Finance Threats Sustainable Growth
To support government’s recent Intended Nationally Determined Contributions (INDCs) to curb India’s greenhouse gas emissions by 35 pc, Indian industries are also introducing certain measures. However, effective implementation would require frameworks for market-based approaches, coupled with appropriate financing mechanisms among other things, says Dr Jyotsna Suri.
FICCI (Federation of Indian Chambers of Commerce and Industry), representing the views of Indian business and industry, strongly urges for a climate agreement at Paris COP21 conference on climate change. What are your priorities in terms of agenda?
FICCI believes that it is essential for COP21 to send a clear signal to the private sector about the future direction of global climate policy that protects market competitiveness, promotes sustainable investment, and up-scales the deployment of existing and emerging low carbon technologies. The 2015 framework must be stable, simple and transparent to enable the massive investments and climate actions that by and large will be provided by businesses. In this backdrop, FICCI expects COP21 to deliver on five key things: (i) mechanisms for making leapfrog technologies accessible and affordable; (ii) innovative financing tools that will bridge financing gaps, mitigate risks and enable scale up; (iii) market based approach to emissions reductions; (iv) a framework for partnerships between countries on technology, research and development, its subsequent transfer, and cost-effective deployment; and (v) the means to enable transformational shifts to low carbon trajectories such as a massive transition to clean energy, clean coal and cleaner fuels.
How would you put forward the need for India to develop and at the same time take its right share of the effort, considering that developed nations have polluted much more and still do it per capita, compared to India?
India is committed to follow the low carbon path in line with our broader development agenda. This is demonstrated in the recently announced ‘Intended Nationally Determined Contributions’ (INDCs), where it has pledged to curb its greenhouse gas emissions by up to 35 pc from the 2005 level. The INDCs also talk of sourcing 40 pc cumulative electric power installed capacity from non-fossil fuel based energy resources. These showcase our country’s commitment towards climate change mitigation.
Besides government, Indian industry too is contributing to this effort through various measures. This trend was underlined in FICCI’s recent report titled ‘Industry Perspectives on INDCs and Corporate Initiatives on Climate Change Mitigation and Adaptation in India’ that assessed a range of initiatives implemented by companies across sectors such as power, oil and gas, iron and steel, chemicals, etc. Scaling up these initiatives, however, would require a framework for market-based approaches, coupled with appropriate financing mechanisms and clearcut signals for catalysing long-term private sector investments, as well as mechanisms to foster collaborative R&D in technology and partnerships among countries.
How can FICCI push for a mechanism to make leapfrog technologies accessible and affordable for developing countries. What do you expect in particular from European countries and companies in terms of collaborations and partnerships?
Although, we have recently witnessed several interesting policy measures and interventions for scaling up renewables in the country, we also recognise the potential of clean coal technologies (CCTs) in de-carbonising the economy which is still heavily reliant on coal as its primary energy source and will continue to do so in the near future. India looks forward to leveraging innovative financing and technology transfer frameworks for CCTs which might come up during the COP21 later this year.
India can also learn from the European experience with various CCTs such as deployment of modern emission control systems. However, what India needs is not merely the transfer of CCT equipment, but for European countries to transfer the technical ability to manufacture such equipment locally.
What would be the right mechanism to create innovative financing tools that will bridge financing gaps, mitigate risks and enable scale up? What do you expect from COP21?
Financing will pose one of the biggest challenges in India’s quest for sustainable growth. COP21 could therefore be an ideal platform where the international community can brainstorm on ways to shape institutional frameworks for this type of financing. The Private Sector Facility of the Green Climate Fund (GCF) could play a significant role in bridging the financing gaps and provide scalability to clean energy, energy efficiency, water and sanitation, which are our key national priorities.
FICCI and the United Nations Environment Programme (UNEP) Inquiry will soon be releasing a report outlining various interventions required to scale up sustainability financing in the country. We believe that opening up of capital markets and green bonds could be viable opportunities to step up funding. Further, it is also important to develop capacities of financial institutions for assessing lending needs and environmental parameters of projects.
What is the right architecture for a market based approach to emissions reductions, from the FICCI perspective? What specific financing tools can be used in India?
FICCI firmly believes in marketbased mechanisms after the success of the Clean Development Mechanism (CDM) in catalysing awareness and actions on various climate-related activities, particularly in renewable energy. We expect COP21 to deliver market-led approaches that can scale up industry action in climate change mitigation. Voluntary emissions trading schemes could be one such potential approach that can help create a domestic market for corporates to achieve their climaterelated targets.
What are the resources and the innovative business models developed by Indian entrepreneurs represented by FICCI to enable transformational shifts to low carbon trajectories such as a massive transition to cleaner energy? Could you give us some examples of innovative companies and entrepreneurs members of FICCI?
Several members of FICCI have demonstrated innovative models to provide clean energy. Off-grid energy enterprises, in particular, are providing energy access to BoP (the base of the economic pyramid) population in rural and remote India, using a mix of interesting solutions such as home lighting systems and micro and mini grids.
One of the innovative and successful pricing models implemented by the micro/mini grid players is the pay-as-you-go or mobile payment model which allows consumers to use SIM cards or their cellphones to buy credits for the amount of electricity they want to consume. Another interesting business model involves mini grid operators serving commercial clients (telecom towers, petrol pumps) acting as anchor loads, alongside rural households.