The European Union will soon launch a programme, initially through a 300 million euro amount from the European Investment Bank, to invest in renewable energy projects in India. The Czech Deputy Prime Minister Martin Bursik announced this on Friday while visiting New Delhi following the European Union’s adoption of its new climate and energy package. The Czech Republic holds the rotating EU presidency.
Half of the amount will be lent through the Export-Import Bank, the other half through the Environmental Development Agency. This programme still faces “bureaucratic hurdles.” For example, said EU officials, the finance ministry still has to provide sovereign guarantees.
This fund is only the first step of what could be a larger transfer of funds to India for climate change purposes. Under the new EU carbon policy, half the money earned by Brussels through the auction of carbon credits can be used to fund climate change projects in developing countries. “We can only guess how much this would be, but it could be in the order of hundreds of millions of euros a year,” said an official.
Bursik was pleased Indian officials had already listed 1300 climate change projects for EU climate change funding and had identified 25,000 villages which had been targeted for solar energy enablement. He warned, however, that “European taxpayers would need to be shown a cost curve for such investments into carbon mitigation so we can verify they are effective.” A system of proposing projects, evaluating and clearing them efficiently was needed.
The EU will thus be providing carbon mitigation funding to India through four potential channels: the existing Clean Development Mechanism, the European Investment Bank, carbon auction profits and the newly created global adaptation fund. EU officials were at pains to stress reports the CDM would be wound up following the new policy were “wrong.”
He mentioned India was the second country, after the US, that the EU was engaging about the new European climate and energy package. An EU official said this reflected a view in Brussels that India, set to become the world’s third largest carbon emitter, had been neglected on climate change.
Bursik noted coal was still a large part of India’s energy story and the EU was prepared to work with India on “carbon storage and sequestration, as it presently does with China.” EU officials expressed frustration at being unable to conclude a green technology transfer agreement with India despite over a year of negotiations.