CORPORATIONS CAN HELP US FIGHT CLIMATE CHANGE
The Paris Agreement of 2015 proved to be a game changer. It focused global efforts towards reducing greenhouse gas emissions as well as strengthening the ability of countries to deal with the unavoidable impacts of climate change. At CoP-24 in Katowice, Poland, world leaders have reconvened to strengthen the global movement for a climate resilient growth. Since the Paris agreement, developing countries like India have made significant progress in meeting their Nationally Determined Contributions (NDCs). This year’s talks at Katowice focus on establishing the “Paris Rulebook” that will set out to enable implementation of the Paris Agreement, as well as mobilise capital needed to implement the agreement. This gives a window of opportunity for the private sector to step up and demonstrate its commitment towards positive climate action.
The private sector is increasingly taking heed of the strong signal sent by the Paris Agreement. According to an International Finance Corporation (IFC) report, 179 companies have committed to set an emissions reduction target that supports the global effort to combat global warming. Companies are engaging in the sector by building resilience into their own functions. To scale up the momentum, it’s important for the governments to mobilise private capital. For instance, enabling policies and eliminating counterproductive policies will help strengthen the investment climate. One such example is the Clean Environment Cess on the use of coal in India that discourages production and consumption of coal by increasing its cost, while part of the revenue from cess is reallocated to support renewable energy development. Another example of reforming a government policy from India is on amending the Electricity Act, 2003 that allowed up to 100% FDI under the automatic route for renewable energy generation and distribution projects.
Since the early 2000s, incentives offered by the federal government to attract FDI have allowed the country’s wind and solar power industries to lower their per unit generation cost, making them cost-competitive with other fossil fuels.
But a gap in adequate and accessible finance remains unaddressed. According to an IFC analysis, India’s estimated climate smart investment potential for selected sectors is $2.1 trillion from 2016-2030. To mobilise private sector investment in these sectors, it’s important to move beyond grant-based projects. Providing a space which enables the private sector to initiate social development and incur economic benefits simultaneously would be an optimal approach.
The synergies between development progress and the opportunities to invest in resilience building will remain at the centre of the climate finance landscape for years to come. The recently released Intergovernmental Panel on Climate Change report highlights the need for collective action to limit global warming to 1.5°C. Climate smart investments will thereby play a key role in providing support to governments in achieving their NDCs and enhancing resilience.
The changing climate is disproportionately impacting the economically disadvantaged and slowing development; a disparity which is likely to increase as climate change accelerates. A study by the World Bank suggests that developing countries will need about $100 billion of new investments per year over the next 40 years to build resilience to the effects of climate change. This enormous burden cannot be carried out by national governments alone and needs the buy-in and participation of the private sector. Mainstreaming climate-smart investment from the private sector will be instrumental to enable a resilient, equitable, and sustainable society. This refers to Mark Tully’s article ‘Poetry can give us solace from life’s pressures’ (December 2). The author has painted a realistic picture of the material world we live in where everything is appraised. This mindset is palpable in all spheres of society, whether it is education, finance or politics. I firmly believe that poetry remains the last refuge in which we can seek solace during these acrimonious days of pressures, even as poetry’s profitability wins over the message it carries. But the question remains: where else do we turn, when all else fails?
AZHAR A KHAN,