestic targets by themselves. However, we also recognize that regarding to India’s low GDP per capita, the pressure of poverty makes it more difficult to  address climate change.

Rather than being contingent on financial flows from the developed world, China and Brazil are willing to help other developing nations via financial and technical assistance. Meanwhile, the conditional and unconditional targets proposed by Mexico clearly indicate both its capabilities and needs to the international community. Furthermore, the move toward an explicit carbon pricing policy in all the other three countries showcases their determination to ramp up domestic climate funding and suggests higher accountability for  their climate commitments.

India’s climate finance roadmap remains an arduous challenge, and only through its own efforts can India address climate change threats and achieve sustainable development. India’s leadership and ambition in renewable energy have played an important role in global climate negotiations – therefore it is reasonable to  believe that India has its own capacity to cope with the constraints in climate finance through mobilizing domestic finance. This requires tremendous political courage, innovative policies, and constructive institutional reforms from India itself, even with the support from the international community. Moving from fossil fuels to renewables regime is inevitable,  and an explicit carbon pricing approach will surely facilitate this transition.

The Paris Climate Conference (COP21) is not the end of the journey, but the beginning of accomplishing the climate blueprint. The new narrative of combating climate change has begun, and India should be one of the front runners in this historical era.

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