Climate mitigation — it’s now about money

DIDAR SINGH | Updated on: Mar 09, 2018

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Cap-and-trade mechanisms, a global corpus and technology transfer will need to work in tandem

There are many different ways to compare national responsibility for climate change. These include current emissions as well as historical emissions. Since carbon dioxide added to the atmosphere can stay there for centuries, historical emissions assume higher significance. The tricky question of historical responsibility is one of the key tensions in the process of negotiating a global climate deal.

The most important issues include financing of the low-carbon transition (climate financing), necessary technologies and their transfer from developed to developing nations, market mechanisms for carbon trading, and carbon pricing, about which several companies and investors have issued statements in recent months.

Climate finance : The Green Climate Fund (GCF) under the UNFCCC has set itself a goal of raising $100 billion per year by 2020 from developed countries for supporting climate actions by developing countries. The European Union is the largest contributor to climate financing. For the period 2014-20, the EU agreed that at least 20 per cent of its budget would be spent on climate-relevant activities. EU countries such as France and the UK have pledged $5.6 billion and $8.8billion a year by 2020. The US has pledged $3 billion. China has pledged around $3.1 billion towards a South-South climate cooperation fund, to help developing countries combat climate change.

Clear road map India wants the developed nations to come out with a clear financial roadmap. It also wants resource flow under ODA not to be counted as climate change finance.

Access to climate finance in particular is critical for meeting the incremental cost of technology transfer from the developed to the developing countries, for mainstreaming SMEs into climate change mitigation and adaptation, and for collaborative R&D on low carbon technology.

Technology transfer : The UNFCCC frameworks have not been particularly successful in facilitating the cost-effective transfer of low-carbon technologies from developed to developing countries and its subsequent deployment. This is because of concerns of the developed nations over supposedly weak IPR regime in developing countries. India advocates global collaboration in R&D and enabling their transfer, free of IPR costs, to developing countries. India believes that high costs associated with IPR must be offset by an international mechanism to make innovative low-carbon technologies more affordable.

Market mechanisms: The US does not intend to utilise international market mechanisms to implement its 2025 target of emissions reduction. The EU pioneered international carbon emissions trading in 2005, which is currently the world’s largest, covering more than 11,000 power stations and industrial plants, along with airlines. The EU carbon trading scheme, however, has struggled with low prices and excess allowances.

Carbon and taxesCarbon pricing or carbon taxes : In the US, federal and state taxes levied on gasoline and diesel are effectively carbon taxes. But at the federal level, those taxes have not been increased since 1993, which has eroded their effectiveness. The Carbon Pricing Leadership Coalition, a conglomeration of private entities, has called to put a price on carbon. Even in Europe, the heads of six major oil companies have openly declared that they can take faster climate action if governments provide stronger carbon pricing and eventually link it all up into a global system that puts a proper price on the environmental and economic costs of GHG emissions. India has not yet announced its stance on carbon pricing but has a few carbon tax instruments in place, such as the coal cess or clean energy cess at the national level and a green cess in States such as Maharashtra, which is used to fund clean energy projects. From the standpoint of the industry, a price on carbon would not determine positive action and innovation by businesses. What would be a strong determinant is a price for carbon — a price that industry can get for reducing greenhouse gas emissions.

COP 21 must send a clear signal to the private sector about the future direction of global climate policy that protects market competitiveness, promotes sustainable investment and innovation, and upscales the deployment of low carbon technologies and finance in developing countries across the short, medium and long terms.

The writer is the secretary-general of Ficci

Published on December 11, 2015
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