India: Climate Change Negotiations - Outside-in viewIntroduction The Copenhagen Accord, though not a legally binding agreement reached between the parties,was the Common Minimum that could be achieved amidst the high tension and difficult bargainingpositions. The accord called on Annex I countries to make their climate change pledges, and theAnnex II countries to identify their nationally appropriate mitigation actions by 31 January 2010.India is a non-Annex 1 country to the Copenhagen Accord and has expressed conditional support forthe Accord, given the huge difficulties in balancing the resources, requirements and demands.India: Highlights The key highlights of India and its significance to any climate change negotiation are1. India is Asia’s third largest energy consumer.2. It has committed to reducing emissions by 20-25 per cent below 2005 levels by 2020. This though is a voluntary target.3. It has recently started pricing carbon pollution since July 2010 in the form of tax on coal.4. It has one of the world’s largest ongoing renewable energy programmes, with nine per cent of its total generating capacity coming from renewable energy sources5. A number of investment opportunities are bound to arise in the areas of energy efficiency, forestry and agriculture through either public-private partnerships or through CDM project activities providing carbon offsets for domestic carbon markets worldwide. Despite being implementer of second largest number of projects in CDM after China, the market to be served and the current penetration level provide significant opportunities.
Indias commitments in Copenhagen Accord India has committed to reducing the emission’s intensity of its GDP by 20-25 per cent below2005 levels by 2020. This does not include emissions from the agricultural sector for the calculationsfor emission intensity. This translates to a reduction of greenhouse gas emissions by 11 per centbelow business as usual levels. India intends to employ forestry measures and become more energyefficient to meet its goals.Regulatory framework in India To honour the commitments made at Copenhagen, the Ministry of Environment and Forests hasannounced 24 initiatives in five broad areas: science and research, policy development, policyimplementation, international cooperation and forestry. The implementation proposals include in-principle approval given to 30 ‘solar cities’ with the aimof a 10 per cent reduction in projected demand of conventional energy through a combination of:1. Energy efficiency and renewable energy2. National Missions under the National Action Plan on Climate Change on solar, energy efficiency and strategic knowledge3. Given that India is experiencing a real estate and infrastructure driven growth, a national conference to be held to stimulate green building materials and technologies4. Fuel efficiency norms and mandatory energy efficiency ratings for key appliances India’s policy implementation targets include a CDM Program with the aim of Indian CDMprojects neutralising 10 per cent of its emissions by 2012. India’s current energy policy and regulatory framework are built up of the Energy ConservationAct 2001, India Electricity Act 2003 and the 2005 National Electricity Policy. India’s Eleventh Five-Year Plan (2007-2012), provides for the promotion of renewable energy sources. The CentralElectricity Regulatory Commission (Terms and Conditions on Tariff) Regulations 2009 ensures thatthe proceeds of carbon credits for approved CDM projects are shared between the projectdeveloper and purchasers of electricity. This incentivises both to seek involvement in renewableenergy projects with carbon credit income streams. Ministry of New and Renewable Energy (MNRE)offers a number of centralised fiscal incentives to renewable energy projects. A system of feed-intariffs and generation-based incentives for renewable energy has been implemented too. Earlier this year, India’s Central Electricity Regulatory Commission (CERC) announced rules fortrading with renewable energy certificates. These can be bought by companies to meet the
requirements to purchase a minimum level of renewable energy according to the State renewableportfolio standards. A national agency will be put in place to administer the trading certificates. TheMinistry of New and Renewable Energy is responsible for the promotion of renewable energy inIndia. A number of programmes have been set up, including a wind mapping program for the futuredevelopment of wind power, identifying sites and building capacity for small-scale hydro power,financial assistance for biomass projects and a grants scheme for solar and solar thermal power. Under the Energy Conservation Act 2001, India has established the legal and institutionalframeworks for both the Central and State Indian governments to promote energy efficiencythroughout the country. The Bureau of Energy Efficiency has established the Action Plan for EnergyEfficiency, a comprehensive plan that covers1. Industrial efficiency2. Efficiency in residential and commercial buildings3. Appliance efficiency through labelling schemes4. Energy efficient agriculture5. Education programmes. India’s ‘science and research’ initiatives arising from its Copenhagen Accord commitmentsinclude the establishment of the India Network for Climate Change Assessment (INCCA). Thisinitiative draws from the expertise of over 220 scientists from India’s premier research institutions,and aims to bringa science based approach to policy. The INCCA has been involved in tracking India’sgreenhouse gas emissions pathways until 2030 under different assumptions and researching the roleof India’s forests and tree cover as a carbon sink. Their assessment shows that forests neutralise 11per cent of India’s annual greenhouse gas emissions. Forests cover almost 20 per cent of the country’s landmass and forests with a crown cover ofover 40 per cent have been increasing. The National Forestry Action Programme (NFAP) forsustainable forest development aims to bring one-third of the country’s geographical area undertree cover as mandated in the National Forest Policy. NFAP relies on both government sponsoredprojects and externally sponsored initiatives with funding from, among others, the World Bank, theJapan Bank for International Cooperation and AusAid. India’s recent initiatives on forestry includethe Green India Mission (a $US2.5 billion project under the National Action Plan on Climate Changeto fast-track re-forestation) and schemes for capacity building for forestry personnel and improvedforest management. Forestry related activities have also been included in India’s employmentguarantee scheme to fast-track reforestation.
A national policy on bio-fuels has also been approved to promote cultivation, production anduse of bio-fuels for transport and other applications, with a focus on wasteland-grown inediblefeedstock to be used for biodiesel. India has recently introduced its ‘clean energy levy’ taxing both coal produced in and importedinto India at a level of 50 Rupees per tonne. Although this does not seem a significant sum, the tax isexpected to raise some $677 million in its first year, all of which will be channelled back intoprogrammes aimed at reducing emissions. The clean energy levy, which for the first time pricescarbon pollution in India, has been in operation since 1 July 2010.Investment opportunities As a rapidly developing economy with one of the highest projected greenhouse gas increases,there are bound to be a large opportunities in GHG reduction investments in India. To sustain itsGDP growth rate, a tall order by itself, India must invest in massive increases in energyinfrastructure. Much of this capacity will need to be delivered from conventional large-scale coal,hydro and nuclear facilities. However India has one of the world’s largest ongoing renewable energyprogrammes, with nine per cent of its total generating capacity coming from renewable energysources. With a combination of voracious energy demands, energy security and climate changeconcerns, the Indian government is pursuing all feasible energy sources to balance its energy needs,including promoting renewable energy. India’s eleventh Five-Year Plan includes targets for the renewable energy sector which must bemet by 2012. The sources of installed renewable energy capacity targets are small hydro, wind, solarphotovoltaics, solar water hearing and biomass power in that order. If such targets are to be met,wind will need to grow by 2.5GW in each of the next three years, small hydro and biomass will needto double over the same period while solar photovoltaics needs to increase over 20-fold. As such,significant investment opportunities are expected to arise in this sector. Further opportunities will arise in the areas of energy efficiency, forestry and agriculture througheither public-private partnerships or through CDM project activities providing carbon offsets fordomestic carbon markets worldwide.References1. Article by Norton Rose on Asia Pacific climate change policy2. CERC India website http://www.cercind.gov.in3. Agneya’s analysis
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