A look at climate challenges and actions in India as G20 nations continue to use public funds for fossil fuels in the face of growing climate crisis
A new report found that India, along with other G20 nations, is facing significant losses across sectors because of rising temperatures. The report showed that even before the energy crisis brought about by Russia’s invasion of Ukraine, G20 government support to produce fossil fuels reached new heights at $64 billion in 2021, despite worsening impacts of the climate crisis. The Climate Transparency report, produced by an international partnership of organisations took stock of G20 climate action.
The countries with the highest total subsidies for fossil fuels were China, Indonesia and the UK. “Too much public finance for energy in the G20 is still skewed towards the fossil fuel industry. 63% of G20’s public finance for energy went to fossil fuels in 2019-2020,” said Ipek Gençsü, Senior Research Fellow at ODI and finance lead of the report.
Five of the eight G20 countries have not delivered their fair share contribution to the $100 billion climate finance goal annually, said the report. The UK, Italy, Canada, and Australia fall short; the US only contributed a small fraction (5%) of its calculated annual fair share.
The report also mentioned that energy emissions likewise rebounded across G20 countries by 5.9% in 2021, climbing back above pre-pandemic levels. “Rising temperatures have brought income losses in services, manufacturing, agriculture, and construction sectors, with India, Indonesia and Saudi Arabia being the most affected countries. The respective income losses are estimated at 5.4%, 1.6% and 1% of GDP, ” said Sebastian Wegner from the Berlin Governance Platform, one of the report’s main authors.
Zooming in on India
Targets and emissions
India announced a net zero target by 2070 and revised the NDC to reduce emissions intensity of GDP by 45% by 2030 from 2005 levels and achieve about 50% of its total installed capacity from non-fossil-fuel energy sources by 2030.
According to the report, India’s total greenhouse gas emissions excluding land use, land use change and forestry (LULUCF) have increased by 182% (1990–2019). In the same period, its total methane emissions (excl. LULUCF) have increased by 10%.
India supported the phasing “down” (not “out”) of coal in the power sector as a short-term strategy at COP26, but the National Electricity Policy includes plans for an additional 25 GW of coal capacity by 2026–2027, the report noted. India also did not sign the Global Methane Pledge at COP26.
However, the Energy Conservation Act in India mandates a minimum share of “non-fossil-fuel” energy for heavy industries, transport, and buildings sectors, and a carbon trading regulatory framework. Committees to steer the sectoral decarbonisation process have been established, the report said.
Climate impacts and adaptation
Apart from the expected hit to GDP as mentioned above, the report found that 10% of the current population in India will likely be affected by heatwaves. At 3°C of warming, this will likely increase to almost 30%.
The report estimated that in 2020, India is estimated to have suffered an average annual loss of about $87 billion from extreme weather events such as tropical cyclones, floods and droughts. Indian rice production could decrease by 10–30%, and maize production could drop by 25–70% with temperature increases in a range of 1°C–4°C. About 33% of India is drought prone and 50% of these areas face chronic drought. These droughts have not only intensified but also increased in frequency over the last few decades.
Additionally, in 2021, heat exposure in India led to the loss of 167 billion potential labour hours, a 39% increase from 1990–1999.
“Extreme weather events in our regions have shown that the effects of climate change are increasing, and more and more people are being affected. The need to transform our energy systems is obvious, requiring support for technology/ best practice development, deployment at scales. The support of developed countries whose per capita emissions are much higher than India’s is needed to help catalyse these actions that could assist India in contributing more aggressively in GHG reductions,” said Suruchi Bhadwal, director, Earth Science and Climate Change, The Energy and Resources Institute (TERI).
While the report said that there is no specific target for adaptation in NDC, actions are planned in relation to agriculture, water, biodiversity, coastal areas and fishing, education and research, energy and industry, health, and infrastructure.
Carbon markets and climate finance
Also, along with six other members of the G20 including Australia and Brazil, India has no carbon pricing mechanism. Only Canada and France among the member nations have sufficiently high prices per t/CO2.
India has trading mechanisms to promote energy efficiency (tradeable energy saving certificates under the PAT scheme) and renewable energy (tradeable certificates for compliance with the Renewable Purchase Obligations for distribution companies). These mechanisms indirectly put a price on carbon. India is expected to announce a domestic carbon trading platform soon. Some states (such as Gujarat) are considering the implementation of an ETS, with pilot phases currently ongoing. In 2017, India phased out the earmarking of revenue from the Clean Environment Cess (taxing coal) for environmental purposes, subsumed under the introduction of the centralised Goods and Services Tax.
On the climate finance front, the report found that in 2020, India spent $6.9 billion on fossil fuel subsidies, about 97% on petroleum. Subsidies in the energy sector have reduced over the past few years and shown a marked shift towards power transmission and distribution and away from oil and gas. Direct subsidies to renewable energy, however, are still lower than the fossil fuel subsidies.
In January 2021, Task Force on Sustainable Finance was set up with an aim to define a framework and roadmap for sustainable finance in India, to suggest a draft taxonomy of sustainable activities and a framework of risk assessment. In May 2021, the RBI set up a Sustainable Finance Group to take the lead on regulatory initiatives for climate risk and sustainable finance.
Key opportunities for enhancing climate ambition
The report suggested that increased investment in climate action in India will lead to job creation if aligned with domestic political imperatives as well as the achievement of multiple SDGs. Mitigation actions can have significant health co-benefits, for example, enhancing reliance on public transportation will reduce GHGs, while also improving air quality. Resource-efficiency, particularly energy efficiency, has significant potential for improved competitiveness and job creation, the report recommended.