A goal of 100 GW in solar energy is a bold undertaking, says U.N. official

While India has been an active participant and leader in global climate discussions for many years, the Modi government has shifted the gears on the issue of climate change, according to Dr Robert C Orr, special advisor to the UN Secretary General on climate change.

In an interview to The Hindu, Dr Orr who came with Michael Bloomberg for the RE Invest in the capital, met with PM and other ministers on two key subjects on renewable energy and on cities. These are going to be the two of the drivers of a global solution to address climate change, he said.

Dr Orr has served as the Assistant Secretary-General for Policy Coordination and Strategic Planning in the Executive Office of the Secretary-General since 2004. His responsibilities include running the Secretary-General’s Policy Committee and serving as the principal policy advisor to the Secretary-General on climate change, energy, food security, global health and counter-terrorism. Excerpts from the interview:

How is India addressing the issue of climate change?

We see a shift-- on the international level there have been discussions on climate change for many years and India has been an active participant and leader in those discussions for quite some time but the Modi government has shifted gears on the issue of climate change. I think the most obvious embodiment of this is the new policy on Renewable Energy and taking a goal of 100 GW is not a small undertaking, it’s a bold undertaking and the Secretary General has asked all countries to be bold and this is a bold stroke.

In the course of the RE Invest summit and speaking to investors they said that 100 GW may sound like a lot but if India gets its policy framework right there is more money out then 100 GW could be a floor not a ceiling. That’s coming from builders and investors of solar energy. The idea is that if a government here in India sets the right policy framework, there is plenty of money to address this. The technology is certainly there and in over 75 countries in the world the price of solar energy is below the grid price of energy but India is not one of those countries currently for reasons that have little or nothing to do with the technology but more to do with the cost of capital in India. If the government and the private sector and financial institutions can address the cost of capital in India and ways to reduce that and the upfront costs and risks, the potential for dramatic investment in India has never been greater.

What about the financing of developing countries climate actions? How would countries address the question of finance and Technology transfer.

There is no doubt that countries which industrialized early have been polluting for a much longer time and at a much greater volume and do bear historical responsibility for the problem of climate change. Even since the time climate change has been understood, the West is still been the greatest polluter- that said, the demography of China in particular and India and the growth in China followed by India has changed the equation fundamentally. While recognising the historical responsibility of the West with certain responsibilities that pertain to that including financing and making available advance technology, there is no contradiction to say there is historical responsibility in the West but that today the countries that most need action on climate change are in the South. I thought the Mr. Modi spoke clearly at the RE Invest conference and said we are doing this for India and not due to any pressure from anyone else- the powerful story that no parent eats their children’s food is a basic way of communicating what is essentially a fact. We have been eating our children’s food for a number of years. However, just because there is historical responsibility it doesn’t make it logical for the developing countries to hurt their own interests or that of their children.

If the West stopped polluting today --US, Japan, the entire OECD countries included, climate change would still be a runaway problem even if they stopped. There is no question that we have to combine the notion of historical responsibility with the realities of today and that is the essence of getting to a pragmatic agreement in Paris.

The Common But Differentiated Responsibility (CBDR) is a fundamental principle of the UNFCCC -- it is not up for debate- it is a founding principle of the Convention. What is being discussed though is what exactly differentiation means in terms of implications. There is no doubt that a country like with levels of poverty like India cannot be helped in the same way as the US in terms of its immediate responsibilities. The notion of differentiation- neither does it mean the rich countries have do everything and the poor do nothing- finding a practical way to implement CBDR is really what this negotiation is about. The very pragmatic approach that the Indian government is taking for its own economic development to pursue a dramatic scale up in renewable energy- is a practical and also a principled stance. It puts India on the right side of the issue and it gives prospects for a dynamic Indian economy for the years to come and I think this is something every country has to do but they have to collaborate with others. There must be collaboration as every country cannot do it on its own.

What about finance?

Finance is at the heart of this equation- In Copenhagen developed countries agreed to provide by 2020, 100 Billion $ a year- it was considered at the time a very extravagant number but it is actually a fraction of the money that is being spent every year in new investments in energy systems- the question is are we going to spend our money on the wrong energy systems that do not have a cost effectiveness into the future and that are damaging the health of our children today not just tomorrow or are we going to spend large sums of money in a sustainable way. The numbers are big but the money is out there- the RE invest conference is yet another sign that investors not only in India but all over the world are flocking to India to invest. For years there was thought the big money would stay in the North- it would stay in the more stable investment climate, today because the returns in the North are such that the large institutional pension funds, the sovereign wealth funds- they need enough returns for their retirees and investment portfolios, so the money is shifting South and the question is where in the South- it will shift primarily to those countries that have scale- India being at the top of the list but that also have an investment climate.

In this regard if India is able to set the right policy framework, because of its scale and the sunshine –it should not be forgotten India has a comparative advantage in sunshine. It has 70 per cent more solar radiation than Europe and if Europe can make solar energy cost effective vis a vis other energy sources with a fraction of the solar radiation India has, this could be a comparative advantage for the Indian economy into the future for decades to come so build out on solar energy makes economic, rational sense.

What about the recent Geneva climate talks ? What obstacles do you see in Paris?

I think we will achieve a significant agreement in Paris but the level of ambition however has not yet been determined. It will only be once we see the Intended Nationally Determined Contributions(INDC)s of all the key parties and then once we have those, the talks get down to detail above and beyond the INDCs and what countries are willing to do to close the emissions gap. We did some analysis before the climate summit in New York in 2014. Looking at the emissions of the world and in which sectors you could close the gap- we had also invited CEOs in key sectors, mayors of cities and what we saw was that there was a way to close the gap on forest based emissions, agriculture based emissions, on transport, city, energy based emissions if you take it sector by sector. You can see there is a strength in these coalitions and we can actually be on that 2 degree C pathway –but we are nowhere near that today.

So Paris is not the end of the journey, it is actually the beginning-we need a bold set of INDCs from all governments, we need subsequent negotiation to help close the gap further and then Paris is the launch pad for a massive implementation at the national and the global level.

What about the need for pre 2020 commitments from countries?

One of the most exciting things in India is that people are talking of pre 2020 actions. One of the most striking things is to have a legally binding treaty from 2020 but we need action at scale now and not to wait till that formal legal threshold is reached. It makes economic sense and the sooner you act the better it is. But it’s also a political necessity, for the first time in memory there is a broad sense that we can indeed address the problem of climate change in governments, in business and in finance houses and even in the streets, long time climate campaigners see a potential light at the end of this tunnel- we have to capitalise on the momentum and get the deal in Paris and get about the business of dramatic movements on implementation not only post 2020 but what we can do today.

The Green Climate Fund (GCF) is underfunded and huge private investment coming in for renewables- isn’t there a contradiction here?

The fact is we need different kinds of money- we need public money from countries, their own systems and governments, public money from classic donor nations, the traditional North South transfers- South South transfers. We need multi- lateral public monies- but ultimately to get to the scale, the vast majority of the capital we need will come from private sources. That fact is what we need to work around to establish the maximum leverage that public money can have to induce the investment necessary. The GCF’s target for initial capitalisation was ten billion $- no one ever thought the climate change problem could be addressed with $ ten billion it’s how that ten billion is used to leverage other public money or private funds.

If you look at multi- lateral development banks both the older and newer ones, that’s another source of public financing that’s on top of what’s in the GCF and they could be utilized to leverage more private money. What we have to get down to is looking at a country by country basis on what are the needs, where does the capital come from internally and externally and how do you blend this capital. What is exciting about the current situation is that the levels of public monies that are being discussed have already got the attention of the private monies- where they see government action on a policy framework and then they see government action investing, it automatically lowers the risk . By taking down the political risk of investment which is always the hardest part. You can hedge against a project risk you can buy down project risks you can’t buy down political risk the same way. By seeing the range of government and private actors working on this, that’s lowering the risk and that’s what’s happening here and its happened in multiple countries.

In Brazil the investments in the Renewable Energy sector led by Brazilian capital, and supplemented by some international capital - has attracted dramatic amounts of private investments into systems that are today some of the world’s the finest-Curitiba is a city that Bloomberg cited as he learnt from for New York’s rapid transit system -- people don’t usually think of a city like New York learning from a city like Curitiba – this is the new reality that we will see in the coming years -- the day is not too far where we could see cities from across Europe and US taking lessons from cities in India. I don’t say that because am sitting here but because the technologies are available and they could be developed and scaled in India. That would bring down the costs so dramatically that it would affect global markets for those technologies. India has the power of the size of the market and if we get policy right and investments starts to flow, it will actually shape global markets and that’s the new reality we haven’t seen before.

Will GCF deliver the way it’s meant to?

AThe GCF is important for many reasons- one is its predictability – once you have a pool of money it changes the game in some fundamental ways. Another important thing is its part of strategic money that will be disbursed on agreed rules, democratically by a group of countries on a Board that is both South as well as North and that creates a different investment dynamic. The other reason GCF is important is that a broad range of financial actors have already applied to become the means of disbursement for GCF funds. This creates the possibilities of leveraging not just private funds but public funds like the various Banks. You could start to see a tiered financing system in a way that some of the early strategic capital comes from the GCF but comes through institutions that match it though other capital.

This is a brand new funding model and details are being worked out on an overall mechanism. The race is on not only to get the promised money into the fund but also how it’s used. It’s not just another fund like any other fund we’ve seen before. In the last three months all the major multi- lateral institutions signing up with GCF shows that we are finally getting an increased level of coherence and public funding space. So when governments decide how to use that money- that will be a beginning of a leverage equation which is democratic.