In a developing country, a low-carbon society is a combined concept, capable of developing a sustainable model for economic development, lifestyle advances, climate change effects mitigation through transfer of technology, use of renewable energy, financing, and finally capacity building, all of which contribute to the overall sustainability of the environment. Protection of environment, as well as other socioeconomic security, will receive equal attention in such a society. This article aims to understand the transition of South Asian nations to a low carbon economy by banking carbon to achieve Net zero.
Introduction: Overview of South Asian Countries – Understanding Regional Demography
Crude oil, coal, and natural gas account for roughlyeighty four percent of global energy consumption. The rise in population and demand caused by the advent of industrialisation has strained the economy of a developing economy by putting a strain on the supply of natural resources. ‘Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka’ are the eight countries that constitute South Asia. South Asia’s urban population increased by 130 million over the years and is expected to increase to nearly250 million by 2030 which will further lead to an increase in energy demand of up to sixty six percent by 2040, according to theParis-based International Energy Agency (“IEA”). Coal will account for nearly forty percent of the increase as it replaces cleaner-burning natural gas in the energy mix. This puts the Paris Climate Agreement’s goal of limiting average global temperature rise to 2 degrees Celsius above preindustrial levels in jeopardy.
On October 31, 2021, global leaders gathered in Glasgow to start ‘COP26’, hoping to take steps toward achieving ambitious global climate goals. One of these objectives is to achieve net-zero emissions by 2050. It is said that South Asia’s energy transition will be essential to making this happen. Governments can help accelerate the transition from a high – to a low-carbon path by investing in catalytic green infrastructure, providing R&D incentives and carbon price signals, and ensuring a just transition.
South Asia’s Transition to a Low Carbon Economy: A Vision
A. Afghanistan: move towards renewable energy technologies
TheAfghanistan National Renewable Energy Policy (“ANREP”) aims to increase the deployment of renewable energy technologies, with a goal of reachingten percent of the country’s total energy by 2032, and to encourage private sector investment to boost renewable energy competitiveness and local industry development, as well as facilitating coordination among government bodies and local communities for the growth and sustainability of the renewable energy sector It is also responsible for promoting international cooperation in renewable energy. The ANREP focuses on climate change by reducing greenhouse gas emissions through the promotion of alternative energies. Furthermore, the ANREP specifies Afghanistan’s ability.
B. India: ‘Panchamrit’ strategy to achieve low-carbon goals
India’sCOP26 announcement that by 2070 it intends to achieve net-zero emissions and to meet fifty percent of its electricity needs with renewable energy sources by 2030, is a pivotal event in the global fight against climate change. India is pioneering a new economic development model that could avoid the carbon-intensive approaches that many countries have previously pursued – and serve as a model for other developing economies. Prime Minister Modi further at the conference presented the five nectar elements ‘panchamrit’ strategy to deal with the carbon issue and highlighted that India aims to reduce the total projected carbon emissions by one billion tonnes from now till 2030, adding that by 2030, India will reduce the carbon intensity of its economy by more than forty five percent.
C. Maldives: Island country aims to achieve net-zero
The Maldives has set anet-zero target for 2030, which is one of the most ambitious for an island nation. To help meet this goal, theAccelerating Private Investments in Renewable Energy or The “ASPIRE” project funded two rounds of competitive bidding for solar Photovoltaic Independent Power Producers (“PV IPPs“) totalling 6.5 megawatts (“MW“) in the Greater Malé area.
D. Nepal: incorporating GRID and transitioning to low-carbon technologies
The Nepal government has set the goal of becoming a climate-resilient nation, and it has incorporated theGreen, Resilient, and Inclusive Development (“GRID”) agenda into its development policies and plans. The government is currently focusing on promoting electrification and shifting to low-carbon technologies in the residential transportation, industrial, and commercial sectors.
E. Pakistan: replacement of coal with hydropower
Pakistanestimates that the cost of the energy transition will be around USD 101 billion by 2030, with an additional USD 65 billion by 2040 due to the completion of in-progress RE projects, additional hydropower, transmission, and thegoal of phasing out coal and replacing it with hydropower.
F. Sri Lanka: Carbon neutrality
Finally, despite its highly vulnerable status,Sri Lanka commits to increasing thirty two percent forest cover by 2030 and reducing greenhouse emissions by fourteen percent from power (electricity generation), transportation, industry, waste, forestry, and agriculture from 2021 to 2030. Sri Lanka has committed to additional measures in order to meet this lofty goal. To achieve seventy percent renewable energy in electricity generation by 2030 andcarbon neutrality in electricity generation by 2050.
To achieve the aforementioned goals, the country has focused on a few strategies, including the adoption of the‘Colombo Declaration on Sustainable Nitrogen Management‘, with the goal of halving nitrogen waste by 2030. Prohibiting the use of agrochemicals and chemical fertilisers, Organic farming and fertiliser are being promoted. Prohibiting single-use plastics and promoting e-mobility Circular economy promotion. Sri Lanka anticipates achieving itsCarbon Neutrality by 2060.
How can Government help reduce Greenhouse emissions with an aim to minimize the Impact of Climate Disasters and promote Long Term Goals?
- Government initiatives
Recently an Indian Cabinet Ministersaid, ‘Swachh Bharat Mission, Pradhan Mantri Awas Yojana, Smart Cities, Pradhan Mantri Jan Dhan Yojana, Deen Dayal Upadhyay Gram Jyoti Yojana, and Pradhan Mantri Ujjwala Yojana’, among others, are all contributing to the achievement of the Sustainable Development Goals. Furthermore, both the union and state governments are working to sustain economic growth by introducing and implementing various policies and measures pertaining to sustainable development, climate change, energy efficiency, and air pollution, laying emphasis on theinitiatives taken by the Government of India in promoting a sustainable green economy. Certain regulatory and tax benefits are also being offered by the Indian government to consumers who buy battery-operated vehicles like electric cars, e-rickshaws and are further incentivising investment in the renewable energy sector. The government is encouraging domestic manufacturers to produce and manufacture eco-friendly goods and products.
One major concern that the South Asian governments are keen on addressing is job creation. Since South Asialargely depends on petroleum and coal for job generation and is one of the largest employment pools in South Asia, replacing the same with green technology is going to be a challenge. Any investor, while investing in the sector has to convince the economy as to the simultaneous employment generation that would occur as a result of the investment. Employment generation directly affects the poverty quotient of the economy. When an industry is set up, there is growth and development in the adjacent areas too. This is relevant because large portions of the South Asian region are trapped in poverty and any sort of investment is appreciated when it can impact this issue.
The governments are proactive however the impact has been slow owing to various other geopolitical factors that affect the market.
- Green infrastructure – Investment
Infrastructure plays an important role in terms of development. Growth in any sector requires sufficient infrastructural groundwork to build its base on. When it comes to climatic changes, effects, pro-climate investment, infrastructure plays a very important role. In recent times, we have gathered from the news howTesla a green technology company is facing issues with compliance with import laws and taxes in entering the Indian market which is a leading investment base in south-east Asia. South Asian motor companies like Suzuki, Tata, Hyundai, Mahindra, and alike are all investing in green energy automobiles to compete with the global demand and supply of eco-efficient technology.
- Carbon tax
A carbon tax places a direct price on carbon by imposing a tax on greenhouse gas emissions or, more typically, on the carbon content of fossil fuels. It is different from an ETS in that the emission reduction outcome of a carbon tax is not pre-defined, but thecarbon price is. With a carbon tax, the governments are allowed to collect taxes from all individuals and corporates on the usage, consumption, production, import-export, or the distribution of non-renewable energy sources and/or fossil fuels.
This is a direct fiscal policy for the governments to generate revenue in direct proportion to the carbon emissions within their jurisdiction which reduces the burden on the treasury to tackle climate change alone. It further acts as a deterrent factor to large corporates with significant emission rates to cut down on the same lest they would be paying heavy taxes which therefore gradually promotes a clean, energy-efficient, and renewable energy-dependent cluster of countries.
- Unlocking green capital flow
As a result of pressure from various stakeholders, investors and financiers throughout the region are accelerating the incorporation of sustainability into their investment strategies. In recognition of the value of sustainability, SEA investors’ attitudes toward sustainable investing have begun to shift over the last 18 months. Mindsets are in turn starting to generate results –USD 9 billion was deployed towards green opportunities in the region in 2020. “Green fundraising and capital deployment are picking up in the region, but we have a long way to go. Less than one percent of the estimated USD 2 trillion needed has been deployed to green businesses and infrastructure assets last year,” saidDr. Steve Howard, Chief Sustainability Officer of Temasek. “The road to Net Zero will have transition costs, but in return, there will be significant opportunities, both economic and social, if the private, public and philanthropic sectors work together to unlock the region’s full potential.”
- Commitments of South Asian countries in UN Framework Convention on Climate Change (COP26)
A. India has announced anet-zero target by the year 2070 and targets 500 GW non-fossil fuel energy. India has committed to a reduction of one billion tonnes carbon emissions by the year 2030, and to lower forty-five percent carbon intensity of its economy. India has plans to establish fifty percent of the country’s installed capacity through renewables tonnes carbon emissions by the year 2030. The Glasgow Climate Pact calls for the “phase-down” of unabated coal power from plants that do not require carbon-capture technology to be accelerated. India has the world’s cheapest solar and second-cheapest onshore wind — the country’s least expensive sources of bulk power generation at the moment.
B. BothPakistan andBangladesh have cancelled all coal power plants that are not currently under construction.
C. China in September 2020, announced its intent to becomecarbon neutral by 2060, a significant follow-up to its previous pledge to reduce carbon emissions by 2030.
D. Indonesia has the advantage of thePacific Ring of Fire, a zone crammed with tectonic and volcanic activity This is the potential of the world’s greatestgeothermal power, with the resource making up almost half (forty six percent) of installed renewables. Solar and wind combined stream behind at only five percent of the total.
It must, however, berecognized that for their crucial energy demands, many developing countries are compelled to rely on coal as a cheap and reliable resource, coal also generates employments and to ensure a balanced transition, reducing reliance on coal will necessitate significant funding and a phased strategy. When it comes to power consumption, there has been a massive shift in demand in the last decade from thermal power plants (that rely on coal as a primary source of energy) to hydroelectric power, wind, and solar power. Governments have become more conscious of climate change and its effects. However, most of the South Asian countries are developing at a fast rate or are entering the stages of development and industrialization. This directly impacts the need for energy resources and considering the cost of establishing renewable energy plants, the South Asian countries are by and large dependent on non-renewable/conventional energy like petroleum and coal. This is the scenario where investment in green and clean infrastructure is desperately needed to occupy the space in the future. It is, therefore, significant that India, along with ‘Indonesia, the Philippines, and South Africa’ signed up as the first recipients of a multibillion-dollar pilot program designed at fast-tracking their shift from coal influence to clean energy through the Accelerating Coal Transition Programme of theClimate Investment Funds (“CIF”) established in 2008 to mobilize resources and promote investments for low carbon, climate-resilient development in select middle income and developing countries.
However, this is just the beginning, and we have a very long way to go. It is estimated that2 trillion USD investments over the next decade are required to build out SEA’s infrastructure for a sustainable transition. Governments cannot do this alone 40 percent of infrastructure investments in Asia need to come from the private sector. It should also be noted that it should not be the responsibility of South Asian countries alone to tackle the effects of climate change. A lot of developed countries have achieved higher growth rates at the expense of South Asian countries, and they should be required to step up as push comes to shove. Neither should private individuals/corporates be exempted from their liabilities. This means that the developed countries are required to invest in the poorer (in terms of western developed nations) South Asian countries with limited access to resources in promoting green infrastructure or infrastructure that complement the energy revolution like India boasts of cheapest solar power plants and alike.
Investments not only in the generation but alsostorage and safe distribution of green energy to the end consumers are required. If consumers are not able to afford green energy, then production or storage will be useless and likewise, if a storage facility is not available, the production and cost to the consumers will only increase which will, in turn, make the shift.
For Nature-by Nature: Exploring Nature-based Solutions (“NbS”) to ease the “Low Carbon” transition
The World Bank in 2008 coined the termNature-based Solutions (“NbS”) and in the following year the term was adopted by the International Union for the Conservation of Nature (“IUCN”). The IUCN defines Nature-based Solutions as:
“Actions to protect, sustainably manage, and restore natural and modified ecosystems in ways that address societal challenges effectively and adaptively, to provide both human well-being and biodiversity benefits. They are underpinned by benefits that flow from healthy ecosystems and target major challenges like climate change, disaster risk reduction, food and water security, health and are critical to economic development.”
Nature-based solutions either increase carbon storage, for instance by afforestation, or reduce greenhouse gas emissions by limiting deforestation. In three ways, these ‘natural climate solutions’ seek to reduce greenhouse gas concentrations in the atmosphere. One strategy is to reduce carbon emissions by protecting ecosystems and, as a result, reducing carbon release; this includes efforts to limit deforestation. Another solution is to restore ecosystems, such as wetlands, so that they can sequester carbon. The third step is to improve land management for timber, crops, and grazing in order to reduce carbon, methane, and nitrous oxide emissions while trapping carbon.
Nature-based Solutionsrequire both public and private funding; Governments, in particular, must promote ecosystem management while taxing polluters and enforcing regulations to ensure that businesses adhere to high social and environmental standards.
To achieve net-zero ambitions by mid-century, our economy must decarbonize at unprecedented speeds. Carbon must be removed from the atmosphere using natural remedies and other methods to combat difficult-to-eliminate emissions. To adapt social and economic institutions in the face of ongoing climate impacts, the world must invest now in nature-based solutions that are ecologically sustainable, socially equitable, and designed to pay off for a century or more. These, if properly managed, have the potential to benefit future generations.
The developed nations must contribute financial resources to underdeveloped countries in order to assist them in scaling up such long-term solutions. Given previous experiences, there is a risk that the burden of implementing NbS actions will also fall on developing countries.
Developed countries, such as those in industrialised Europe, have either lost a large portion of their natural ecosystems or, like the United States and Canada, have abundant natural resources that are subject to significantly less extraction pressure.
TheUnited Nations Framework Convention on Climate Change (“UNFCCC”) should establish clear criteria for accounting for nature-based solutions at the national level This will guide the targets stated in the Paris Agreement’s Nationally Determined Contributions, as well as the monitoring, reporting, and verification procedures necessary to meet these targets.
COP26 also provides an opportunity to align the UNFCCC’s and the objectives of the Convention on Biological Diversity Nature-based solution projects, for example, are likely to be required to adhere to the concept of free prior informed consent of local people, which means that local populations must be involved in the project’s development and management at all stages. Similarly, to maintain and enhance biodiversity, nature-based solutions should be implemented. Existing social and biodiversity criteria can be used to support this endeavour.
NbS is ultimately being recognised as a viable solution, even if it is a little late, the developed world must immediately assist and support local natural resource management that results to biodiversity conservation, the deployment of adaptation technologies, the strengthening of local livelihood options, and better land management practises.
NbS provides an opportunity for poor nations to not only demand a fair and cost-effective share of developed-world financial resources, but also to take the lead in demonstrating how traditional technologies can be used to combat the consequences of climate change.
Barriers to the Transition
Inadequate and limited resource supply or availability of high-quality combustion-efficient raw materials for the subsequent expansion and development of wood-burning power plants; Lack of suitable materials, for example, is impeding the development of renewable energy-based systems.
The power system’s (national grid’s) absorption capacity is insufficient to accommodate renewable energy sources.Small hydropower andwind energy projects are hampered by a lack of transmission infrastructure and grid integration in India and thus it limits the development particularly in remote locations. The governments should provide transmission infrastructure for renewable energy projects or else the project developers end up having to build it themselves, incurring additional costs. Prospective developers may be discouraged from pursuing cleaner technology projects as a result of the additional financial burden.
South Asia has a variety of policy and regulatory barriers to the development of clean technology. Direct and indirect subsidies to fossil fuels, for example, givingdirect and indirect subsidies gives the impression that renewable energy is significantly more expensive than conventional power. Power tariffs in India are under-priced and subsidised, particularly in rural and some industrial areas. Due to the government-regulated low retail tariff, which acts as a disincentive to independent power producers, Nepal’s national electricity utility has incurred a massive deficit. The government also, directly and indirectly, subsidises the import of fossil fuels, which has increased the use of imported fuels. Furthermore, the current hydroelectricity policy is geared toward larger projects, which stymies the development of smaller micro-hydro systems that benefit small, poor communities.
Intraregional energy trade in South Asia is limited topetroleum products traded between ‘India and Bangladesh, Bhutan, Nepal, and Sri Lanka’, as well as electricity traded between ‘India and Bhutan and India and Nepal’. India imports, refines, and exports crude oil and petroleum products to other countries as part of its petroleum trade. Furthermore, India exports diesel fuel to Bangladesh. The traded electricity is derived from local hydropower resources. India and Nepal are currently negotiating theexchange of up to 50MW of power. However, due to a lack of transmission capacity, significant expansion of this power trade has not been possible.
Looking Ahead – Nature-Based Solutions (“NbS”)
As we reach a closure to the discussion, one thing that we must have inferred is that change is required. It is required at this very hour, more crucially across South Asia, since South Asian countries like India and China have a large population, which subsequently generates massive demand in commodities/jobs. Any market is dependent on fuel, petroleum, and coal prices. South Asian countries face a massive dearth of resources in comparison to their growing demand for energy resources. These countries largely depend on the middle- east, and western states to provide energy resources. This has multifarious effects on an economy. It impacts the foreign reserve; the prices are largely governed by the international market dominated by a few countries that have an abundant supply of energy resources. South Asian countries have in abundance, on the contrary to popular belief, a large amount of natural reserve of resources. What the countries lack essentially, is either technology or investment in the technology to harness and generate alternate power resources.
India boasts of solar and hydroelectric power whereas Indonesia and Sri Lanka and other Asian states also have abundant wind supplies. This takes us back to the point of green investment. To give a fair idea, the companies in India are required to statutorily spend on environmental and social aspects as a part of discharging their “Corporate Social Responsibility”. Likewise, we must ensure the accountability of all stakeholders in promoting the usage of alternate, green technology in both consumer and commercial foray.
We, the South Asian countries must at this crucial juncture, incentivize, popularise, and generalise the use of nature-based resources to avoid impacts of non-renewable energy dependency. The focus should be on easy taxation for green technology, providing incentives to investors for funding green technology, and if required penalise individuals and corporates for excess exploitation of non-sustainable energy resources.
Therecent industry trend across South Asia has seen a growth in the Micro, Small, and Medium Enterprises (“MSMEs”) across the region. Statistically, a significant percentage of the growth in countries like India, Pakistan, Bangladesh, Nepal, Sri Lanka, Indonesia is from these MSMEs. Further, a major section of these MSMEs are ‘start-ups’ and are being provided with various other incentives to promote capital growth across these countries. However, no incentives, in particular, are being planned or provided to encourage green start-ups or for including clean technology across MSMEs. These sectors are at a budding stage and have easier reception to changes. If useful methods are used, then carbon dependency will reduce across MSMEs, who are burdened with other costs and will prefer green technology if found financially feasible and profitable.
About the Authors
Mr. Joysurjo Roy is an Associate (Corporate) at King Stubb & Kasiva, New Delhi.
Ms. Aribba Siddique is a 3rd year student at Amity Law School, Kolkata, and is an Associate Editor at IJPIEL.
Managing Editor: Naman Anand
Editors-in-Chief: Jhalak Srivastav and Aakaansha Arya
Senior Editor: Muskaan Singh
Associate Editor: Aribba Siddique
Junior Editor: Harshita Tyagi
Preferred Method of Citation
Joysurjo Roy and Aribba Siddique, “South Asian Transition to a Low Carbon Economy: Analysis and Overview” (IJPIEL, 22 April 2022)