“Green Finance Has Been Majorly Skewed Towards Renewable Energy"
C.K. Mishra, former secretary in the Ministry of Environment, Forest & Climate Change, and Chairperson, Expert Committee on Sustainable Finance, in an interaction with Annurag Batra, Editor-in-Chief, BW Businessworld as part of its Policy Square Series, talks about India’s strategy to mitigate the impact of climate change and how relevant stakeholders from different industries are working towards formulating policies for a greener future, among other things.
Excerpts:
Following our bold commitments made during the CoP26 Conference, do you think India has the required capacities to achieve its climate change goals in a time-bound manner?
I think India has already initiated its plan since the Paris agreement of 2015. Yes, the commitments made during CoP26 are bold and will definitely require tremendous amount of technological and financial resources to successfully implement the climate change goals. We are actively working towards drafting a plan that measures if adequate financial support is being provided in this area. Additionally, we need to focus on sectors that require a tremendous amount of in-house technological innovation in order for them to deliver on India’s commitments.
What are the efforts the government of India taking or ones that should be taken with regard to the goals that have been laid down under Panchamrita?
An issue like climate change should be treated as a holistic societal responsibility. The government of India aims to provide an enabling environment that promotes green activities and green projects. The government should enable financing capabilities for certain projects, provide incentives and draft policies that support the implementation of such projects. But climate change is not only the responsibility of the government but also of the private sector and the citizens at large. Citizens need to reflect on their choices that lead to an increase in emissions. People also need to take charge and spread the right kind of message and awareness regarding climate change.
What steps can be taken to increase awareness and communicate the impact of climate change to the citizens of the country?
We need to create a platform for climate change discussions, whereby the government, the people and the industry come together and the learnings from this are communicated to all. Additionally, as a country we must recognise and honour the efforts that are targeted towards mitigating the impact of climate change. An institutional mechanism needs to be put in place to recognise sustainable consumption.
How economically viable is it for companies to make investments in sustainable activities given the fact that some of them are struggling to survive as a consequence of the pandemic?
Yes, I understand and acknowledge the fact that companies are struggling financially given the fact that some of them are still trying to recover from the aftermath of Covid-19. But we need to look at this from a deeper angle because if we miss the opportunity now, we will miss it all together. Currently, the per capita emission is low, the overall emission by the country as a whole is low. If companies take corrective measures now, it will prove to be extremely cost effective and timely. I do believe that we need to help MSMEs that are currently in financial distress, which can even translate into certain fiscal or non-fiscal incentives.
Providing fiscal incentives to MSMEs via institutional mechanisms may not be as effective as expected given their large numbers. What is your take on this?
MSMEs will continue to play a pivotal role. If we do a breakdown of the emissions caused, MSMEs play a very critical role. The government of India has schemes in place such as Credit-linked Subsidy scheme, Zero Effect Zero Defect scheme. However, these schemes only benefit a section of the industry. We need to have a combination of government incentivisation and creation of a financial instrument that provides funds at a cheaper and affordable rate. The access to finance is rigid, we need to make it more liberal as far as the MSMEs are concerned. We need to create a market space whereby they are able to access finance on their own terms.
There are two major trends in climate change finance. A large section of climate finance is dedicated towards climate mitigation initiatives and a very small part of it is focused on climate adaptation initiatives. Why do you think of these trends?
Global trend is focused on mitigation as it gives you immediate results. Additionally, the finances that are directed towards mitigation have an element of profit, therefore the private sector is slightly inclined towards that. I think there is also a popular misconception that if we are able to reduce emissions, you will be able to reduce the ill-effects of climate change. But we need to look at the impact of climate change on lives and that’s where the adaptation part steps in. Adaption is a central part of climate change, and it is extremely critical for countries like India. Even if we look at the green climate fund, it is majorly in favour of mitigation, even though the charter states a 50-50 distribution. We need to have a strategy where we combine both.
Why is that we mostly talk about renewable energy as the key sector for climate change finance and not sustainable agriculture, sustainable infrastructure, etc?
Yes, green finance has been majorly skewed towards renewable energy and there are two reasons for it. Firstly, there are easily available technologies across the world for renewable energy. Moreover, such investments provide you great returns. We need to include sectors like infrastructure and target investments for sustainable developments in those sectors.
What role can the private sector play in climate change finance?
Private sector should make ESG its top priority, and this will definitely benefit them in the long run, in terms of being more cost-effective.
