India News | Carbon Market Plan Doesn't Make Up for US' Failure in Mobilising Promised Climate Finance: Experts
Get latest articles and stories on India at LatestLY. The US' plan to develop a new carbon credits market to finance renewable energy projects in developing countries cannot compensate for its failure to provide its fair share of climate finance -- an estimated USD 40 billion of the unmet goal of USD 100 billion a year, according to experts.
New Delhi, Nov 9 (PTI) The US' plan to develop a new carbon credits market to finance renewable energy projects in developing countries cannot compensate for its failure to provide its fair share of climate finance -- an estimated USD 40 billion of the unmet goal of USD 100 billion a year, according to experts.
At COP15 in Copenhagen in 2009, developed countries had committed to jointly mobilise USD 100 billion per year by 2020 to help developing countries tackle the effects of climate change. Rich countries, however, have miserably failed in delivering this finance.
The "Energy Transition Accelerator" (ETA) proposes that firms buy carbon credits and the proceeds be used to fund clean energy projects in developing countries seeking to retire fossil fuel assets.
Launching the initiative, US Special Presidential Envoy for Climate John Kerry said: "Our intention is to put the carbon market to work to deploy capital to speed the transition from dirty to clean power, specifically for two purposes - to retire unabated coal fired power and accelerate renewables."
Experts, however, said that developing countries need predictable finance and not offset markets. Also, it is not clear if ETA will make finance available at concessional rates.
Vibhuti Garg, director (South Asia) at Institute for Energy Economics and Financial Analysis (IEEFA), said: "To achieve climate goals, there is a huge requirement of finance especially by the developing countries. Public capital alone cannot meet these requirements and thus private capital has a pivotal role to play."
"ETA is a good platform to get the required private capital. However, availability of this capital will be at market rates which the developing countries can access otherwise also. What they need is concessional capital," she said.
How this mechanism will ensure availability of finance at concessional rates is something not very clear. Moreover, there should be clarity in terms of which projects can qualify as part of this fund and having established a proper taxonomy in place or else there is fear of greenwashing, Garg said.
“What developing countries need is predictable finance - not offset markets. The proposed initiative cannot make up for the US' failure to provide its fair share of climate finance - an estimated USD 40 billion of the unmet goal of USD 100 billion a year," Ulka Kelkar, Director, Climate Change Programme, World Resources Institute, said.
"It also should not substitute for the deep decarbonization needed within the US and other industrialized countries. For developing countries like India, who have been raising their climate ambition, the first priority would be to meet their own targets and not provide offsets for reductions in developed nations,” she said.
Navroz Dubash, Professor, Centre for Policy Research and IPCC Coordinating Lead Author on AR6 WGIII report on mitigation said: "Kerry's announcement may solve a political narrative problem -- telling a story about unlocking finance - but is highly unlikely to actually get sufficient, predictable finance moving."
He said offset rules will be nationally set, and every country has an incentive to race to the bottom.
"A further risk is that countries may face a disincentive to upgrade their NDC because offsets are likely to only be eligible for actions above and beyond those in NDCs. The core mechanism of the Paris Agreement risks dilution."
(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)