Global GDP Growth 2007-2010
7.2 Material capabilities
7.2.1 Material capabilities internationally
Chapter 7.India vying to occupy centre stage with the USA & China: the fourth phase (2011–2015)
of Capricorn, thus having great solar-energy potential (Government of India, 2015a; Prime Minister’s Office, 2015c). As outlined in the INDC, India sought to build “Green Energy Corridors” to distribute the anticipated 175GW of renewable energy it intended to produce by 2022 and also secured EUR2 billion from Germany to do so (Basu, 2015).
In furthering their argument for international equity, the government continued to maintain that implementation of the INDC would be contingent upon “an ambitious global agreement including additional means of implementation to be provided by developed country parties” thereby evoking Articles 3.1 and 4.7 of the Convention (Government of India, 2015a). India framed international cooperation as a “critical enabler” of its plans, citing an estimate of US$ 2.5 trillion (at 2014-15 prices) required to fund its climate change response between 2015 and 2030 (Government of India, 2015a). It framed the continuation of development nationally as the panacea for poverty.
The seriousness with which this world view considers the impact of climate change is found in the breadth of adaptation plans, which address agriculture, water, rural livelihoods, and the protection of biodiversity and the all-important Himalayan ecosystem (Government of India, 2015a).
To date the domestic contestation between ideas/world views has continued in this phase, such that the pre-Bali primacy of the “growth-first realist” idea has not been re-established; in other words, it has not regained its position as an intersubjectively held idea. India, however, continued to view equity and CBDR as the “bedrock” of a global collective response to climate change (Prime Minister’s Office, 2015a) in spite of the indications that the winds of the climate change regime were blowing in the direction of legal symmetry.
From 2012 onwards GDP growth in developed economies began to improve steadily, though not dramatically, while there were signs of a slow-down in Chinese growth, which brought down the overall GDP growth of emerging market and developing economies, as seen below. India’s GDP growth, although slower in the 2013-2015 period, showed a steady improvement in contrast to this trend (IMF, 2012).
Figure 50: Real GDP Growth – annual percentage change Source: April 2015 World Economic Outlook (IMF, 2015a)
By the second half of 2013 world trade and global financial activity had picked up; however, the recovery was still slow and uneven, with advanced economies still lingering in the shadow cast by the 2008/9 crisis, and emerging economies adjusting to lower rates of medium-term growth (IMF, 2014). While the projected global GDP growth for 2015 was slightly lower than the growth in 2014, the IMF forecasted a gradual acceleration in advanced economies based on improving fundamental economy drivers but a continued slowing of growth in the emerging economies (IMF, 2015b) This phase includes the first few years of the Fast-start Finance (FSF) period. In the Copenhagen Accord developed countries pledged US$10 billion FSF a year from 2010 to 2012, to be allocated evenly between mitigation and adaptation (UNFCCC, 2010 decision 2/CP15, para. 8). By the end of 2012, developed countries were reported to have exceeded this target but the US$33 billion raised included grants, export credit and development finance, it was predominantly allocated to mitigation: the extent to which it was “new and additional” funding was unclear (Brown, Stadelmann & Hörnlein, 2011; Fransen & Nakhooda, 2012). Part of the problem of making precise calculations rests on the lack of clarity on what financial flows are included under the rubric of
“climate finance”: public and private investments, public framework expenditures, policy-induced revenues (e.g. generated by feed-in tariffs or carbon credits). This issue was even one of the key findings of the SCF’s first biennial assessment (BA) and overview of climate-finance flows report in
Chapter 7.India vying to occupy centre stage with the USA & China: the fourth phase (2011–2015)
2014. Given this uncertainty the BA estimated a range of financial flows from developed to developing countries of US$40-US$175 billion per year between 2010 and 2012 from public and private sources (UNFCCC Standing Committee on Finance, 2014). See appendix 9.7 for a useful illustration of climate finance included in the SCF’s report.
Analysis by the Overseas Development Institute and the Heinrich Böll Stiftung places India among the top five recipients of multilateral FSF with US$ 588,6 million in pledges by 2015 (Overseas Development Institute & Heinrich Böll Stiftung, 2015). However, despite the call for even allocation, funding has been predominantly targeted at mitigation, as shown in Figure 51. In addition, Figure 52 indicates that the majority of the funding was actually in the form of concessional loans (Overseas Development Institute, 2014) and not direct resource transfers.
Figure 51: Fast-start Finance by aim (mitigation or adaptation) Source: Overseas Development Institute (2014)
Figure 52: Fast-start Finance by disbursement type Source: Overseas Development Institute (2014)
Of the US$34,688 pledged to 25 multilateral funds by the end of June 2015, only US$ 16, 809 million had been deposited and only US$2,586 million had actually been disbursed (Overseas Development Institute & Heinrich Böll Stiftung, 2015). A breakdown of these funds is in appendix 0.
In addition to raising FSF, developed countries committed to “a goal of mobilizing jointly US$ 100 billion dollars a year by 2020 to address the needs of developing countries” (UNFCCC, 2010 decision 2/CP15, para. 8). FSF can be thought of as a litmus test of the developed countries’ commitment to sharing the burden by raising the long term finance needed by developing countries to respond to climate change. While the focus in the first part of this phase was necessarily on the FSF, since 2013 there has been increasing concern on the part of developing countries at the lack of progress in mobilising the longer-term finance. With the agreement of the second commitment period at Doha in 2012, the continuation of the CDM was assured until 2020. The CDM has been an important source of climate-related finance for India as it ranks second only to China in terms of Certified Emission Reductions (CERs) issued – 12.8% of total – and therefore revenue generated (Fenhann, 2015) through the mechanism. This revenue was especially important in light of the slowing of the Indian economy which is discussed next.