By Sanjeev Krishan
In the history of the Conferences of Parties (COP) for climate change since 1995, the world has witnessed only two significant global accords coming out. One in Kyoto, Japan, in 1997 (COP3): the Kyoto Protocol, in which the developed nations agreed to take up legally binding emission cuts. The other in 2015 in Paris: a landmark climate deal adopted not only by the developed nations but by all the leading emerging economies, including China and India, who took up legally binding but nationally determined emission reduction targets with a common goal to limit the warming to 1.5oC by 2100. This climate deal has so far been a success story, as the world has witnessed thousands of organisations and around 150 countries committing to Net Zero by mid-century and triggered funding from both public and private sector entities. As a sequel, the expectation from COP28 was to create an enabling institutional and financing framework to further accelerate and incentivise climate actions.
Compared to the expectations, CoP28 falls short. Though the final agreement focusses on transitioning away from fossil fuels, operationalisation and capitalisation of the loss and damage fund, tripling renewable energy, reduction in methane emissions, and forging a framework for the global goal on adaptation, it does not provide clear direction on how the climate targets set will be supported by facilitating access to technology and finance. On the issues of climate finance, the pledges and commitments include the Loss and Damage Fund ($700 million), Least Developed Countries Fund and Special Climate Change Fund ($174 million) and to the Adaptation Fund ($188 million). It’s a far cry from the quantum requirement—India alone needs $1 trillion for its 2030 goals—and clarity on specifics of operationalisation of the funds is needed.
India’s approachto climate change
India’s Nationally Determined Contributions (NDCs) encapsulate its roadmap to achieve the Net Zero by 2070 target while aiming to decouple economic growth and emissions. India’s latest communication to the United Nations Framework Convention on Climate Change (UNFCCC) based on the 2019 emissions inventory indicates that the country has already achieved its initial emission intensity reduction target, more than a decade ahead. In order to enhance the country’s energy transition, in February 2023, the government of India notified 13 capital-intensive clean technologies and processes where India will seek international climate finance. This was followed by the notification in May 2023, for the formation of a domestic carbon market mechanism that aims to incentivise deeper decarbonisation efforts by the Indian industries.
This year, India has also spearheaded “going beyond carbon” through its Green Credit Initiative that was unveiled at COP28 by Prime Minister Narendra Modi. The mechanism, lauded by global leaders at the conference, aims to combat the impacts of climate change through a crediting system based on water harvesting and tree plantation. While India continues to make headway on these mechanisms, this year’s COP saw fewer outcomes on Article 6 of the Paris Agreement which primarily pertains to developing international carbon markets. Numerous discussions took place, each targeting different aspects of Article 6, from voluntary carbon markets to the establishment of a UN-led international carbon market framework; however, further discussions are expected in future COPs for final outcomes. In a significant first, six of the world’s major voluntary carbon crediting standards announced a collaboration to enhance the integrity and transparency of the crediting mechanisms in the international offset market. Increased robustness of these mechanisms is expected to expedite bilateral agreements on carbon trading that India is currently exploring with Singapore, Japan and Switzerland to mobilise international climate finance for the 13 capital-intensive, low-carbon technologies as notified by the Centre earlier this year.
Response from Indian Inc
PwC India has been collaborating with the World Economic Forum (WEF) on developing a business case for climate adaptation to accelerate private sector participation. The framework presents actions for businesses to build resilience for themselves as well for the community around them by managing risks, capitalising on opportunities and shaping collaborative outcomes. As per the latest business stocktake conducted by WEF and PwC India, while 87% of businesses recognise their role in protecting their operations and the communities around them from climate risks, only 23% are pursuing adaptation opportunities that contribute to sustainability and climate resilience.
Way forward
Sustainability can also be a powerful economic driver for India, creating jobs and opportunities for revenue generation. For example, companies can opt to view co-firing biomass residues with coal for energy generation not only to meet emission reduction goals but also as an income generation and alternative livelihood option for the local communities and farmers who would collect and transport such residues and create a sustainable supply chain.
India has made significant progress towards decarbonising the economy, without losing sight of the developmental targets. The measures that may be taken up at a national level, irrespective of COP outcomes, are:
Ensuring optimum utilisation of national schemes such as Performance Linked Incentives to accelerate uptake of technologies such as green hydrogen, offshore wind and storage based renewable energy for deeper decarbonisation.
Setting up collaborative institutional frameworks where project promoters, investors, climate start-ups and technology vendors may come together to make informed decisions on which technology to go for, how and by when.
India should look at incentivising existing mechanisms like green bonds. While global investor response has been mixed, a transparent and seamless regulatory framework could attract more participants in the Indian green bonds.
Developing a comprehensive monitoring, reporting and verification framework for efficient and transparent transaction of carbon credits in the domestic carbon market.
Accelerating mobilisation of the national adaptation funds, or reviving the National Adaptation Fund for Climate Change to bridge the gap between mitigation and adaptation financing.
India’s journey toward meeting its climate goals will serve as inspiration for other nations facing similar challenges. The collective effort to combat climate change hinges on the success of individual countries in meeting their commitments. By staying steadfast in its pursuit of a greener, more sustainable future, India Inc has a definitive role to play in this, leading by example in the global fight against climate change.
Sanjeev Krishan,Chairperson, PwC in India. Views are personal.