Event ReportsPublished on May 21, 2015
Lack of clarity on the legal nature of the Paris deal and the INDCs has been a cause of concern for India. There has been a proposal for a kind of "hybrid agreement", which suggests that Paris deal will not actually be legally binding but have certain legally binding elements.
Lack of clarity on legal nature of Paris deal a concern for India

In order to understand EU/UK’s emerging position on climate change, Observer Research Foundation conducted an interaction with Mr. Peter Betts, EU’s Lead Negotiator on Climate change in New-Delhi, India on March 31, 2014. The discussion was chaired by Mr. J.M Mauskar, advisor, ORF and key participants included: Dr. Prodipto Ghosh, TERI, Lavanaya Rajamani, Centre for Policy Research, Indrajit Bose, Thirdworld Network, Raman Mehta, Vasudha Foundation, Nitin Sukh, Yes Bank Institute, Sudatta Ray, Council on Energy, Environment and Water, Vijayta, Centre for Science and Environment, Amb. H.H. Viswanathan, ORF, Elmar Thomas Schuppe, ORF, and Vikrom Mathur, ORF. This report summarizes the broad issues discussed during the interaction, held under the Chatham House Rules.

For nationally "intended" contributions to look up, the politically-challenging suggestions on equity, technology, finance and border measures may not be good enough to achieve the 2 degrees goal. That ’India may act as spoiler’ on these issues, in the Paris deal, is an undeserving blame that snubs nuanced understanding of India’s climate worries. While Indian developmental goals such as poverty eradication, health and energy security are recognized in the global forum, the extent and content of strategies for meeting these goals, in terms of infrastructure, financial and technological requirements, are severely underscored. There are certain underlying structural and political constraints which further complicates global climate action and national developmental imperatives. Additionally, in what appears to be rigidity and lack of proactivity towards the climate deal, is actually India’s effort for mainstreaming principles of equity, sovereignty, solidarity and best practical solution towards the 2 degree goal. Here, in order to understand India’s wish list for the Paris deal, some of the key issues need to be understood more in detail.

To start with, India is concerned with the actions to be taken from 2015-2020, that is sometimes expressed as the second commitment period for Kyoto or operationalisation of the Long-Term cooperative Action (LCA) mechanisms. Little attention has been paid to the status of ratification and assessment of the pledges made under the extended period of Kyoto Protocol. Box 13.7 of the IPCC Fourth Assessment Report clearly states the range of emission allowances for Annex I and Non-Annex I countries for 2020 and 2030 using different regime designs. To achieve 450 ppm carbon equivalent by 2020 and 2050, Annex I countries need to reduce GHG emissions by 25-40% and 80-95% respectively. Developing countries and climate activists faced disappointment on less than expected increase in the level of ambition for pre-2020 targets. This not only puts doubt on the intentions and process of realization of the already set goals but also creates an environment of mistrust for the post-2020 pledges to be undertaken at Paris. However, EU and other nation states have claimed to be on track and respecting their mitigation commitments (by ratifying Kyoto) by the end of 2015. Their assessment reports on achievements ascertain seriousness and builds confidence to some degree.

Lack of clarity on the legal nature of the Paris deal and the INDCs has been a cause of concern for India. There has been a proposal for a kind of "hybrid agreement", which suggests that Paris deal will not actually be legally binding but have certain legally binding elements. Traditionally, the legal instrument has to be ratified completely, subject to accession or acceptance, with all its elements. There are conceptual doubts in having only certain elements in the instrument subject to ratification. The extent to which particular provisions lend themselves to enforcement depends on the language, location and precision of the provisions. Therefore, doubt persists over the kind of legal instrument or agreement with legal elements will be undertaken at Paris. Similar question of enforceability extends to the legal nature of the INDCs as well. Different viewpoints suggest that INDCs will either be an integral part of the agreement or treated separately. However, ambiguity remains on the extent of legal bindingness and distinction between Annex I and Non-Annex countries, which will inherently influence reduction goals submitted by member countries.

Issue of enforceability is closely linked to rules for accounting, verification and compliance. The MRV system prescribes measurement of GHG emissions, reporting of the measured data and independent verification of reported information. The MRV system or other instruments for verification and reporting has been a contentious issue with respect to INDCs. India refusing any form of ex-ante review for INDCs is seen as a negative step. It is important to clarify that India abides by the principle of transparency and is not reluctant in disclosing information on GHG emissions. Case in reference, is the 2009 Copenhagen goal of 20-25% reduction in GHG intensity by 2025. These targets were based on 5 modeling studies and were made publicly available along with the detailed structure of the models, sources of data, assumptions and detailed results. Unfortunately, no feedback was ever received on this study; and there aren’t any similarly detailed studies submitted by the developed countries. The question of assessment of INDCs, therefore, has more to do with international political pressures and equity than transparency and accountability.

India has been highlighting the principles of equity and fairness since the very beginning of climate negotiations. However, there has been silence on the content of equity by the Annex I countries. The content of substantive equity, more often than not, is simply ignored. The underlying problems relate to differing interests, geopolitics and power balances. Equity resonate different logic across mitigation, adaptation, damage and loss. Unless there is uniformity in the perception and understanding, ’equity’ will continue acting as a barrier element for global climate ambitions.

Intellectual Property Rights (IPR) is another grey area which hinders negotiations on climate change. There have been numerous studies which emphasized on IPR’s being a major issue in terms of cost, commercial restrictions, and equity, etc. For instance, technologies like second and third generation bio-fuels, Integrated Gasification Combined Cycle, high energy, high flux linear accelerators etc. are very expensive technologies and are held closely by Japan, U.S and UK firms. These technologies will greatly improve India’s energy generation capacities, yet remain inaccessible. In sharp contrast, there is skepticism over whether IPR, which constitutes a small percentage of the total project cost, is a real obstacle. Rather, access to capital for an investment of this scale needs to be focused on. This is not to say that IPRs should not be supported by global mechanisms for developing countries, but to lay focus on more integral challenge of capital access.

India’s 175 GW ambitions for deploying renewable energy is just one of the projects that would need considerable financial flows. Funding requirements for infrastructure, social development and building climate resilience is expected to be much more than what the global financial bodies such as Green Climate Fund can possibly accrue. Attracting global finance, mobilization of finance from the developed economies, currency hedging risk mitigation and global investment architecture needs to be strengthened in order to meet the ambitious goals of economic growth and climate resilience. However, realistic grant finance routed through GCF is equally important. It is important to make the distinction between climate finance and Overseas Development Assistance. India needs climate finance and analysts fear that unless there is serious commitment on this from Annex I, finance may become a spoiler for the Paris deal.

Finally, intersection of climate policy and international trade has created anxieties in Indian and global industries and firm. Import of carbon-intensive goods from countries with less stringent environment policies has led to issues of competitiveness and free-riding. Countries with strong climate policies, therefore, have started imposing off-setting tariffs and charging GHG allowances. The implication of such unilateral policy measures will impact global trade, production and consumption, especially in the developing and emerging economies. Issue of protectionist border measures has been quiescent in the climate negotiations and needs further clarification.

In conclusion, India’s concerns towards Paris agreement clearly include: pre-2020 actions, legal form of the agreement, rules of accounting, application of equity and fairness, IPR, finance, and border measures. The U.S-China deal on climate action is a positive sign for clean energy market and green growth, but how will this influence the upcoming Paris deal in terms of mitigation targets and review process is unclear. On the other hand, compensation liability for loss and damage has not been acknowledged comprehensively at the global forum. Given these challenges, optimal solution on the above issues will need to be negotiated, if a global agreement is to be reached by 2015.

(This report is prepared by Sonali Mittra, Associate Fellow, Observer Research Foundation, Delhi.)

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