Drop demand for finance from rich countries: Arvind Subramanian

New Delhi
Chief Economic Advisor (CEA) Arvind Subramanian has suggested Prime Minister Narendra Modi and Finance Minister Arun Jaitley to radically alter India's climate-change policy and negotiation strategy before the new global climate-change agreement, to be finalised in Paris by December this year.

In a note to the two ministers - which has been reviewed by Business Standard - Subramanian has recommended that India should stop insisting that the developed countries provide financing for poor countries to fight climate change, as they are required to under the UN climate convention.

The chief economic advisor has said India should align with coal-rich countries and distance itself from poor ·and developing ·countries, as well as existing allies like China, those in the BASIC grouping, other 'like-minded developing countries', and BRICS, for the coming climate change negotiations in Paris.

He has advised that India stop focusing on adaptation to meet the inevitable threats of climate change on the poor and, instead, do more to reduce its own emission. He has also suggested that India stop insisting that the current way of differentiating in the UN Framework Convention on Climate Change between rich and developing countries - called annexures - be retained in future.

Subramanian has warned that India should not trust China, even as the latter has formally insisted at the talks that this firewall be retained.

So far, India's stance on climate-change negotiations has consistently been just the opposite, for years. The National Democratic Alliance (NDA) government at the Centre, too, has in the past year and a half maintained the non-negotiable 'red lines' - diametrically opposite to Subramanian's present recommendations - at the UN climate talks.

In the note, the CEA has said a dramatic shift in stance will "help cement Prime Minister Narendra Modi's reputation as an international global leader". This will also "burnish India's credentials when it seeks membership of the United Nations Security Council".

Subramanian declined to comment on a detailed questionnaire sent by Business Standard.

As its chief economic advisor, Subramanian also leads the government's thinking on all negotiations regarding climate finance.

Earlier, in an article for the Indian Express, he had elucidated how India should better highlight the many actions it was taking to fight climate change.

However, he had not mentioned what he believed India should do in terms of strategy and policy at the Paris talks. The present note elaborates the same observations, and additionally gives specific recommendations to the prime minister and finance minister on how India's goals, strategy and actions for the Paris talks should change.

These recommendations, if accepted, will entail a complete overhaul of India's long-standing policy on climate change, internationally as well as domestically. India will also require a radical realignment with the countries it sees closer to its national interests at the climate talks.

India has so far been at the forefront of the demand that rich countries meet their existing legal obligations to finance the fight against climate change in poor and developing countries - more than 100 developing countries under the G77+China umbrella have been demanding that. The developed countries are legally required to provide more than $100 billion annually from 2020. But they have been refusing to give a timeframe for this.

India aligns closely with 'like-minded developing countries', including China, and is also a member of the powerful BASIC group (where Brazil, South Africa and China are the other members). While it negotiates and holds bilateral talks with other countries like the US, besides the European Union, India's governments over decades have without any exception found national interests furthered by sticking with the G77 group, and closely parleying with other smaller developing country groups.

"India has a greater stake in climate change mitigation than most rich countries, which will likely be less affected and better able to cope with consequences," Subramanian has said in his note.

"India should not consider seeking finance (from the developed countries), retaining the Annexe I distinction (in the UN convention between developing and developed countries), or adaptation as our vital interest in the negotiations. These issues can be used as bargaining chips in the final negotiations," he has said.

"Seeking climate change financing, retaining the distinction between Annexe I (developed) and non-Annexe I (developing) countries, and emphasising on adaptation" he has listed as "less vital interests" of the country.

In a paragraph on why India should not demand climate change finance from rich countries, Subramanian has asked: "Are the commitments of cash-strapped advanced countries plausible? After all, the US cannot muster the will and ability to contribute a few hundred million dollars (chump change really) to increasing the International Monetary Fund's resources." In the answer to these and other questions, he has suggested "obtaining finance cannot be a vital interest for us. In pressing this issue India might score polemical victories, but not a substantive one".

"India might be tempted to make common cause with the poorer countries in Africa in pressing for financing. But as argued above, getting financing is not a vital interest for India," he adds.

"A third non-vital interest is adaptation. India should be clear that at Paris our vital interest is climate-change mitigation and not adaptation," he says. So far, India has contended that since it is home to the largest number of people vulnerable to climate change, adaptation should be its key focus, especially considering that the developed world has not undertaken mitigation action matching up to the requirements under various scientific assessments.

Subramanian suggests: "The one group that India should make common cause with, because of its critical value for India, is that of coal-producing countries like China, Australia, Poland and even the US."

There, though, are some contradictions in this advice. Poland negotiates at the climate talks only as part of the European Union's unified position. Also, while Subramanian suggests India align with China as a coal-rich country, in a different part of the note he says India should not rely on China or other country groups of which China is a key member. Again, he recommends moving away from BRICS, which includes Russia. But BRICS does not function as a negotiating entity at the climate talks.

He notes that China has in its formal submission to the UN "expressed strong commitment to maintaining the Annexe-based distinctions". But he suggests China cannot be trusted: "India cannot rely or take comfort in the fact that China today is canvassing for retention of this distinction (between developed and developing countries based on Annexures in the climate convention)."

At the Lima round of climate talks in 2014, India was part of a strong alliance with China and other developing countries, and averted a concerted push from the developed countries to do away with a differentiation in the draft for the Paris agreement.

In the run-up to the Paris agreement, the US and EU have repeatedly pushed for doing away with the differentiation between rich and poor countries, as it exists in the UN convention at the moment. India has strongly advocated that the Paris agreement should be signed under the UN convention and the latter should not be rewritten by stealth. While there are differences between the EU and US on the legally binding nature of the Paris agreement, the two are seen together, playing reluctant to provide concrete timetables and details on finance, adaptation, loss and damage and technology transfer to poor nations.

In his note, the economic advisor says developed countries like the G-7 should be forced to take higher carbon taxes and financing of clean coal technologies, as well as technology. The two issues do not at the moment form integral part of the UN climate negotiations and no key country has proposed a carbon-tax-based model of mitigation under the Paris agreement.

In the run-up to the Copenhagen round of climate talks in 2009, India's then environment minister Jairam Ramesh had written a similar letter to the then prime minister Manmohan Singh, suggesting India move away from other developing countries and the demand on differentiation. He, too, had suggested the move would help India in its attempt to gain a seat at the UN Security Council. He had not, however, talked of giving up many positions that Subramanian has now suggested. But the previous government had stuck to the 'red lines' till the last UN climate negotiations that took place during its tenure.

If the current government is to now accept Subramanian's views, it will have to formally approve a totally revised Cabinet note to be drawn up by the environment & forests ministry in consultation with the external affairs, finance and other ministries. This process could in part take place when the Cabinet will approve India's targets for the Paris agreement in August, and later during October-November when a final brief for the negotiating team to Paris will be cleared by the Cabinet.

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First Published: Aug 12 2015 | 0:56 AM IST

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