India-EU Track II Dialogue
The India-EU Track-II dialogue aims to explore options for strengthening both parties’ cooperation in the reduction of greenhouse gases and enhancing resilience to climate change.
The climate change negotiations revolve around the idea of ‘Common but Differentiation Responsibility and respective capability (CBDR&RC)’. The main thrust of CBDR&RC is for developed countries to take lead in the efforts for mitigation and provide support (technical, financial, and capacity building) to developing countries for taking climate action. India needs to develop technical, institutional, and human capabilities to effectively address the challenges posed by climate change. In this context, the EU-India Clean Energy and Climate Partnership, launched in 2016, deserves particular mention, as it has a catalytic role in the energy transitions in India. Similarly, the ’India-EU Strategic Partnership: A roadmap for 2025’ significantly identifies the priority areas for collaboration for the two parties and how they can collectively meet the requirements of the Paris Agreement. Both parties are already engaged in several activities on renewable energy, including offshore wind and solar power, energy efficiency, including of buildings, and smart grids. The EU is supporting several Indian projects on climate action, sustainability, and clean energy.
Broad areas of interest for the two parties on climate change revolve around energy transition, mobilizing finance, industrial decarbonization, technology transfer, and market-based mechanism. The following section lists specific opportunities for the two parties to jointly work on towards furthering India’s course towards sustainable climate action. Solutions and interventions in climate discourse are cross-cutting in nature and all points listed below support each other towards meeting NDCs, mitigating the effects of climate change and aiding India’s transition to a low-carbon energy system.
Energy transition
The EU and India are respectively the third and the fourth largest emitters of atmosphere-warming greenhouse gases. Meanwhile, India's per-capita emissions are much lower than those of other major economies. Despite being strongly dependent on coal as its primary source energy, the country is now a leader in the promotion of renewable energy and has fixed ambitious targets in terms of electricity-generation capacity from renewables.
However, achieving these ambitious targets will require support for scaling up efforts, especially in priority sectors such as transport, industries, and urban housing. Cooperation with the EU is very valuable to scale up production and utilization of green hydrogen as an alternative source of energy in India. Partnership in technology innovation and regulation will be crucial to harnessing India’s green hydrogen potential for the energy transition. Scaling up the adoption of renewable energy and energy efficiency technology will be vital to support the transition. Faster adoption of electric vehicles for mass transit systems and hydrogen for aviation are also areas of potential collaboration from EU parties.
Collaboration on smart grids, storage technology, and modernizing the electricity market will be essential to meet the growing energy needs of India and assure energy security.
Industrial decarbonization
As mentioned earlier, hydrogen will be a critical energy source, especially for energy-intensive industrial processes in heavy industries such as iron, steel, and cement. Scaling up R&D and running pilot projects in India will be required before mass deployment. Alternative sources of fuel such as biofuel and biomass-based energy will also be needed to support smaller industries. Decarbonization in the hard-to-abate sectors will only be possible through carbon capture utilization and storage (CCUS) technology which will require further piloting in India before being deployed at an impactful scale. There is also a need to intensify bilateral exchanges on relevant regulatory approaches, market-based instruments, and business models to incentivize industries to transition to low-carbon energy systems.
Technology and knowledge transfer
For India to transition in all its sectors, the developing country will require significant support from developed parties in the form of technology transfer along with the capability to utilize them in the local context. The Paris Agreement reiterates the responsibility of developed nations to support developing countries, especially in the form of technology transfer through its idea of ‘Common but Differentiation Responsibility’. All points discussed above can only be achieved by new and cleaner technologies being adopted in India’s sectors. Solar parks, smart grid technology, storage and battery technology, electric vehicles, hydrogen, and CCUS technologies are all areas in which India will support to scale up, develop and integrate them within the market.
Finance
In India, there is a critical need in mobilizing climate finance to support the above-mentioned points and for improving the market and investment environment with a view to enhancing sustainable energy access and reliance. India and the EU’s partnership can support the transfer of technology and the adoption of cleaner technology in several ways with the support of international climate finance. De-risking and lowering of the capital cost incurred for expensive technology solutions would significantly attract businesses and industries to transition. Leveraging large funds for large-scale and expensive projects such as solar parks, hydrogen, and CCUS technologies would support the industry’s transition. Developing a taxonomy in India would allow for greater parity and accountability in green technologies. A key action of forming an EU- India panel on green taxonomies and access to climate finance should take place. This is important as harmonized/aligned EU and India green taxonomies are critical to allow projects to take advantage of global funding possibilities. This is also important to prevent erroneous classification and greenwashing while promoting the sustainability of the long-term green finance market. Building capacity for improving access to climate finance will also be critical for promoting low carbon transition in India.
Market-based mechanism
The EU Emissions Trading System (ETS) is the EU’s key tool for cutting greenhouse gas emissions from large-scale facilities in the power and industry sectors, as well as the aviation sector. Negotiations related to formally collaborating on carbon market-based mechanisms will be critical for technology transfer, mobilizing international finance, and meeting the NDCs. A collaboration under Article 6.2 of the Paris Agreement would be ideal for achieving this. Negotiations related to carbon pricing would also support developing a partnership under carbon markets. However, India will first need to build up its carbon market infrastructure and regulatory mechanism in order to take part in the EU ETS and collaborate in carbon markets.
India and the European Union (EU) are important players in the field of international climate diplomacy. The India-EU dialogue aims to further a climate-focused dialogue between the two regions by establishing a high-level, informal forum for exchange on issues of domestic climate change policy and international climate diplomacy. The project aims to engage key stakeholders from both regions on the topics mentioned above to bring forward further scope of collaboration between the two parties.
For more information, please contact Dr Manish Kumar Shrivastava manish.shrivastava@teri.res.in
India-EU Track-II Dialogue First high-level meeting of the Finance Working Group
The first high-level meeting of the India-EU Track II dialogue on Finance Working Group jointly curated by TERI, Institute for Sustainable Development and International Relations (IDDRI) along with the European Climate Foundation (ECF) took place successfully on December 16th, 2021.
Briefing Note
As a precursor to the EU India Leaders’ meet to be held virtually on May 8, 2021, IDDRI and TERI prepared a short briefing note on key areas of cooperation in the field of international climate diplomacy and action between EU & India. These themes form the foundation of continued climate action between the regions. These will also be explored in greater detail in the upcoming India-EU Track II Dialogue hosted by TERI and IDDRI. The first of these dialogues will be held on May 31, 2021.
Development of thematic working groups, low-carbon transition and climate finance: A glimpse into the first high-level meeting
The first high-level meeting of the India-EU Track II dialogue jointly curated by TERI, IDDRI and ECF took place successfully on May 31, 2021. The meeting saw discussions around possible areas of collaboration between the two regions towards a low-carbon transition, development of thematic working groups for climate action and a way to mobilise climate finance for enabling a low-carbon transition across energy, industry and transport sectors.