Beyond COP21: Opportunities for China-India Climate Collaboration
By: Morgan Rote, Reyna Askew, Lingyan Yu, Rachel Estrada, James Grant, Brandon Yeh, Ryan
Bender, Colleen Howe, Megan Hyndman, and Deeba Yavrom
This report was produced by a team of twenty Johns Hopkins University SAIS students and
supported by the school’s Energy, Resources, and Environment department. It is the result of
independent research, as well as two field research trips to Beijing and New Delhi. During these
trips, which were sponsored by the SAIS ERE department’s Frontiers in Energy, Science and
Technology (FEST) program, the student teams held meetings with policymakers, energy
industry leaders, diplomats, and non-governmental organizations to discuss climate change policy
developments and opportunities in each country.
Executive Summary
The 21st United Nations Framework Convention on Climate Change (UNFCCC) Conference of
the Parties (COP21) marked a historic shift in global climate policy. For the first time, a common
framework was established to engage all countries in robust climate change action. China and
India were among those offering strong support, and both have committed to significant energy
intensity reductions and renewable energy expansions through 2030. Now, as the negotiations
have settled and the goals have been set, the baton shifts to policymakers to develop and
implement concrete action plans. Meeting the ambitious targets agreed upon will require
concerted efforts—including policy changes, technological developments, the deepening of
financial markets, and political leadership.
This study argues that such developments will be more fruitful if they are marked by
collaboration between two of the world’s largest economies and heaviest energy consumers–
China and India. In recent months, Prime Minister Narenda Modi and President Xi Jinping have
engaged in relationship building, through official visits by leaders, bilateral political dialogue,
and collaborative infrastructure investment. These efforts have sparked discussion on ChineseIndian climate collaboration, as there is enormous potential for the two emerging powers to
coordinate their climate change mitigation efforts.
Collaboration is in both China and India’s interest for several reasons. First, the two countries
face a series of common goals and challenges in addressing climate change, including balancing
development and electricity access needs with sustainability efforts. Notwithstanding some
important distinctions, many of the challenges that China and India face are unique to developing
countries, and collaboration by the world’s two most populous developing societies helps to
ensure these issues receive sufficient global attention. Collaboration also enhances the
development of low carbon solutions—through knowledge sharing, best practice sharing, and
joint RD&D. Furthermore, collaboration helps to build a larger regional market for green energy,
helping Chinese and Indian producers to achieve economies of scale and cost reductions and
promoting a robust market for clean energy financing. Finally, such collaborative efforts would
enhance China and India’s leadership role in global climate action, while setting a precedent for
the international community on successful cooperation.
This study aims to highlight areas that hold the most potential for future Chinese-Indian
collaboration, including clean coal technology, energy efficiency, renewable energy, bioenergy,
and climate finance.
China and India’s tremendous economic growth over the last 20 years has been fed by
burgeoning fossil fuel consumption, and coal is expected to remain a significant power source for
the foreseeable future. This makes the adoption of clean coal technologies, including
desulfurization and dust-removal equipment, critical for boosting efficiency and reducing
emissions. While such measures aim to minimize carbon emissions in power generation, a
number of initiatives are also targeting energy efficiency in the industrial and buildings sectors.
For example, China’s 12th Five Year Plan (2011-2015) has set aggressive efficiency targets, and
its recently announced national carbon trading system could offer a strong policy mechanism to
promote efficiency. Meanwhile, India’s Perform, Achieve and Trade scheme (PAT) has
introduced a promising certificate trading program to boost energy efficiency in the country’s
most energy-intensive sectors.
In addition to tackling the harmful effects of fossil fuels and improving efficiency, India and
China have seen significant development in renewable energy and bioenergy generation that offer
opportunities for collaboration and expansion in the future. Both countries are placing increased
reliance on clean energy, requiring strong advancements in technology and financing.
Fortunately, clean energy financing is an area ripe for collaboration, with green bond programs
and infrastructure debt funds offering two major financing sources.
Achieving collaboration on climate change initiatives going forward will require monitoring of
efficiency and financing programs, introduction of technology and knowledge sharing plans, and
cooperation between high-level Indian and Chinese government officials. This study argues that
such efforts would offer tremendous payoffs and allow China and India to realize their climate
ambitions. It suggests a basic framework for collaboration, which may be expanded or adjusted as
integration deepens.
Introduction
The 21st UN Framework Convention on Climate Change Conference of the Parties, held in Paris
this December, was a landmark event for climate change negotiations. It achieved a strong
universal agreement on climate, with the explicit goal of limiting global warming to 1.5 to 2
degrees Celsius above pre-industrial levels. Because China and India are the first and third largest
carbon emitters globally, carbon emissions reductions in these two countries will be a deciding
factor in the global community’s success or failure in achieving its targets and mitigating the
adverse impacts of climate change.
There is much room for optimism, as both countries are making strides toward a low-carbon
economy. China pledged to peak its carbon emissions by 2030 at the latest, reduce its carbon
intensity by 60-65% compared to its 2005 level, and increase the share of non-fossil fuels to 20
percent of its energy mix by 2030. The central government has been active in pursuing these
climate goals, and domestic policies underway (such as the recently announced national carbon
trading system) should allow China to honor these commitments. Similarly, India has made
notable climate change commitments, including its Intended Nationally Determined Contribution
(INDC) pledge to reduce emissions intensity by 33-35% compared to 2005 levels and increase the
share of non-fossil fuels to 40 percent of power capacity by 2030. These targets, along with
ambitious renewable energy and carbon sequestration goals, suggest that India is devoting
increased attention to climate concerns. While continued economic growth and expanded
electricity access will remain India’s primary development goals, these recent announcements
could mark a window of opportunity for innovative climate action.
2 Historically, China and India have worked independently to pursue their own climate goals.
Bilateral cooperation has been limited thus far; however, certain trends suggest an evolution is
underway. Both have participated in multilateral platforms such as the Major Economies Forum
and the Clean Energy Ministerial, focusing in particular on electric vehicle and smart grid
initiatives.1 Within the G20, both countries are pushing to reduce tariff and non-tariff barriers to
trade in environmental goods and services (EGS).2
In addition, there have been several recent initiatives within China and India’s non-profit, private,
and even public sectors that suggest the potential for future bilateral cooperation. For instance, a
collaborative research task force organized by the United Nations Development Program (UNDP)
brought together leading climate change researchers and policymakers from The Energy Research
Institute (TERI) in India and the National Center for Climate Change Strategy and International
Cooperation (NCSC) in China. The joint research program was designed to foster south-south
cooperation in order to share peer country experiences and exchange sustainable development
strategies. In March 2014, the project released its first collaborative China-India climate change
study.3 The report provides practical recommendations for broader climate change cooperation
between China and India, many of which have been incorporated into this study.
In addition, the Chinese and Indian governments have demonstrated greater interest in
collaborating on areas of mutual concern than at any time since the early 1950s. Since taking
office, Prime Minister Modi has actively looked to strengthen ties with Beijing–for example, by
inviting Xi Jinping to visit India in September 2014. In response, China has pledged $20 billion
of investment in India over the next five years.4 More recently, during Modi’s May 2015 visit to
Beijing, the two countries issued a joint statement on climate change, affirming that “the two
sides believe that their bilateral partnership on climate change is mutually beneficial and
contributes to the global efforts to address climate change.” China and India committed to
enhancing “high-level bilateral dialogue on domestic climate policies and multilateral
negotiations and to further strengthen practical bilateral cooperation, including in areas of clean
energy technologies, energy conservation, energy efficiency, renewable energy, sustainable
transportation including electric vehicles, low-carbon urbanization and adaptation.”5 This
bilateral statement is a clear indication that China and India are beginning to recognize
collaboration as in the interest of both parties.
Indeed, collaboration between these two world powers will be critical for meeting the global two
degree Celsius target, as collaboration would multiply the impact of individual action.
Collaboration is in China and India’s interest for several reasons. First, the two countries face a
series of common goals and challenges in addressing climate change. Both seek to achieve
1
“International Smart Grid Action Network (ISGAN),” Clean Energy Ministerial, http://www.cleanenergyministerial.org/OurWork/Initiatives/Smart-Grid.
2
“More Countries Must Push for Deal to Liberalized Green Goods and Services,” World Commerce Review, March 2014,
http://www.worldcommercereview.com/publications/article_pdf/821. 3
The Energy and Resources Institute (TERI), National Centre for Climate Change Strategy and International Cooperation (NCSC),
Central University of Finance and Economics (CUFE), Zhejiang University (ZU) and the United Nations Development Programme
(UNDP), “Low Carbon Development in China and India: Issues and Strategies (Advance Publication),” 2014, Study by To be
published by TERI Press, http://www.teriin.org/pdf/TERI-NCSC-CUFE-ZU_China-India-LCD-book.pdf.
4
Manu Balachandran, “A Complete Timeline of India-China Relations since Modi Took Charge,” Quartz, May 15, 2015,
http://qz.com/404869/a-complete-timeline-of-india-china-relations-since-modi-took-charge/.
5
Business Standard, “Joint Statement on Climate Change between India and China during Prime Minister’s Visit to China,” May 15,
2015, http://www.business-standard.com/article/government-press-release/joint-statement-on-climate-change-between-india-andchina-during-prime-115051500306_1.html. 3 economic growth, energy security, enhanced electricity access, and well-managed urbanization
while minimizing energy intensity, air pollution, and the local impacts of climate change.
Initiatives that pursue dual goals—like boosting economic growth and sustainability by fostering
new low carbon industries or increasing rural electricity access and clean energy aims by
adopting renewable sources—offer windows of opportunity for both countries. Such initiatives
require immense innovation, mobilization and integration, underscoring the need for cross-border
collaboration.
In addition, many of the challenges that China and India face are unique to developing countries.
For example, while the United States and the European Union may share China and India’s desire
for lower cost solar power, they do not have the same pressing need for clean coal technologies or
safer and more efficient bioenergy. Failure to coordinate on these issues risks allowing them to
fall out of global focus.
Not only does collaboration generate attention for key low carbon issues, but it brings concrete
benefits as well. Additionally, it deepens and broadens the market for low carbon technologies.
Technology transfer–exchange of equipment, knowledge and capacity building–is a critical part
of the RD&D process and would allow China and India to see technological advancements not
yet achieved. China and India have much to gain by sharing their own comparative advantages in
both technology and policy expertise–for example, China exchanging its best practices in energy
efficiency for India’s expertise in local renewable energy promotion.
Furthermore, collaboration helps to build a larger regional market for green energy. It would
allow Chinese and Indian producers to achieve greater economies of scale, driving prices down.
This is critical, particularly in developing countries, as Indian stakeholders have listed cost as the
key factor hindering renewable energy penetration. In addition, collaboration would promote a
robust market for clean energy financing (e.g., green bonds, partial credit guarantees) and
mitigate existing structural restraints.
Collaboration also offers China and India the opportunity to expand their leadership roles in
global climate change negotiations. While both parties are already important players in the talks,
coordination would allow them to advocate common principles held by developing countries even
more robustly. It would highlight the extent of their commitment to climate change action,
offering an innovative way to meet–and perhaps go beyond–their INDCs.
Such collaborative efforts would set a precedent for the international community and align with
the spirit of the COP talks–many countries working together to combat a global challenge. The
concept could easily expand from bilateral to multilateral cooperation with, for example, Brazil
and South Africa joining this partnership, particularly in light of their existing trilateral
cooperative agreement with India regarding technology transfer.6 In addition to collaboration
among developing countries, China-India cooperation could kick-start further collaboration with
the United States and Europe. Such broad collaboration would likely target research areas that are
of common interest, such as wind and solar power, clean vehicles, and international efficiency
standards. Furthermore, it would benefit the clean energy financing sector by bringing together
financing sources (United States, European Union) and a wide array of investment opportunities
(China, India, etc.).
6
University of Sussex Science & Technology Policy Research and TERI, “UK-India Collaborative Study on the Transfer of Low
Carbon Technology: Phase II Final Report,” 2009.
4 Thus, we believe that collaboration between China and India is not only in these countries’ own
interest, but offers broad global benefits including technological advancements, policy
improvements, and market development–all while promoting the spirit of international
cooperation. Such collaborative initiatives could span across sectors, including industry,
academia, and local, regional, and national governments. For example, industry can assess market
dynamics and identify areas of opportunity, while researchers can share knowledge and build
upon each other’s work. Multilateral agencies can help to facilitate intergovernmental
arrangements and bring together a global community of technical experts, while governments can
drive policies to promote market formation and technology adoption.7
In this paper, we have sought to identify areas that are ripe for such collaboration. In some cases
(such as clean coal and bioenergy), the opportunity exists because the topic is both paramount to
China and India and neglected by much of the developed world. In others (such as renewables
and energy efficiency), the opportunity exists due to comparative advantages between the two
countries, as well as the potential for joint market development. Finally, the field of green energy
financing is critical for technological development and requires a broad market for success.
Clean Coal
China and India’s tremendous economic growth over the last 20 years has been fed by
burgeoning energy consumption, dominated heavily by conventional energy sources – in
particular, coal. Coal accounts for 67% of China’s total primary energy consumption.8 In fact,
China is the world leader in coal-fired generation at 846 GW of installed capacity in 2014,9 and is
adding almost 1GW of capacity each week.10 In India, coal comprises roughly 44% of the
country’s total energy consumption,11 and Prime Minister Narendra Modi has announced plans to
increase coal consumption to 1 billion tons in the next five years.12 These consumption patterns
have been driven by abundant coal reserves in both countries, as well coal’s affordability relative
to other fuel sources.
Despite the recent slowdown in China’s key coal consuming industries and the subsequent
collapse of global commodity prices, we can expect coal to remain the backbone of each
country’s power generation sectors for well into the next decade.13 In addition, it bears
mentioning that rapid and unforeseen economic developments over the past year – which saw
impressive Indian growth (7.5%) overtake that of China (6.9%) – will have significant impacts on
the coal consumption trajectories of both nations.14 Any effective low-carbon growth policy for
Ibid. 7
8
China’s Energy Research Institute (NRDC) in discussion with the SAIS Beijing research team, March 2015
9
“2015 Coal Capacity,” China’s National Energy Association, 2015, http://www.nea.gov.cn/ztzl/mtscnlgg/index.htm
10
“China Adopts Clean Coal Technologies While its Installed Capacity Exceeds 800 GW in 2014,” Global Data, February 10, 2015,
http://energy.globaldata.com/media-center/press-releases/power-and-resources/china-adopts-clean-coal-technologies-while-itsinstalled-coal-capacity-exceeds-800-gigawatts-in-2014-says-globaldata
11
“Energy Statistics 2015,” Central Statistics Office, Government of India, March 2015,
http://mospi.nic.in/Mospi_New/upload/Energy_stats_2015_26mar15.pdf
12
“Coal Production to Double to 1 Billion Tonnes by 2019: Piyush Goyal,” India Times, November 6, 2014,
http://articles.economictimes.indiatimes.com/2014-11-06/news/55836084_1_coal-india-coal-production-india-economic-summit
13
“Coal Information 2015 edition,” International Energy Agency, 2015,
https://www.iea.org/publications/freepublications/publication/coal-information---2015-edition---excerpt.html
5 these emerging giants must not only aim to aggressively curb coal consumption, but also include
a strategy to mitigate the environmental impacts of future coal energy generation.
Clean Coal Technologies
Clean coal refers to any process that mitigates that emission of carbon dioxide (CO2) and other
greenhouse gases or pollutants – including nitrogen oxides (NOx), Sulphur dioxide (SO2) and
particulate matter (PM) – that result from the burning of coal. So called Supercritical and Ultrasupercritical coal facilities are also considered a form of clean coal technology, as they are more
efficient and less emitting than their subcritical counterparts. Both China and India have taken
steps to incorporate and employ clean coal technologies into their thermal generation mix, albeit
with varying degrees of progress.
As part of China’s recent “Air Pollution Action Plan,” the Chinese Communist Party (CCP) is
investing 760 billion yuan (US$117bn) in air pollution controls, including the installation of
desulfurization, dust-removal equipment and other pollutant treatment technologies in industrial
boilers, furnaces and power plants. The goal is to reduce the concentration of particulate matter in
the air around Beijing, Tianjin and Hebei Province (BTH region) some 25% by 2017. Beijing has
also pursued the shuttering of inefficient coal plants across the country. In 2014, China shut down
3.3 GW of capacity, with plans to shutter another 20 GW of capacity that do not meet new
emission standards.15 China’s National Energy Association (NEA) also released an action plan to
significantly increase the clean coal technology in its fleet of thermal plants by 2020. Measures
include the construction of large-scale, modern coal washing and processing stations, the
development of “ultra-low emissions power generation stations,” and drastic improvements to
plant efficiency.16 Reduced allowances for sulfur dioxide, nitrous oxide and soot will also be
implemented. Overall, China is expected to install over 500GW of clean coal capacity between
2016 and 2025.17
While India’s clean coal capacity is virtually non-existent today, its power sector is expected to
add over 103 GW of clean coal generation between 2016 and 2025. This capacity addition will be
realized through the construction of more efficient supercritical and ultra-supercritical
installations, as well as some incorporation of supercritical technology in existing plants.18
Compared to China, India’s coal plant standards are less developed – although the government
recently issued more stringent emissions requirements.19
While implementing national clean coal strategies, both countries could also benefit strongly
from joining the existing Climate and Clean Air Coalition, which is dedicated to reducing short-
14
“India Outpaces China in 2015 Economic Growth,” BBC, February 8, 2016, http://www.bbc.com/news/business-35519671
“China’s Economy Showed Steady Growth in the First Quarter of 2015,” China National Bureau of Statistics, April 2015,
http://www.stats.gov.cn/english/PressRelease/201504/t20150415_712435.html
15
16
Ibid.
17
“China Adopts Clean Coal Technologies While Installed Capacity Exceeds 800GW,” Global Data, February 10, 2015,
http://energy.globaldata.com/media-center/press-releases/power-and-resources/china-adopts-clean-coal-technologies-while-itsinstalled-coal-capacity-exceeds-800-gigawatts-in-2014-says-globaldata
18
“India Will add over 100GW of Clean Coal Capacity between 2016 and 2025,” Global Data, March 3, 2015,
http://energy.globaldata.com/media-center/press-releases/power-and-resources/india-will-add-over-100-gigawatts-of-clean-coalcapacity-between-2016-and-2025-says-globaldata
19
“Government Revises Norms for Coal-Run Power Plants to Cut Pollution,” NDTV, December 22, 2015, http://www.ndtv.com/indianews/government-revises-norms-for-coal-run-power-plants-to-cut-pollution-1257928
6 lived climate pollutants. This platform seeks to identify the most cost-effective solutions for
emissions reduction and encourages collaborative research, best practice sharing, and financial
mobilization to address short-lived pollutants.20
Clean Coal Challenges
Both countries face considerable hurdles in their pursuit of widespread clean coal technology
implementation. In China, barriers to clean coal stem from governance issues and the need to
balance conflicting priorities. For example, although the central government is pursuing a
national coal reduction target, there is a large deal of variation between regional coal quotas.
Beijing has the most stringent goal: to cut its coal consumption in half by 2020. Similarly, coalwashing standards are met with compliance and enforcement challenges. While 95% of existing
coal power plants are required to apply retrofits for sulfur and nitrogen emissions, the estimated
compliance rate is only 50%.21 Such inconsistent standards allow for carbon leakage, as industry
will be tempted to move production facilities to less-regulated areas in central and western China.
However, imposing such a dramatic industry transition across all regions is difficult because it
will likely face headwinds from coal-producing provinces that witness an economic slump and
rising unemployment.
In India, roadblocks to clean coal development remain at the technological level. On the whole,
India’s coal-fired power plants are less efficient than those in China. Indian coal is low quality
(high ash content), and average ambient temperatures in the country are higher, which contributes
to reduced efficiency. Additionally, even India’s new plants are relatively inefficient and account
for 60% of subcritical units under construction around the world, though encouraging policies are
in place to phase out the construction of subcritical units by April 2017 and encourage
construction of more efficient technology.22 These policies will help bring the average efficiency
of the coal-fired fleet more in line with international best practices, but the technical challenges to
meeting this goal are serious, and emissions from existing power plants will need to be addressed.
For India, clean coal remains attractive strictly from an energy savings perspective, and the
government will likely not pursue the technology in earnest until costs come down considerably.
As both India and China stand poised to continue their tremendous consumption of coal into the
foreseeable future, it is necessary to promote a technology trajectory that allows both countries to
meet their medium and long-term needs, both in terms of human development and the
environment. Clean coal will be a critical element in realizing this objective, and cross-country
collaboration in this area will be highly beneficial. Knowledge-sharing and technology transfer
will allow India to make many of the same gains that China has already done, while providing a
wider market for Chinese clean coal technology manufacturers. Furthermore, technical
collaboration makes it more likely that both countries will remain on the cutting edge of clean
coal technologies -- for example, moving beyond supercritical to ultra-supercritical installations.
Finally, in tandem with technological development, best practice sharing on regulatory policies
can help both countries find the most effective methods of regional implementation.
20
21
“Who We Are,” Climate and Clean Air Coalition, 2015, http://www.ccacoalition.org/en/content/about-us Bloomberg New Energy Finance (Beijing office) in discussion with SAIS Beijing research team, March 2015
22
“An IEA Blueprint for a Lower-Carbon India,” International Energy Agency, July 30, 2014,
http://www.iea.org/newsroomandevents/news/2014/july/an-iea-blueprint-for-a-lower-carbon-india.html
7 Energy Efficiency
For both China and India, increasing energy efficiency is one of the most feasible and costeffective means of reducing emissions and provides ample opportunities for knowledge sharing
and technology transfer. Both countries are heavily reliant on energy-intensive manufacturing and
are experiencing massive urban growth. India’s urban population is expected to grow from 340
million in 2008 to 590 million in 2030,23 while China’s is projected to reach one billion if current
trends persist.24 Hence, the industrial sector and buildings are clear common focus points. A
strategy of increasing efficiency also allows for continued economic growth – each country’s
primary development objective. As such, it is at the core of both China and India’s national
energy policies.
In China, the 11th Five-Year Plan (FYP) (2006-2010) and 12th FYP (2011-2015) have prioritized
improving energy efficiency and reducing energy intensity. After having met the 11th FYP goal
and obtaining a 19.1% reduction of energy intensity (energy consumption per unit of GDP),
China set an additional target of a 16% reduction in energy intensity and a 17% reduction in
carbon intensity (carbon emissions per unit of GDP) by 2015.25 In addition, China has
implemented a Top 10,000 Energy-Consuming Enterprises program, which targets energy
savings in the industrial sector and has saved 150 million tonnes of coal equivalents (Mtce).
Under this program, local governments evaluate industry’s progress toward energy savings
targets, and entities that do not meet the target are required to undergo mandatory energy audits
and retrofits. Currently in its last year, this program covers two-thirds of China’s total energy
consumption, accounting for 37% of the total energy savings target (assuming a GDP growth of
8.5% per year).26
In India, the 2001 Energy Conservation Act provided formal organizational support to energy
efficiency and paved the way for the creation of the 2008 National Action Plan for Climate
Change (NAPCC) and its flagship multi-sector climate policy scheme. The National Mission for
Enhanced Energy Efficiency (NMEEE) proposed a national target of 33-35% reduction in carbon
intensity from 2005 levels by 2030. Along these lines, India has implemented the Perform,
Achieve and Trade scheme (PAT), which seeks to reduce industrial energy intensity by trading
energy efficiency certificates in the country’s eight most energy-intensive sectors.27 This program
targets 478 facilities and aims to reduce 26 Mtce emissions and 6.6 million tons of oil-equivalent
over its first commitment period (2012-2015).28
23
Shirish Sankhe, et al., “India’s Urban Awakening: Building Inclusive Cities, Sustaining Economic Growth,” McKinsey Global
Institute, April 2010, http://www.mckinsey.com/global-themes/urbanization/urban-awakening-in-india
24
Jonathan Woetzel, et al., “Preparing for China’s Urban Billion,” McKinsey Global Institute, February 2009,
http://www.mckinsey.com/global-themes/urbanization/preparing-for-chinas-urban-billion
25
“China: The Twelfth Five-Year Plan for National Economic and Social Development,” International Energy Agency, Energy
Efficiency Policy and Measures Database, Accessed February 21, 2016,
http://www.iea.org/policiesandmeasures/energyefficiency/?country=China
26
“China is on Track to Meet its 12th Five-Year Plan Energy Intensity Target,” International Partnership for Energy Efficiency
Cooperation, May 19, 2014, http://www.ipeec.org/blog/view/id/797.html
27
“India: Perform, Achieve, Trade (PAT) Scheme,” IEA, Energy Efficiency Policy and Measures Database, Accessed February 21,
2016, http://www.iea.org/policiesandmeasures/energyefficiency/?country=India
28
“India – The World’s Carbon Markets: A Case Study Guide to Emissions Trading,” Environmental Defense Fund and International
Emissions Trading Association, May 2013, Page 2
8 Much of China and India’s economic growth has been based on heavy manufacturing, which is
energy intensive and highly polluting. In both countries, the industrial sector represents more than
a third of final energy consumption, with energy-intensive industries accounting for the lion’s
share. These sectors face difficulty in achieving clean energy goals while remaining competitive.
For example, in China’s “Rust Belt,” Heilongjiang, Jilin, and Liaoning provinces have struggled
to respond to new pollution control measures. In Hebei Province, the city of Tangshan has seen
factory closures and loss of steel production profits following measures designed to improve air
quality in neighboring Beijing.29 These provinces recognize the need for less pollution and greater
efficiency, but the pathway toward modernization is difficult. Air pollution fines alone provide
punishment but no solutions. While programs like the Top 10,000 Enterprises program help to
reduce energy intensity, much more progress must be made to limit overall consumption growth.
While the efficiency schemes outlined above are beneficial, serious institutional and financing
barriers remain in both countries. Institutional challenges include inadequate delivery
mechanisms, weak intellectual property rights, limited transparency (particularly in the Chinese
case), loose energy efficiency standards, poor monitoring, and principal-agent challenges in terms
of enforcing policies at the local level. In addition, industrial efficiency projects struggle to
compete with other projects that offer a higher risk-adjusted rate of return, particularly when there
is limited financing available for upfront costs. Growing firms often choose to invest in increased
production rather than efficiency measures to boost their market share even if the two strategies
offer similar returns.30 Addressing these barriers and securing targeted funding will be necessary
for China and India’s industries to modernize and compete.
In addition to industrial efficiency, much attention is being paid to the building sector in both
countries. In China, the National Development and Reform Commission (NDRC) set forth the
Green Building Action Plan, which sets strict efficiency codes for new buildings and seeks to
retrofit more than 500 million square meters of floor space by 2015.31 Because building efficiency
improvements have high upfront costs and long payback periods, the Chinese government has
offered technical support and financial incentives for such improvements.32 Building is a huge
factor in China’s economic growth, constituting roughly 9% of GDP.33 With new construction
taking place at an unfathomable scale, building efficiency is a particularly important target of
opportunity. India’s Bureau of Energy Efficiency recently launched a “National Campaign for
Energy Efficiency and Conservation,” which included the implementation of a successful
“Energy Star” efficiency labeling program for lights and household appliances, as well as a
mission to increase public awareness on the benefits of efficient electrical use.34
China and India both face significant hurdles in reducing energy intensity. Much of the potential
for investment in energy efficiency remains untapped due to lack of financing and delivery
29
“Back in the Cold,” The Economist, January 3, 2015, http://www.economist.com/news/china/21637449-after-promising-signsrenaissance-chinas-old-rustbelt-suffers-big-setback-back-cold
30
“Energy Intensive Sectors of the Indian Economy: Path to Low Carbon Development,” World Bank, 2011
31
S. Yu, et al., “Analysis of the Chinese Market for Energy Efficiency.” U.S. Department of Energy and Pacific Northwest National
Laboratory, 2014
32
China’s Energy Research Institute (NDRC) in discussion with SAIS Beijing research team, March 2014
33
“China GDP Annual Growth Rate,” Trading Economics, October 19, 2015, http://www.tradingeconomics.com/china/gdp-growthannual
34
Shri Sushilkumar Shnide (Minister of Power, New Delhi), “National Campaign For Energy Efficiency & Conservation: Inputs
Seminar” (presentation, New Delhi, May 5, 2010), http://www.ficci.com/events/20378/ISP/speech-5-may-2010.pdf
9 mechanisms. However, similar development goals, a shared interest in taking advantage of
energy efficiency as the “low-hanging fruit” of emissions reductions, and complementary areas of
expertise suggest that sharing best practices and technological knowledge would be mutually
beneficial. Such cooperation would allow each country to adapt and improve upon promising
policies and programs to suit its own national objectives and domestic conditions. In particular,
China’s Top 10,000 Enterprises program offers lessons in promoting accountability among
energy intensive industries, while its recently announced national carbon trading scheme will
generate globally applicable lessons. India’s PAT scheme is both scalable and adaptable to other
industries and countries. In addition to incentivizing individual efficiency measures, such trading
schemes could offer a pathway to joint efficiency markets in the future. While implementation of
successful energy efficiency measures will depend on addressing existing institutional and
financial barriers, collaboration between China and India would better enable both countries to
achieve their international emissions reductions commitments while reducing long-term energy
consumption costs.
Renewable Energy
While progress is being made in clean coal and energy efficiency, the fastest and most apparent
growth is occurring in the field of renewable energy. In both countries, electricity generation from
renewables is surging under strong government support. Both countries agree that renewables
represent a path toward sustainability while satisfying energy demand and providing access to
remote regions. As domestic resources, they also enhance Chinese and Indian energy security.
China recently increased its renewable energy targets to 150-200 GW of solar power and 250 GW
of wind power, each to be achieved by the year 2020.35 In 2014, the country invested more than
$90 billion in renewable energy.36 India has also made considerable progress building up its
renewable portfolio. In 2000, non-hydro renewables represented only 2 percent of India’s power
generation, but they stand at 13 percent today.
The dramatic growth in China and India’s renewable energy sectors is nonetheless limited by
several factors, including energy market structure, lack of financing options, and technological
barriers. For example, while government financial support and Independent Power Purchaser
(IPP) involvement has enabled large growth in utility-scale wind and solar power plants in
Western Chinese provinces like Xinjiang and Gansu, around 30%-50% of that electricity
production has been curtailed due to several reasons: 1) weak local demand in the western part of
China; 2) lack of grid interconnection to higher demand centers; 3) grid construction that can’t
keep pace with the construction of renewable energy plants; and 4) occasional grid stress caused
by turbines producing power levels that exceed demand.37
As for India, Modi’s mission to “electrify India” through renewables is expected to face
considerable challenges. Critics argue that a 266 GW goal of additional renewable capacity is not
35
“The Road to a Paris Deal / China Raises Its Targets for Renewable Energy,” New York Times, December 8, 2015,
http://www.nytimes.com/interactive/projects/cp/climate/2015-paris-climate-talks/china-raises-its-targets-for-renewable-energy .
36
Liu Yuanyuan, “China’s Investment in Renewable Energy Surpasses Europe, U.S. Combined,” Renewable Energy World,
November 25, 2015, http://www.renewableenergyworld.com/articles/2015/11/china-s-investment-in-renewable-energy-surpasseseurope-u-s-combined.html.
37
“Great Western Province, the New Energy Projects Abandoned Electricity up to Five Percent,” Economic Information Daily,
August 1, 2013, http://jjckb.xinhuanet.com/2013-08/01/content_458890.htm.
10 feasible, given that the subcontinent’s total installed capacity stands at 250 GW combined.38
Reaching this ambitious goal may be hindered by grid integration challenges. For example, the
grid in its current state can only handle up to 20-30 percent renewables in its power mix, and
increasing capacity beyond this point would require costly upgrades to India’s transmission
infrastructure, either through better grid management or more peak plants. However, performing
the upgrades that are necessary to integrate large amounts of intermittent renewables into the grid
system may fall behind the priority of providing universal energy access.
While many of these challenges are country-specific and must be dealt with at the domestic level,
some renewable energy challenges are universal. In both China and India, wind and solar
photovoltaic (PV) suffer from grid connectivity issues, equipment quality problems, lack of
interconnections between provinces, and other factors. Subsequently, breakthroughs in the
efficiency and affordability of power saving technology, as well as grid management strategies,
will be critical to the widespread adoption of alternative energy. China and India would see many
benefits from collaborating on renewable energy production, particularly in wind and solar
power.
In particular, the two countries should aim to collaborate on renewable development through joint
business ventures, knowledge-sharing, joint RD&D projects, and increased trade opportunities.
Engage in knowledge-sharing and joint RD&D
There are several opportunities for collaborative low-carbon development. On a bilateral basis,
China and India should engage in knowledge and best-practice sharing regarding technology,
policies, and regulations. In this sense, education exchange programs and industry partnerships
may be useful ways to encourage dialogue between scientists, engineers, and business people.
Current programs exist to facilitate discussions on climate change within the countries, such as
the Mission on Strategic Knowledge on Climate Change (MSKCC), part of India’s National Plan
on Climate Change. Similar bodies could potentially be formed to create opportunities for Indian
and Chinese researchers to collaborate on renewable development.
Furthermore, because the low carbon development field relies on technological integration and
incremental advances, it is particularly well suited to joint RD&D. China and India should engage
in both bilateral and international RD&D efforts, conducting assessments on existing
technological capacities and market structures to combat their shared renewable integration
challenges. For example, as China and India collaborate in upgrading their existing grids to
reduce transmission loss and enhance renewable integration, the two can initiate best practice
sharing with developed countries, like the United States to augment their collective knowledge.
Lower trade and investment barriers
On May 14, 2015, President Modi arrived in China for a three-day visit, during which he met
with a handful of Chinese businesses and announced $22 billion worth of bilateral business deals,
signify a strengthening in commercial ties between the two Asian neighbors.39 Many of these
company collaborations represent avenues of increasing levels of investment and trade between
China and India. For example, the Adani Group plans to set up an integrated photovoltaic (PV)
38
Katherine Tweed, “India’s Lack of Wholesale Markets and Grid Investment Could Hinder Ambitious Renewables Commitments,”
Green Tech Media, March 4, 2015, http://www.greentechmedia.com/articles/read/Overly-Ambitious-Renewable-Commitments-inIndia-Lack-Wholesale-Markets-and.
39
James Areddy, “India, China Businesses Agree on $22 Billion Worth of Deals,” Wall Street Journal, May 16 2015,
http://www.wsj.com/articles/india-china-businesses-agree-on-22-billion-worth-of-deals-1431763185.
11 industrial park in the Mundra special economic zone (SEZ) in a joint venture with Chinese green
energy major Golden Concord Holdings, a deal worth upwards to $3 billion.40
To continue this trend of economic and trade collaboration between India and China, both
governments should look at reducing trade barriers of low-carbon goods and technology. As
indicated in a 2007 World Bank study, the potential for liberalization in the area of low-carbon
goods could lead to real increase in trade flows.41 Existing barriers such as complicated
applications and approval procedures, sector-based limits on FDI, and anti-dumping import bans
issued by India against China should be reduced or eliminated.42 In addition, China and India
could alleviate low carbon trade barriers by liberalizing their cross-border procurement rules. For
example, many state-funded projects in China currently require that 80 percent of technologies be
sourced domestically.43 Expanding this preferential treatment to Indian firms (and vice a versa)
could help to build an efficient and integrated market.
Bioenergy
Currently, the inefficient burning of biomass and large scale agricultural waste from both China
and India is creating significant GHG emissions, while simultaneously posing serious threats to
public health and societal well being. For China, the existing number of household biogas plants
in rural China is one of the highest in the world, with around 30 million biogas plants in 2010
reaching an output of 10.5 billion cubic meters (equivalent to more than 100 million tons of
standard coal) and accounting for roughly 1.2% of China’s total energy use.44 However, low
comprehensive biogas utilization, inadequate follow-up services, and poor management of biogas
digesters pose significant barriers for China to further tap into its existing bioenergy potential. For
India, more than 75% of rural households today still depend on fuel wood for their cooking
energy needs, accounting for an expected 1 billion to 5.9 billion tonnes of CO2 emissions per
year. By adopting improvised cook stoves and biogas digesters, India has the potential in
reducing existing fuel wood consumption by 205 metric tonnes (MT) a year, cattle dung by 107
MT each year and agro-waste by 57 MT each year.45
Despite existing efforts to scale-up distributed bioenergy for rural access, the policies to tap into
remaining bioenergy potential is still predominantly a domestic issue for both countries. Limited
domestic and international cooperation, persistent technical challenges, and institutional barriers
continue to hinder the development of a sound bioenergy strategy on both sides. To address these
challenges, China and India could benefit by working together. Experts on both sides can work
40
Arun Kumar, “Deals Worth $23.5 Billion Likely to Be Signed during PM Modi’s China visit,” The Economic Times, May 15, 2015,
http://articles.economictimes.indiatimes.com/2015-05-15/news/62192098_1_china-development-bank-adani-group-bharti-airtel.
41
“Climate Change and Trade on the Road to Copenhagen,” International Centre for Trade and Sustainable Development (ICTSD),
December 2008, Page 28; and “International Trade and Climate Change,” World Bank, 2007. 42
Dhiraj Nayyar, “India and China Should Let Trade do the Talking,” Bloomberg View, September 15, 2014,
http://www.bloombergview.com/articles/2014-09-15/india-and-china-should-let-trade-do-the-talking.
43
The Energy and Resources Institute (TERI), National Centre for Climate Change Strategy and International Cooperation (NCSC),
Central University of Finance and Economics (CUFE), Zhejiang University (ZU) and the United Nations Development Programme
(UNDP), “Low Carbon Development in China and India: Issues and Strategies (Advance Publication),” 2014, Study by To be
published by TERI Press, http://www.teriin.org/pdf/TERI-NCSC-CUFE-ZU_China-India-LCD-book.pdf.
44
Yu Chen, et al., “Household Biogas Use in Rural China: A Study of Opportunities and Constraints,” Renewable and Sustainable
Energy Reviews, 2009
45
N.H. Ravindranath and P. Balanchandra, “Sustainable Bioenergy for India: Technical, Economic and Policy Analysis,” Energy 34,
no. 8 (2009): 1003-1013 12 together to share best practices and technologies, combine research efforts, and create financial
support mechanisms for the long term. Specifically, both countries can work to increase
bioenergy output in two areas:
●
●
The continuing replacement of traditional low-efficiency stoves with improved cook
stoves (ICS) programs
The promotion of biogas methane technology for cooking, heating and electricity
generation
Currently, a combined 1.5 billion rural residents in China and India still rely on solid biofuels for
heating and cooking purposes, resulting in significant GHG emissions and harmful indoor air
pollution.46 Both China and India have worked to implement cleaner stove technology to mitigate
these effects. For example, China has undertaken decades of improvements through the National
Improved Stoves Program in the 1980s and 90s, as well as other more recent initiatives since that
time — installing close to 177 million stoves and covering 76% of rural households.47 Similarly,
India launched the National Biomass Cook Stove Initiative in 2009, which sought to upgrade 160
million Indian cook stoves to advanced models that utilize biomass more efficiently. However,
despite the respective domestic progress, dissemination of ICS remains slow, while ecological
and health damages associated with inefficient stoves persist. Neither country has pledged to join
the UNEP Climate and Clean Air Coalition (CCAC). This represents an opportunity for China
and India to reaffirm their commitment to addressing biomass-related pollution and contribute to
the international effort.
Furthermore, both countries can work together to share the most advanced stove technologies and
best practices, thus introducing an effective market environment for ICS. This is particularly
pressing, as ICS represents a relatively under-covered technological area in non-developing
countries. Moreover, since China is currently home to the world’s largest biomass stove
industry,48 the adoption of common product quality standards between India and China could not
only improve the rate of clean cook stove adoption, but also further facilitate trade and
technology research between the two countries.
Another key source of bioenergy is biogas formed from animal and agricultural waste. Efforts to
promote the conversion of waste into biogas energy have been well established in China and
India, particularly in the rural areas. Biogas production from anaerobic bio-digesters has been
widely employed in China for many years. By the end of 2009, through government subsidies and
technical assistance, there were over 30.5 million household biogas digesters in China, and the
total biogas yield was 12.4 billion cubic meters.49 In India, a large bovine population is seen as a
viable potential source of biogas fuel material.50 At the Indian household level, the cumulative
number of biogas plants built from 1982 to 2006 was estimated at 3.83 million, with a total
46
A.K.K. Reddy, R.H. Williams and T.B. Johansson, “Energy after Rio: Prospects and Challenges,” United Nations Development
Programme, 1997
47
Li Junfen, et al., “Biomass Resources Assessment in China,” report submitted to Asian Regional Research Programme in Energy,
Environment and Climate, Asian Institute of Technology, 2000
48
“China: Accelerating Household Access to Clean Cooking and Heating,” World Bank, September 2013
49
Xiyuan Jiang, Sven G. Sommer, Knud V. Christensen, “A review of the biogas industry in China,” Energy Policy 39, no. 10 (2011):
6073-6081
50
N.H. Ravindranath and P. Balanchandra, “Sustainable Bioenergy for India: Technical, Economic and Policy Analysis,” Energy 34,
no. 8 (2009): 1003-1013
13 potential of 12-17 million more tanks in the next few years.51 Furthermore, there exists a large
potential for community and institutional biogas plants in the majority of around 500,000 Indian
villages.
Despite the progress already made in both countries, current barriers to further develop biogas
technology include relatively weak environmental policies, flawed financial policies, and a lack
of long-term follow-up services. Many of these issues can be overcome through cross-border and
cross-sector collaboration. For example, private businesses and civil society from both sides
could develop joint mechanisms to overcome the technical and maintenance challenges
associated with biogas digester operation, particularly in colder temperatures.52 Furthermore,
collaboration could both increase the energy services provided to rural Chinese and Indian
citizens and deepen the regional market for biogas digesters.
As India and China strive towards a low carbon developmental path, both governments have
much to gain by working together and overcoming existing technical and institutional barriers,
thus maximizing their respective bioenergy potentials. In addition to biogas digesters and
improvised cook stoves, many other collaborative opportunities related to bioenergy exist. In an
effort to curb consumption of fossil fuels for both transportation and electricity generation, China,
India and other developing nations such as Brazil could work more closely together on further
developing biofuels. Together these countries could devise ways to overcome challenges of
production costs, irrigation management and resilient fuel crop development.
Climate Finance
Securing adequate financial resources will be the key enabling factor for most low-carbon
initiatives. Significant progress is starting to be made in this area. For example, in 2015, China
announced a new climate finance commitment of around $3.1 billion to help developing countries
combat climate change. 53 During President Modi’s visit to China in May, the two sides urged
developed countries to honor their commitment in providing to developing countries $100 billion
annually by 2020.54 Despite these pledges, though, there still remains a lack of financing
mechanisms to help China and India overcome the high cost of implementing their “green”
targets. China has estimated that two-thirds of the country’s total green investment needs, about
$320 billion annually, will need to come from private capital markets to alleviate the burden of
fiscal pressure.55
Both China and India stand to benefit greatly from introducing climate-oriented financial policies,
as it would allow both countries to signal their resolve on low-carbon development and even
51
Tathagata Chatterji, Climate Smart Development in Asia: Transition to Low Carbon and Climate Resilient Economies, ed. Ancha
Srinivasan, et al. (2012)
52
Christoph Burger and Jens Weinmann, “Bioenergy in China: Can China Learn from Germany’s Experience?” CKGSB Knowledge,
March 10, 2014, http://knowledge.ckgsb.edu.cn/2014/03/10/technology/bioenergy-in-china/ 53
“Fact Sheet: The United States and China Issue Joint Presidential Statement on Climate Change with New Domestic Policy
Commitments and a Common Vision for an Ambitious Global Climate Agreement in Paris,” The White House Office of Press
Secretary, September 25, 2015, https://www.whitehouse.gov/the-press-office/2015/09/25/fact-sheet-united-states-and-china-issuejoint-presidential-statement.
54
“India, China Commit to Work Together on Climate Change,” Reuters, May 15, 2015,
http://www.reuters.com/article/2015/05/15/india-china-climate-idUSL3N0Y63YQ20150515.
55
Zhang Chenghui, et al., “Greening China’s Financial System: Synthesis Report,” International Institute for Sustainable
Development, March 2015, https://www.iisd.org/media/green-finance-growing-focus-china. 14 become leaders of the global movement toward green finance. Recent efforts to introduce
sustainable finance in China and India reveal that both countries already recognize the potential
benefits of green financial innovation. This is evidenced by the China Banking Regulatory
Commission’s (CBRC) passage of green credit guidelines in 2012 and YES Bank’s work to
pioneer green bonds in India earlier this year.56 The following outlines several promising areas of
collaboration between the two countries and serves as a useful starting point for future dialogue
on these issues.
Green Credit Guidelines
As a first step toward market integration, India and China should strive to introduce and
implement effective green lending standards that assess projects on the basis of their
environmental and climate impacts. These guidelines would serve as a reference for banks to
direct funds to environmentally responsible projects, while increasing transparency and attracting
international investors.
The People’s Bank of China has already taken steps in this direction through the introduction of
the Green Credit Guidelines in 2012, and through its advocacy for green lending principles in
overseas investment.57 China’s recent experience can help to inform a joint dialogue between
China and India on institutionalizing such green credit guidelines at the international level. This
could entail working with the Asian Infrastructure Investment Bank (AIIB) or other multilateral
development banks to adopt the Equator Principles and associated green credit guidelines for
their own lending programs.
Corporate Green Bonds
Green bonds offer another promising option for financing the shift to low-carbon development in
China and India, as they are well suited to long-term infrastructure projects that require high
upfront capital costs.58 Although Multilateral Development Banks have been the primary issuers
of green bonds since their launch in 2008, the market is experiencing rapid growth due to the
increased participation of government agencies, municipalities, utilities, and corporations.59
Standard & Poor’s has estimated that corporate and municipal issuances of green bonds will drive
even greater growth in global green bond markets in the future, with the potential of corporate
green bond issuance to reach up to $30 billion in 2015, a 50% increase from 2014.60
China and India could develop a robust corporate green bond market in Asia by jointly
developing a series of policies for their two countries that can serve as a model for financial
innovation elsewhere. Establishing a robust green bond market would require developing
standards for green project certification (e.g., based on the Green Bond Principles), introducing
strong auditing procedures (e.g., through a third party regulator), and developing financial
56
“YES Bank Floats First Green Infra Bond for Rs 500 Crore,” The Times of India, February 17, 2015,
http://timesofindia.indiatimes.com/business/india-business/YES-Bank-floats-first-green-infra-bond-for-Rs500cr/articleshow/46269428.cms. 57
“Establishing China’s Green Financial System,” The People’s Bank of China and UNEP, April 2015,
http://www.unep.org/newscentre/default.aspx?DocumentID=26802&ArticleID=34981, 9. 18.
58
Sean Kidney, “Greening China’s Financial Markets,” International Institute for Sustainable Development, February 2014,
http://www.iisd.org/pdf/2014/growing_green_bonds_en.pdf, 6.
59
“Green Bonds Attract Private Sector Climate Finance,” World Bank, June 10, 2015,
http://www.worldbank.org/en/topic/climatechange/brief/green-bonds-climate-finance.
60
Michael Wilkins, “Corporate Bond Market Shows it Green Shoots,” Standard & Poor’s Ratings Services, 2. 15 incentives to stimulate the domestic green bond market (e.g., tax exemptions, adjusted loandeposit ratios and risk weightings for green investments).
Green bonds offer China and India a key opportunity to leverage private sector resources to
finance sustainable infrastructure, while lowering the cost of financing for green projects and
improving the depth and maturity of domestic fixed-income markets. Furthermore, both China
and India would gain substantial international prestige for establishing the world’s first corporate
bond markets in the area of green financing, even becoming centers for corporate innovation in
climate finance.
Joint Infrastructure Debt Fund
Along with efforts to expand green bond markets in Asia, policymakers in India and China should
consider establishing a joint infrastructure debt fund (IDF) exclusively for low-carbon
development projects. This infrastructure debt fund would operate like a mutual fund by raising
money from investors and channeling the proceeds into green bonds issued by companies and
projects. This would support each country’s nascent corporate green bond market by providing a
dedicated source of funds, while lowering the cost of financing by injecting much-needed
liquidity into the corporate green bond sector. According to the Climate Policy Initiative, this
could decrease the cost of debt of renewable energy projects in India by up to three percentage
points and increase loan tenors by up to five years.61
China and India could establish a joint IDF for green projects at the bilateral or multilateral level.
Considering its focus on infrastructure, the AIIB would be an ideal setting to launch the IDF,
especially if it becomes a forum for developing green investment policies in Asia. A joint IDF, as
opposed to separate national IDFs, would be uniquely positioned to diversify its assets by
investing in a number of different green projects in China, India, and other countries if
established at the multilateral level.
Risk Mitigation
Another promising topic of collaboration on green finance between India and China is in the area
of partial credit guarantees for green projects. The purpose of partial credit guarantees is to lower
the cost of financing for long-term projects by covering some or all of the associated risks of
these projects and thereby enhancing their credit ratings. Partial credit guarantees could be
especially useful in India, as they would allow institutional investors to invest in corporate bonds
that are currently too risky to attract investment.62
Given the potential of such guarantees to raise investment in long-term infrastructure projects,
China and India could lobby for the development of a “green” partial credit guarantee mechanism
to be launched within the AIIB, New Development Bank, or another multilateral setting. Since
one of the major challenges of setting up such guarantees is the complex coordination required
between lenders, guarantors, and project developers, the benefit of establishing the partial credit
guarantee mechanism at the multilateral level is gaining access to resources and expertise to
organize such complex arrangements.
61
Gireesh Shrimali, Charith Konda and Sandhya Srinivasan, “Solving India’s Renewable Energy Financing Challenge: Instruments to
Provide Low-cost, Long-term Debt,” Climate Policy Initiative and Bharti Institute of Public Policy, April 21, 2014, 6;
http://climatepolicyinitiative.org/publication/solving-indias-renewable-energy-financing-challenge-instruments-to-provide-low-costlong-term-debt/.
62
Ibid., 8. 16 The above recommendations provide some of the most promising ways in which China and India
can collaborate to establish a common framework for green investments in Asia. The huge scale
of investment required in sustainable infrastructure in each country, as well as the importance of
achieving a global consensus on low-carbon development, ensures that their collaboration on
these issues will be essential in expanding green investment opportunities across the globe.
Conclusion
Bilateral collaboration offers China and India an innovative path toward achieving their climate
commitments. It allows them to multiply the gains that could be made separately. Knowledgesharing, joint RD&D, and wider market formation promotes the advancement of low carbon
technologies which solve critical, shared challenges. Energy efficiency improvements allow
China and India to meet their economic development needs while reducing emissions intensity.
Renewable and bioenergy development can increase rural electricity access and enhance energy
security while reducing the countries’ reliance on carbon-heavy fuels. Clean coal technologies
assist with this transition from coal to low carbon power sources – while continuing to provide
reliable and low cost power. Finally, clean energy financing is the great enabling factor, allowing
technological developments to take place.
Collaboration in each of these areas would prove highly beneficial, and recent developments
suggest that China and India are increasingly open to cooperation. This study suggests a basic
framework for collaboration, identifying the most obvious windows of opportunity – the “low
hanging fruit.” We hope that in the future, this initial collaboration can deepen into an integrative
approach for policy alignment. Specific policy measures, including vehicle emissions standards,
trading systems, and harmonization of standards, should eventually be assessed. However, in the
wake of the Paris talks, the first step – deepening the spirit of collaboration – is both a worthy and
timely goal.
17