‘Indian energy switch matters globally’

In an interview Bapna said India has taken great strides in energy transition in the past decade. Speaking on India’s plans to install new coal-fired power plants, Bapna, who was recently made a member of the the US Advisory Committee for Trade Policy and Negotiations, said coal is not the future for any country.

He also said multilateral lenders including the World Bank and other development banks need to take bolder steps in terms of climate finance and acknowledged that countries across the global would have different climate targets given their differential paths of decarbonization. Edited Excerpts:

How you would rate India on its pathway for transition?

There is a recognition not just because of scale, but also because India plays an incredibly important role geopolitically. And what happens in India is going to be an incredibly important model for much of the development. So what happens in India matters tremendously. I think India has made credible strides in the last 10 years. When you think about where this conversation was in 2013, you were just starting to talk about climate change. We talked about energy efficiency. So, at one level, the scale of change that’s taken place in India has been significant in the last decade. And yet, we know we have so much more to do not just in India, but across the world. But I think part of that is an increasing recognition that even 1.5 degrees celsius of warming, can have catastrophic impacts. Our understanding of the science has evolved… where 10 years ago, we thought 2.5 degrees would be fine. We realized we were being way too optimistic. In 2018, the IPCC completed their report and talked about what would happen if we wanted to have degrees of warming. And that shook everyone up about the scale of the challenge and urgency.

India also is planning to set up more coal-based power plants by 2030. What would you say on it?

We see countries, not only India, that are making very significant steps forward on clean energy, while at the same time still investing heavily in fossil based generation. The Ukraine war has been the latest driver.

This (coal) is not the future. Clean energy and storage are arguably much more compelling economically, financially for the country, than investing in coal. That’s going to create significant costs, and a potential for stranded assets in the medium run. So the argument I’m making is that its own economic self- interest is unclear as to why one has significantly invested in coal.

When you look at the framing of the narrative for climate actions, is there a sort of revision happening on the energy pathways?

In Europe, even in Germany, in the short run, there has been a greater focus on coal or on gas to respond to the short-term shock that Ukraine war has created. But it’s quite important to remember that also in Europe, they have strengthened, not weakened their clean energy targets for 2030.

So if anything, the Ukraine war is actually accelerating the medium and long term shift or transition to Europe. In the short run, there has been a bump on coal and gas, but that has not been reflected in their medium term targets. Even in the United States, no one is building a new coal based project. Years are numbered for coal in the United States. Now, the broader conversation that we need to be talking about is not just phasing down or phasing out of coal, but looking at all fossil fuels collectively.

To some extent, one of the important contributions India has made on the global stage is to shift from not only having the world talk about phasing on hold, but facing out of all fossil fuels, because that is an area where the rich world needs to do more. And let me come to the second point, which is the United States is not India, and India is not China. Different countries are at different stages of development. And there needs to be a recognition, a very important recognition that economic development, tackling poverty, tackling inequality have to be top comparative solely for the government. But the benefits of a clean energy transition, the economic benefits, the public health benefits, the energy security benefits, are incredibly compelling are as are the costs of not act. And so when you add all that up together, it makes, in my mind, a very persuasive case that a rapid shift to clean energy is in Indian’s broader public interest.

What needs to change for climate financing to pick up?

Well, I think the question should be, what kind of financing do we need. And what role can public financing play to catalyze or unlock private financing, which will be needed to create the types of shifts we need in technology and systems. And in that context, one of the areas we need to see is the World Bank and multilateral development banking system to be much bolder about scale of resources they could deploy to climate change. The World Bank, and the development banking system, could better leverage their access to capital markets, to unlock more financing at scale for these types of issues and do a better job of leveraging crowding on private investment to help support the transition.

The second thing that the banking system is starting to do more effectively, is not to see climate as just a big part, a small part of their large portfolio. But to integrate our mainstream climate considerations across everything that we do. They are starting to do that they could do more.

Further, I want to make sure that the finance question is much larger than just the public finance which has dominated the debate within India. Its also how we think about our private finance and the role that asset managers play in helping accelerate the shift towards clean energy. That is a very active conversation in the US, in China, in Europe globally at this point of time. The third area where there might be some real untapped source for concessional funding are corporate net zero targets and how corporations how they strive to meet their net zero targets more resources

Several countries including India are building their own supply chain and are concerned about high imports from China which has largely dominated the renewable ecosystem. How do you see these concerns?

There are very active conversations in many countries today around green industrial policy. You have seen the US embrace industrial policy in a way that it hasn’t decades. The US is embracing a climate framework that relies significantly on public support, tax credits and direct government funding. The broader point is we are seeing a number of countries wanting to win tomorrow’s markets by building domestic manufacturing capacity, in supply chains that would be critical for the clean energy transition. The challenge in that is that it could lead to high cost particularly for specific technologies. Either a country remains dependent on other countries for imports to support the transition or they are willing to tolerate higher cost that may be required to ensure supply chain…and how you get that balance right.