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Beyond COP21: Opportunities for China-India Climate Collaboration – Part I

Posted: March 3, 2016 at 1:08 pm   /   by   /   comments (0)

Morgan Rote, Reyna Askew, Lingyan Yu, Rachel Estrada, James Grant, Brandon Yeh, Ryan Bender, Colleen Howe, Megan Hyndman, and Deeba Yavrom

PART I

This report was produced by a team of twenty Johns Hopkins University SAIS students and supported by the school’s Energy, Resources, and Environment department. It is the result of independent research, as well as two field research trips to Beijing and New Delhi. During these trips, which were sponsored by the SAIS ERE department’s Frontiers in Energy, Science and Technology (FEST) program, the student teams held meetings with policymakers, energy industry leaders, diplomats, and non-governmental organizations to discuss climate change policy developments and opportunities in each country. Divided into a two part web series, Part I will include the executive summary and provide an introduction to the report. Part II will detail two areas that hold the most potential for future Chinese-Indian collaboration: renewable energy and climate finance.

Executive Summary

The 21st United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP21) marked a historic shift in global climate policy. For the first time, a common framework was established to engage all countries in robust climate change action. China and India were among those offering strong support, and both have committed to significant energy intensity reductions and renewable energy expansions through 2030. Now, as the negotiations have settled and the goals have been set, the baton shifts to policymakers to develop and implement concrete action plans. Meeting the ambitious targets agreed upon will require concerted efforts—including policy changes, technological developments, the deepening of financial markets, and political leadership.

This study argues that such developments will be more fruitful if they are marked by collaboration between two of the world’s largest economies and heaviest energy consumers–China and India. In recent months, Prime Minister Narenda Modi and President Xi Jinping have engaged in relationship building, through official visits by leaders, bilateral political dialogue, and collaborative infrastructure investment. These efforts have sparked discussion on Chinese-Indian climate collaboration, as there is enormous potential for the two emerging powers to coordinate their climate change mitigation efforts.

Collaboration is in both China and India’s interest for several reasons. First, the two countries face a series of common goals and challenges in addressing climate change, including balancing development and electricity access needs with sustainability efforts. Notwithstanding some important distinctions, many of the challenges that China and India face are unique to developing countries, and collaboration by the world’s two most populous developing societies helps to ensure these issues receive sufficient global attention. Collaboration also enhances the development of low carbon solutions—through knowledge sharing, best practice sharing, and joint RD&D. Furthermore, collaboration helps to build a larger regional market for green energy, helping Chinese and Indian producers to achieve economies of scale and cost reductions and promoting a robust market for clean energy financing. Finally, such collaborative efforts would enhance China and India’s leadership role in global climate action, while setting a precedent for the international community on successful cooperation.

This study aims to highlight areas that hold the most potential for future Chinese-Indian collaboration, including clean coal technology, energy efficiency, renewable energy, bioenergy, and climate finance. Two of these areas—renewable energy and climate finance—stand out in particular and will be featured in Part Two of this series.

India and China have seen significant development in renewable energy and bioenergy generation that offer opportunities for collaboration and expansion in the future. Both countries are placing increased reliance on clean energy, requiring strong advancements in technology and financing. Fortunately, clean energy financing is an area ripe for collaboration, with green bond programs and infrastructure debt funds offering two major financing sources.

Achieving collaboration on climate change initiatives going forward will require monitoring of efficiency and financing programs, introduction of technology and knowledge sharing plans, and cooperation between high-level Indian and Chinese government officials. This study argues that such efforts would offer tremendous payoffs and allow China and India to realize their climate ambitions. It suggests a basic framework for collaboration, which may be expanded or adjusted as integration deepens.

Introduction

The 21st UN Framework Convention on Climate Change Conference of the Parties, held in Paris this December, was a landmark event for climate change negotiations. It achieved a strong universal agreement on climate, with the explicit goal of limiting global warming to 1.5 to 2 degrees Celsius above pre-industrial levels. Because China and India are the first and third largest carbon emitters globally, carbon emissions reductions in these two countries will be a deciding factor in the global community’s success or failure in achieving its targets and mitigating the adverse impacts of climate change.

There is much room for optimism, as both countries are making strides toward a low-carbon economy. China pledged to peak its carbon emissions by 2030 at the latest, reduce its carbon intensity by 60-65% compared to its 2005 level, and increase the share of non-fossil fuels to 20 percent of its energy mix by 2030. The central government has been active in pursuing these climate goals, and domestic policies underway (such as the recently announced national carbon trading system) should allow China to honor these commitments. Similarly, India has made notable climate change commitments, including its Intended Nationally Determined Contribution (INDC) pledge to reduce emissions intensity by 33-35% compared to 2005 levels and increase the share of non-fossil fuels to 40 percent of power capacity by 2030. These targets, along with ambitious renewable energy and carbon sequestration goals, suggest that India is devoting increased attention to climate concerns. While continued economic growth and expanded electricity access will remain India’s primary development goals, these recent announcements could mark a window of opportunity for innovative climate action.

Historically, China and India have worked independently to pursue their own climate goals. Bilateral cooperation has been limited thus far; however, certain trends suggest an evolution is underway. Both have participated in multilateral platforms such as the Major Economies Forum and the Clean Energy Ministerial, focusing in particular on electric vehicle and smart grid initiatives.[1] Within the G20, both countries are pushing to reduce tariff and non-tariff barriers to trade in environmental goods and services (EGS).[2]

In addition, there have been several recent initiatives within China and India’s non-profit, private, and even public sectors that suggest the potential for future bilateral cooperation. For instance, a collaborative research task force organized by the United Nations Development Program (UNDP) brought together leading climate change researchers and policymakers from The Energy Research Institute (TERI) in India and the National Center for Climate Change Strategy and International Cooperation (NCSC) in China. The joint research program was designed to foster south-south cooperation in order to share peer country experiences and exchange sustainable development strategies. In March 2014, the project released its first collaborative China-India climate change study.[3] The report provides practical recommendations for broader climate change cooperation between China and India, many of which have been incorporated into this study.

In addition, the Chinese and Indian governments have demonstrated greater interest in collaborating on areas of mutual concern than at any time since the early 1950s. Since taking office, Prime Minister Modi has actively looked to strengthen ties with Beijing–for example, by inviting Xi Jinping to visit India in September 2014. In response, China has pledged $20 billion of investment in India over the next five years.[4] More recently, during Modi’s May 2015 visit to Beijing, the two countries issued a joint statement on climate change, affirming that “the two sides believe that their bilateral partnership on climate change is mutually beneficial and contributes to the global efforts to address climate change.” China and India committed to enhancing “high-level bilateral dialogue on domestic climate policies and multilateral negotiations and to further strengthen practical bilateral cooperation, including in areas of clean energy technologies, energy conservation, energy efficiency, renewable energy, sustainable transportation including electric vehicles, low-carbon urbanization and adaptation.”[5] This bilateral statement is a clear indication that China and India are beginning to recognize collaboration as in the interest of both parties.

Indeed, collaboration between these two world powers will be critical for meeting the global two degree Celsius target, as collaboration would multiply the impact of individual action. Collaboration is in China and India’s interest for several reasons. First, the two countries face a series of common goals and challenges in addressing climate change. Both seek to achieve economic growth, energy security, enhanced electricity access, and well-managed urbanization while minimizing energy intensity, air pollution, and the local impacts of climate change. Initiatives that pursue dual goals—like boosting economic growth and sustainability by fostering new low carbon industries or increasing rural electricity access and clean energy aims by adopting renewable sources—offer windows of opportunity for both countries. Such initiatives require immense innovation, mobilization and integration, underscoring the need for cross-border collaboration.

In addition, many of the challenges that China and India face are unique to developing countries. For example, while the United States and the European Union may share China and India’s desire for lower cost solar power, they do not have the same pressing need for clean coal technologies or safer and more efficient bioenergy. Failure to coordinate on these issues risks allowing them to fall out of global focus.

Not only does collaboration generate attention for key low carbon issues, but it brings concrete benefits as well. Additionally, it deepens and broadens the market for low carbon technologies. Technology transfer–exchange of equipment, knowledge and capacity building–is a critical part of the RD&D process and would allow China and India to see technological advancements not yet achieved. China and India have much to gain by sharing their own comparative advantages in both technology and policy expertise–for example, China exchanging its best practices in energy efficiency for India’s expertise in local renewable energy promotion.

Furthermore, collaboration helps to build a larger regional market for green energy. It would allow Chinese and Indian producers to achieve greater economies of scale, driving prices down. This is critical, particularly in developing countries, as Indian stakeholders have listed cost as the key factor hindering renewable energy penetration. In addition, collaboration would promote a robust market for clean energy financing (e.g., green bonds, partial credit guarantees) and mitigate existing structural restraints.

Collaboration also offers China and India the opportunity to expand their leadership roles in global climate change negotiations. While both parties are already important players in the talks, coordination would allow them to advocate common principles held by developing countries even more robustly. It would highlight the extent of their commitment to climate change action, offering an innovative way to meet–and perhaps go beyond–their INDCs.

Such collaborative efforts would set a precedent for the international community and align with the spirit of the COP talks–many countries working together to combat a global challenge. The concept could easily expand from bilateral to multilateral cooperation with, for example, Brazil and South Africa joining this partnership, particularly in light of their existing trilateral cooperative agreement with India regarding technology transfer.[6] In addition to collaboration among developing countries, China-India cooperation could kick-start further collaboration with the United States and Europe. Such broad collaboration would likely target research areas that are of common interest, such as wind and solar power, clean vehicles, and international efficiency standards. Furthermore, it would benefit the clean energy financing sector by bringing together financing sources (United States, European Union) and a wide array of investment opportunities (China, India, etc.).

Thus, we believe that collaboration between China and India is not only in these countries’ own interest, but offers broad global benefits including technological advancements, policy improvements, and market development–all while promoting the spirit of international cooperation. Such collaborative initiatives could span across sectors, including industry, academia, and local, regional, and national governments. For example, industry can assess market dynamics and identify areas of opportunity, while researchers can share knowledge and build upon each other’s work. Multilateral agencies can help to facilitate intergovernmental arrangements and bring together a global community of technical experts, while governments can drive policies to promote market formation and technology adoption.[7]

In this paper, we have sought to identify areas that are ripe for such collaboration. In some cases (such as clean coal and bioenergy), the opportunity exists because the topic is both paramount to China and India and neglected by much of the developed world. In others (such as renewables and energy efficiency), the opportunity exists due to comparative advantages between the two countries, as well as the potential for joint market development. Finally, the field of green energy financing is critical for technological development and requires a broad market for success. To read the details of our discussion on renewable energy and climate finance, please access part two here.

For a downloadable copy of the full report, please click here.

 

[1] “International Smart Grid Action Network (ISGAN),” Clean Energy Ministerial, http://www.cleanenergyministerial.org/Our-Work/Initiatives/Smart-Grid.

[2] “More Countries Must Push for Deal to Liberalized Green Goods and Services,” World Commerce Review, March 2014, http://www.worldcommercereview.com/publications/article_pdf/821.

[3] The Energy and Resources Institute (TERI), National Centre for Climate Change Strategy and International Cooperation (NCSC), Central University of Finance and Economics (CUFE), Zhejiang University (ZU) and the United Nations Development Programme (UNDP), “Low Carbon Development in China and India: Issues and Strategies (Advance Publication),” 2014, Study by To be published by TERI Press, http://www.teriin.org/pdf/TERI-NCSC-CUFE-ZU_China-India-LCD-book.pdf.

[4] Manu Balachandran, “A Complete Timeline of India-China Relations since Modi Took Charge,” Quartz, May 15, 2015, http://qz.com/404869/a-complete-timeline-of-india-china-relations-since-modi-took-charge/.

[5] Business Standard, “Joint Statement on Climate Change between India and China during Prime Minister’s Visit to China,” May 15, 2015, http://www.business-standard.com/article/government-press-release/joint-statement-on-climate-change-between-india-and-china-during-prime-115051500306_1.html.

[6] University of Sussex Science & Technology Policy Research and TERI, “UK-India Collaborative Study on the Transfer of Low Carbon Technology: Phase II Final Report,” 2009.

[7] Ibid.

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