No heroes at COP: On COP26

Synopsis: If COP26 fails, it will be because of misplaced targets from the West and China, and a lack of ambition and imagination from India.

Introduction

A few months ago, one could reasonably expect that there would in fact be a significant increase in the global ambition to combat climate change and reduce carbon emissions as a result of COP26 Glasgow conference.

Yet a combination of factors has unfortunately caused this optimism to appear misplaced.

What are the reasons behind this reduction in expectations from COP26?

Multiple nations are responsible for this reduction in expectations.

USA: Biden administration has made no attempt to change the price of carbon in the US economy, and the “build back better” bills barely add up to one-third of the emissions reductions that Mr Biden promised by 2030 and even then face serious objections in the US Senate.

European Union: The EU, meanwhile, has set more credible targets and taken more credible action. Yet its ambition is inward-focused: The “European Green Deal” would ensure a large amount of capital flows to climate-sensitive projects within the EU, but at the potential cost of funding more efficient carbon mitigation projects elsewhere in the world. It also proposes to levy a carbon tariff on goods entering its borders from 2026- in other words, steel from Indian plants, if it is produced in a more emissions-intensive process, will have to pay an additional price per ton to be sold in Europe. This has severely increased distrust with its potential partners on climate change, including India.

China: It has pledged to become net zero by 2060. This means there are no restrictions in effect on the announcement of new coal-fired thermal power plants, and China has continued to make such announcements even in 2021; in just the year’s first six months, the projected new plants would increase the country’s emissions by 1.5%.

What are India’s views and why they need to evolve?

India may be right to resist a meaningless net zero target but there is less justification for some of their other points.

On climate finance. In 2015, at the Paris Agreement, the developed world promised to mobilise $100 billion of climate finance to aid the green transition in emerging economies. Only a fraction of that money has materialised. India insists that any climate action should be predicated on the rest of that grant money being made available.

This viewpoint is not constructive, and not helpful even from India’s point of view. At best, India would get a small amount of incremental grant capital from this $100 billion. And even the total figure of $100 billion is extremely less than the trillions of dollars actually required by India and the rest of the emerging world over the next decade if greener infrastructure is to be built.

What is the way forward for India?

– Global agreement on climate finance: Govt should push for private-sector investment in green and frontier sectors. India’s government has isolated some of these sectors in its recent moves towards industrial policy — batteries, for example. This agreement on climate finance should cover such areas as risk mitigation, targeted investments, and project preparation assistance. And COP26 is the right location to move towards such a global agreement.

– South African model: India’s model should be South Africa (SA), a fellow coal-rich developing country that has had an even harder time imagining a development path that is greener than its current trajectory. Transitioning its debt-ridden state-run electricity company, Eskom, from coal-fired plants to renewables would be prohibitively expensive. That’s why the South Africans have put proposals out there which aim to make it easier to swap debt for green financing. These proposals, if approved, would clear up Eskom’s balance sheet on the condition that it begins greater investment in renewables.

Source: This post is based on the article “No heroes at COP” published in Business Standard on 24th Oct 2021.

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