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Suma Chakrabarti
The writer is former president, European Bank for Reconstruction and Development.
In advance of the two-day 2021 G7 Summit that starts today in Cornwall, Britain, the G7 countries announced that they would stop all financing for unabated thermal coal power projects by end-2021. Just two months earlier, 99% of HSBC's shareholders voted for the world's top financier of coal power to phase out support for the fuel by 2040. The energy transition is accelerating.
India will be the only country at the G7 summit with a nationally determined contribution (NDC) - its official submission to the UN climate convention - compatible with a 2° C pathway. It aims to position itself as a champion of renewable energy with the International Solar Alliance (ISA).
Yet, India is also the second-largest coal producer in the world. The Energy Policy Tracker (bit.ly/3wbYTRM) further reports that it has dedicated nearly a quarter of its energy-related fiscal stimulus spending - around $31 billion - to fossil fuels. Notable announcements include $6.4 billion for 32 coal-mining projects, $4.4 billion to expand refinery capacity in Haryana, and $1.2 billion for a coal-fired power plant in Bihar.
Fossil fuel production and power generation are important sources of employment and tax revenues in many parts of India. But the industry also carries costs. The State of Global Air 2020 report (bit.ly/3cycqv1) suggests that 980,000 Indians died from toxic air pollution in 2019, with coal power plants being a major contributor. This urgency of cleaning up India's air has never been more apparent than during the Covid-19 pandemic.
Over recent days, we have seen how different crises can come together to devastating effects. Cyclones Tauktae and Yaas have hammered India's coastline even as Covid-19 continues to batter the country. Going forward, the frequency and severity of such climate-related disasters will depend on levels of global warming. A world that is 3° C hotter will be much more dangerous than one where humanity collectively managed to hold the average temperature increase to 1.5° C.
India's invitation to the G7 Summit this year offers a chance to position itself as a global leader on climate change. With the world's second-largest population and as the third-largest emitter, India has a pivotal role to play in avoiding runaway global warming.
This is very much in India's best interests. Pursuing low-carbon development will reduce the human and economic toll of climate change. Moreover, it need not compromise development aspirations: a clean, resource-efficient economy will yield a host of benefits including cleaner air, higher rates of job creation, and greater energy, food and water security.
So, what should we look for at the G7 summit? First, India's 2030 emission targets. Currently, there is a fierce domestic debate raging about the feasibility of a net-zero target by 2050. Stronger near-term targets are equally crucial because greenhouse gases accumulate in the atmosphere: early reductions in emissions make it easier to achieve long-term temperature goals. A new pledge from India would signal to builders, businesses, investors and more that they need to take emission reductions into account.
Second, India's commitment to steer public and private finance towards sustainable options. RBI has just joined the global network of central banks working to green the financial sector. Now the world is watching eagerly to see what measures it will announce to help India's banks, pension funders, insurance companies and other financial institutions manage climate risks and seize low-carbon opportunities. RBI urgently needs to impress India's financiers with the dangers of propping up coal.
Third, India's commitment to a just transition away from fossil fuels - and the support of the G7 for this difficult task. This goes beyond coal mining or power generation to newer transitions, such as vehicle electrification. The central and state governments will need to nurture greener industries and reskill workers in the affected regions to create future-ready jobs.
The G7 climate and environment ministers have already welcomed new efforts to support transitions away from coal. At the leaders' summit in Cornwall, the G7 should announce further finance for this important challenge. With its large coal industry, institutional capacity and immense diversity, India is well-placed to experiment with different approaches that can guide other developing and emerging economies looking to achieve a just transition.
India is blessed with everything a low-carbon economy could ask for: plenty of renewable energy potential, a skilled workforce and a gigantic domestic market. As the 2021 G7 Summit gets underway, our policymakers and regulators should harness these comparative advantages with bold new announcements. Then we can truly claim to be the world's climate champion.
India will be the only country at the G7 summit with a nationally determined contribution (NDC) - its official submission to the UN climate convention - compatible with a 2° C pathway. It aims to position itself as a champion of renewable energy with the International Solar Alliance (ISA).
Yet, India is also the second-largest coal producer in the world. The Energy Policy Tracker (bit.ly/3wbYTRM) further reports that it has dedicated nearly a quarter of its energy-related fiscal stimulus spending - around $31 billion - to fossil fuels. Notable announcements include $6.4 billion for 32 coal-mining projects, $4.4 billion to expand refinery capacity in Haryana, and $1.2 billion for a coal-fired power plant in Bihar.
Fossil fuel production and power generation are important sources of employment and tax revenues in many parts of India. But the industry also carries costs. The State of Global Air 2020 report (bit.ly/3cycqv1) suggests that 980,000 Indians died from toxic air pollution in 2019, with coal power plants being a major contributor. This urgency of cleaning up India's air has never been more apparent than during the Covid-19 pandemic.
Over recent days, we have seen how different crises can come together to devastating effects. Cyclones Tauktae and Yaas have hammered India's coastline even as Covid-19 continues to batter the country. Going forward, the frequency and severity of such climate-related disasters will depend on levels of global warming. A world that is 3° C hotter will be much more dangerous than one where humanity collectively managed to hold the average temperature increase to 1.5° C.
India's invitation to the G7 Summit this year offers a chance to position itself as a global leader on climate change. With the world's second-largest population and as the third-largest emitter, India has a pivotal role to play in avoiding runaway global warming.
This is very much in India's best interests. Pursuing low-carbon development will reduce the human and economic toll of climate change. Moreover, it need not compromise development aspirations: a clean, resource-efficient economy will yield a host of benefits including cleaner air, higher rates of job creation, and greater energy, food and water security.
So, what should we look for at the G7 summit? First, India's 2030 emission targets. Currently, there is a fierce domestic debate raging about the feasibility of a net-zero target by 2050. Stronger near-term targets are equally crucial because greenhouse gases accumulate in the atmosphere: early reductions in emissions make it easier to achieve long-term temperature goals. A new pledge from India would signal to builders, businesses, investors and more that they need to take emission reductions into account.
Second, India's commitment to steer public and private finance towards sustainable options. RBI has just joined the global network of central banks working to green the financial sector. Now the world is watching eagerly to see what measures it will announce to help India's banks, pension funders, insurance companies and other financial institutions manage climate risks and seize low-carbon opportunities. RBI urgently needs to impress India's financiers with the dangers of propping up coal.
Third, India's commitment to a just transition away from fossil fuels - and the support of the G7 for this difficult task. This goes beyond coal mining or power generation to newer transitions, such as vehicle electrification. The central and state governments will need to nurture greener industries and reskill workers in the affected regions to create future-ready jobs.
The G7 climate and environment ministers have already welcomed new efforts to support transitions away from coal. At the leaders' summit in Cornwall, the G7 should announce further finance for this important challenge. With its large coal industry, institutional capacity and immense diversity, India is well-placed to experiment with different approaches that can guide other developing and emerging economies looking to achieve a just transition.
India is blessed with everything a low-carbon economy could ask for: plenty of renewable energy potential, a skilled workforce and a gigantic domestic market. As the 2021 G7 Summit gets underway, our policymakers and regulators should harness these comparative advantages with bold new announcements. Then we can truly claim to be the world's climate champion.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
