Climate change initiatives: convergence of actions Contents Vulnerability to climate change and its...

Climate Change Initiatives In India: Convergence of Actions

2015

Fore

wor

d

D. S. Rawat Secretary General ASSOCHAM

For arriving on consensus to achieve a legally binding and universal agreement on reducing emissions, Conference of the Parties (COP 21) and Kyoto Protocol (CMP 11) will be held in Paris, France from 30 November to 11 December 2015. In addition to the macro policy framework, the fact remains that there is a pressing need to enhance mitigation initiatives and adaptation responses to address issues in protecting vulnerable from climate change. This calls for a convergence among public and private development agencies who have long been tackling the issue of vulnerability reduction through their respective activities such as disaster risk reduction, mitigation of climate change, environmental management and poverty elevation.

Climate change is a pressing issue globally and it calls for a strong governing framework which makes the roles and responsibilities more transparent at every stage. In reality, climate change is here now, and it is as much opportunity as risk for those who are wise enough to adapt early on. We should be beyond merely recognising the scienti c fact of climate change. Credit crunch or not, now is the time to nd the right response and act. The long-term stability of our environment and economy depend on it.

I am pleased to present this ASSOCHAM Publication on ‘Climate Change’ which provides focused solutions on

nancing climate change initiatives in India, which are critical for our environment, health and livelihood.

I sincerely thank our Knowledge Partner Ernst & Young for its signi cant effort in preparing the report on this critical topic of Climate Change Initiatives in India : Convergence of Actions.

I appreciate the efforts and contribution of Dr. Om S Tyagi, Ms Purnima Dhingra, Mr Amit Bunger and Mr Nitesh Sinha for organizing this Conference.

I believe this publication will serve as an invaluable resource, providing the necessary framework to inform various stakeholders on the risks of climate change and to engage them in the crucial debate on how to manage these risks going forward.

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Cont

ents

Vulnerability to climate change and

its solutions1.1 Climate change vulnerability in the Indian subcontinent

1.2 Evolution of market-based solutions to combat climate change

India s current ractices related to nancing

climate change vulnerability solutions2.1 India’s position and current practices

2.2 Domestic climate nance mechanisms and ows

2.3 Role of banks

2.4 Green Bonds

2.5 International funding

Convergence of climate initiatives

and way forward 3.1 International convergence initiatives

3.2 Mechanism of convergence within India

3.2.1 Emphasizing on centre-state-municipal collaborations

3.2.2 Encouraging public private partnerships

3.2.3 Encouraging the private sector and non-pro t civil society organizations

3.3 Success story

3.4 Recommendations

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5

ist of gures

Figure 1: Climate change and environmental risk atlas 2014

Figure 2: Global Climate Change Risk Index

Figure 3: Evolution of market & non-market mechanisms under the UNFCCC

Figure 4: Illustrative representation of carbon markets

Figure 5: Illustrative representation of ow of climate nance

Figure 6: Budget requirements of state governments for implementing SAPCCs for ve years (in INR billion)

Figure 7: Cost estimates for Implementing State Climate Action Plans

Figure 8: Convergence of the solutions

Figure 9: Project stakeholders for Rajasthan Sun Technique plant

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- 10

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- 12

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- 22

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There is growing evidence that providing businesses and consumers with market-based mechanisms for addressing environmental problems can achieve equal or better compliance while reducing costs and improving technological innovation. In the context of climate change, countries have agreed to use several market-based mechanisms in implementing greenhouse gas emissions reductions through emissions trading. In the light of adaptation and mitigation actions across the globe, the major barrier is lack of nance. The incentive to invest a large of sum of money in a business, which is not tangible, does not attract a large number of entrepreneurs. More often than not, it becomes the role of the regulator to force in the actions through market based or regulatory mechanisms.

Used by governments for decades, market-based mechanisms are used to control environmental pollution at various leverage points. They work by changing relative prices — raising the cost of emissions-intensive activities and or lowering the cost of lower-emitting alternatives — to provide producers and consumers with a nancial incentive to adopt the latter. Adopted in 1997 by UNFCC, the Kyoto Protocol de nes a

target for GHG emission reductions for the period between 2008 and 2012 of 5.2% as compared with 1990 level through established international market-based mechanism, such as emissions trading, joint implementation and clean development mechanism (CDM) to meet the targets.

India has voluntarily committed itself to reducing its emissions intensity by 20%–25% of its 2005 levels by 2020. Furthermore, in June 2008, the Prime Minister’s Council on Climate Change announced the adoption of the National Action Plan on Climate Change (NAPCC) to identify measures that promote development objectives while also yielding co-bene ts for addressing climate change effectively. This plan has identi ed eight core national missions and calls for identifying measures that promote our development objectives while also yielding co-bene ts for addressing climate change effectively (Prime Minister’s Council on Climate Change 2008). In addition to the National Action Plan on Climate Change, the Government of India has taken several other measures to promote sustainable development and address the threat of climate change. These initiatives operate at the national and sub national level and span domains that include climate change research, clean

Executive summary

6 | Climate Change Initiatives In India: Convergence of Actions

7

technology research and development, nance, and energy ef ciency and renewable energy policy and deployment.

What is essentially required, over and above the initiatives is a convergence. Convergence not only among institutes and panels but among the various approaches that lead to solutions regarding climate change. The Government and private sector needs to work hand-in-hand to develop better infrastructure and research on innovative techniques to curb pollution and global warming at a micro-level. The incentive mechanism needs to develop in the society, which inculcates intangible bene ts of the environmental safeguard as a direct cost. India also needs to design a dedicated nancial and governance instrument to link national government climate plans and state-level expenditures on climate change, to improve the delivery of domestic climate nance. Furthermore, India needs to put in place a domestic MR mechanism on various nancial ows. It needs to go beyond mere reporting, but also look into the qualitative aspects of nancial ows.

The decentralized international approaches of Carbon Pricing Leadership Coalition and Partnership for Market Readiness can be replicated in India, which is structurally a decentralized

democracy. India needs to focus on channelling it funds and providing incentives to different players in the economy to form a consortium to tackle climate change. The primary motive worldwide is to price carbon and it surfaces into the grassroots of the economy through a regulatory channel. India should choose a mechanism, which suits the appropriate actions required for the country. There have been quite a few initiatives already taken by the Government. We take a few examples to highlight the approach. Private sector and non-pro t organizations in India have competency to bring innovative solutions and scale to various models for climate change adaptation shaped by the civil society and or govt. There is a vital need for the Government to involve them through innovative and alluring partnerships, while on other hand induce them to take it as their prime responsibility. Globally, many community-focused social venture capital funds have emerged in recent years seeking to strike a balance between social bene t and nancial returns. Green Bonds were identi ed as one of the key nancial instruments that can provide Indian RE project developers with access to scalable, long-term, low-cost debt capital from institutional investors.

Climate Change Initiatives In India: Convergence of Actions | 7


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The scale of international climate change negotiations has grown constantly, since the 1992 Rio Earth Summit, which was an important milestone in international climate negotiations. This was followed by the Kyoto Protocol in 2005 followed by the Bali Action Plan in 2007, which had a long-term vision. The Copenhagen Climate Summit in 2009 saw the world validating the common goal of limiting global warming to 2°C. In 2010, the Cancun Conference enabled countries to make this goal effective through the creation of dedicated institutions for key points, including those for adaptation, the Green Climate Fund and the Technology Mechanism. This will be further strengthened by the 21st Session of the Conference of the Parties (COP-21), which will be hosted and presided over by France. COP 21 aims to achieve, for the rst time in more than 20 years of UN negotiations, a binding and universal agreement on climate, from all the countries of the world. The overarching goal of the Convention is to reduce greenhouse gas emissions to limit the global temperature increase to 20C above pre-industrial levels.

Considering China’s agreement to the Convention, it may be expected that India is not lagging behind in the trial. The GHG-mitigation challenge comes at a time when India already faces extremely pressing challenges, such as the urgent need to expand its energy sector to fuel economic and social development and enhance energy access for all citizens. Nonetheless, India, like all other major economies, will also have to alter its GHG-emissions trajectory, despite the fact that India’s energy economy will be strained by these efforts.

Concerns regarding fairness, equity and burden-sharing are the central theme of negotiations on international climate agreements. More so, considering the problems of sharing of responsibility, lack of nancial capability and the tremendous direct and indirect economic, human, and environmental cost involved. It has been argued that a per-capita based allocation framework will be the appropriate approach to think about GHG emission reduction commitments. Not surprisingly, this argument has not found much traction in industrialized countries, given their high per-capita emissions. On the other

hand, India being a developing country will have a plethora of opportunities for development and investments driving the economy under this umbrella of climate change through the medium of climate change funds from various international funding institutes and private agencies channelling their investment as loans.

1.1 Climate change vulnerability in the Indian subcontinent

Future estimates of the overall cost of climate change on the global economy include a wide spectrum of opinions. What cannot be disputed is that the high and extreme risk countries include emerging and developing markets, whose importance to the world economy is ever increasing. More than 530,000 people died as a direct result of almost 15,000 extreme weather events, and losses of more than US$2.5 trillion (in public private partnership) occurred from 1993 to 2012 globally1. According to the Climate Change Vulnerability Index (CCVI), 67 countries have been identi ed who come under increasing threat from physical impacts of more frequent and extreme climate-related events, such as severe storms, ooding or drought. The economic impacts of climate change will be most keenly felt by Bangladesh ( rst and most at risk) whereas important growth markets at risk include — India (20th), Pakistan (24th) and Vietnam (26th) all classi ed at high risk 2.

CCVI has been developed to identify climate-related risks to populations, business and governments over the next 30 years.

It includes exposure to extreme climate-related events, the sensitivity of populations, and the adaptive capacity of countries to combat the impacts of climate

Vulnerability to climate change and its solutions

1

Climate Change Initiatives In India: Convergence of Actions |

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� CCVI has been developed to identify climate-related risks to populations, business and governments over the next 30 years.

� It includes exposure to extreme climate-related events, the sensitivity of populations, and the adaptive capacity of countries to combat the impacts of climate change.

� The Global Climate Risk Index 2014 analyzes to what extent countries have been affected by weather-related loss events (storms, oods, heat waves etc.).

� The most recent data available from 2012 and 1993–2012 were taken into account.

Figure 1: Climate change and environmental risk atlas 2014

Figure 2: Global Climate Change Risk Index

| Climate Change Initiatives In India: Convergence of Actions

Source: http://www.indiaenvironmentportal.org.in

Source: www.germanwatch.org/en/cri

11

Both the indices highlight the Indian subcontinent to be highly at risk. The ability of highly vulnerable countries to manage the direct impact of extreme events on infrastructure will be a signi cant factor in mitigating the economic impacts of climate change and may present opportunities for investment. Adaptive measures, such as building ood defenses and increased infrastructure resiliency, will, however, require the sustained commitment of governments. A warming planet and changing climate will have signi cant but varied global affects. India has around 4,400 miles of coastline, more frequent and intense coastal storms could cause enormous damage to human settlements and coastal ecosystems, while resulting in loss of life. Similarly, an increase in sea levels, driven by increases in the global mean temperature, will have signi cant implications for coastal communities. The substantial number of poor in India, who are particularly vulnerable to these kinds of climatic impacts, will be exposed to signi cant risk (IPCC, 2001). India’s economic exposure to the impacts of extreme climate related events was recently highlighted by Cyclone Phailin. The storm caused an estimated US$4.15 billion of damage to the agriculture and power sectors alone in the state of Odisha, which is also India’s most important mining region. Up to 1 million tons of rice were destroyed, while key infrastructure, including roads, ports, railway and telecommunications were severely damaged, causing major disruption to company operations and the supply chains of industrial users of minerals.

1.2 Evolution of market-based solutions to combat climate change

There is growing evidence that providing businesses and consumers with market-based mechanisms for addressing environmental problems can achieve equal or better compliance while reducing costs and spurring technological innovation. In the context of climate change, countries have agreed to use several market-based mechanisms in implementing greenhouse gas emissions reductions through emissions trading.

In the light of adaptation and mitigation actions across the globe, the major barrier is the lack of nance. The incentive for investing a substantial of sum of money in a business, which is not tangible, does not attract a large number of entrepreneurs. More often than not, it becomes the role of the regulator to force in the actions through market-based or regulatory mechanisms. With increasing importance of India as a global economy and its role at crucial international forums dealing with economic and climate change issues, climate change and

nancing thereon has been included in the scope of the annual Economic Survey by the Ministry of Finance.

The drive for giving incentives to private players to indulge in mitigation and adaptation actions was served through the introduction of market-based mechanisms. These mechanisms gave private agents an incentive for doing business in the new market called carbon market, where pollution levels could be curbed through the act of pricing the pollution and setting a market for it. The evolution of the market is illustrated in the

gure below.

Figure 3: Evolution of market & non-market mechanisms under the UNFCCC

LOW

Mat

urity

of m

echa

nism

HIG

H

Kyoto track(1997/COP3)

CDM(2001/COP7)

CoventionalCDM

CDMProgramme of

activites (POA)-(2007)

AutonomousNAMAs (2009/

COP15)Supported

NAMAs (2009/COP15)

2001 2007 2009 20111997

Sectoralmechanisms

New marketmechanism

(CO17)

REDD+(2009/COP15)LCA

(Bali action plan2007/COP13)


Source: Perspectives Analysis; UNEP Risoe 2012

12

Used by governments for decades, market-based mechanisms are used to control environmental pollution at various leverage points. They work by changing relative prices — raising the cost of emissions-intensive activities and/or lowering the cost of low-emitting alternatives — to provide producers and consumers with a nancial incentive to adopt the latter. Adopted in 1997

by UNFCC, the Kyoto Protocol de nes a target for GHG emission reductions for the period between 2008 and 2012 of 5.2% as compared with 1990 level through established international market-based mechanism, such as emissions trading, joint implementation and clean development mechanism (CDM) to meet the targets.

Figure 4: Illustrative representation of carbon markets

Carbon Market

Carbon CreditingCarbon Trading

Emission Allowance

Threshold for Credit

Original emission

Emission post-credit

Buyer: Low Emission

Seller: High Emission

Credit bought

CDM works by having a polluter in a poor nation accept CDM money and then compares their actual situation to a story about what might have been if they had not been paid that


Source: EY

money. The claim then undergoes a certi cation process. However, the process generates a Certi ed Emissions Reduction (CER), which can be used as permission to pollute within rich Kyoto signatories.

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Lack of Environmental Integrity

Government of cials claimed that none of the CDM projects in India (the second biggest host of CDM projects after China) can be considered ‘additional’. The GFL gas project in Gujarat, India, for example, has been one of the biggest producers of CDM carbon offset credits in the world, selling them to many of the biggest polluters in the EU. GFL has pro ted immensely from the CDM, and Europe’s polluters have had a cheap way to offset their climate responsibilities without actually greening their way at all.

Carbon Markets are failing due to at least three systematic failures.

Corruption and Non-Transparency

Carbon markets have created a lot of income for consultants, carbon brokers and project developers, not to mention the validators, policy makers, NGO professionals and academics who have made a living from these markets. There is very little independent and democratic oversight in the system. Instead, there are many revolving doors between the business, policy, NGO and university worlds, fuelling accusations of corruption.

Unsustainable Practices

AT Biopower, a Thai company that generates renewable electricity by the burning of rice husk is able to sell carbon credits to Japanese and other polluters. AT Biopower presents rice husk as a waste product, but, it is actually a vital source of fertilizer in the local, sustainable economy of subsistence farmers. Farmers now have to buy petroleum-based, chemical fertilisers, which makes them worse off and creates negative environmental impacts.

New market mechanisms (NMM) were established as a part of post-2012 Bali Action Plan under the UNFCCC for the consideration of various approaches, including opportunities for using markets, to enhance the cost-effectiveness, and to promote, mitigation actions, bearing in mind different circumstances of developed and developing countries. NMM is designed to scale-up mitigation activities beyond project and program-level activities. The new scale is called broad segments of the economy, which may cover sectors, subsector and cross-sectoral policies. NMM were comprehensive processes to enhance implementation action on mitigation of climate change through Nationally Appropriate Mitigation Actions (NAMA) by developing country parties in the context of sustainable development, supported and enabled by technology, nancing and capacity-building,

in a measurable, reportable and veri able manner (UNFCCC, 2007). In order to facilitate provision of support to prepare and implement NAMAs, Cancun Agreements set up a registry to record nationally appropriate mitigation actions seeking international support and to facilitate matching of nance, technology and capacity-building support for these actions .

What is essentially required, over and above the initiatives is a convergence. Convergence not only among institutes and panels but among various approaches that lead to solutions regarding climate change. The government and private sector needs to work hand-in-hand to develop better infrastructure and research on innovative techniques to curb pollution and global warming at a micro-level. The incentive mechanism needs to develop in the society, which inculcates the intangible bene ts of the environmental safeguarding as a direct cost.


14Financing climate change actions in India: convergence of climate initiatives |


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India s current practices related to nancing climate change vulnerability solutions

Adaptation and mitigation responses are underpinned by common enabling factors, which include effective institutions and governance, adequate and long-term nancing in environmentally sound technologies and infrastructure, sustainable livelihoods and behavioral and lifestyle choices. India has chalked out ambitious plans and policies to tackle climate change and environmental issues that re ect India’s strong will to address this global public issue. However, given the scarcity of resources and other competing demands,

nding matching resources is a challenge. In its Interim Report, the Expert Group on low carbon strategies has also stated that aggressive mitigation cannot be achieved without substantial international nancial support, both in terms of nancial resources and technology transfer. Domestic momentum for addressing climate change also critically depends on multilateral negotiations and actual disbursement of long-term nance.

2.1 India’s position and current practicesIndia being a developing country is categorized as a non-Annex 1 country in the international climate negotiations. This status means that currently India is not required to take up any legally binding commitments for countering climate change. However, India has voluntarily committee itself to reducing its emissions intensity by 20%–25% of its 2005 levels by 2020. Furthermore, in June 2008, the Prime Minister’s Council on Climate Change announced the adoption of the National Action Plan on Climate Change (NAPCC) to identify measures that promote development objectives while also yielding co-bene ts for addressing climate change effectively. This plan has identi ed eight core national missions and calls for identifying measures that promote our development objectives while also yielding co-bene ts for addressing climate change effectively (Prime Minister’s Council on Climate Change 2008).

India’s current stand on climate change: highlights

The Prime Minister has stated that India’s per capita emission levels will never exceed that of the per capita emission levels of developed countries

India cannot and will not take on emission reduction targets because:

• Poverty eradication and social and economic development are the rst and over-riding priorities

• Each human being has equal right to global atmospheric resources (i.e., Principle of Equity)

• Common but differentiated responsibility is the basis for all climate change actions

India will continue to be a low-carbon economy, according to India: Strategies for Low Carbon Growth 3

India’s primary focus is on adaptation , with speci c niches for mitigation 4

India has already started work on a comprehensive National Action Plan on Climate Change whose activities are in the public domain.

Only the Nationally Appropriate Mitigation Actions (NAMAs) can be subject to international monitoring, reporting and veri cation that are enabled and supported by international nance and technology transfer.

India advocates collaborative research in future low-carbon technology and access to intellectual property rights (IPRs) as global public goods.

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Points of concern for India

Differentiation among developing countries sought to be introduced

Sectoral approaches to mitigation actions outside Bali Plan being advocated

� Making all nationally appropriate mitigation actions (NAMAs) subject to international monitoring, reporting and veri cation

Requirement for quanti cation of emission reductions from baseline scenario

Ambiguity in responsibility for nance and technology transfer

India’s Proactive Contribution to Climate Change Negotiations

Actively involved with G77 and China to evolve common position on negotiations

Made 9 submissions to UNFCCC on nance, technology, forestry and other areas, e.g.,

• Suggested a mechanism for technology transfer and development

• Suggested a nancial architecture for climate change

Presented a proposal for comprehensive approach to REDD+

Worked with China, Brazil, South Africa and 33 other countries to present a joint proposal for emission reduction targets by Annex 1 countries in second commitment period

The Government of India has introduced and implemented several initiatives, policies, regulations and undertaken missions to mitigate climate change and face the adaptation challenges. Following is the list of initiatives/missions taken by the government of India to combat climate change and its objectives:

Jawaharlal Nehru National Solar Mission: The mission aims to establish India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country as quickly as possible. The Mission has adopted a three phase approach.

National Mission for Enhanced Energy Ef ciency: This Mission aims to achieve growth with ecological sustainability by devising cost-effective and energy-ef cient strategies for end-use demand side management.

National Mission on Sustainable Habitat: To promote sustainability of habitats though improvements in energy ef ciency in buildings, urban planning, improved

management of solid and liquid waste including recycling and power generation, modal shift toward public transport and conservation.

National Water Mission: It aims to conserve water, minimize wastage and ensure equitable distribution both across and within states through integrated water resources development and management.

National Mission for Sustainable Agriculture: It aims to transform agriculture into an ecologically sustainable climate resilient production system while at the same time, exploiting its fullest potential and thereby ensuring food security, equitable access to food resources, enhancing livelihood opportunities and contributing to economic stability at the national level.

National Mission for Sustaining the Himalayan Ecosystem: It plans to evolve management measures for sustaining and safeguarding the Himalayan glaciers and mountain ecosystem and attempt to address key issues namely impacts of climate change on the Himalayan glaciers, biodiversity, wildlife conservation and livelihood of traditional knowledge societies.

National Mission for a Green India: This Mission plans to use a combination of adaptation and mitigation measures in enhancing carbon sinks in sustainably managed forests and other ecosystems, adaptation of vulnerable species/ecosystems, and adaptation of forest-dependent communities.

National Mission on Strategic Knowledge for Climate Change: This mission aims to identify challenges and responses to climate change through research and technology development and ensure funding of high quality and focused research into various aspects of climate change.

In addition to the National Action Plan on Climate Change, the Government of India has taken several other measures to promote sustainable development and address the threat of climate change. These initiatives operate at the national and sub national level and span domains that include climate change research, clean technology research and development,

nance, and energy ef ciency and renewable energy policy and deployment.

National Clean Energy Fund

State Action Plan on Climate Change

NABARD: Progressing Adaptation Actions

Auto Fuel Vision and Policy 2025

Indian Network for Climate Change Assessment

Expert Group on Low Carbon Strategies for Inclusive Growth

Bilateral Cooperation on Environment and Clean Technology


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Mission Targets Responsible EntityAllocation of funds for twelfth

ve ear Plan Period (2012–2017) (in billion)

Mission focused on mitigation

National solar mission 20,000 MW of solar power by 2020

Ministry of new & renewable energy

INR87.95

National mission for enhanced energy ef ciency

10,000 MW of EE savings by 2020

Ministry of power INR1.90

National mission for sustainable habitat

EE in residential and commercial buildings, public transport, Solid waste management

Ministry of urban development INR 9.50

Mission Objectives Responsible entityAllocation of funds for twelfth ve

year plan period (2012–2017) (in billion)

Mission focused on adaptation

National water mission Water conservation, river basin management

Ministry of water resources INR891

National mission for sustaining the Himalayan ecosystem

Conservation and adaptation practices, glacial monitoring

Ministry of science & technology INR16.95

National mission for a green India

6 million hectares of afforestation over degraded forest lands by the end of Twelfth Plan

Ministry of environment & forests

INR460

National mission for sustainable agriculture

Drought proo ng, risk management, agricultural research

Ministry of agriculture INR1080

National mission on strategic knowledge for climate change

Vulnerability assessment, research and observation, data management

Ministry of science & technology

INR9.5

Details of a few important initiatives have been summarized in the table below.

Source: Ministry of environment, forests and climate change, government of India


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Climate nance provides the means to reconcile equity with effectiveness and ef ciency in actions to reduce emissions and adapt to climate change. However, current levels fall far short of estimated needs. Climate nance concerns any

nancing that is tied speci cally to projects and programs for climate change mitigation (reduction of GHG emissions) or adaptation (actions to minimize the effects caused by climate change). With the need to alleviate climatic changes on the environment, India has committed itself to various renewable energy projects and energy ef ciency projects to reduce carbon emissions. Through CDM, India was able to make money by creating and trading carbon credits to developed countries. The National Action Plan on Climate Change

was also developed to give impetus to the development and climate change adaptation and mitigation objectives that India is pursuing. As with every project, funding it is a key element. The most obvious source of nancing is government budgetary support. Since some of the resources for adaptation and mitigation are built into ongoing schemes and programs, most of the funds are expected to come as sectoral nance. However, in spite of the support of the Government, India will need external support for meeting its ambitious commitments. Channelizing international nance through NAMAs plays a key role in helping India meet its climatic aspirations.

Climate relevant sectors and its subsectors

Cleantech Energy Forestry Building Technology

Industrial ApplicationsTransport

Waste Management

Renewable energy

Energy ef ciency

Fuel switch

CHP, CHS

Products andservics thatimproveoperationalperformance,productivityor ef ciencyrelated topollution

Afforestation& reforestation

Forestmanagement

Reduceddeforestation

Forestryproducts forbioenergy

TechnologyLF methanerecovery

Waste incinerationand energyrecovery

Compstingrecycling andminimization

Vehicularef ciency

Electricvehicles

Hybridvechicles

Biofuels

Modal shift

Transportplanning

Energyeggiciency

Heat & powerrecovery

Recycling

Emissioncontrol

Ef cientlighting

Appliances

Improvedinsulation

Solar heating

Fluorinatedgases

The usual framework for climate nance ow in India is illustrated in the diagram below. Domestic and International funds are channelled to the implementing agencies through various programmes planned by the government.

Source EY


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STATE

SAPCCs(Through Line

Ministries)

NAPCC Missions(Through Line

Ministries)

National Development

Plans

GOVERNMENTS DFIsPRIVATE FINANCE

INSTITUTIONS

CLEANENERGY

ENERGY EFFICIENCY

TRANSPORT FORESTRY

International Funds

DomesticBudgetFunds

PrivateSector

Financing

Privatesector

Internationslorganizations

CivilsocietyNGOs

LocalGovt

Implementing &Executingbodies

Delivery Bodies

National GovernanceClimate Finance coordinating agency functions:Coordinates CF access from a variety of sourcesNeeds assessment & CBA to prioritise actionsMainstream climate nance solutions into national-level plans

Climate Finance

Source: Ricardo-AEA/R/ED59216/Final Report

Figure : Illustrative representation of ow of climate nance


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The estimated actual expenditure (by national public sources) to the adaptation needs of India, covering the sectors of health, water, rural development and forestry, was approximately at 2.6% of GDP in 2009–10. To meet the requirements of NAPCC’s plans, programs and activities, being voluntary in nature, Finance Minister Arun Jaitley announced an increase in the target for renewable energy generating capacity, to 175,000 megawatts by 20225 . However, the funding for the Ministry of New and Renewable Energy is expected to reduce by more than two-thirds in 2016, to INR3 billion (US$48 million). Nevertheless, India has expressed its willingness to take on more ambitious mitigation projects if there is nancial aid from the Green Climate Fund. Mechanisms and initiatives undertaken by the Government of India:

The Perform, Achieve and Trade (PAT) scheme is a market-based energy ef ciency program adopted by the NAPCC to enhance energy ef ciency in large energy-intensive industries and facilities, reducing speci c energy consumption by approximately 5%.

Renewable Energy Certi cate (REC) Mechanism was established to enable states to economically achieve their Renewable Purchase Obligations (RPOs). Through this mechanism, state distributors who lack adequate renewable sources had exibility to meet their RPOs as a market-based trading mechanism had been established.

The National Feed-In Premium for Wind Power was implemented with the objectives to give different types of investors a ghting chance, especially since some of them were eligible to claim accelerated depreciation bene t to encourage autonomous power manufacturers and overseas investors to invest in the Indian wind industry. The subsidy is disbursed only to eligible projects, which have to meet several requirements.

The feed-in tariff is a policy mechanism designed to accelerate investment in renewable energy technologies. A range of feed-in tariffs are operating at both the federal and state levels in India for a variety of different sources. The MNRE’s use of auctions to set tariffs for renewable energy projects is leading states to re-examine their feed-in tariffs and potentially adopt a similar process.

Guaranteed tariffs set through auctions awarded to solar projects by the Government to meet ambitious targets of the NAPCC’s solar mission. The projects are awarded in various rounds through a competitive bidding process.

Preferential nancing instruments such as Partial Risk Guarantee Fund (PRGF) for energy ef ciency is a mechanism by which lending risk associated with energy ef ciency projects can be lowered. Through this instrument, up to half of the principal loan amount is guaranteed, in case of default by the borrower. Complementary to the PRGF is the Venture Capital Fund for Energy Ef ciency (VCFEE), which injects equity funding into energy ef ciency projects. VCFEE has been established with seed capital from the Government along with other institutions. It provides risk capital, leverage other private venture capital investments, and set a reasonably lower rate of return expectation on its share of investment.

National Clean Energy Fund was created to fund research and innovative projects in clean energy technologies. Review of project proposals, as submitted by all types of companies and organizations are done by the government and decisions on disbursement of funds lie with various ministries or committees.

Taxes in the form of Clean Energy Cess are levied on per ton of domestic and imported coal, lignite and peat. The revenue generated thereon is channelized into the National Clean Energy Fund. India has gradually removed fossil fuel subsidies for petroleum, liberalizing prices and reducing duty.


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The budgetary requirements to meet the plans under the NAPCC for a period of ve years are estimated to be US$31 billion. To translate the National Policy into action, especially at local levels, the State Action Plan for Climate Change (SAPCC) was adopted to decentralize NAPCC objectives into local context. In line with NAPCC, SAPCC can help states address

climate change issues. So far majority of the states have submitted their SAPCC to the environment ministry, which has been endorsed by the National Steering Committee on Climate Change whilst SAPCC of three states are being considered by Expert Committee on Climate Change.

4.4

3194.71

113.32

21.42

99

210.59

565.65

15.6

673.94

31.79

71.2

29.38

47.08

39.17

62.98

36.75

37.78

170.32

8.25

587.96

2.62

760.95

4029.28

234.28

88.33

182.71

Andaman & Nicobar Islands

Andhra Pradesh

Arunachal Pradesh

Bihar

Chhattisgarh

Gujarat

Haryana

hsedarP lahcamiH

Jammu and Kashmir

Jharkhand

Karnataka

Kerala

Madhya Pradesh

Manipur

Meghalaya

Mizoram

Nagaland

Odisha

Puducherry

Punjab

Rajasthan

Sikkim

Tamil Nadu

Tripura

Uttarakhand

West Bengal INR BILLION

Figure 6: Budget requirements of state governments for implementing SAPCCs for ve years (in INR billion)


Source: Ministry of Environment, Forests and Climate Change, Government of India

22

The National Action Plan on Climate Change (NAPCC), which was released by the then Prime Minister of India in June 2008, mainly looks into protecting the poor through inclusive sustainable development and inclusion of civil society and public-private partnerships in the process. However the country needs to work out operational guidelines for detailing scope of PPP in each sector as well as various national development schemes.

2.3 Role of banksBanks have been assigned a special role in the economic development of the country and the Reserve Bank of India has prescribed certain percentage of bank lending to be allocated to the developmental sector called the Priority Sector . Additionally, banks have begun to realize their role as multipliers for responsible and sustainable business as they increasingly integrate evaluation on sustainability as one of the key inputs to their decision on nancing and valuation of projects. Banks play an indispensable role in mobilizing

nancial resources across the economy — in particular, providing capital for large-scale infrastructure and low carbon technology deployment. To date, climate change impacts have only in uenced nancial decisions at the margins, if at all.

Figure 7: Cost estimates for implementing state climate action plans

The HSBC Climate Partnership is a ground-breaking, ve-year partnership between HSBC and The Climate Group, Earth-watch Institute, Smithsonian Tropical Research Institute and WWF. HSBC’s US$100 million investment — the largest ever corporate donation to each of these four world-class environmental charities — aims to combat the urgent threat of climate change by inspiring action by individuals, businesses and governments worldwide.

IndusInd Bank inaugurated Mumbai’s rst solar-powered ATM as part of its green of ce project campaign Hum aur Hariyali . It also unveiled a Green Of ce Manual - A Guide to Sustainable Practices , prepared in association with the Centre for Environmental Research and Education (CERE). IndusInd’s new Solar ATM replaces the use of conventional energy for eight hours per day with eco-friendly and renewable solar energy. It is expected to save 1,980 kW hrs of energy every year and will be accompanied by a simultaneous reduction in CO2 emissions by 1,942 kgs. In terms of costs, the savings will be substantial, approximately INR20,000 per year in case of a commercial user with grid power supply. And in areas with erratic power supply the solar will replace diesel generators and translate into savings as high as INR40,200 every year.

GrantsINR 12398

Bilateral Funds INR 245855

Multilateral Funds

INR 298369

Technical AssistanceINR 187488

LoansINR 344455

AdaptationINR 119723

MitigationINR 424501

International Finance

INR 544224

Cross Cutting AreasINR 733

EnergyINR 402136

IndustryINR 7348

TransportINR 14724

All values in Millions

Sources Intermediaries Instruments Uses

Focus Sector

Disaster RecoveryINR 68754

AgricultureINR 1196

Forest & BiodiversityINR 6247

WaterINR 24043


Source: EY

23

The State Bank of India (SBI), as part of its Green Banking Policy, will set up windmills to generate 15 MW of power in Tamil Nadu, Maharashtra and Gujarat for its own consumption. SBI was the rst Bank in the country to think of generating green power.

The issue of climate nance is important to several departments and ministries both at the GoI as well as at the state government level. It is, therefore, important that all decisions on climate nancing, whether related to need assessment or project and nancing determination, are made in coordination with all concerned departments and ministries, and should involve the state planning commissions. It is also important that the GoI put in place a mechanism to involve civil society groups and other stakeholders in decisions regarding climate nance. India needs to put in place a mechanism that is capable to raise domestic nance to meet the climate change needs of the country. As of now, there seems to be only one dedicated fund, the NCEF, with just one revenue source stream, which is cess on coal .

India also needs to design a dedicated nancial and governance instrument to link national government climate plans and state level expenditures on climate change, so as to improve the delivery of domestic climate nance. Furthermore, India needs to put in place a domestic MRV mechanism on various nancial ows.

2.4 Green BondsIndia’s renewable energy (RE) potential is estimated to exceed 3,000 GW, yet currently only a fraction of this amount,32.8 GW, is used. The Government aims to dramatically increase the amount of installed RE, and has set a target of 165 GW of additional RE capacity installation by 2022. The Government focus is currently on methods of arranging and facilitating the needed capital investment to achieve this target, which is estimated at US$200 billion. However, even with the variety of project nancing mechanisms for RE that are prevalent in India, there are some fundamental challenges for RE developers in the

nancial marketplace:

Asset-liability mismatch: This limits project nancing tenure to ve to seven years except in cases of institutions such as Indian Renewable Energy Development Agency (IREDA), PTC Financial Services, etc., which have access to lines of credit from multi-lateral and bi-lateral agencies with extended tenures.

High interest rates: It is estimated that high interest rates and inferior terms of debt in India raise the cost of renewable energy by 24%–32% compared to similar projects

nanced in the US or Europe.

Sector limits: With renewable energy categorized under the power sector by the banks, there is an increased competition for RE projects to access capital vis-à-vis thermal power projects.

In this context, innovative nancing mechanisms are required for the development of the RE sector in India. To address these challenges, the USAID Partnership to Advance Clean Energy – Deployment (PACE-D) Technical Assistance (TA) 3 Program prepared comprehensive reviews of nancing mechanisms for renewable energy and energy ef ciency in 2013. Green Bonds were identi ed as one of the key nancial instruments that can provide Indian RE project developers with access to scalable, long-term, low-cost debt capital from institutional investors.


24

Resource risks

Stable operatingperformance vis-a-visdesign performance

PPA quality

OEM quality

Low regulatoryrisks in the stateswhere assests arelocated

Additional insurancecovers, for unmitigatedrisks-such as RE resource or plant performance

Currency hedge

OPIC, MIGA or equivalentcovers for regulatoryrisks in the country, for bond holders

DFIs such as WB orADB may give suchcredit enhancement atsame cost

Design securitization mode (pledges, mortages, cash lowcharge, SPV etc)

For ex; Climate bondStandards Board (CBSB) or Climate bondsInitiatve (CBI)

Green Bonds Principles(2014) announced by aconsortium of leadingbanks outlines principlesof designing, disclosing,managing and reporting

The bonds may belisted or unlistedissued to a few QFIs

London, Luxembourg,NY are proven places for listing

Process ow for issurance of green bonds

Identify high quality assets

Mitigate residual risks

Enhance credit rating

Get green certi cation

Select appropriate listing

2.5 International fundingOver and above the national budget, there are various international nancing institutes who channel their funds to India in the form of grants, loans or technical assistance.

1. Grants The key sources of bilateral assistance in the form of grants are:

USAID

Canadian international development agency (CIDA)

IDRC, Canada

DFID and British high commission

SDC

Indo-German development cooperation

GIZ

SIDA

NORAD

Indo-french development cooperation

Australian-Aid (Government of Australia)

European commission

Japan – green id plan

2. Multilateral grants The key sources of multilateral assistance to India in the form of grants and project support in the recent past are:

UNDP

GEF

3. Multilateral loans and technical assistance Other multilateral agencies that support India through project loans, both soft as well as market-based loans and technical assistance, which can be a component of a loan and also can be in the form of a grant are:

The world bank

ADB

International fund for agricultural development (IFAD)


25

Organization Focus AreasTotal project budget amount

2014–15 2015–16 2016–17W 2017–18

DFID

• Health• Government• Education• Multi sector• Social• Other

|US$200 MILLION

US$50 MILLIONUS$ 15 MILLION

ADB

• Water• Transport• Education• Multi Sector• Trade & Industry• Health• Finance• Energy• Agriculture

• Public Sector

US$2855.86 MILLION S$1661 MILLION

|

WORLD BANK

• Education• Health• Infrastructure• Water Supply &Sanitation• Vocational Training• Rural Livelihood

US$5236 MILLIONUS$1519 MILLION

| |

JICA

• Power/ Energy• Infrastructure• Social Services• Water, Sewerage & Sanitation• Agriculture, Forestry• Mining & Manufacturing• Irrigation & Flood Control

US$2500 MILLION

US$580 MILLION | |

UNDP

• Responsive Institutions 33%• Inclusive & Sustainable Growth 21%• Development Impact & Effectiveness 20%• Democratic Governance 15%• South-South 9%• Climate Change & Disaster Resilience 2%• Crisis Prevention & Recovery <1%• Gender Equality <1%

|US$13.88 MILLION

| |

India is concentrating its efforts on ensuring that rich industrialized countries provide predictable and adequate nance and technology to developing countries to tackle climate change6. There has been a plethora of initiatives undertaken globally to tackle the climate change and its impact. The United Nations Framework Convention on Climate Change (UNFCCC) treaty was signed at the Earth Summit to stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent

dangerous anthropogenic interference with the climate system (Article 2 of UNFCCC). There have also been wide climate change legislative actions in 16 major economies. 155 laws, regulations, policies, and decrees of comparable status that relate to climate change, energy ef ciency, low-carbon energy, sustainable transport, forestry management, or adaptation to climate change have already been identi ed by a study conducted by members of Globe International.

6



27

Combating climate change will require mobilization of substantial resources. Success will depend on the establishment of mechanisms and approaches that incentivize the mobilization of resources for cost-effective and ambitious climate action at all levels. Cooperation between countries and between private and public-sector stakeholders is considered crucial.

3.1 International convergence initiatives The international convergence initiatives have shown integration between regulatory tiers and henceforth been capable to have a broader outreach. A few examples have been listed as follows:

A. Carbon Pricing Leadership Coalition7

The Carbon Pricing Leadership Coalition brings together leaders from across government, the private sector and civil society to share experience working with carbon pricing and to expand the evidence base for the most-effective carbon pricing systems and policies. The coalition formed from a groundswell of support for carbon pricing at the 2014 UN Climate Summit, where 74 countries and more than 1,000 companies expressed support for carbon pricing. Its goal is to expand the use of effective carbon pricing policies that can maintain competitiveness, create jobs, encourage innovation, and deliver meaningful emissions reductions.

Part of the coalition’s role is to deepen understanding of the business and economic case for carbon pricing. In that role, it is developing scenarios that will illustrate plausible outlooks under a variety of carbon pricing policies and timelines. The scenarios are being developed for use by governments, companies, and investors and will be released in mid-2015. The coalition’s initial work also includes developing a set of principles to help guide best practices for carbon pricing, building from lessons learned through the Partnership for Market Readiness and experiences in jurisdictions around the world.

B. Partnership for Market Readiness (PMR)8

A global partnership, the Partnership for Market Readiness (PMR) brings together different countries, organizations, and experts to spark innovative approach to GHG mitigation using markets and carbon pricing. Through grant funding and technical assistance, the PMR helps countries explore and address the technical capacity gaps to assess, design, and adopt innovative and cost-effective approaches to greenhouse gas (GHG) mitigation. Particular focus is on mitigation approaches that lead to a price on carbon — such as domestic ETS and carbon taxes. Importantly, the PMR supports countries to move forward with national action plans that reduce carbon emissions while also stimulating growth and competitiveness.

Seventeen implementing country participants are middle income countries that receive funding and technical support from the PMR. Thirteen contributing participants contribute funding and share relevant experience. Together, these two groups make up the Partnership Assembly (PA), the PMR’s decision-making body.

The partnership also includes a third participant category — the technical partner. Technical partners represent countries or sub-national jurisdictions that are at an advanced stage of carbon mitigation policy development. While they do not participate in decision making, they provide valuable lessons and are an important contribution to the PMR’s knowledge exchange.

The PMR also bene ts from the knowledge, experience and participation of observers. PMR observers are countries, multilateral development banks, UN organizations and other non-governmental organizations that join the dialog on market readiness and market-based approaches at PMR meetings and events. A growing group of Technical Experts provides feedback on country proposals and facilitates learning during workshops and training.

Convergence of climate initiatives and way forward


28

IndiaThe decentralized international approaches can be replicated within the country, which is structurally a decentralized democracy. India needs to focus on channelling its funds and providing incentives to the different players in the economy to form a consortium to tackle climate change. The primary motive worldwide is to price carbon and it surfaces into the grassroots of the economy through a regulatory channel. India should choose a mechanism, which suits the appropriate actions required for the country. There have been quite a few initiatives already taken by the Government. We take a few examples to highlight the approach.

3.2.1 Emphasizing on centre-state-municipal collaborations

Under the new guideline of 14th Finance Commission, states are given 42% of divisible revenue pool collected by the Union Government of India. In addition to that, FC-XIV also recommended the state’s forest cover as a factor with 7.5% weightage in terms of deriving revenue share. Grant-in-aid to the states is under two major headings — basic grant and performance grant. Issuing Municipal Bonds as a source of additional revenue is also another option. National nodal ministries would have to allocate funds under the respective National missions through the outlays of respective ministries. For example, in Sikkim, Mahatma Gandhi Rural Employment Guarantee Scheme (MNREGA) funds were used to recharge hilltop lakes as well as revive springs.

Other centrally funded schemes such as Raj Krishi Vikas Yojna and National Horticulture Mission could also help the SAPCC link with, and scale up ongoing sustainable development work in the state, while Delhi discovered an innovative way to tax residents to fund sustainable development programs. Other suggested funding options were from bilateral and multilateral agencies. Various activities listed under individual SAPCCs are placed under different individual implementing agencies. It is required that the various potential ground level activities and initiatives to combat climate change be identi ed. The decentralized structure of the Indian Government gives the opportunity for the Government to realize the needs and assess the potential risks.

11

3.2.2 Encouraging public private partnerships

To promote private sector nancing for clean energy projects, through the use of concessional funds to catalyze investments in renewable, low-carbon technologies that would not otherwise happen, PPP models need to be set up.

There have been several infrastructural PPP initiatives9 undertaken in India. Some of the initiatives include the following:

Alandur Sewerage Project10 in Tamil Nadu to avoid ground water contamination is initiated by the Government with a consortium of private developers on a Built-Operate-Transfer basis.

Timarpur Okhla Integrated Municipal Solid Waste Management Project by IL&FS Infrastructure Development Corporation Limited and M/s Jindal Urban Infrastructure Limited (The project was registered with the UNFCCC for the CDM to earn 2.6 million Certi ed Emission Reductions (CERs) over a ten-year period).

Sun Edison and Azure Power with the Gujarat Government launched the Gandhinagar (Solar) Photovoltaic Rooftop Programme11.

Climate-conscious PPPs make sense for several reasons.

PPPs are an excellent vehicle to promote cost-effective projects that spur innovation.

PPPs can contractually set minimum performance standards that can result in lowering GHG emissions.

PPPs are also important for climate initiatives because these partnerships can ef ciently organize, under a single project umbrella, numerous and complex arrangements that make a renewable energy (or any other climate-related) project work. It is critical to consider the role of PPPs in addressing adaptation to the effects of climate change. Adaptation initiatives, which would partially accept or avoid the climate risk, can be implemented by designing projects that look forward, examining the potential effects of a changing climate in its infrastructure. Adaptation is gaining prominence as new funds are being negotiated to assist countries that need it most —especially developing countries, which see the impact of climate literally on the ground. Many of these governments feel that adaptation is in their immediate interest because results can help improve people’s lives right away.


29

PPPs, with possible 25-year (or longer) concessions, have the advantage of providing a structure for addressing medium- and long-term issues. Currently, we need a public sector that is engaged and can provide an enabling environment, funds that can catalyze progress, and a private sector committed to innovation and cost ef ciency. Most important, the private sector must prioritize working with governments to continue building sustainable PPPs. From the symbolic embrace of government and the private sector, the future generation of climate-conscious business emerges12.

3.2.3 Encouraging the private sector and non-pro t civil society organizations

Private sector and non-pro t organizations in India have competency for bringing innovative solutions and scale to the various models for climate change adaptation shaped by the civil society and/or Government. There is a vital need for the Government to involve them through innovative and alluring partnerships, while on the other hand induce them to take it as their prime responsibility. Globally, many community-focused social venture capital funds have emerged in recent years seeking to strike a balance between social bene t and

nancial returns.

Figure 8: Convergence of the solutions

Source EY

Advantage

Key Roles

Major Responsibilities

Public Sector

Facilitator, Regulator

Designing andPlanning the ow of

funds Incentivedesign

Frameworkregulations and

policy

Planning andimplementation of

projects andindenti cation of

potential

Convergence of Solutions to climate change vulnerability

Post-implementationresponsibilitiespolicy advocacy

Technical solutions,R D, building

partnerships and market linkages

Sensitization capacity buildingimplementation

mediators

Transfer and sharing of Risks

Building the structure

Services, Finance Community LevelOutreach

Private Sector Non-Pro t/CivilSociety Organizations


30

India should work toward unique and innovative PPP models in the climate change sector and bring together resources and expertise of diverse stakeholders. Public sector and the Government can play a role of facilitator and regulator and earmark funds through national development schemes. The private sector can play a role in lining up sources of new funds, shaping risk management mechanism and innovative technological solutions. Civil society organizations on the other hand can play a major role as mediator between public sector, private sector and communities to enable scaling up of initiatives.

3.3 Success story A combination of National Policy, Public Co-Financing and Private Risk Management Enabled Investment in the Rajasthan Sun Technique CSP plant

The Rajasthan Sun Technique plant is one of the most advanced Concentrated Solar Power (CSP) plants under the National Solar Mission (NSM) despite using a technology that has never been deployed at this scale. Not only is it among the largest projects under the National Solar Mission and the second-most advanced in terms of planned commissioning, it is also the only one that uses the more innovative linear Fresnel instead of the more common parabolic trough technology. In addition to the subsidized PPAs offered by the NSM, the Rajasthan Sun Technique project also bene ted from the Rajasthan Solar Energy Policy (RSEP) from 2011, which reduced VAT for solar products from 14% to 4% and exempted solar project equipment from the entry tax13 . The project also bene tted from leasing earmarked land at subsidized rates under the RSEP. The other measures under the RSEP — 33kV transmission lines for plants within 15 kilometers from the next

Rajasthan Sun Technique capital structure

substation — did not bene t the project, as developers built a dedicated 220 kV transmission line for the plant.

The project involves a series of public and private stakeholders, each having a speci c role in nancing the CSP plant. Reliance ADA, a large Indian conglomerate, developed the project through its subsid¬iary Reliance Power, holds the full equity in the special purpose vehicle and is responsible for engineering, procurement and construction (EPC) through Reliance Infrastructure, another Reliance ADA subsidiary. A US-based subsidiary of a large French energy company (Areva) provides the Linear Fresnel technology and ensures operation and maintenance through an India subsidiary. The other key stakehold¬ers are two national public bodies (MNRE and NVVN) responsible for policies and power purchase, and a consortium of domestic private and international public investors, including FMO (Dutch Development Bank), Asian Development Bank and Export-Import Bank of the US.

The 100 MW Rajasthan Sun Technique CSP plant gath¬ered total nancing of approximately US$414 million. We attempt to quantify cost inputs, returns, and impacts that will derive from the investment to the extent possible using information about proj¬ect speci cs if it is publically available, or industry standard assumptions if it is not. Foreign investors provided for 70% of nancing, a local Indian bank 5%, and the project developer 25% in equity contributions. Financing from foreign investors is denominated in US dollar and mostly in the form of senior debt with long-term maturities of 18 years. The Export-Import Bank of the United States (Ex-Im Bank of the US) provided a loan tied to US Treasury pricing, provided that the project purchase goods from US exporters, in this case Areva Solar Inc. Conversely, the debt provided by the ADB and the FMO did not contain any subsidies. They provided loans at rates consistent with the cost of capital for these Development Finance Institutions (DFIs).

SOURCE OF FUND FINANCING TYPE AMOUNT (in million)

US EX-IM Bank Export Credit Loan US$80

ADB Senior Loan US$103

FMO Senior Loan US$90

FMO Subordinated Loan US$15

Axis Bank Senior Loan INR1140

Reliance Power Equity INR5500


31

Figure 9: Project stakeholders for Rajasthan Sun Technique plant

Source: The-Role-of-Public-Finance-in-CSP-Rajasthan-Sun-Technique-India

Asian Development Bank

DEBT-USD 312 M GOVERNMENT INSTITUTIONS IN INDIA

Operation and Maintenance

Engineering, procurement and constructionPROJECT SPONSOREQUITY-USD 104 M

POWER OFF-TAKER

Rajasthan suntechnique energy

pvt ltd

USD 103 M in senior debt

USD 90 M in senior debt,USD 15 M in Sub-ord debt



Areva renewables India

Areva solar Inc.USA Main

Technology

MajorityOwner

MajorityOwner

RelianceInfrastructure

Reliance ADA

Equity 104 M Reliance power

INR INR State discoms

DistributioncompaniesPower trader

NVVN

Land, water,tax breaks

Payment securityscheme 100% Owner

NTPCGovernment of Rajasthan

Government of IndiaMinistry of new andrenewable energy

National solor mission:subsidized PPA, Tax

exemptions

Majorityowner

FMO (Netherlands)

US Ex-Im Bank

Axis Bank (India)



3.4 Recommendations The government can plan to follow a certain path towards arranging the funds which provides incentive for the private sector.

The convergence will benchmark on the key advantages of the different agencies. While the community involvement and grassroot-level problems which can be identi ed by the social organizations, there problems can be addressed through project development and provision of suf cient funds from public and private funding. Channelling and incentivizing green funds is essential in this context. Working groups, speci c to industries, can be set-up for prioritizing inclusion of DRR and climate change adaptation. Government should give incentives to private sector for innovative PPP adopting green technologies through tax bene ts, revenue subsidies etc. Such PPP models could be useful for pooling resources and expertise and for up-scaling climate change mitigation and adaptation initiatives.

Corporate level disaster policy and climate change adaptation compliance can also be formulated at national level by Government. Tool kits for PPP models for concerned sectors should be made available by Government – such kits need to be comprehensive dossiers indicating model concession agreements, risk and revenue sharing framework etc.

Detailed action plans under NAPCC should be prepared by Government in collaboration with private sector and civil society organizations. It is important that all decisions on climate nancing are made in coordination with all concerned ministries and departments, and involve state planning commissions to align action plans. Government can create a welcoming investment environment through overall policies geared to the ease of doing business by giving incentives to private sector for innovative PPP adopting green technologies through tax bene ts, revenue subsidies etc. They must work together closely to reduce vulnerability to climate change while enhancing economic growth and development for the country.

Market place and incubation facilities to upscale small and grass root innovations for sustainable models for climate change adaptation should be promoted by Government. Small infrastructure projects promoting alternative energies, non-conventional waste management technologies and green technologies can be promoted with active participation of private sector and civil society organizations. Development of agship programmes to promote and support the establishment of a global network of national clean technology accelerator programmes as an effective platform to catalyse and accelerate innovations in clean energy and environmental technology in the SME sector, by leveraging the knowledge assets accrued.

A public policy for corporate social responsibility should be formulated at national level considering disaster risk reduction and climate change adaptation measures. Out of 50 companies, 38% have supported disaster relief and rehabilitation activities as part of CSR14. Ministry of corporate affairs, CII (Confederation of Indian Industries and FICCI (Federation of Indian Chambers of Commerce and Industry) need to take the lead in formulating the policy recommendations.

14

33

corporate IndiaASSOCHAM initiated its endeavor of value creation for Indian industry in 1920. Having in its fold more than 400 Chambers and Trade Associations, and serving more than 4,50,000 members from all over India. It has witnessed upswings as well as upheavals of Indian Economy, and contributed signi cantly by playing a catalytic role in shaping up the Trade, Commerce and Industrial environment of the country.

Today, ASSOCHAM has emerged as the fountainhead of Knowledge for Indian industry, which is all set to rede ne the dynamics of growth and development in the technology driven cyber age of ‘Knowledge Based Economy’.

ASSOCHAM is seen as a forceful, proactive, forward looking institution equipping itself to meet the aspirations of corporate India in the new world of business. ASSOCHAM is working towards creating a conducive environment of India business to compete globally.

ASSOCHAM derives its strength from its Promoter Chambers and other Industry/Regional Chambers/Associations spread all over the country.

VisionEmpower Indian enterprise by inculcating knowledge that will be the catalyst of growth in the barrierless technology driven global market and help them upscale, align and emerge as formidable player in respective business segments.

MissionAs a representative organ of Corporate India, ASSOCHAM articulates the genuine, legitimate needs and interests of its members. Its mission is to impact the policy and legislative environment so as to foster balanced economic, industrial and social development. We believe Education, IT, BT, Health, Corporate Social responsibility and Environment to be the critical success factors.

Members-our strengthASSOCHAM represents the interests of more than 4,50,000 direct and indirect members across the country. Through its heterogeneous membership, ASSOCHAM combines the entrepreneurial spirit and business acumen of owners with

ASSOCHAM

The Associated Chambers of Commerce and Industry of India ASSOCHAM Corporate Of ce: 5, Sardar Patel Marg, Chanakyapuri, New Delhi-110 021 Tel: 011-46550555 (Hunting Line) Fax: 011-23017008, 23017009 Email: [email protected] Website: www.assocham.org


management skills and expertise of professionals to set itself apart as a Chamber with a difference.

Currently, ASSOCHAM has more than 100 National Councils covering the entire gamut of economic activities in India. It has been especially acknowledged as a signi cant voice of Indian industry in the eld of Corporate Social Responsibility, Environment & Safety, HR & Labour Affairs, Corporate Governance, Information Technology, Biotechnology, Telecom, Banking & Finance, Company Law, Corporate Finance, Economic and International Affairs, Mergers & Acquisitions, Tourism, Civil Aviation, Infrastructure, Energy & Power, Education, Legal Reforms, Real Estate and Rural Development, Competency Building & Skill Development to mention a few.

ASSOCHAM has been a signi cant contributory factor in the emergence of new-age Indian Corporates, characterized by a new mindset and global ambition for dominating the International business. The Chamber has addressed itself to the key areas like India as Investment Destination, Achieving International Competitiveness, Promoting International Trade, Corporate Strategies for Enhancing Stakeholders Value, Government Policies in sustaining India’s Development, Infrastructure Development for enhancing India’s Competitiveness, Building Indian MNCs, Role of Financial Sector the Catalyst for India’s Transformation.

ASSOCHAM derives its strengths from the following Promoter Chambers: Bombay Chamber of Commerce & Industry, Mumbai; Cochin Chambers of Commerce & Industry, Cochin: Indian Merchant’s Chamber, Mumbai; The Madras Chamber of Commerce and Industry, Chennai; PHD Chamber of Commerce and Industry, New Delhi.

Together, we can make a signi cant difference to the burden that our nation carries and bring in a bright, new tomorrow for our nation.


35Climate Change Initiatives In India: Convergence of Actions |

List of Abbreviations

CCVI Climate Change Vulnerability Index

CDM Clean Development Mechanism

CERE Centre for Environmental Research and Education

CIDA Canadian International Development Agency

CII Confederation of Indian Industries

FICCI Federation of Indian Chambers of Commerce and Industry

GHG Green House Gas

GW GigaWatt

IFAD International Fund for Agricultural Development

INR Indian National Rupee

IPCC Intergovernmental Panel on Climate Change

IREDA Indian Renewable Energy Development Agency

MNREGA Mahatma Gandhi Rural Employment Guarantee Scheme

NAMA Nationally Appropriate Mitigation Actions

NAPCC National Action Plan on Climate Change

NMM New Market Mechanism

PACE-D Partnership to Advance Clean Energy – Deployment

PAT Perform Achieve and Trade

PPMV Parts Per Million By Volume

PPP Purchasing Power Parity

RE Renewable Energy

RECM Renewable Energy Certi cate Mechanism

RPO Renewable Purchase Obligation

SAPCC State Action Plan for Climate Change

UNFCCC United Nations Framework Convention for Climate Change

USD United States Dollar

VCFEE Venture Capital Fund for Energy Ef ciency

36

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Climate Change Initiatives In India: Convergence of Actions | 37

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ASSOCHAM INDIA

The Associated Chambers of Commerce and Industry of India

As a representative organ of Corporate India, ASSOCHAM articulates the genuine, legitimate needs and interests of its members. Its mission is to impact the policy and legislative environment so as to foster balanced economic, industrial and social development. We believe Education, IT, BT, Health, Corporate Social responsibility and Environment to be the critical success factors.

ASSOCHAM represents the interests of more than 4,50,000 direct and indirect members across the country. Through its heterogeneous membership, ASSOCHAM combines the entrepreneurial spirit and business acumen of owners with management skills and expertise of professionals to set itself apart as a Chamber with a difference

ASSOCHAM Corporate Office:

5, Sardar Patel Marg, Chanakyapuri, New Delhi-110 021 011-4655 0555 (Hunting Line). Fax: 011-2301 7008, 2301 7009 [email protected] I www.assocham.org

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