India among the largest recipients of climate change assistance, but few key questions remain unanswered

Climate change negotiations are often fraught with tension. Developing countries want the developed world to pay for their carbon emission-fuelled industrial growth, while the US and Europe want emerging economies like India to commit to sustainable growth. Central to this debate is how the developed countries should “pay” and one way is for them to provide funds to middle-income and low-income nations to mitigate and adapt to climate change. That, in a nutshell, is climate finance. This may sound simple, but the reality is anything but. Despite the concept of climate finance being as old as the United Nations Framework Convention on Climate Change (UNFCCC) itself, which turned 25 this June, experts are still grappling with what can be categorised under climate finance. “Developing countries have been pushing for climate finance to be defined, but developed countries have refused to be drawn into that debate,” says Indrajit Bose, a senior climate change research officer at Third World Network, a non-governmental organisation (NGO). The ambiguity over its definition and the absence of compulsory reporting and rigorous accounting of funding have given critics of climate finance ample ammunition.
Global public climate finance could be provided by dedicated climate funds or multilateral development banks (MDBs) like the World Bank or the Asian Development Bank, or bilaterally between countries. Nearly half of these are given as concessional loans and a tenth as grants. Liane Schalatek, associate director, Heinrich Böll Foundation North America, says there is a debate over whether loans which, even if low-cost, come with the obligation of repayment, should be accounted for in the same way as grants.
A Billion Dollar Promise
In 2014, according to a report by Climate Policy Initiative (CPI), climate finance flows totalled $391 billion, of which 38% was public money and the rest investments by the private sector in renewable energy. But of the total public climate finance, three-fourths were raised by countries domestically. While it is not clear how much of the total global finance has India received, of the $15.3 billion approved by climate funds, India has got approvals for over $1 billion, more than any other country, and the biggest projects are not surprisingly in the renewable energy sector. Gireesh Shrimali, India director at CPI, says countries prioritise climate goals differently. “In India, energy access and security is a priority. So much of India’s climate plan is about scaling up renewable energy.”
India’s per capita energy consumption is a third of the global average and nearly a fifth of its population does not have access to electricity. India accounted for well under a tenth of the world’s carbon dioxide emissions in 2014. Two-thirds of India’s installed power capacity is fossil fuel-based, but the Narendra Modi administration is keen on ramping up renewable energy generation. It is targeting a capacity of 175 gigawatt by 2022, which is three times the current capacity. More importantly, the objective is to ensure that more than half of the targeted capacity is solar power, whose share in renewable energy is only 22.5% now. The government is providing subsidies of Rs 150 billion in the first phase under the National Solar Mission. Climate funds like the Global Environment Facility (GEF) Trust Fund, which was the first of its kind; the Adaptation Fund; and the Green Climate Fund (GCF) are under the UNFCCC. Climate Investment Funds (CIF), which includes the Clean Technology Fund (CTF), were set up by MDBs. The GCF is the world’s largest fund, with donor pledges of $10.3 billion and the CTF the second biggest, with $5.6 billion. The CTF has approved over $750 million for renewable energy projects in India. (China, the world’s largest CO2 emitter, has not taken any money from CIF.) Jagjeet Singh Sareen, senior policy officer, CIF, says they usually finance an eighth of the project cost. The GCF has greenlit just one project in India, a groundwater recharge and solar micro irrigation initiative in Odisha. The GCF is financing $34 million of the total $166 million project cost, with the rest being footed by the state government and the World Bank. The GCF and the GEF did not respond to requests for comment nor did Environment Ministry officials. The 2030 Water Resources Group (WRG), a partnership between MDBs, bilateral donors, private companies and NGOs, is helping Maharashtra secure $270 million financing from the GCF as part of a $1 billion project on climate-resilient agriculture, especially in the drought-prone Marathwada and Vidarbha regions. “We prefer projects that leverage private sector investment,” says Bastiaan Mohrmann, 2030 WRG’s co-lead for Asia. Jairam Ramesh, former Union environment minister, while commending India’s focus on renewables, believes dealing with climate change goes beyond that. As part of a landmark climate accord signed in Paris in October 2015, India agreed to reduce the volume of carbon emissions per unit of GDP by a third by 2030 from 2005 levels and said it would need $2.5 trillion for that and other mitigation and adaptation efforts. The Paris Agreement, as it has come to be known, aims to restrict the global temperature rise this century to well below 2 degrees Celsius above pre-industrial levels and to strive to limit the temperature increase even further to 1.5 degrees Celsius.
Developed countries agreed at the Copenhagen climate conference in 2009 to direct $100 billion in “new and additional” funds, both public and private, to developing countries by 2020. The Organisation for Economic Co-operation and Development (OECD) in 2015 issued a report that said climate finance flows increased from $52 billion in 2013 to $62 billion in 2014.
Home Finance
Ramesh says India must invest in adaptation and mitigation on its own and not depend on international climate finance. ¡§If that is forthcoming, well and good, but we should not link domestic actions to availability of finance from abroad. We must make investments on our own, keeping in mind our unique vulnerabilities to climate change. India has had an action plan on climate change since 2008, which includes, besides the National Solar Mission, programmes to promote sustainable agriculture, water conservation and conservation of the Himalayan ecosystem, which had a budget of Rs 550 crore in the last five years, among others. In the last fiscal, the Centre sanctioned Rs 251 crore for state government projects under the National Adaptation Fund (NAF). Mitigation deals with reducing greenhouse gas emissions and is mostly identified with renewable energy and energy efficiency. Adaptation, meanwhile, includes making agriculture climate-resilient and helping coastal communities deal with flooding caused by a rise in sea levels, among other objectives. “Adaptation is a matter of life and death for developing countries,” says Bose. Climate financing till recently had a clear bias toward mitigation: in 2013 and 2014, 70% of climate change aid from climate funds and 82% of MDBs’ funding were directed to mitigation efforts, but that is changing, with more funds being made available for adaptation. While the stress on adaptation is welcome, there is still no consensus on how much money is actually flowing from the developed world to developing countries. The Indian government issued a scathing rebuttal to the OECD report in 2015.
“Climate change finance flows need to be precisely that: measured flows, meaning, disbursed funds crossing borders. Not promises, pledges, or multi-year commitments about promised sums in the future. “It goes on to question redirection of funds meant for development purposes to climate change and the lack of verification of climate funding by MDBs. Developed countries do climate finance accounting the way the like. This raises the temperature in negotiation rooms,” says a senior Indian government official dealing with climate finance, requesting anonymity, and with no pun intended. The other major hurdle to climate finance is US President Donald Trump’s threats to pull out of the Paris Agreement and his refusal to continue US contributions to climate funds; the US has pledged $5.8 billion to climate funds. While it has fulfilled its pledge to the CIF, it is unlikely to pay the remaining $2 billion of its $3 billion commitment to the GCF, according to Schalatek, but it is a matter of waiting out the Trump administration. Sareen believes we need to keep in mind the campaign rhetoric of any election. The US hasn’t withdrawn from the UNFCCC, and its financial obligations relate to the UNFCCC so its overall commitment stays. Climate finance, as outlined in the UNFCCC, is more essential for small, climatically vulnerable countries than India, which is better placed to mobilise domestic resources. But climate funding needs to be more transparent if it is to continue as a credible tool to fight climate change.

Source:EconomicTimes