India stands to gain from massive renewable energy investments and achieve energy efficiency in key sectors under a Climate Agreement, a global coalition of business organisations working on low carbon economic growth has said.
The top industries and services that could reap the benefits are energy companies, financial services attracting investment from around the world, and the IT sector that would find new opportunities in big data analytics, measuring and monitoring systems to meet national climate obligations.
Besides direct benefits, the economy could save enormous costs in the future, both in terms of higher efficiency and avoided losses due to more severe catastrophic climate events, Edward Cameron, policy lead, We Mean Business, a coalition of corporations whose members include Google, Microsoft, General Electric and Sun Edison told The Hindu .
The We Mean Business group consists of seven business-facing networks working to promote business action on climate, and to develop a policy enabling environment for a clean economy. It works with investors who collectively are worth almost $20 trillion in assets under management.
Global business has welcomed the announcement by Prime Minister Narendra Modi on boosting growth of solar and other renewables by 2022, and cutting the energy intensity of growth.
The coalition is “very sympathetic to the Indian position [on emissions reduction], because you must reduce emissions as a global community, otherwise we will breach temperature thresholds that threaten natural resources, threaten food security, undermine development and human rights”.
The Indian position, that in order to be effective on climate you need to reduce the cost of capital, so that low carbon investments become possible is understandable, the coalition says. The price point of energy for consumers who have limited disposal income must be low.
The availability of technologies should also be increased so that India can meet its commitments to deploy more and more energy. Simultaneously, there is a need to tackle issues of governance, of relations between industrialised economies and the least developed countries, and domestic governance.
Businesses are looking to the forthcoming U.N. Framework Convention on Climate Change agreement to provide policy certainty, “as the type of investments we need are not six month or five year investments, they stretch across multiple decades. The important market signal that is sought is the long term goal towards decarbonisation before the end of the century”.
Without the agreement, the physical, operational and financial risks to all businesses all over the world will be huge. Verizon in the U.S. lost a billion dollars because of superstorm Sandy, because salt water intruded into its communication infrastructure.
At the Paris conference, the WMB coalition has made specific policy asks. “We have indicated to governments not only the type of agreement we would like to see, but also where the text should be placed in the context of the new agreement,” says Mr. Cameron.
Market signals
If the private sector is viewed as an important player, the Paris Agreement itself would be the most important market signal. The only way businesses would make those investments is if “they are certain that governments around the world will honour those commitments made in Paris”. So the very important market signal is the long term goal towards decarbonisation before the end of the century. It was positive that 184 governments including India have come forward with their domestic climate action plans.
Before the national action plans came forward the world was on course for a 4.8°C rise by the end of the century, which would be uninhabitable, and crises such as water scarcity, agriculture distress in staples like rice, and wheat corn becoming impossible to grow would have followed. As a consequent of the voluntary climate action pledges, “we are on course for a 2.7°C rise. That still is not good enough”.
But the space between 4.8°C and 2.7°C creates a whole new global economy, that moves trillions of dollars in the direction of renewable energy. China alone is committing to a rise in renewable energy in the next decade that is the equivalent of all the electricity produced in the U.S. today, involving trillions of dollars in public and private investments.
Paris also needs to see climate finance commitments, with industrialised countries honouring the $100 billion a year pledges that they made in Copenhagen in 2009.
Need five-year review
Governments that have made climate action plans must agree to come back to the table every five years with a process overview and to raise ambitions further. “Business innovates quickly, and we need the pace of innovation within government policy to keep pace. That means five year review, not ten year review,” Mr. Cameron says.
Similarly, there have to be strong measures for transparency and accountability to ensure that governments are actually honouring their commitments and are not backsliding, or creatively accounting for emissions or finance, he adds.
It would be very difficult for renewable energy to be cost effective, if there are government subsidies for fossil fuels that artificially lower the cost of fossil fuels while making renewables more expensive. Government subsidies going into R and D on fossil fuels, and not renewable energies, would be a problem as also giving privileged access to the grid or fossil fuels, while restricting access to the grid for renewable energy.
Mr. Cameron said China presents an economic opportunity not just for renewable energy companies, but for all of the companies involved in retrofitting factory, retrofitting manufacturing, and energy efficiency. This opened up the economy for private investors like pension funds, multilateral banks, private equity companies to invest in a growing segment of the economy. Walmart said in China that they wanted their supplies from those going down the road of low carbon.
