Home Events Event Coverage

Can Market Based Measures Help Fight Climate Change?

logo-ficci-icpbc-2013-1New Delhi Mr. Pinak Ranjan Chakravarty, Secretary (ER), Ministry of External Affairs, Government of India, today exhorted the business community to iron out the real impediments in the working of the market mechanism currently in place to address climate change.

Mr. Chakravarty while addressing the ‘India Climate Policy and Business Conclave 2013’ organized by FICCI, cautioned that the low ambition of developed countries has undermined Clean Development Mechanism (CDM) and threatens to undermine the future of carbon markets.

At the same, there are efforts in organizations like the International Civil Aviation Organization (ICAO) to set in place Market Based Measures (MBMs) without examining their viability or feasibility in international civil aviation.

event-partner-1“We are convinced that MBMs can only supplement and not supplant actions and commitments by developed countries. Also, these MBMs have to be voluntary and not obligatory, thereby ensuring greater participation and mechanism focused impact on combating climate change,” he said.

Mr. Chakravarty also emphasized that it would be important to ensure that we do not put in MBMs, which are designed to fail due to the lack of demand or due to their inability to focus on climate change but merely become revenue earning sources.

He expressed disappointment that the emission reduction obligations undertaken by the Annex-I Parties in the Kyoto Protocol are not at all ambitious and much more serious emission cuts by Annex-I Parties are required.

“I hope that they will re-visit their targets in 2014 as agreed and enhance their ambition to meet the requirement of science. Those who have stayed out of the Kyoto Protocol must also undertake ‘comparable targets’ since climate change regime demands higher ambition from all Annex-I parties and not just those, who scribe to the Kyoto Protocol,” Mr. Chakravarty added.

“While we consolidate and implement the decisions taken in Doha last year as well as in earlier Conference of Parties, we remain engaged on the Durban Platform which was launched in 2011. Our focus is in ensuring that we come to an agreement in 2015 for the Post-2020 period, he added.

Mr. Chakravarty said, “India has been actively involved in discussions and has made important contributions through the BASIC Group and Like-Minded Developing Countries. These groups have, in turn, strengthened the voice of developing countries in the ongoing discussions. We convey our readiness to work with our developed country partners for a balanced and comprehensive outcome in 2015.”

The forthcoming Conference of Parties in Warsaw in November this year will be important in the context of implementation of decisions so far and charting out a road map of negotiations for the 2015 Agreement. An area of focus will be the big gap in the long term finance goals of mobilization of US$ 100 billion per year by 2020. This gap should be addressed in Warsaw. We also need a clear road map for 2015 as per the mandate of Durban, the Secretary said.

Mr. Ravi Prasad, Joint Secretary, Ministry of Environment and Forests, Government of India, said that climate change has really climbed up in the ladder of importance and industry has emerged as a key stakeholder effecting changes impacting climate change. The government and MEF have involved the industry in all consultation processes and all stakeholders are part of the process. Also with the coming of the CSR Bill, of which environment is a key component, we hope that the industry will accord highest importance to it and will also explore possible domestic markets.

Mr. Neeraj Prasad, Manager, Climate Change Practice, The World Bank, remarked that India has been negotiating climate change issues but it simultaneously needs to focus on scaling its growth and developing in a smart way. The focus needs to be on issues such as the developments in the international climate change negotiations since the 18th Conference of Parties (COP 18) in Doha and the outlook for the UNFCCC COP19 in Warsaw at the end of this year; the current state of play on climate finance at the global level; domestic finance and fiscal initiatives in India to support action on climate change; the experience of domestic market mechanisms in various countries and perspective on the future of carbon markets and how the businesses across the globe see climate change as an opportunity to develop and innovate their strategies, processes and technologies to adapt to the local climate effects, which will enhance their bottom lines.

Dr. Silke Karcher, Head of European Climate and Energy Policy, New Market Mechanisms, German Federal Ministry of Environment, Nature Conservation & Nuclear Safety, underlined India’s need of a sound economic policy to formulate an effective climate policy. While explaining the importance of increased use of renewables to harness energy, she said that it would lead to raising competitiveness, increasing energy efficiency, stabilizing the price of fossil fuels and will also provide energy security and long term price stability to energy.

Dr. Jyotsna Suri, Vice President, FICCI, said, “Businesses need policy measures that will help in channeling climate friendly technologies and finance into projects that focus on climate change mitigation and adaptation. Ultimately, businesses need markets and market based mechanisms to provide the returns on investment, to be able to make the right impact at the right time, and to help scale up their initiatives on emissions reductions.

Climate policy can address all these aspects of private sector engagement. Governments are the architects of policy and private sector is the vehicle to deliver the objectives of these policies and therefore policies should incentivize private sector engagement in a way that they can get returns on investment.”

On the occasion, FICCI released a report titled ‘Indian CDM Pipeline Analysis’. According to the report, India has witnessed a steady rise in the number of CDM projects over the years. This rise is seen from 1633 projects in April 2010 to a total of 2355 in June 2012. There has been an increase of 722 projects in this time period. The fact that 2355 CDM projects have been approved by the Indian DNA by June 2012 clearly shows that the Indian CDM portfolio grew rapidly.

About the Conclave:

The India Climate Policy and Business Conclave is India’s flagship event in the carbon market space, organized by the Federation of Indian Chambers of Commerce and Industry (FICCI) in partnership with the Ministry of Environment & Forests (MoEF), Government of India, The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) and The World Bank. The Conclave is supported by GIZ India and International Emissions Trading Association (IETA).