The relevance of climate change to the India-EU partnership
Collaboration on climate change is central to the relationship between India and the European Union (EU). Since 2016, the EU and India have together pursued a Clean Energy and Climate Partnership (CECP), which focuses on developing cooperation in clean energy and the implementation of the Paris Agreement, including in the area of energy efficiency, renewable energy, smart grids, storage, sustainable finance, and climate mitigation and adaptation. The European Commission in 2018 in its note to the European Parliament and the European Council on partnership with India indicated that a crucial element of the EU’s India strategy was “an enhanced EU-India partnership on sustainable modernisation” featuring in particular cooperation on climate change, the environment, green energy, and urbanisation, which would “help the EU and India to meet internal objectives as well as international commitments”.
Following the 15th India-EU Summit on 15 July 2020, the political leadership released a joint “Roadmap to 2025” for strengthening the strategic partnership including the preparation of a new work programme. Specifically, the leaders suggested a focus on mobilising finance and improving the market and investment environment with a view to enhancing sustainable energy access and resilience.
The 16th EU-India Summit on 8 May 2021, resolved on even greater cooperation under the 2016 Clean Energy and Climate Partnership by stepping up the “deployment of renewable energy, promoting energy efficiency, collaborating on smart grid and storage technology and modernising the electricity market”. The Joint Statement further agreed on further enhancement of the sustainable modernisation partnership, and specifically mentioned the new Circular Economy and Resource Efficiency Partnership would “intensify bilateral exchanges on relevant regulatory approaches, market-based instruments and business models”. The leaders also agreed to a new Connectivity Partnership, including clean energy, transport, and climate.
Possibly, the biggest obstacle to deeper cooperation has been differences over ‘differentiation’ and more generally equity concerns, regularly surfacing in the UNFCCC negotiations. Indeed, major differences as to levels of welfare, per capita GHG emissions and vulnerabilities exist.
At the same time, many opportunities for cooperation have been identified based on common interest and shared values such as federalism, multilingualism, multiculturalism, rule of law and democracy, and trust in multilateralism.
Climate change has become a centrepiece of India’s diplomatic outreach. The International Solar Alliance, founded by France and India, is a pioneering organisation with a primary target to mobilise more than US $1 trillion by 2030, apart from bringing down the overall cost of solar energy installations. In 2018, the EU and ISA signed a Joint Declaration, with the intention to further deepen cooperation. In March 2021, the EU became a member of the Coalition for Disaster Resilient Infrastructure, which was also co-founded by India.
The state of climate policy in the two partners
European Union:
The European Green Deal presented in December 2019 sets out a detailed vision to make Europe climate-neutral by 2050, safeguard biodiversity, establish a circular economy and eliminate pollution. The strategy is also meant to boost the competitiveness of European industry while ensuring a just transition for people and regions. To implement the ambition, the European Commission on 14 July 2021, presented a first set of legislative proposals, the so-called Fit for 55-package referring to the new EU 2030 target of a 55-percent GHG emissions reduction compared to 1990, enshrined in the Climate Law, in addition to the legally binding target of net zero greenhouse gas emissions by 2050. The Recovery Plan for Europe includes the Just Transition Fund that seeks to ensure “fair climate transitions” and provides 30 percent of EU funds towards fighting climate change, the highest ever share of the bloc’s budget. Additional measures will follow.
India:
India is working towards fulfilling its commitments under the Paris Agreement. India's NDC (Nationally Determined Contribution) is for reducing the measure known as the emission intensity of gross domestic product (GDP) by 33 to 35 percent from 2005 levels by 2030, and increasing the share of non-fossil fuels in primary electricity production to 40 percent. India is currently the only member of the G20 confident of exceeding its Paris NDC target; it has reduced its emission intensity of GDP by 24 percent between 2005 and 2016, thereby achieving its pre-2020 voluntary target.
India had also set out a target of 450 GW (gigawatts) of renewable energy by 2030. Currently, it has a total installed capacity of 389 GW, and has achieved 155 GW of non-fossil fuel installed capacity, of which around 100 GW is renewable energy; the target of 450 GW would represent 40 percent of estimated power demand in 2030. At COP26, Prime Minister Modi raised the target to 500 GW, also adding that India would reduce carbon intensity of GDP by 10 to 12 percentage points in addition to its Paris targets. India has also set 2070 as a distant date for carbon neutrality.
India has co-founded both the International Solar Alliance and the Coalition for Disaster Resilient Infrastructure, both based in India, as well as the Leadership Group for Industry Transition, Mission Innovation and is a founding member of the International Platform on Sustainable Finance.
Purpose of the dialogue:
The purpose of the Track 1.5. Dialogue is to discover pathways that will further strengthen relations between the EU and India under the 2016 EU-India Clean Energy and Climate Partnership (CECP). It focuses on shared aspirations, identifies sectoral partnerships, and works on increasing understanding of each other’s positions, interests and ambitions.
The Dialogue consisted of two parts: A panel discussion open to the public and a closed-door roundtable held under the Chatham House Rule to exchange views and build mutual understanding in the run-up to the 26th UNFCCC Conference of Parties.
The roundtable was a first step towards creating a platform for the free exchange of views on climate ambition between India and the European Union. The aim was to build momentum that would drive the discussion beyond the official negotiating positions and identify opportunities for sectoral and broad-based cooperation.
Implementation of the dialogue:
The public session was jointly moderated by ORF and CEPS. The scene was set by Opening Remarks from Ugo Astuto, the Ambassador of the European Union to India.
Official perspectives, in order to provide the context for the expert discussion, were provided by two keynote speakers. The first was from Marc Vanheukelen, Ambassador at Large for Climate Diplomacy at the European External Action Service; followed by remarks by Jayant Sinha, Chairperson of the Parliamentary Standing Committee for Finance, and Member of Parliament, India. Ambassador Vanheukelen outlined new developments in the India-EU partnership, especially in the context of the recent visit to New Delhi by Executive Vice-President of the European Commission, Frans Timmerman. Mr. Sinha explained the constraints on India’s green transformation, as well as his belief that getting to “net zero” would be a net positive for India in economic terms due to, for example, positive externalities regarding air quality, public health, and energy efficiency.
The keynote addresses were followed by a discussion between Sharmila Chavaly, Advisor, National Institute of Smart Government, India; Lola Vallejo, Director Climate, IDDRI; Siddharth Pathak, of the 2050 Pathways Platform; Vaibhav Chaturvedi of the Centre for Energy, Environment and Water; and Mats Engström, Senior Advisor at the Swedish Institute for European Policy Studies.
The closed-door roundtable gathered experts from think tanks and academia from India and the European Union. Framing commentary was provided by the EU Delegation to India. There were also insightful remarks highlighted from the representatives of the EU Member States.
The sectoral focus of both the panel discussion and roundtable were clean energy, biodiversity, regulatory harmony, carbon markets, and sustainable finance.
Outcomes of the dialogue:
There is a widespread understanding, almost a consensus, also in the light of the recent visit to India of Executive Vice-President Timmermans, that future economic competitiveness would require greening both economies, and closer cooperation between both parties.
Given that future growth will be low-carbon and also the necessity of addressing climate change, strong climate change action is becoming more and more mainstream in both the EU and in India. This opens up new avenues for practical cooperation.
Differences within the UNFCCC context—e.g. on differentiation, (historical) carbon budgets, (global) market mechanisms, technology or finance—most likely will continue to exist. India-EU cooperation on climate change therefore will need to be grounded in deeper and more broad-based interaction and cooperation to avoid being trapped in these long-standing issues and in a single (UNFCCC) framework.
‘Co-development’ emerged as a consistent theme as being central to the strength of the relationship in the future. Many initiatives from the EU and the Member States were appreciated. It was argued that co-development of new technologies through closer research, industrial and educational links could replace the notion of “technology transfer”, so as to both move beyond past disagreements and better reflect reality.
Yet there was a general feeling that more intensive ‘advance discussion’ would have been useful on issues such as the Global Methane Pledge and the Carbon Border Adjustment mechanism. A clearer understanding of sensitivities in advance, before the proposals are finalised, would aid in having more useful discussions on the content, objectives and possible support for the proposals. There was agreement that more conversation will be required to increase mutual understanding, and to ensure that future climate change policies on both sides would find stakeholders and supporters on either side in order to build broad-based momentum and mutual understanding.
Digitalisation may be another area of joint cooperation, both on its own terms and with linkages to resource efficiency and energy transition. For the EU, the digital transition is the second of the ‘twin transitions’, next to climate/energy, while India brings its own strengths to the table due to its highly developed digital sector. India has also demonstrated demand-side flexibility in tech adoption and digitalisation, which might aid the EU’s transition to new methods of providing consumers with greater control over their payment for and consumption of energy.
The hydrogen transition was discussed at length. Two aspects emerged: first, given that initial costs of development and adoption of hydrogen-based technologies at scale might be high, the EU would be best placed to be a first adopter and India could pick up insights provided by the EU experience. Participants also stressed the need to co-develop norms around the safety of hydrogen-based energy.
There was agreement that the dissemination of frontier technology is not just about research and development, but also about sharing the experience of integrating that technology into financial, industrial, and human systems.
As the dialogue developed, it appeared that even in areas such as technology transfer, finance or market mechanisms, progress is possible—for example by re-centring the themes.
Net zero is net positive: The discussion about the ambition level can instead be considered a discussion about the speed of the required economic transformation in the EU and in India, including the feasibility (such as available technology, available land, social economic impacts) and the costs and required finance and technologies.
Monitoring and Data: It was considered that for effective climate policies, using market mechanisms and increased investments, good data and monitoring will be crucial.
Technology: There was strong interest both in the EU and India on technology development and deployment, co-development and more generally, breaking down the debate on ‘technology development’ (e.g. R&D cooperation), deployment (e.g. technology cooperation on renewables or (flexible) nuclear), transport technologies or regulatory frameworks fit for India to drive large-scale deployment of low-carbon technologies (e.g. low-carbon energy). Common approaches to standardisation can also be a part of technology discussions.
Investment: Given the sheer size of required finance, public finance will only cover a fraction of the requirements for net-zero. The cooperation could therefore focus more on how to mobilise more investments and to ensure that cheaper finance goes to cleaner technologies. Regulatory frameworks to attract project capital or sustainable finance, including a taxonomy to avoid greenwashing, were identified as crucial areas for further cooperation.
Market mechanisms: While being a sensitive topic, it is still necessary to examine how cooperation and exchange of experiences can be increased in the area of European and Indian carbon markets, taking into account that in India there are already market mechanisms linked to energy efficiency and the use of fossil fuels. Incipient market mechanisms can also help usher in improved data collection on emissions and industrial sites, even in the absence of carbon constraints.
Promising areas for future discussion:
The current dialogue can become a solid starting point for a new process of bringing together officials and think tanks from both sides to catalyse better EU-India relations in climate, particularly in those areas where there is already intensive bilateral cooperation under the CECP. The following areas for future discussion were identified:
The external dimension of the European Green Deal, including a focus on a social and just transition, should be strengthened and seen as important for the EU and India alike. The EU’s carbon pricing approaches and how the EU deals with the revenues would be a concrete example;
Cooperation on a) urbanisation (including mobility), b) education and awareness, and c) connectivity;
Discussions and analysis on value-added in future global industrial value chains, as well as India and the EU’s related opportunities and vulnerabilities;
Exchanges of experiences in the area of monitoring and data and carbon pricing;
Adaptation to climate change, including in the area of agriculture;
Cooperation towards an increasing role of the EU and India in global value chains. The adoption and integration of technology into financial and industrial systems and value chains, including for hydrogen and for new carbon pricing mechanisms;
Exchanging experiences on the EU Hydrogen Strategy and the Indian Hydrogen Mission, which could be linked to existing initiatives on decarbonising industry, including through the Leadership Group for Industry Transition;
Moving beyond discussions of public finance to discussions on how to mobilise ‘investment’ including ensuring cheaper private finance—these fits better with the idea of ‘co-development’;
Exploring and strengthening the role of India in regional climate policies to drive change and in creating a better understanding of the needs of emerging economies.
This report has been written by researchers from CEPS (Christian Egenhofer, Milan Elkerbout, Irina Kustova) & ORF (Mihir Swarup Sharma).This dialogue was prepared with support from the European Union (EU). The recommendations and the views expressed in the report are, however, those of the researchers and do not reflect the formal position of the EU.
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