Introductory Remarks 

Adrian Haack, Director, KAS India Office
Adrian Haack noted the urgent need to address the climate change agenda  during India’s G20 presidency. Dr Haack highlighted Germany’s efforts to  reduce carbon emissions—in August 2022, Germany launched the world’s first  fleet of 14 hydrogen-powered trains, which aim to save up to 4,000 tonnes of  carbon emission in a year. As India’s largest trade partner in Europe, Germany  has a shared objective of fostering the green partnership. Recently, India and  Germany signed a joint declaration of intent on Indo-German partnership for  green and sustainable development. According to the declaration, Germany  pledged US$10.52 billion as support to India until 2030 to enable the country  to meet its target of raising its non-fossil energy generation capacity to 500 GW. He underlined Germany’s support for India’s green initiatives such as ‘One Sun,  One World, One Grid’ and Coalition for Disaster Resilient Infrastructure.  Moreover, Dr Haack reiterated the importance of creating a climate club to  reinforce the sense of urgency of climate change. He noted that the climate club  would be critical in coordinating aspects such as technology transfer, shared  regulation, and intellectual property rights. 

Jayant Sinha, Member of Parliament, India
Jayant Sinha highlighted that it is crucial to unlock the surplus investment  flow from Global North to Global South. He cited a recent Asia Society study,  which highlighted the existing capital requirement of US$ 5-10 trillion to drive  the net-zero commitment in India by 2050. Currently, for India, the total  corporate investment stands at merely US$ 100-150 billion. Thus, Mr Sinha noted  that there is an enormous gap that can be bridged to drive the decarbonisation  agenda in India. He highlighted that for India, net zero is net positive,  wherein decarbonisation and development are closely related. The capital  investment infused into cost-effective green technologies will result in  increased GDP, increased balance of payments, and improved public health and employment for India. Additionally, capital infusion into commercial sectors such  as electric mobility, solar power, green cement, green steel, and green fertiliser  can help the Global North earn a return for its investors.
Mr Sinha also highlighted that with India taking up the G20 presidency in  December this year, it has an opportunity to go beyond the Paris Agreement  and initiate a global climate alliance, which will enable capital flows from the  Global North to Global South. Such a climate alliance should acknowledge the  principle of Common-But-Differentiated-Responsibilities (CBDR). This will allow  G7 countries to set up more ambitious targets, but at the same time, it can  provide the Global South with an enabling environment to set legally binding  sovereign treaties, which will help drive both—development and decarbonisation. 

Naoyuki Yoshino, Professor Emeritus, Keio University, Japan;  Former Dean and CEO, Asian Development Bank Institute (ADBI) 
Naoyuki Yoshino highlighted that there are two kinds of green projects. The  first kind is large-scale projects, such as hydro projects found in Southeast Asia,  where private finance can be brought in. He noted that traditionally, electricity derived its revenue from user charges—today, electric power supply has created  new businesses in the region, which leads to spill-over tax revenues. He proposes  that to enhance the private sector participation, 50 percent of the spill-over  tax revenues from new businesses can be returned to power operators. 
The second type is community-based projects such as solar power projects  found in Cambodia. In such an arrangement, the community contributes to  setting up the project, which can sufficiently supply electricity to the entire  village. Additionally, Dr Yoshino expressed his scepticism regarding the green  credit rating agencies and green bonds. According to him, each credit agency  has its own definition of ‘green’. Similarly, each green bond has different yield  rates, which distorts the portfolio distribution. According to him, it is necessary  to ensure common definitions to avoid distortions. 

Remarks 

Tapan Sarker, Finance Discipline Lead, School of Business, Faculty of Business, Education, Law, and Arts, University of Southern Queensland, Australia
Tapan Sarker reiterated that it is crucial to incentivise private sector  financing in developing countries. According to him, the challenges in developed  and developing countries differ. For instance, while the carbon tax could be a  good tool for developed countries to reduce emissions, for developing countries, it is likely to add additional costs to companies. Similarly, the political challenges  are far more in developing countries. For the Global South, public finance is  still the mainstream source of climate finance as the capacity of the private  sector is limited. Thus, we need to forge more partnerships between the private  and public sectors—with the public sector providing fiscal incentives for greater  private sector participation. Dr Sarker also highlighted that developing  countries are more likely to face higher institutional challenges. Therefore,  for India’s G20 presidency, it must direct focus on reforming its governance  and institutions.

 
Suranjali Tandon, Assistant Professor, The National Institute of Public Finance and Policy, India
Suranjali Tandon highlighted the need to “marry the language” of green finance  and design appropriate green financial plumbing needs—including  taxonomies, creating asset classes, and addressing counterproductive regulations. She reiterated that fiscal incentives would be useful in attracting foreign  private sector investment, however, she also noted that FDI still accounts for a  very small percentage of the Indian economy. According to her, designing a  carbon tax would require—balancing behavioural change with equity  concerns. Moreover, while the G20 has recognised carbon pricing as a potential  tool for addressing climate change, the G20 members need to assess and  recalibrate how cross-border carbon pricing mechanisms will reshape  international trade and taxation. She also noted that it is important for G20  members to collaborate on how the carbon tax revenues could be  utilised—whether they would be used to enhance social security or for new  investment opportunities.

 
Sylvia Beyer, Senior Energy Policy Analyst, International Energy Agency
Sylvia Beyer highlighted that the developed economies’ 2009 pledge to provide US$100 billion of climate finance to developing countries every year  by 2020 remains unfulfilled. The latest OECD data shows in 2020, US$ 83.3 billion was provided and mobilised for climate, US$ 16.7 billion short of the intended  US$ 100-billion level in the initial target year of the goal. While adaptation  finance continues to grow, mitigation finance remained the core focus area.  According to her, adopting whole-of-government national energy transitions  toward net-zero emissions can provide the necessary stability of the regulatory framework across a range of ministries—finance, energy, climate/environment,  and industry. This alignment of pathways, policies and tracking would be  critical for ensuring investment in the transition. Adopting legal net-zero targets  and whole-of-government frameworks will be an important pillar of robust and  stable long-term policies, strategies, and predictable investment frameworks  for the private sector.  She noted that economy-wide transitions can be  supported by phasing in policy packages that include stable incentive frameworks  for clean energy technologies, regulations and standards, alongside carbon  pricing and taxes, and phasing out of fossil fuel subsidies. Moreover, she underlined that India is now designing a national carbon  pricing scheme, building on the excellent Perform Achieve Trade energy  efficiency scheme. According to her, such a scheme would be helpful in India.  For the design of such mechanisms in developing countries, it will be useful  for India to learn from other countries that have gone through similar activities. She reiterated that India’s G20 presidency should continue sharing the  experiences (both best practices and lessons learned) amongst countries,  maybe in the sustainable finance working group, which has now agreed to a  transition finance agenda that includes carbon pricing schemes.

RR Rashmi, Distinguished Fellow and Programme Director, TERI, India

RR Rashmi, Distinguished Fellow and Programme Director, TERI, IndiaRR Rashmi highlighted that there are three main challenges for India’s  G20 presidency. According to him, the first challenge is enhancing the role  of the private sector—the private sector must ensure the availability of more  risk capital, which is consistent with the countries’ national ambitions. The  second challenge is addressing currency risk—Mr Rashmi proposed creating a  global hedge fund that could address such a risk. The third challenge is the implementation of a nationwide carbon market. He noted that carbon pricing is a powerful policy tool to mitigate climate change, however, several challenges  can impede its implementation in developing countries. In developing countries  such as India, political barriers, fragmentation, and distortion of the energy  sector could especially pose difficulties in the adoption of a uniform carbon  pricing mechanism. 
He also highlighted the importance of scaling up green technology transfers  and bridging the knowledge gaps in the Global South. The Global Environment  Facility (GEF) is one such initiative that aims at obtaining new technologies  and project financing at a low cost. The Paris Agreement also played a key role in elaborating the provisions of technology transfer and financing, however, the implementation of such transfers still suffer a funding shortfall. According to him,  the G20 members must aim at developing technology facilitation mechanisms  to support the needs of the developing countries in technology development  and transfer.

Delfina Lopez Freijido, Co-lead of the Finance for Nature Unit,  International Union for Conservation of Nature (IUCN) 
Delfina Lopez Freijido noted the importance of policy interventions by the  public sector. She highlighted that the climate club could play a crucial role  in reducing the distortions, especially fossil fuel subsidies. She reiterated that it is important to address risk investment to ensure sustainable and resilient  infrastructure in developing economies. According to her, the international  financial institutions and multilateral development banks have a crucial role to  play in attracting private sector investment in green infrastructure, as they have a range of de-risking tools and approaches at their disposal.
 

Galit Palzur, Expert on Corporate Risk Management of Disasters, Climate Change and Extreme Events, Israel
Galit Palzur noted that the G20 must highlight the importance of improving  domestic capacities in the form of building a bankable pipeline of shovel-ready  projects. It emphasised the need to enhance the “country platform approach”  to increase the private capital flows to developing and emerging economies. She highlighted that while many G20 members have taken several steps to align  their financial systems with sustainable development and climate change risks,  there is a need to create comparable standards for financial assets across nations.
 

Shruti Sharma, Senior Policy Advisor, IISD, India
Shruti Sharma noted that India and some other emerging economies have  performed well towards reforming fossil fuel subsidies, thus, it would be  a good agenda point to see in India’s upcoming G20 presidency. Another  agenda point could be the climate leadership and target setting by  state-owned Enterprises (PSUs/SoEs). Several PSUs in major economies  (including India) have announced new clean energy partnerships and targets, however, most have not set out clear strategies for adjusting business models  to clean energy transition and net-zero. According to Ms Sharma, G20  leadership on this aspect could be useful and an easy win for consensus building.
 

Emre Tiflik, Director, Sustainability Research, Institute of International Finance, US
Emre Tiflik highlighted that the private sector has two major concerns. The  first concern is the lack of pipeline on projects—for the private sector, there  is a lack of clarity on what is investible and available. The second concern is  the lack of transparency—there is information asymmetry in the market,  especially in ESG-related investment opportunities. Thus, there is an urgent  need for a transparent flow of information. According to him, Multilateral  Development Banks (MDBs) play a crucial role in addressing the flow of capital.  It is important to optimise the MDB balance sheets such that there is  greater collaboration between the private sector investors and MDBs. 
 

Neha Kumar, Programme Manager, Climate Bond Initiative, India
Neha Kumar noted that India is a member of the International Platform for  Sustainable Finance—the platform is a forum for dialogue between  policymakers, with the overall aim of increasing the amount of private capital  being invested in environmentally sustainable investments. India’s thinking is  not to reinvent the wheel but to work on a regime that not only has a common  language but also contributes something new that is important within its  own context and that of other developing economies. 
According to Ms Kumar, it is crucial to task the Ministry of Finance to develop  a green taxonomy, build a sustainable finance architecture, and define the role  of central banks. Moreover, she noted that India’s stance is unique because  it not only focuses on mitigation and adaptation but also aspects such as just transition and employment creation. It is important to understand how much leeway the Indian presidency will have to set new rules and tweak  existing rules, which can be demonstrated by domestic action. A roadmap  for India’s G20 presidency can include achieving low-hanging fruits such  as the creation of an alliance that has political backing and addresses political  economy constraints in the grand bargain. She also reinforced that  transition finance and de-risking play a key role in addressing climate change.