Is it possible for India to make a significant contribution towards mitigating climate change without undermining its growth and poverty-reduction imperatives?
Indian policymakers view calls for reducing India’s greenhouse gas emissions as both illegitimate and a threat. They are illegitimate because rich countries are primarily responsible for the historic stock of emissions. The calls are a threat because curbing emissions could undermine growth, necessary to lift millions out of poverty.
But the fact remains that despite historically low per capita emissions, India will increasingly become a major source of emissions. Developing countries (led by China and India) will account for three quarters of the projected increase in emissions up to 2050. Unless developing countries’ emissions are also stabilized by 2020-25, any meaningful action by rich countries would be negated.
The transfer of cleaner coal technologies to India holds one of the keys to reconciling these competing concerns.
Continue reading my latest article, on the transfer of cleaner coal power technologies to India, which has been published in Indian business newspaper, Mint.
Showing posts with label technology transfer. Show all posts
Showing posts with label technology transfer. Show all posts
Monday, 27 April 2009
Tuesday, 31 March 2009
Bonn climate meetings 2 - Climate financing and four-letter words
I spent much of today attending plenary sessions and 'side-events' on financing and technology transfer. It is easy to get lost in the rhetoric that envelopes the debates. I have seen this happen so many times in trade negotiations, and am witnessing the same in climate talks. But the essential issue is this:
1. The climate change problem is real to which there could be two responses: either countries can try to mitigate the problem by reducing greenhouse gas emissions (the world needs at least a 50% cut in emissions by 2050 to restrict average temperature increases to 2 degrees Celsius); or countries can adapt to an already changing climate, which means changing agricultural practices, building flood defences, preparing for sharp changes in water availability, etc. In practice, both mitigation and adaptation are necessary and sometimes the activities cannot be easily distinguished.
2. In order to do so, all countries need money and access to new technologies. Developing countries argue that since they played no part in creating this problem, they should receive funding from developed countries. The UN Framework Convention on Climate Change recognises this obligation of developed countries, in principle.
The consensus ends there and the debates begin.
1. The first issue is the amount of funding required for techology research, development, deployment and diffusion (or RD3 in the jargon). Estimates vary wildly. For mitigation, the spending is anywhere between $70 billion and $165 billion a year; and additional funding of $262 billion to $670 billion is needed. Adaptation spending is about $1 billion a year when some estimates suggest $86 billion are needed. Thanks to such a wide range, one NGO representative told me that developing countries are hesitating to put any specific estimate in their proposals. Fair enough, but then how do you get a concrete commitment and, more importantly, by what standard would you measure compliance? Compliance has been one of the biggest problems with the climate regime so far, and there has been little progress so far to overcome it on the question of climate financing.
2. Where will the money come from? There is a major debate about private versus public financing. Developed countries argue that since much of the technology spending comes from private sources, that would also be the source of funding for developing countries. Developing countries are calling the bluff. They argue that private investment can flow into developing countries only when profits are expected, not when the higher capital, operational and intellectual property costs make a project commercially unviable. Hence, public funding has to cover the difference in costs. As the Indian delegate put it, "If the initial upfront capital investment and lifetime expenses [of a clean technology project] are positive, then developed countries must recompense developing ones. I'd love to see which are the commercial institutions that will invest in projects that have no return!"
3. Under what conditions will the funding be given? There is a fear that, even if commitments for funding mitigation and adaptation activities were secured, developing countries would be treated as aid recipients, subject to conditionalities imposed by rich donors. Developed countries are, of course, interested in ensuring that the money is spent in a verifiable manner. But poor countries argue that the process cannot be top-down, there has to be a sense of "ownership", as the Filipino delegate noted.
In the end, the debate boils down to the purpose of climate funding. Developing countries, like Uganda, insist that "funding climate change is a commitment, not a donation." For them it is a right, both from a legal point of view and from an ethical one. But the modalities of financial and technology transfer will not be resolved easily. The Indian delegate ended his intervention by asking for grants, not loans: "A 'grant' is a four-letter word in some dictionaries, so I will introduce a new phraseology: we want interest-free, non-repayable transfer of money." The current climate negotiations are meant to conclude in December this year. There will be many more four-letter words whispered under diplomatic breaths before then.
1. The climate change problem is real to which there could be two responses: either countries can try to mitigate the problem by reducing greenhouse gas emissions (the world needs at least a 50% cut in emissions by 2050 to restrict average temperature increases to 2 degrees Celsius); or countries can adapt to an already changing climate, which means changing agricultural practices, building flood defences, preparing for sharp changes in water availability, etc. In practice, both mitigation and adaptation are necessary and sometimes the activities cannot be easily distinguished.
2. In order to do so, all countries need money and access to new technologies. Developing countries argue that since they played no part in creating this problem, they should receive funding from developed countries. The UN Framework Convention on Climate Change recognises this obligation of developed countries, in principle.
The consensus ends there and the debates begin.
1. The first issue is the amount of funding required for techology research, development, deployment and diffusion (or RD3 in the jargon). Estimates vary wildly. For mitigation, the spending is anywhere between $70 billion and $165 billion a year; and additional funding of $262 billion to $670 billion is needed. Adaptation spending is about $1 billion a year when some estimates suggest $86 billion are needed. Thanks to such a wide range, one NGO representative told me that developing countries are hesitating to put any specific estimate in their proposals. Fair enough, but then how do you get a concrete commitment and, more importantly, by what standard would you measure compliance? Compliance has been one of the biggest problems with the climate regime so far, and there has been little progress so far to overcome it on the question of climate financing.
2. Where will the money come from? There is a major debate about private versus public financing. Developed countries argue that since much of the technology spending comes from private sources, that would also be the source of funding for developing countries. Developing countries are calling the bluff. They argue that private investment can flow into developing countries only when profits are expected, not when the higher capital, operational and intellectual property costs make a project commercially unviable. Hence, public funding has to cover the difference in costs. As the Indian delegate put it, "If the initial upfront capital investment and lifetime expenses [of a clean technology project] are positive, then developed countries must recompense developing ones. I'd love to see which are the commercial institutions that will invest in projects that have no return!"
3. Under what conditions will the funding be given? There is a fear that, even if commitments for funding mitigation and adaptation activities were secured, developing countries would be treated as aid recipients, subject to conditionalities imposed by rich donors. Developed countries are, of course, interested in ensuring that the money is spent in a verifiable manner. But poor countries argue that the process cannot be top-down, there has to be a sense of "ownership", as the Filipino delegate noted.
In the end, the debate boils down to the purpose of climate funding. Developing countries, like Uganda, insist that "funding climate change is a commitment, not a donation." For them it is a right, both from a legal point of view and from an ethical one. But the modalities of financial and technology transfer will not be resolved easily. The Indian delegate ended his intervention by asking for grants, not loans: "A 'grant' is a four-letter word in some dictionaries, so I will introduce a new phraseology: we want interest-free, non-repayable transfer of money." The current climate negotiations are meant to conclude in December this year. There will be many more four-letter words whispered under diplomatic breaths before then.
Monday, 26 January 2009
First signs from Obama on climate change
The Obama administration has signaled intent on climate-related issues within its first week. The New York Times reported this morning that the new President favours allowing states to set their own automobile emission and fuel efficiency standards, which are sometimes higher than federal standards. California and thirteen other states in the United States wish to regulate tailpipe emissions, but their request had been rejected by President Bush. Obama's memorandum to the Environmental Protection Agency to review Bush's order opens up the possibility that more states will take the lead. Obama has also ordered the Department of Transportation to issue new nationwide fuel efficiency standards, raising them from the current 27 miles per gallon to 35 miles per gallon by 2020.
Another idea is that of a 'smart grid', which would use information technology to manage the flow of power through the electricity grid. The objective is to reduce the irregularities associated with renewable energy sources like wind and solar, thereby actually increasing the potential for their use and also cutting transmission losses. Further, 'smart meters' would monitor energy consumption and are expected to reduce household use by 10-15%. The project has the support of Obama's new energy secretary, Nobel laureate Steven Chu.
But Obama is also insisting on action by India and China. While saying that 'America is ready to lead' he also warned that 'we will ensure that nations like China and India are doing their part.'
India has its own complaints, particularly the unwillingness of rich countries to commit more money to help developing countries adapt to the adverse impacts of climate change. As India's negotiator, Prodipto Ghosh, put it, 'Obama's announcement of US$15 billion a year - for ten years - is significant but is probably far from enough.'
Here lies the real tension. For rich countries, climate change action means the reduction of emissions globally. For poor countries, the responsibility of causing global warming lies with rich countries who should also bear the burden of financial transfers, technology transfers and accelerated action on adapation. As I've written before, these tensions raise many governance questions. Despite Obama's initial signals, 2009 is not going to be an easy road for climate negotiations.
Another idea is that of a 'smart grid', which would use information technology to manage the flow of power through the electricity grid. The objective is to reduce the irregularities associated with renewable energy sources like wind and solar, thereby actually increasing the potential for their use and also cutting transmission losses. Further, 'smart meters' would monitor energy consumption and are expected to reduce household use by 10-15%. The project has the support of Obama's new energy secretary, Nobel laureate Steven Chu.
But Obama is also insisting on action by India and China. While saying that 'America is ready to lead' he also warned that 'we will ensure that nations like China and India are doing their part.'
India has its own complaints, particularly the unwillingness of rich countries to commit more money to help developing countries adapt to the adverse impacts of climate change. As India's negotiator, Prodipto Ghosh, put it, 'Obama's announcement of US$15 billion a year - for ten years - is significant but is probably far from enough.'
Here lies the real tension. For rich countries, climate change action means the reduction of emissions globally. For poor countries, the responsibility of causing global warming lies with rich countries who should also bear the burden of financial transfers, technology transfers and accelerated action on adapation. As I've written before, these tensions raise many governance questions. Despite Obama's initial signals, 2009 is not going to be an easy road for climate negotiations.
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