By Gaurav Bhatiani, Director, Energy and Environment, RTI International India
South Asia is extremely vulnerable to the impacts of climate change. According to the World Bank, the region is already living through a new climate normal and is experiencing increased frequency of extreme weather events. Further, these events are geographically widespread, impacting cities, towns and rural areas, and damaging economic activity in agriculture, industry and services. The World Bank estimates that climate change will sharply diminish living conditions for up to 800 million people in the region. Given the commonality of impacts, cultural similarities and geographic proximity, it is imperative for South Asian countries to develop a shared vision and roadmap for climate action and financing.
An earlier effort, the SAARC Action Plan on Climate Change, which was adopted in 2008, did not yield much. A key reason is that cooperation in the past has been mired in geopolitics in the region. China’s economic emergence and increasing influence in Nepal, Bangladesh, Pakistan and Sri Lanka has made collaboration even more challenging. We have stressed on the role of trust and trade in the past, particularly in the context of energy cooperation. It is time for India to take the lead in building a transparent, fair and mutually beneficial regional climate collaboration, given the rapid increase in climate risks, and addressing many of these requires collaboration.
Energy cooperation has been on the agenda for decades. While some progress has been achieved, most action has been around relatively small bilateral agreements between India and one of its neighbours (Nepal, Bhutan, or Bangladesh). The discussion on a common market for the region is yet to be initiated. India already has a working spot market and a market for short-term contracts. Though relatively small, they work reasonably well and have demonstrated gains for consumers as well as generators. India has selectively allowed other countries to participate in the spot and bilateral markets. Several independent research studies have demonstrated economic gains from energy cooperation and trade.
Therefore, a dialogue needs to be initiated to evolve the common market. India is already considering moving to market-based economic despatch. Convincing countries to develop a common market will require adopting a strategic and long-term approach. A key aspect is to build trust and gain confidence by convincing interested countries that a common market will be a win-win for all. While several studies have theoretically demonstrated the advantages, stakeholders are still concerned. For example, the role of private companies, driven primarily by commercial interests, is often viewed with suspicion. This may simply be a lack of familiarity with private companies given that the energy sector continues to be dominated by public utilities. This needs to be addressed.
Being the largest economy in the region with a significantly advanced energy sector, India must play an enabling role and demonstrate its willingness to incorporate the interests of other countries. There are various ways to enhance trust and understanding, leading to the evolution of a common market.
First, a demonstrated commitment from the respective governments is critical. India should take the initiative to reactivate a regional energy group, SAARC, or otherwise. A biannual meeting with a structured agenda should plan and review progress to enhance energy cooperation in the region. The ultimate objective of evolving a common market and an integrated grid should be the “North Star” for the discussions.
Second, India’s experience and learnings in renewable energy have relevance across South Asia, particularly the accelerated scale-up and low prices achieved through innovations brought by the MNRE, SECI, etc. Clean energy transition is of interest to many countries such as Bangladesh and Sri Lanka, given their growing demand, fossil fuel dependence and significant commitments under their Nationally Determined Contributions. Bilateral cooperation with India will offer an opportunity to develop structured solutions based on individual circumstances. Alternatively, agencies such as the International Solar Alliance can play an enabling role given their focus on solar as well as the One Sun One World One Grid programme.
Third, the proactive sharing of information and knowledge about market products, prices, regulations and procedures will be seen as a positive step. It will ensure that stakeholders across the region have access to all relevant information even if they are not actively trading. A step further is to conduct awareness sessions for utilities and stakeholders on a regular basis. These sessions should be led by staff from the regulators’ office. If required, a dedicated regional energy cooperation and regulation wing can be institutionalised. Further, market platforms and academic experts may be invited to contribute, and existing official platforms such as BIMSTEC or the Forum of Regulators can be used. It is, however, important to have high-level participation from the respective ministries to provide strategic guidance.
Beyond energy cooperation, there are at least three other areas to prioritise climate action in the region. First, enhancing the adaptation capability, that is, developing resilience, given the reality of climate change impacts. A large population in many South Asian countries depends on water from the Himalayan rivers and annual monsoons for survival and income. Noticeable deviations from long-term trends are causing floods and droughts across the region, resulting in damage to crops, homes and urban infrastructure. Most importantly, lives and livelihoods are being lost. Therefore, it is crucial for all countries to work together to mitigate this challenge.
The collection and sharing of meteorological, hydrological and marine data can improve forecast capabilities. Joint activities and active collaboration will serve farmers and the common man on the street and should be above politics. That such a collaboration is possible is evident from the World Bank-supported South Asia Hydromet Forum. A broader and more strategic engagement such as shared infrastructure, can enhance benefits by providing timely and accurate information at a lower cost.
Further, many rivers flow across countries. Therefore, it is crucial to develop cross-country joint adaptation projects including nature-based solutions such as check dams, wetlands and, wherever required, reservoirs to avoid floods and provide water during the dry season. Likewise, projects for building coastal resilience and developing a blue economy can be a collaborative effort, given the shared interest in the Indian ocean. A joint working group comprising senior government officials should be constituted to evolve principles and action plans for undertaking these projects.
Second, developing climate-resilient agriculture is crucial for food security and livelihoods in the region. Collaborative research and knowledge sharing on resilient crops, improved agricultural practices, water-energy nexus, and nature-based solutions can accelerate adaptation capabilities. Given the similar agro-climatic zones, food preferences and farming practices, the agricultural sector can enable wider cooperation including active collaboration between universities, research institutes and people-to-people connections.
Last but not least, South Asian countries should jointly devise and implement strategies for enhancing climate financing for the region. While the loss and damage fund launched at COP27 is a positive, it will be at least a few years before the actual funds flow through this mechanism. Even other existing mechanisms are relatively slow and insufficient. Therefore, it is necessary to develop shared mechanisms and products to meet the growing requirements for clean energy transition as well as adaptation. India has experience in issuing green bonds as well as some of the more innovative instruments such as the InvITs. Sharing this experience may be a first step towards developing an active collaboration. This will enable common standards, regulations and products. An example is to develop products for covering risks, such as parametric insurance, which offer quick payouts based on the occurrence of a specific event, for example, a cyclone. Given the frequent occurrence of extreme weather events, common regulations can enable market players to offer similar products, driving down the cost and increasing accessibility for a greater number of beneficiaries.
There has been significant damage over the last few years, and many have experienced loss and pain due to climate change. There is significant support for effective government action. Developing a shared vision and a collaborative action plan is a technically sound and a politically savvy move. The Hopi quote “One finger cannot lift a pebble” is appropriate, as we move forward to lift the climate change mountain. n
(The views expressed are personal and do not reflect those of the organisation.)