The stupendous success of India’s solar and wind energy programs, the snail’s pace with which river Ganga and Yamuna are getting cleaned, and nearly no headway made in control of pollution in our cities, show that India is good at greenfield projects and least effective in solving existing problems. Indeed, India will continue to be a country of paradox for a long time to come.
India has chugged along with massive inefficiencies and sloth because of this paradox. The price of this paradox is largely hidden in bureaucratic jangle and Indian citizens don’t complain enough. The price this paradox could extract because of laxity on ecological issues could subsume this nation in unimaginable ways. Are we waiting for massive disasters before acting?
Costs of partial or half-hearted initiatives are immense. According to Niti Ayog chief Amitabh Kant, pollution costs India 5.5 to 5.7% of the GDP. And India is yet to build 80% of is cities. Without a massive effort in curbing pollution, India would turn into a smoky hell. Already 75% of the most polluted towns are in India. The task ahead is indeed huge.
The good news is that India has the golden opportunity to leap-frog on its ecological journey as it’s not burdened by legacy assets like in the developed countries. A massive Low-carbon green economy push – not just on solar and wind – but also on waste to wealth, restoration and building of decentralized water bodies, cleaning up its river systems, biomass, green farming – is needed urgently. All this is possible if India adopts a decentralized decision-making with accountability and not pushed top down like it’s happening today.
Naina Lal Kidwai’s book Survive or Sink –an Action Agenda for Sanitation, Water, Pollution and Green Finance is set in this context. It lists significant progress in the last few years but the speed of the fundamental shift to a green economy is painfully slow. While one can squirm and wait for better days, a surge in innovation in legislation, governance models and green finance will help. This requires more than a ministry of environment which gets bogged down because it has to deal with multiple other ministries. Only a national body with independent power like the Stock Exchange Board of India (SEBI) could propel India into the greener orbit.
The book has interesting analysis and future forward ideas on sanitation, water and pollution. Its real contribution is in the discourse on green finance. The book has a welcome banker’s bias.
What’s the future path of green finance? The good news is both the RBI and stock market regulator SEBI are in sync in making green bonds more attractive. SEBI’s green bond guidelines to scale up the green bond market is said to be progressive. But the private sector’s appetite to green bonds appears still lukewarm.
Industry body FICCI has launched the India Green Bonds Council in collaboration with Climate Bonds market in India which could act like the catalyst.The council’s task is well cut out and hopefully effective. Its brief include policy advocacy, market education and investor-issuer interface. Its bigger job however is to bring investors – both public and private, banks, insurance and other players onto a common platform. At $3.2 billion as against the $235 billion global green bond market in 2017, India has a long way to go.
Paradigm Shift in Banking
The author has rightly emphasized on the much needed green finance innovations suitable to Indian conditions. The Indian arm of the Climate Finance Lab has been launched as a public-private initiative to provide solutions to financing challenges to investment in green infrastructure.
A green bank too is in the offing. The news that Indian Renewable Energy Development Agency (IREDA) has offered to turn itself into a green bank seems a good development as it would save time setting up a new one. It’s still early days; it will need to acquire skills that come with managing different sized project funding involving private banks and private investors. Ms. Kidwai says, this bank “should help develop a deep market for green finance via demand aggregation.”
That’s only the beginning. She observes: “While we need massive funding for the green agenda, the paradigm shift would come from creating a sustainable framework for the financial sector that would change the rules of the game for financial institutions and create the appeal for financing the ‘green’.”
She advocates market-based mechanism to trigger private capital investment into protection of the environment. “While this is not easy, it needs a stronger will from the financiers; it would also require suitable regulations from the government, RBI, SEBI and the insurance regulator.”
India also quickly needs its pension funds and insurance companies to hold some green investments in their portfolio just like many global players do. She believes “green ratings, green stock indices and mandatory disclosures can help steer funds into green industries.” She has suggested setting norms on the likes of the Equator Principles which ensure that banks do not lend to those who do not meet minimum environmental standards. “The business case for financing sustainability has to be created… while building a sustainable financial ecosystem which believes in India’s green agenda.” Building strong green development financing institutions and directing priority sector lending for sustainable businesses, she suggests are critical.
Funding sustainable urban infrastructure is a gargantuan task staring at India. The author is not for lifting solutions that may have worked elsewhere but learn about unlocking financing for this sector. The 100 smart cities plan is a very bold experiment. However, until the financial web is built strongly and with agility, the new cities may not turn out smart. Smart cities need smart finance too!
Why Survive When You Can Thrive
The book title Survive or Sink reflects the current mindset of global policy makers who are targeting to limit global warming by 1.5 degrees by the end of this century. It’s a typical survival response to impending catastrophe. And achieving this objective doesn’t appear too assuring either as Glen Peters, a climate policy expert at Cicero, told Climate Home News recently: “The barriers to mitigation are really not the cost, the barriers lie somewhere else: in vested interests, in inertia, in winners and losers that have different political power.”
It’s a largely accepted belief that a survival objective is risk prone and typically falls short of expectation. Putting the planet on a survival mechanism is like ensuring it disaster.
Instead, a mindset of ‘reversing global warming’ may ensure higher chance of survival and even sow seeds of prosperity. Paul Hawken, author of ‘Drawdown – The Most Comprehensive Plan Ever Proposed to Reverse Global Warming’ is leading this shift in the direction of the discourse. His is not simply a wishful thinking.
In his book he lists 100 solutions. If they are implemented they could reverse climate change by 2050. The good news is that most of the solutions already exist in various corners of the world. They can be scaled and the cost of doing it is much lower than the cost of trying to limit global warming to under 1.5 degrees Celsius.
The book is based on meticulous research by 70 leading scientists and policymakers around the world from 22 countries. They came together to offer a set of realistic and bold solutions to climate change as part of a three years project.
India, more than any other country, is better suited to adopt the ‘reversing global warming’ philosophy and the chances of it succeeding are much higher. How? It’s worth starting a new conversation.
