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India ups climate targets, bans overseas credit sales – but is it all bark no bite?

© Shutterstock / Amit.pansuriyaPrime Minister Of India Mr. Narendra Modi

India has announced new, stronger climate targets putting further pressure on economic transition. While compliant with the Paris Agreement, India’s history of setting and missing ambitious targets begs the question if the new targets are for real, or just for show.

India increases ambition for reducing emissions intensity of its GDP and scaling up renewable energy in updated Nationally Determined Contributions (NDCs).

Historically, there has been dissonance between India’s ambition and actions, causing scepticism over the actual impact of the newly upgraded targets.

As a developing country, India will need the support of the international community to meet these targets.

India’s new NDC aims to reduce the emissions intensity of GDP by 45%

India has announced new targets for reducing greenhouse gas emissions under its Nationally Determined Contributions (NDCs). One year after the deadline for updating NDCs under the Paris Agreement, India approved its new targets for cutting greenhouse gas (GHG) emissions.

The new NDC aims to reduce the emissions intensity of GDP by 45% from 2005 levels by the end of the decade. The Indian government has also committed to ensure that renewable energy will account for at least 50% of the country’s installed electricity generation by 2030.

Both new commitments are an increase of 10% from the 2016 pledges, signalling a moderate increase in India’s climate action ambition. Ultimately, the country has targeted net zero by 2070, nearly 20 years after most countries have set their targets.

Prime Minister Narendra Modi made big promises at 2022’s COP26 in Glasgow to ramp up India’s climate commitments, saying in a speech that “[his] words are not just words; they are announcements of a bright future for our future generations”.

While his words have now become official targets (for at least 2 out of 5 of his COP26 promises), will these targets become action?

A history of high ambition – and high attrition

As the world’s third largest carbon emitter and one of the most vulnerable countries to the impacts of climate change, India has a lot of motivation for reducing carbon emissions and taking climate action.

The country has been one of the most ambitious developing countries when it comes to setting targets for climate action, but has a history of failing to translate these targets into action and real carbon reductions.

To begin, it is worth noting the difference between emissions reductions and emissions intensity reduction. Most countries have committed to absolute emissions reductions as part of their NDCs – i.e. a reduction of the total quantity of GHG emissions.

However India has taken a different approach, using emissions intensity reductions in the country’s NDCs target. This means that the GHG reductions promised are tied to the country’s gross domestic product (GDP) – i.e. a reduction of GHG emissions per unit of GDP.

This raises concerns over the actual volume of emissions reductions as India’s economy and population is set to grow significantly over the next decade.

India is projected to be the third largest economy in the world by the end of the decade, according to research group IHS Markit. Additionally, the UN projects that India will become the most populous country in the world by 2030, with 1.5 billion people calling India home – or nearly one-fifth of the total global population by the end of the decade.

More people and more growth inevitably means more carbon emissions in today’s world. Analysis by independent researcher Climate Action Tracker forecasts that due to these factors India’s emissions intensity reduction target may actually mean a rise in carbon emissions instead of a reduction.

A growing population and economy also means a growing demand for power. The new target approved by the Indian government promises that 50% of electricity will come from renewable energy sources by 2030. But India is already behind on its current renewable energy targets, and is lacking the necessary policy and regulatory frameworks to accelerate renewable energy growth over the long-term.

Although India is ranked fourth in the world in terms of total renewable energy capacity, over 80% of India’s energy needs are still met by coal, oil and solid biomass, according to intergovernmental organisation the International Energy Agency (IEA)

The country’s rising energy demand has mainly been met by coal, with solar and wind power experiencing a boom and bust cycle due to a variety of issues such as permitting red tape, lack of long-term planning to integrate variable renewable energy sources, and an ineffective tendering system.

India previously set a goal of installing 175 GW of solar and wind capacity by the end of 2022. However, with the year over half way done, so far it seems like India will fall short of this goal. According to Minister of State for New and Renewable Energy Bhagwanth Khuba, the country is more than 60 GW short of meeting its goal.

Although perhaps most indicative of the goal-to-action dissonance in India has been the country’s offshore wind ambitions. The country had set an offshore wind goal of 5 GW by 2022, but as of today, India has no turbines at sea and almost no policy and regulation to establish the foundations of an offshore wind market.

In a bid to meet the target, India announced it would open a 4 GW offshore wind tender this year. However, the tender frameworks have been criticised by the industry, and may be a classic case of ‘too little too late’.

Ultimately, while India’s new climate goals may look good on paper, historically the country’s goals have been lacking the foundations necessary to give them a chance at being met.

Who should be responsible for reducing emissions?

India has long been a self-appointed champion for developing countries in international climate negotiations, insisting that developed countries should bear the brunt of the burden when it comes to climate action, considering they have contributed much more towards climate change.

While India may be one of the biggest carbon emitters in terms of total volume, its per capita emissions in 2020 was around 1.96 tonnes of carbon – less than one-third than the global average. And the country has not been responsible for carbon emissions historically compared to developed countries like the US and Europe.

Additionally, as companies from developed countries set up manufacturing facilities and other carbon-intensive activities in India to take advantage of cheap operating costs, developing countries have been accused of exporting their emissions to developing countries like India.

This again causes an imbalance when tallying up carbon emissions of developed versus developing countries, putting an additional reduction burden and environmental burden on countries like India for the benefit of the ‘West’.

To curb this disequilibrium, India has recently announced it will ban firms from selling carbon credits overseas until the country meets its climate goals. Indian Minister of Power Raj Jumar Singh said that “these credits will have to be generated by domestic companies, bought by domestic companies”.

However, no further details have been released to outline what this carbon offset market will look like or the requirements for credits. This is amid growing scrutiny of permanence and additionality of certain types of offsets, fuelling scepticism on the effectiveness of carbon offset markets to deliver actual emissions reductions.

Money matters

At COP26, PM Modi raised concerns over the climate financing needed for India to meet its ambitious targets, calling on developed countries to urgently provide at least $1 trillion in climate finance.

“Today, it is necessary that as we track the progress made in climate mitigation, we should also track climate finance”, said Modi, claiming that climate finance promises to date have been “hollow”.

In the infamous Copenhagen COP conference in 2009, developed countries committed to jointly mobilise $100 billion a year in climate finance by 2020 to support developing countries. However, countries have consistently fell short of meeting this target.

UK-based think tank the Overseas Development Institute (ODI) says that only Germany, Norway and Sweden have been paying their fair share of the amount committed, while major economies such as Australia, Canada, New Zealand, and the US have contributed less than 20% of their fair share.

Finance is undoubtedly a major bottleneck for India achieving its climate goals. BloombergNEF analysis finds that $223 billion will be needed for India to meet its 2030 wind and solar power goals. As a developing country, this significant level of financing is a big mountain to climb, and India will need support from donor countries in order to make it to the peak.

While it is important to set an ambitious goal, India needs the policy, actions, and finance to make ambitions reality. While solutions should be developed at the national level to pave the way to net zero, developed countries also need to ensure they are sticking to their promises to give India a chance at succeeding.

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