India Wants Rich Countries To Pay More For The Green Energy Transition

According to a senior government official, India can not prioritize eliminating greenhouse gas emissions without adequate funding from wealthy countries to help offset the high costs of transitioning to clean energy. Setting his position ahead of major global climate talks later this year, the top bureaucrat in India’s environment ministry also said the country is not planning to strengthen its emissions targets unless more money is promised from developed economies under a United Nation-sponsored climate change agreement.

“Every policy decision has a cost to the economy. There is also a cost to going net-zero or using less carbon,” Environment Secretary Rameshwar Prasad Gupta said in an interview at his New Delhi office. “We are not anti-net-zero. But without adequate climate finance certainly being available, we can not commit to that part.” India’s stand, the world’s third-largest emitter, highlights a top challenge that global leaders will face at the UN climate change summit, which begins in Glasgow in late October. While cutting net global carbon emissions by 2050 is critical to meeting the goals of the Paris Agreement, which aim to avoid the catastrophic damage caused by climate change, figuring out how to pay for the transition to clean energy is key.

Gupta also said that $100 billion promised annually by rich countries to help developing countries – a target they have yet to meet – is insufficient to make a difference. “We have our own developmental imperatives,” Gupta said. “If you want me to not emit carbon, provide finance. This would be more than $100 billion per year for developing countries.”

Also, until talks about funding support are finalized, India will likely not upgrade the emissions targets it made in 2015, known as the nationally determined contribution, which is the Paris Agreement. The amendment is expected as soon as possible. “It’s not a final decision, but we probably won’t be filing a revised NDC,” he said. “Let decisions on climate finance be first.” While Prime Minister Narendra Modi’s government discussed setting a 2050 net-zero emissions target earlier this year, policymakers have opposed it. Citing the role of fossil fuels in lifting their growing population out of poverty and before that, progress has been made on climate commitments.

But India runs the risk of looking like an outlier in other developing economies. Still demanding more money from wealthy states, more than 100 countries, including large emerging economies such as Mexico, as well as neighboring Pakistan and Bangladesh, have publicly committed to zero carbon by mid-century. Even China, formerly one of the strongest voices calling for more developed countries to do more, has changed its tune, aiming to decarbonize the world’s top polluter by 2060.

Meanwhile, Brazil has also made its commitment to rich countries, saying net-zero is possible only if it can guarantee $10 billion annually in contributions from other countries. As India recovers from the economic contraction induced by the pandemic, it sees international finance as key to the overhaul of the industry that is needed to reduce emissions. This involves the removal of coal, a dirty but cheap source of energy, which is currently being used to generate about 70% of electricity. Solutions include replacing coal in heavy industries such as steel and oil refining with more expensive and untested alternatives, such as green hydrogen.

Economic Impact :

According to an analysis by Vaibhav Chaturvedi, (fellow at Energy, Environment and Water Council, New Delhi), the green transition presents opportunities for infrastructure-driven economic growth, but will trade-off in the form of higher electricity prices and rail fares, job losses in the coal sector and financial challenges for states. However, there are also long-term costs to inaction. India’s loss to GDP per capita by 2050 under a global warming scenario could be as low as 0.41%, if the Paris Agreement is met, up to 5.08% in the case of high warming, the International Monetary Fund estimates in 2019.

The global climate talks in Scotland later this year, known as COP26, are seen as the last opportunity to set a plan to limit global warming to 1.5°C. The British government is hoping that the summit will lead to an agreement by all countries to give up coal power, with the G-7 leading the way. While India can not set new targets ahead of the meeting, Gupta said it is on track to exceed the 2030 targets set in 2015, increasing the country’s share of non-fossil fuel power generation capacity to 40%. He said it aims to reduce the intensity of its emissions by a third from 2005 levels by 2023, seven years ahead of schedule.