US climate change bill is not good news for India

Focus on domestic policies, little for US global commitments


August 16, 2022

/ By / New Delhi

US climate change bill is not good news for India

Climate change has resulted in wildfires becoming more prevalent across the world (Photo: Unsplash)

A much-hyped bill, the Inflation Reduction Act, that passed the United States Senate on Sunday with great difficulty, has been praised widely in the US as a game changer on the issue of global warming and climate change. But India and other developing nations need to take it with a generous pinch of salt. The bill may have allocated a lot of money for make US economy a tad greener, but it misses out on almost every single international commitment.

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On Friday, sticking to the party line, the United States House of Representatives handed President Joe Biden a major victory by passing 220-207 a bill that would see unprecedented expense on climate change, while boosting healthcare and raising corporate taxes to finance part of the USD 750 billion expenditure that the bill entails.

The House passed the bill a few days after the United States Senate Democrats managed to push through, a highly controversial bill that is seen as a dramatic win for President Joe Biden’s effort to fight climate change, after he struggled for over 18 months to get the bill passed.

The so-called Inflation Reduction Act is actually a hodge podge of various policy measures that aim to dedicate USD 750 billion on climate change, green energy, healthcare, financed by a generous dose of higher corporate taxes.

The IRA had appeared to be dead as recently as July but with a number of concessions made to various Democrat Senators, the bill was revived and finally passed strictly on party lines with 50 votes each, forcing Vice President Kamala Harris to use her casting vote as a tie breaker to push through the bill.

The bill has received a fair bit of welcome from the environmental groups, but even more so from the US businesses that stand to gain from the focus on green energy, while it has been ravaged by most of the businesses, especially those benefiting from the fossil fuel economy.

The IRA has come as a major boost for Biden and would also help in rehabilitation of the US in the global climate change negotiations from where the country exited summarily in 2018 when Biden’s predecessor Donald Trump decided to pull out of the Paris Agreement that had been signed by Barack Obama in 2015.

Though Biden did reverse Trump’s decision and bring the US back on the negotiating table, the next step of moving towards measures to cut emissions has taken Biden well over 18 months. The cuts are important since the US is not only the second largest polluter, with 5.2 gigatonnes in 2019, just behind China and much ahead of any large country in terms of per capita emisssions that in 2019 were

15.6 tonnes per capita per year. In comparison, large economies like India (1.87 tonnes) or China (7.38 tonnes). Historically, too, the US is responsible for bulk of carbon emissions, accounting for 21 pc of all carbon ever emitted by human action.

Hence, it was time that the US began some meaningful action to cut its emissions and here Biden’s IRA is little more than a good start. Certainly, it commits over USD 369 billion to climate and energy provisions and it seeks to change how the country’s energy is produced and is expected to put the US on the path to its stated goal of cutting its carbon emissions 40 pc below the 2005 levels by 2030. Though clearly far from being enough to save the world, most environmentalists would welcome the idea of the US taking climate change seriously, at least. The bill also should spell an end to the decision of Biden Administration to boost oil and gas output to combat sky-high energy prices.

But while the bill is certainly expected to nudge the US towards tackling climate change in some serious manner, the country needs to do far more to come anywhere close to its commitments, both binding and moral, in cutting carbon emissions and leading the battle against climate change and global warming.

First, the US would need to not only ensure that it meets the commitment of 40 pc in emissions from 2005 levels, or not even the 50 pc as agreed under the Paris Agreement, but as climate scientists have been pointing out the battle to prevent rise in global temperatures to below 1.5°C from pre-industrial era, is almost certainly lost and the world needs to do much more effort than meeting current commitments to even keep the rise below 2.5°C.


Climate finance nowhere on horizon

As of now, no major economy is anywhere on the path to even meet its commitments, let alone do anything more. Here, the US is definitely among the laggards rather than the leaders. But the US IRA fails on another key measure, that is of immense significance to the billions of people living in poor countries around the world facing the worst impact of climate change – through desertification, rising sea levels, flash floods and prolonged droughts.

One of the key commitments of the US and other developed economies has been to provide adequate financial assistance to help these countries mitigate the impact of climate change and also cut their own emissions by getting access to the latest technologies, most of which is with the developed countries. The rich world has consistently failed to honour its commitments for financial aid that is supposed to have been at least USD 100 billion each year for well over a decade.

As per reports from Oxfam and OECD as well as  Independent Expert group,  even after counting all the sources of climate finance, annual support to developing countries fluctuates widely from year to year and on average is around USD 20 billion per year till 2020 which is far from USD 100 billion.

If only ‘new and additional’ funding by Green Climate Fund ( GCF) which started  its operation in 2011 is considered, total cumulative new and additional funding committed by the developed countries till now is only USD 10 billion and actual project allotment even lower, meaning USD 1 billion per year from 2011. Cumulative funds for climate projects under Global Environment Fund which is established in 2010 is meagre USD 7 Billion along with about USD 60 billion in co-financing from other governments or private sector, making annual figure of around just about USD 4 billion. Total of GCF and GEF-Climate as new and additional funding thus comes to about USD 5 billion per year against USD 10 billion in 2010 rising to USD 100 billion per year in 2020.

Last year, when Biden hosted a Climate Summit, he pledged a paltry USD 5.7 billion annually to help the developing countries deal with climate change. But that falls way short of not only US’ own commitments and since the other developed economies use the US assistance as a benchmark and contribute a fraction of that, if at all, then the developed world will continue to break its promises, with deadly consequences for not just the poor countries but the entire globe.

And even in these minuscule payments, the West has resorted to ‘smart’ financial fudging or cheating in simpler terms. Instead of giving this money as outright grants or at best soft government-to-government loans and only for climate-related projects, the West has started counting any kind of loan or investment by a western company made out to the poor world as part of climate finance.

This kind of fudging needs to end, but that would need an unprecedented amount of sincerity from politicians, which is perhaps extinct in today’s world.

It is here that India needs to constantly not only remind the US and other rich world nations about their commitments, but also keep a close tab on the movement, or as is far more likely, the total absence of any movement of the rich countries towards paying up the hundreds of billions of dollars that they have promised for well over a decade.



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