With India having assumed Presidency of G20 this month, there is intense speculation on the priorities and thrust areas that G20 may pursue under India’s captaincy. The most recent statement of G20 Leaders issued in Bali in November this year highlights a few key issues that the G20 is expected to focus on.
The Declaration talks, amongst others, about the challenges of food security, stability of global supply chains, climate change and just transition, trade and investment cooperation, digital transformation, fiscal sustainability, and stability of international financial system.
The growing climate change crisis requires that major economies of the world intensify their shift to cleaner and renewable energy. It is moot how India shapes G20 response in this matter while protecting the needs of energy security and energy acess.
The Bali Declaration (2022) mentions that G20 members will use all options for generating clean power including renewable energy while accelerating efforts for coal phase down. This is a language that is more or less similar to the one used in decisions taken last year by the CoP26 at Galsgow. However, meaningful progress along this path depends on several factors.
First is the nature of energy policies that the G20 needs to pursue for advancing cleaner energy options. Global autonomous investment in renewable energy in the past 5 years have been consistently higher than in the conventional energy sector. However, this needs to be further scaled up if the global goal is to be met. India has announced a goal of creating 50% of energy capacity in terms of renewables by 2030. It is the leader of the International Solar Alliance whose objective is to scaled up if the global goal is to be met. India has announced a goal of creating 50% of energy capacity in terms of renewables by 2030. It is the leader of the International Solar Alliance whose objective is to scale up deployment of solar energy across continents. G20 will do well to come up with specific renewable energy goals in terms of capacity or generation to be able to support this initiative.
Next is the matter of promoting global cooperation in development and deployment of alternative fuels. Investment in development of biofules, green hydrogen and newer technologies for energy storage is critical to decarbonise emission intensive sectors such as steel, cement, and transport. Industry transition leadership group set up at the Climate Summit convened by the UNSG in 2019 has unfortunately not made much progress. India as leader of G20 should promote global alliances that can fast-track development of alternative clean fuels, create global demand for such technologies and help set up demonstration plants in the hard to abate sectors.
Equally important is the issue of raising capital to finance the clean energy investments. International donors and multilateral financial institutions have begun to look at future energy related investments from the lense of phasedown or phaseout of coal. Just Energy Transition Partnership (JETP) announed by G7 countries under the leadership of Germany is based on this premise. There is anticipation that India will be the next partner of the JETP after South Africa, Egypt and Indonesia that have already becomes partners.
As G20 President, India will have the challenge to ensure that the expansion of JETP does not hinge on a plan whose sole aim is to facilitate withdrawal of coal related invetments. A plan of transition based on this strategy would be harmful for India’s energy security and stability of the power sector in the short term. In the long term, this has to happen. But, India’s long-term low emission development strategy recently announced at Sharm El Sheikh does not predict any time frame for peaking of emissions either from coal or economy in general.
‘Bali declaration of G20 accepts that energy transition should take place in a manner that is just, and in line with the national circumstances. Hence, JETP should fulfil aspirations of renewable energy capacity within the franmework of Nationally Determined Contributions (NDCs). To ensure that the process is jut, it should look at plans of economic diversification at regional level and help restore incomes and revenues to the states that will be losers in the event of energy transition.
The terms on which the bilateral assistance and international capital is going to be mobilised for supporting energy transition is another area of attention. From discussions held at CoP27 in Egypt, it is clear that the developed world is in no mood to provide public grants or concessional funds to meet climate goals. JETP should fill this gap and provide risk free finance in a manner different from the multilateral financial institutions. G20 is well positioned to create a global risk The terms on which the bilateral assistance and international capital is going to be mobilised for supporting energy transition is another area of attention. From discussions held at CoP27 in Egypt, it is clear that the developed world is in no mood to provide public grants or concessional funds to meet climate goals. JETP should fill this gap and provide risk free finance in a manner different from the multilateral financial institutions. G20 is well positioned to create a global risk mitigation fund for international equity capital that can address risk of investment in
developing countries.
Two other areas that the G20 can explore for global cooperation is the blue economy and nature-based solutions. For the first time, the importance of oceans as an important instrument of climate stabilisation was highlighted at Sharm El Sheikh. Cooperation in this area can have huge economic benefits for economies of several countries having large coast lines. Nature based solutions are being projected as promising area for carbon market finance. India should welcome it if it promotes agroforestry, , expansion of tree cover outside forests, and carbon-plus benefits in term of protection of biodiversity and ecosystem. These benfits can be quantified and rewarded through a global fund under G20 leadership.
G20 leadership is an opportunity for India to shape the energy transition dialogue on its own terms. Prime Minister’s personal commitment to the principle of Lifestyle for Environment (LiFE) may be a good basis for India to convince the rest of G20 about the legitimacy of transition that is just for both, present and future generations.
Source: PTI
