Leveraging international cooperation to finance renewable energy domestically
Author - Sriparna Pathak, associate professor, Chinese Studies and International Relations, OP Jindal Global University, Sonipat.
The challenge between balancing industrialisation and tackling the climate crisis has been a treacherous one and increases in dimensions as the global population increases along with the need to ensure livelihoods. In the process of industrialisation, the burning of fossil fuels which is available at cheaper costs, depletion of forest reserves, and the need for farming livestock for consumption as well as livelihood generation influence the climate and the earth’s temperature. The processes associated with industrialisation add enormous amounts of greenhouse gases, increasing the greenhouse effect and global warming in turn. One of the most potent greenhouse gases causing global warming is carbon dioxide (CO2). CO2 has increased particularly owing to the Industrial Revolution and an increase in manufacturing activities around the world. Deforestation, agriculture, and fossil fuel usage are the primary sources of CO2. The top five countries that produced in aggregate, the most CO2 since the Industrial Revolution are the United States (US), China, Russia, Germany, and the United Kingdom. As India has now become the most populated country in the world, with a population of roughly 1.4 billion, with rapid rates of industrialisation, the choice between efforts to provide for livelihoods and reduce global warming will be difficult.
The effects of the climate crisis have been devastating for India, ranging from heat waves devastating crop yields to torrential rains causing floods that have submerged entire communities! While India comprises about 17% of the world’s population, it produces just about 7% of global emissions! The US and China remain the topmost emitters. Between 1901 and 2018, temperatures rose in India by 0.7 degrees Celsius. Between 2000-04 and 2017-21, India saw a 55% increase in deaths due to extreme heat. About 70% of households in India rely on agriculture directly or indirectly for their livelihoods but have been struggling with lower yields attributed to lower rainfall and frequent droughts. Extreme heat also makes outdoor work dangerous, and in one of the myriad ways global warming can affect lives, the most vulnerable communities in India get hit the hardest.
Keeping the difficult choice between industrialisation, which in turn yields employment among the many other things; and the need to combat global warming, India in its presidency of the G20 this year, included discussion points on energy transitions, livelihoods, economic resilience, development, sustainability, and inclusivity while leaving no one behind. At the first Sustainable Finance Working Group Meeting under the aegis of the G20, held in February this year in Guwahati, deliberations were held on mechanisms for mobilisation of financial resources for climate finance, as well as on enabling finance for sustainable development goals. The Delhi Declaration of the G20 also mentioned a Global Biofuels Alliance (GBA). The GBA is an India-led initiative to develop an alliance of governments, international organisations, and industries to facilitate the adoption of biofuels. The initiative aims to position biofuels as a key to energy transition and to contribute to jobs and economic growth. In a bid to move away from fossil fuels consumption, India has also paid attention to renewable energy and is the world’s third largest renewable energy producer with 40% of energy capacity installed in the year 2022.
India is the world's fourth largest consumer of electricity and the world's 3rd largest renewable energy producer with 40% of energy capacity installed in the year 2022 (160 GW of 400 GW) coming from renewable sources. However, one of the biggest challenges faced by renewable energy projects is the high upfront investment needed for development and installation. Solar technologies and wind power systems involve huge costs for equipment, infrastructure, and land acquisition. As stated by the Asian Development Bank, the financing of renewables in India faces conundrums due to the short tenure of loans, high capital costs, a lack of adequate debt financing as well as with the sector-specific issues of the renewable energy sector. Keeping these prevalent challenges in mind, the budgetary allocation in 2023 for renewables in India has been increased and the ministry of new and renewable energy received an allocation of ₹10,222 crore, a 45% hike from the ₹7,033 crore, it expects to spend in the current financial year. The most significant hikes are for off-grid solar projects.
A significant role in financing renewables in India also lies in international cooperation, and an example of this is the Pavagada Solar Park in Karnataka, which is the world’s largest solar park. The park has attracted significant investment from companies such as Softbank. Canadian Solar, and Adani Green Energy investing in the project. In 2022, the World Bank Board of Executive Directors also approved an additional ₹165 million to support India’s residential sector to adopt rooftop solar systems and to make solar energy more affordable. In 2023, the National Investment and Infrastructure Fund (NIIFL), India’s collaborative investment platform for international and Indian investors announced the establishment of its first bilateral India-Japan fund in partnership with Japan Bank for International Cooperation (JBIC). The fund will invest in India’s environmental preservation sector including renewable energy among other sectors. Given Japan’s extensive plans for investment in India’s Northeast, and the potential India’s Northeast has for the generation of renewable energy, a greater collaboration in the region for renewables could be aimed. While the leveraging of international cooperation to finance renewables looks promising, a closer tracking of the deliverables, along with studies of existing hurdles and pinpointed solutions for overcoming the hurdles would go a long way in a safer and greener future.
This article is authored by Sriparna Pathak, associate professor, Chinese Studies and International Relations, Jindal School of International Affairs, OP Jindal Global University, Sonipat.
The challenge between balancing industrialisation and tackling the climate crisis has been a treacherous one and increases in dimensions as the global population increases along with the need to ensure livelihoods. In the process of industrialisation, the burning of fossil fuels which is available at cheaper costs, depletion of forest reserves, and the need for farming livestock for consumption as well as livelihood generation influence the climate and the earth’s temperature. The processes associated with industrialisation add enormous amounts of greenhouse gases, increasing the greenhouse effect and global warming in turn. One of the most potent greenhouse gases causing global warming is carbon dioxide (CO2). CO2 has increased particularly owing to the Industrial Revolution and an increase in manufacturing activities around the world. Deforestation, agriculture, and fossil fuel usage are the primary sources of CO2. The top five countries that produced in aggregate, the most CO2 since the Industrial Revolution are the United States (US), China, Russia, Germany, and the United Kingdom. As India has now become the most populated country in the world, with a population of roughly 1.4 billion, with rapid rates of industrialisation, the choice between efforts to provide for livelihoods and reduce global warming will be difficult.
The effects of the climate crisis have been devastating for India, ranging from heat waves devastating crop yields to torrential rains causing floods that have submerged entire communities! While India comprises about 17% of the world’s population, it produces just about 7% of global emissions! The US and China remain the topmost emitters. Between 1901 and 2018, temperatures rose in India by 0.7 degrees Celsius. Between 2000-04 and 2017-21, India saw a 55% increase in deaths due to extreme heat. About 70% of households in India rely on agriculture directly or indirectly for their livelihoods but have been struggling with lower yields attributed to lower rainfall and frequent droughts. Extreme heat also makes outdoor work dangerous, and in one of the myriad ways global warming can affect lives, the most vulnerable communities in India get hit the hardest.
Keeping the difficult choice between industrialisation, which in turn yields employment among the many other things; and the need to combat global warming, India in its presidency of the G20 this year, included discussion points on energy transitions, livelihoods, economic resilience, development, sustainability, and inclusivity while leaving no one behind. At the first Sustainable Finance Working Group Meeting under the aegis of the G20, held in February this year in Guwahati, deliberations were held on mechanisms for mobilisation of financial resources for climate finance, as well as on enabling finance for sustainable development goals. The Delhi Declaration of the G20 also mentioned a Global Biofuels Alliance (GBA). The GBA is an India-led initiative to develop an alliance of governments, international organisations, and industries to facilitate the adoption of biofuels. The initiative aims to position biofuels as a key to energy transition and to contribute to jobs and economic growth. In a bid to move away from fossil fuels consumption, India has also paid attention to renewable energy and is the world’s third largest renewable energy producer with 40% of energy capacity installed in the year 2022.
India is the world's fourth largest consumer of electricity and the world's 3rd largest renewable energy producer with 40% of energy capacity installed in the year 2022 (160 GW of 400 GW) coming from renewable sources. However, one of the biggest challenges faced by renewable energy projects is the high upfront investment needed for development and installation. Solar technologies and wind power systems involve huge costs for equipment, infrastructure, and land acquisition. As stated by the Asian Development Bank, the financing of renewables in India faces conundrums due to the short tenure of loans, high capital costs, a lack of adequate debt financing as well as with the sector-specific issues of the renewable energy sector. Keeping these prevalent challenges in mind, the budgetary allocation in 2023 for renewables in India has been increased and the ministry of new and renewable energy received an allocation of ₹10,222 crore, a 45% hike from the ₹7,033 crore, it expects to spend in the current financial year. The most significant hikes are for off-grid solar projects.
A significant role in financing renewables in India also lies in international cooperation, and an example of this is the Pavagada Solar Park in Karnataka, which is the world’s largest solar park. The park has attracted significant investment from companies such as Softbank. Canadian Solar, and Adani Green Energy investing in the project. In 2022, the World Bank Board of Executive Directors also approved an additional ₹165 million to support India’s residential sector to adopt rooftop solar systems and to make solar energy more affordable. In 2023, the National Investment and Infrastructure Fund (NIIFL), India’s collaborative investment platform for international and Indian investors announced the establishment of its first bilateral India-Japan fund in partnership with Japan Bank for International Cooperation (JBIC). The fund will invest in India’s environmental preservation sector including renewable energy among other sectors. Given Japan’s extensive plans for investment in India’s Northeast, and the potential India’s Northeast has for the generation of renewable energy, a greater collaboration in the region for renewables could be aimed. While the leveraging of international cooperation to finance renewables looks promising, a closer tracking of the deliverables, along with studies of existing hurdles and pinpointed solutions for overcoming the hurdles would go a long way in a safer and greener future.
This article is authored by Sriparna Pathak, associate professor, Chinese Studies and International Relations, Jindal School of International Affairs, OP Jindal Global University, Sonipat.