Why is the government reacting in fits and starts to Paris agreement

India promised that 40 per cent of its installed power capacity would come from non-fossil fuel energy resources by 2030

Three months after India committed to an ambitious set of targets under the global climate change Paris agreement the government is working in fits and starts to put the architecture, policy and regulations in place to achieve what it promised to the global community.

India promised a 30-35 per cent reduction in the carbon intensity of its economy by 2030 from 2005 levels with two sectoral components defined as well.

India promised that 40 per cent of its installed power capacity would come from non-fossil fuel energy resources by 2030 and that the country would build an additional carbon sink of 2.5-3 billion tonnes of CO2 equivalent through additional forest and tree cover by 2030.

The targets, called Intended National Determined Contributions or INDCs, came about as part of a top-down approach by the Union government after three modelling studies it commissioned.

But now it is required to break down these targets to specific sectors, set up regulations and regulators to achieve and monitor the achievement of targets, besides finding the financial resources to do so.

Retrofitting and parallel processing

Speaking at a function organised by TERI on Monday to map out the challenges of implementing the Paris agreement, special secretary in the environment ministry Susheel Kumar said the government was now looking to retrofit the existing national action plans on climate change, build up new ones that were approved before December, as well as see what needed to be done with the state action plans.

The latter were developed much before the Paris agreement in what an official of the Union government admits was to a large extent a donor-driven activity.

It took more than two years to put them together and the pieces of the state plans to achieve reduction in emissions did not add up to provide the national picture even then.

Since then all targets have been revised by the Union government and now the environment ministry is looking at pilot projects on emission reduction and adaptation in states to help build their capacities.

Separately it commissioned experts for an adaptation index to review its work in the area periodically.

The largest emissions in the Indian economy arise from the power sector, transport and buildings.

It is relatively easy to regulate the centralised power sector, but transport and buildings require not just engaging state governments but also municipal bodies -- a move that has had minimal result previously when the Union government tried to push through energy efficiency in building bye-laws.

In the meantime the Niti Aayog has finalised the first draft of a new national energy policy, which would also have to integrate the climate commitments of the country. 

“The draft is in circulation. Roughly, we know the energy map for 2030 because of the exercise done in the government on climate targets.

"What the policy should be telling us is the financial and regulatory policies to be put in place to achieve these goals,” said a senior government official.

But he said he was disappointed with the disengagement of the power ministry in the development of the policy.

In a parallel process, the environment ministry has asked all ministries concerned to say what and how they can contribute to the achievement of the international commitment.

Not many ministries had responded yet, Kumar admitted.

Similarly, states have been asked separately to say how they can revise their plans to fit into the Paris agreement obligations.

The act of setting sector-specific targets is bound to be marred by the failure of the government to launch the Green India mission to afforest lands as a sink to capture carbon emissions.

Additionally, the sector is globally plagued by having unclear benchmarks and methodologies to measure how different kind of forests really operate as carbon sinks.

In India, the mission will eventually face the competing demand of millions of forest-dependent families against large-scale plantation programmes that will be needed to meet the targets.

In comparison, the energy efficiency programme has secured a first-generation of changes that it is to substantially upscale to cover a larger percentage of the fossil economy in the coming years.

The solar and wind mission, which now has been handed down overly-ambitious targets -- 100 GW of solar by 2022 and 60 GW of wind power alongside -- too, is dealing with the challenges.

Speaking at the dialogue organised by TERI on Monday, the new and renewable energy secretary, Upendra Tripathi, noted the initial concerns in the government over the ambitious target that Prime Minister Narendra Modi had suggested.

Now the ministry is tackling the challenge of finding low-cost finance to achieve its targets.

Murmurs are already audible that India may soon be under global pressure to move these targets higher as the time approaches to operationalise the Paris agreement from 2020.

The existing global commitments do not match up to what science requires to keep temperature rise within safe levels.  

Finding the money

Finding finance for the existing targets remains a challenge. India estimated it would cost it $2.5 trillion by 2030 to achieve the targets.

It is yet to assess how this sum breaks down by sectors and map out the domestic and international resources.

The likelihood of global public finance being available has dimmed after the Paris agreement.

Kumar accepted that a large part of this would have to be mopped up domestically.

Tripathi suggested that multilateral funding agencies be asked to block a higher percentage of their portfolio for renewable energy, besides lowering the cost of finance by finding a method to fund the hedging costs of dollar-denominated loans.

But how that will impact India’s insistence that global funds for climate change also be brought to back clean coal projects remains an unanswered question.

Ajay Mathur, who till recently was a top negotiator for India at climate talks, in his new avatar as director-general of TERI noted, “There is a short-term question of finding the right business models, the low-cost finance and a longer-term question of fixing the economics of balancing power for the renewable energy.”

He did not forget to emphasise the role that the private sector would have to play in achieving the targets India had set out.

Transparency and accounting

The private sector also faces a regulatory risk from the Paris agreement.

India committed to a new transparency mechanism that would evolve over the next five years to which different sectors of the economy would have to adhere.

Without prior consultation with industry, the government has already set a high benchmark for the level of disclosure and scrutiny it will permit through a document called the Biennial Annual Update which it submitted to the UN Framework Convention on Climate Change.

The ministry is now exploring the possibility of a legally mandated reporting mechanism for industry to build the annual inventory of carbon emissions. Doing so in the unorganised sector though could be yet another challenge.

A senior manager in the India office of a top global consultancy said, “Indian industry has no clue of the real consequences of the Paris agreement, besides thinking of climate change as branding exercise.

It will have to come to terms with an emerging regulatory regime and the risks involved. The government will have to also find a way to engage industry rather than just hold stakeholder meetings for the sake of it.”

Several private sector players came up with SWOT analyses after Paris agreement to map out risks and opportunities. 

The sustainability division heads of two top private companies, one in the transport sector and the other in the power sector, that Business Standard spoke to noted that Indian industry had traditionally invested very little intellectual capital in the area.

“I read the paragraph on common transparency standards in the Paris agreement and I said, hey, that is a whole new animal,” one of the two said.

At the moment, the attempt by different arms of the government to deal with the fallout of the Paris agreement, too, seems like grappling with a new animal in the jungle of policy making. Multiple sources confirm the government at the highest level is consulting internally to put a coordination system in place.

Under the previous United Progressive Alliance regime, the Prime Minister’s office worked as the coordination point for all national action plans on climate change.

At the moment, the government is considering the possibility of housing such a coordination team in the cabinet secretariat.

Anil Kumar Jain, energy adviser in the Niti Aayog, speaking at the TERI function on Monday said it might not be wise to follow the UK or US model of energy and climate change departments being stitched into one, considering India’s energy-related ministries would remain strongly supply-oriented.