India, Loss and Damage and COP27

In this episode of Energy Insights, we speak with Ulka Kelkar. Ulka is the Director of the Climate Program at the World Resources Institute India.
By training, she is an economist with two decades of experience in climate change research. Currently, Ulka is leading the World Resources Institute's work on climate policy that supports India's low-carbon goals across policy and markets within states and cities.
 
Previously, Ulka worked in climate change at the Asian Development Bank and has been involved in projects with several organisations that have worked on issues across India, Bangladesh, Bhutan and Nepal. Her research has also appeared in journals such as the Annual Review of Environment and Resources, Global Environmental Change and Climate Policy, and Mitigation & Adaptation Strategies for Global Change.

Today we discussed several topics that revolved around India and South Asia's climate change impacts, fossil fuels, India's renewable energy progress, India's place amongst growing calls for loss and damage payments, climate adaptation finance and the outlook for COP27 competing with other global issues like energy security, inflation and the like.

Twitter: @UlkaKelkar
Web: World Resources Institute | Ulka Kelkar

Transcript

Host: Before we get started, I was just wondering if you'd give listeners a brief background on your career history, what you're currently working on, and what your interests are right now.

Ulka Kelkar: I work with a research institution called World Resources Institute (WRI). I work with the India office and WRI is located in a number of cities in India, and we work on programs like energy climate, cities, and landscapes. I'm the director of the climate program there. I'm an economist by training and a lot of what we do involves analyzing what long-term low carbon pathways for India might look like at different scales, how states and cities that are subnational governments can implement these pathways so that they actually become a reality, and what role the private sector can play in making sure that we have a good, just, and fair low carbon transition.

Host: I did wanna dig into loss of damage payments and COP27 in relation to India, but I think a good place to start and provide some context is to talk about India's and South Asia's relationship to climate change in general. Maybe we could start with some of the most recent events that took place across the subcontinent this year. What was 2022 like?

Ulka Kelkar: Right. So the Asian subcontinent has always been prone to a lot of extreme events, but this year was particularly disconcerting. We had a very severe and prolonged heat wave that came earlier in the year than anybody expected. We had extreme rainfall events and severe floods in Pakistan as well as in Bangladesh and Northeast India. 

This affected a lot of different sectors of the economy. Agriculture, for sure. Large tracts of fields in Northeast India were flooded for weeks. The wheat crop was hit by the heat wave at a time when the world was already concerned about wheat availability due to the Ukraine war. Even school children, workers who work outside for a living - such as construction laborers and those who deliver supplies, food, and so on - all of them were really unable to protect themselves from the extreme heat that hit the subcontinent earlier in the year. This was followed, of course, by the floods in Pakistan, which estimates say covered a third of the country, putting it under water and displacing one out of seven Pakistanis.

I think more than any other previous year, this year has been drawing attention to the fact that there is a limit to how much we can adapt to climate impacts and that there is an inevitable loss of lives and damage to property that we are already beginning to see, even at something like 1.2 degrees celsius of warming. 

It's very important for us to act now to prevent the worst case scenarios of four degrees celsius or others that some models were predicting. With the Paris Agreement, we are hoping that if all countries do keep to their pledges, then we could reach somewhere around two and a half degrees celsius of warming and it might be possible to adapt to some of the worst impacts, but there will still be some losses and damages that would need additional finance and support. That's really something that has come to a pitch just on the eve of COP27. 

Host: Would you say that this year was worse in terms of extreme weather events? In a sense, what I'm hearing from you is it was akin to a wake up call, not only for the region, but for the globe itself. 

Ulka Kelkar: That's right. I mean when the heat wave, for example, hit North India, North Indians are used to extreme summer heat. But the timing this time was very different. It came at a time when schools were still open and the summer holidays hadn't yet started. We were using the last of the water resources. The previous monsoon and the next monsoon were still several weeks away and the wheat crop was still standing, it was yet to be harvested and was therefore affected by the heat. So, some of this is not normal. Even in a place like Northeast India, which is highly flood prone, the severity and the extent of the floods this year basically shocked everyone. 

What happens when these kinds of events of this magnitude happen, is that the normal coping mechanisms fail even among communities that are used to extreme events. Even modern commercial mechanisms like insurance start to fail because the extent of the damage is so widespread. I think for the first time, also, it was reflected in extreme and prolonged droughts in Europe, China, and Africa. Many parts of the world that have been visuals of highly unprecedented areas were exposed because the water level in certain rivers had never gone so low in decades. So that was also something that connected the countries of South Asia with other parts of the world, which were experiencing extreme events.

The other thing that connected us was this issue of energy volatility or energy security, which was again, a combination of a number of factors - the war between Ukraine and Russia and also the heat wave itself, which increased the demand for cooling.

So for the first time, we are going into this COP in a kind of sense of being in the same boat, both in terms of facing the impacts of climate change and in terms of finding permanent long term solutions rather than short term solutions to the problem of clean energy, which doesn't further exacerbate fossil fuels.

It is very similar to the situation last year, when we went to the COP all trying to recover from the pandemic and economic recession as a result of the pandemic. Hopefully, this COP will provide an opportunity for countries to see that they have much more in common than their differences and can find some common solutions in this international meeting that they're going for.

Host: Speaking of energy, like much of the world, India is still heavily reliant on fossil fuels, namely coal, to keep the lights on. What would your view be on the current state of affairs in India regarding fossil fuels? Is coal still the dominant resource right now? I know that during the heatwave, as you mentioned, there was a spike in demand for cooling so the coal use temporarily soared upwards. Has that come down since then? 

Ulka Kelkar: There were a number of different things happening and I distinguished between trends that are short term trends and then those that are longer term trends. In the short term, what we saw this year were several factors. One, the heat wave, which certainly increased the demand for cooling. Second, the rebounding of the economy from the session of the previous two years due to the pandemic, which also meant that a lot of factories were starting up, a lot of economic activity was reviving that also increased the demand for energy - not cooling, but other types of energy such as industrial use, building use, transport, and so on. Third, we also had untimely rains, which affected the supply of coal from coal mines in certain locations where it rained. Then fourthly, these international trends as a result of the world in Europe and the fact that various sources of supply of gas and oil were all affected. There was volatility and energy prices and long term insecurity. 

A number of these factors kind of converged. Cooling by itself is not such a big source of energy demand in India currently, because right now there aren't, for example, that many people or much fraction of the population that has access to air conditioning, right? That's still a very small fraction of the population that has [air conditioning]. But going forward, over the next 10, 20, 30 years, this is certainly expected to become a more important factor.

Similarly on the supply side right now, coal accounts for about 70% of our electricity generated. But increasingly, the renewable capacity is being ramped up at quite a rapid pace. India had its first nationally determined contribution, an NDC commitment, which is a promise that it made under the Paris Agreement, that it would have 40% of its electricity generation capacity coming from non-fossil fuel sources by 2030. That 2030 target was achieved in 2021. We already see renewable energy becoming a very big share and growing share of electricity in India. I'm very optimistic that certainly by 2030, this 40% might become close to 60%. The new target that it has updated in its NDC says 50%, but I’m quite confident that they might even exceed that if everything goes well, if policies and finance and all of that goes hand in hand.

I distinguish between the short term situation right now where we don't have too many alternatives to coal. Oil and gas, we don't have too many domestic reserves. Nuclear, that's just 2% of our electricity capacity. So currently, yes, coal is a dominant source. Hydro plays an important role, but the pace at which renewable and particularly solar capacity is being ramped up. Almost all new electricity demand is being met from renewables rather than from fossil fuels, and that gives us a lot of room for optimism that the long term direction of travel is in the correct direction. The policies are all supporting that.

I'll give you a couple of examples of what I mean by policies. India has targets called renewable purchase obligations for states, which means that any state needs to either generate a certain amount of its electricity from renewable energy or purchase it from other regions or other parts of the country. This used to be somewhere around 12% or so per year, and many of the Indian regions and states were not able to meet these targets. But recently, these targets have been doubled, and in fact, by 2030 they're gonna be quadrupled and there's going to be a penalty for non-compliance. Increasingly, there are policy disincentives that are reinforcing the policy incentives that are offered by the rapidly declining prices of solar electricity. 

The IPCC report, in fact, says that the cost of solar has fallen 85% in the last 10 years. So even as renewable energy is becoming competitive and attractive compared to fossil fuels in India, there are other policies that are being offered, which are pushing in the same direction. It’s likely that in the long term, renewables will become a larger and larger share of the electricity mix compared to fossil fuels. 

Host: I do think that India's renewable energy progress has been impressive. It seems to me that the current administration and private sector is betting big on the clean energy transition, despite fossil fuels currently being a big part of the energy mix, but it looks like it is changing.

I think this would be a good place to pivot to loss and damage. Now, India's been quite loud about loss and damage payments coming into COP27, which is in a couple weeks. It also has been one of the biggest proponents of it. But before we get into it, I think it might be useful to give listeners an idea of what loss and damage actually is in the context that India's been advocating for.

Ulka Kelkar: Loss and damage refers to loss of lives and damage to property. It refers to the fact that, however much we may prepare for the additional risks due to climate change, extreme weather, sea level rise, depleting water tables, for example, however much we may be prepared socially, in terms of engineering solutions, in terms of when managed retreat, there will be limitations to how much we can adapt. Even at 1.2 degrees celsius of warming, roughly, we are already beginning to see impacts that are heating people and leading to loss of lives and damage to property. 

Some of these impacts can be measured or quantified and be converted into money terms. For example, how much was a crop loss because of a heat wave that was made, say 30 times more likely due to climate change? How much was, for example, the damage to infrastructure due to a flooding event that was several times larger than it would've been in the normal course of events? It is possible to attribute more and more what is the greater probability, the greater chance that an extreme event happened only because of climate change and what was then the magnitude of the economic losses due to that event. 

However, there are also sometimes non-economic losses that are very hard to quantify - if people have to abandon the region, if they lose their family's belongings or memories as a result of having to leave a particular place. We've seen, for example, even stories from California and the wildfires where families have to escape from their houses at just half an hour's notice, carrying only what they can in their arms or in their cars. So there are non-economic losses that happen because of the complete change in the way of life. Migration, for example, that is induced by climate stress is another example of this.

I think more small island developing states, where they've been talking about how they don't have too many alternatives in terms of where they could go to, even if they retreat to higher land, there is a limitation beyond which perhaps agriculture on that island might become impossible in the future. Same with Bangladesh, I think the voices of civil society from Bangladesh have been very eloquent in raising the issue of loss and damage. 

Particularly, I think at the last COP in Glasgow, for the first time the issue of loss and damage was really given a lot of credence by the host government, Scotland, putting in a pool of money and for the first time creating a fund for loss and damage finance. Basically, acknowledging the legitimacy of this need and really putting finance to back it. After the government of Scotland, the government of Wallonia and Belgium also followed suit. Very recently, we've had the government of Denmark putting in dedicated loss and damage finance and a number of other philanthropies who also contributed to this pool.

For India, I would say that the greater role is that of expressing solidarity with the least developed, most climate vulnerable countries. I would say that the issue is not so much of seeking loss and damage finance, particularly for ourselves, but really supporting this common cause that we have with our neighboring countries in this region and even with countries from Africa, Caribbean, and other parts of the world.

I think that is something that consistent statements from the environment minister and the last COP also said, and I'm hoping to see more of that this year as well. 

Host: How important is India's role in what you could dub as a leadership role in supporting smaller countries' calls for loss and damage payments? Would it be fair to say that because of India standing in the world, it's a vital part of this ongoing dialogue?

Ulka Kelkar: India always has this very unique position of both being among the top most vulnerable countries to climate change and also being in the top current emitters to climate change. But if you look at historical responsibility that is past emissions, India's share is very low. So in some sense, it can speak on behalf of countries that have not done much to bring us to this stage of the climate crisis, but are already suffering the most and are the most exposed to these risks. In that sense, I think it was Mary Robinson, the President of Ireland, who called the most vulnerable countries the conscience of the climate negotiations. They're the ones who can speak in favor of climate justice, saying that we have done the least to cause this problem, yet we are facing the brunt of it. 

India can definitely amplify those voices, but it also brings a lot of responsibility to the table for future actions and future responsible pathways to development that don't replicate the same path that the industrialized countries of the West have followed. But trying to seek out an alternative sustainable pathway that, really there isn’t a precedent for, it's fought with a lot of risks. 

For example, there are studies that have shown that as renewable energy becomes 80% or 90% of the grid mix, the cost of that kind of energy transition increases exponentially, non-linearly, because it becomes very expensive to balance the grid when all sources of electricity are so dependent on the sun, wind, and water. You need to be able to store that electricity. You need to be able to transmit it efficiently. So this is not something that any other country in the world has done. There are some countries in Africa that have a lot of geothermal energy where renewables are already 90% of the grid mix. But if you see that total amount of electricity, it could be only maybe 2% of what India's electricity demand is.

In terms of its magnitude and future responsibility, its current risk to climate change and its very low per capita emissions, where we still have very poor people who really are trying to seek out a living, lift themselves out of poverty and are still not causing any kinds of emissions because they're just barely using any energy. Because of this very peculiar combination of circumstances, India can speak with a clear conscience saying that we are trying to do our best, but we really do support the needs of the most climate vulnerable countries. In that sense, I think that a leadership role and an honest voice in negotiations, which can sometimes be very fraught with brinkmanship other than solidarity, is something that is important for India to really make the most of that. 

Host: I think it's a useful place to plant a flag here and bring up the fact that many rich countries are yet to uphold their promises for climate impact support. By memory, they promised a hundred billion every year from 2009 to 2020, and this was not delivered upon by a wired margin. In your opinion, do you think that a hundred billion is even enough and I guess what you would call a bad precedent is not a very good place to start in expecting other countries to support loss and damage going forward.

Ulka Kelkar: You're absolutely right. It has been a matter of a lot of disappointment and frustration over the last several years. I think matters really came to a head last year and unfortunately this year, again, we are heading into this scope knowing that according to the latest report from the UNFCCC, by the most optimistic estimates, only 80% of that target has been met. So definitely it is a cause for a lot of frustration among developing countries. 

Recently, for example, much was made of the difference between unconditional and conditional pledges. Conditional pledges are those which countries are willing to do, developing countries are willing to do these actions, but they need additional finance or technologies to make them really happen. Unconditional means those things that they can do anyway based on their own domestic resources. The UNEP Emissions Gap report pointed out that the difference between conditional and unconditional is the difference between 2.4 degrees celsius and 2.6 degrees celsius. 

A lot more can be done only if there is a flow of finance at the right time, particularly now at an early stage in the energy transition. A hundred billion dollars, of course, was meant to be a symbolic amount and even that has not been delivered, so it becomes all the more disappointing. 

Going forward at this COP, I think there will be negotiations that will be concluded next year on a new goal beyond 2025 for what countries can deliver. Of course, there have been numbers that have been talked about that seem quite large, but they're very small in contrast to the amount of finance that has been raised for COVID recovery, for the post pandemic recovery of economies. It's not that there is a shortage of finance. What seems to be the problem is a shortage of political will and a shortage of trust as a result. 

Host: Now this all brings up an important point of where does the money come from? There's been talks about raising funds from a tax on carbon or taxes on fossil fuel companies’ profits. Could you give us a quick tour of what kind of avenues the globe could take to source the money? 

Ulka Kelkar: There have been a number of new ideas which have been discussed. I think one of the important things to keep in mind is that the existing climate finance, that is flowing, the bulk of it is in the form of private investment. It is also in the form of loans rather than grants, and it is for mitigation of emissions - so activities and say energy or industry rather than adaptation to risks of climate change and sectors like agriculture, water, or forestry. Already, the existing kinds of climate finance flows have certain biases in them and certain areas of greater emphasis than others. That's the kind of gap that we need to fill.

For example, there are actions in the adaptation sector in agriculture, water, health, which will benefit a very large number of people, most of whom will not be able to pay back for those services or it may be very difficult to charge them. These kinds of actions - say better health infrastructure, the search for improved varieties of crops, watershed development - all of these kinds of activities are not suited for commercial investment. They're not very well suited even to the kinds of loans that multilateral development banks offer, which have to be repaid. So there is a need for more grant finance for these kinds of activities. That grant finance has to come from the developed country’s own budget, from multilateral development banks, from philanthropies as well. I think there is definitely a need to increase the amount of funding that is coming from these existing sources. According to some estimates, the United States, for example, has particularly fallen behind on its fair share of climate finance. This doesn't need new sources of finance, it just means actually committing and delivering its fair share compared to, compared to other countries.

At the last COP, a promise was made that the amount of adaptation funding would be doubled. It was something like, at that time, 20 million dollars and this was supposed to be doubled to 40. That is something that just requires specifying in the existing amounts of climate finance, what types of activities that the finance will go to. The third is that there are these new types of finance sources that are being discussed. Again, last year there was a minimum corporate tax which was agreed on worldwide - a 15% minimum corporate tax. Those resources could be used for climate friendly activities. Then, there are talks about taxing the windfall profits of fossil fuel companies. Taxing luxury emissions, for example business travel, such as first class air travel. 

For example, the IMF created a new fund last year called a Resistant Resilience and Solidarity Trust, which was funded from special drawing rights, a currency that the IMF has. The idea is that the least developed countries can borrow from this or can draw on this pool of new finance that is created.

So there is no shortage, I think, of novel ideas of creativity, of blending and leveraging the public finance that is available with other types of private finance. It's just that it needs to be finally done and agreed on. 

Host: This also links in a sense to time. The UNFCCC just released a report essentially saying that even though there's been a lot of progress on renewables and net zero goals, for example, that the world is still on track for a 2.5 degree temperature rise. How optimistic are you that this kind of adaptation funding will support those that need it most? Especially, if we overshoot the Paris Agreement’s 1.5 degree goal.

Ulka Kelkar: Optimism depends on, I suppose, the day of the week. I think in developing countries like India in particular, what we are trying to do on the adaptation side is mainstream it into the developmental activities of the government. For example, if any subnational government in India, state government, or the city government has a budget for actions in the agriculture, water, or health sector, they should also build in additional risks due to climate change. 

For example, if there are a number of doctors or a number of health centers being planned, they should take into account that at certain times of the year, there may be additional patients coming in because of extreme heat stress and they may need special shelters which are equipped for emergency cooling. Maybe certain parks and green spaces will need to be kept open and maintained. Water may need to be publicly provided. Similarly, in the water resources sector, there may be a need to make sure that we take into account not only depletion due to growing demand for water, but also salinization due to sea level rise.

There are many different things that can be done in order to make sure that the existing programs and the budgets that support them incorporate this additional layer of climate risks, and therefore, domestic resources are used more efficiently to build resilience to climate change.

For example, with the order the bridge is being constructed, it could take into account the additional risks of damage due to a flood or the cyclone of greater magnitude than what had been previously planned for in engineering infrastructure in that region. 

I think there is an urgent need for adaptation finance to be increased from the global north to the global south, from the philanthropy sector, even from the private sector, as corporate social responsibility. After all, even for industries, the corporate social responsibility in India that exists, it’s something that helps to provide education or healthcare, water, and sanitation facilities to the communities that live around their factories or maybe from where their workers come from, or those who may be living downstream from where their influence are being released.

There is a responsibility that the industry or sector also owes to the community, to society that lives around it. If they also can be made aware of the additional risks due to climate change, then any actions that they implement can also add in a layer of climate resilience and climate adaptation.

Host: So given all that we've discussed, how do you think climate change and the discussions surrounding loss and damage, and adaptation financing in general, how do you think that'll all be received at COP27, which is coming up in a few weeks? Bearing in mind that climate change and all the other issues attached to it will be competing with other things like energy security, war, inflation, food security, and the like. Can you see much progress being made or do you think that climate change issues will be overshadowed by what you mentioned earlier for more short term issues over longer term ones?

Ulka Kelkar: I feel that a lot of progress has been made since last year or at the last COP, thanks to those civil society voices who have been very dedicated about raising the issue of loss and damage at every possible opportunity.

Already, the fact that this little fund was created which was legitimized by contributions from governments, that itself has been a major achievement that was made. This year, what we need is for loss and damage to become a permanent agenda item, an official agenda item in the negotiation so that it does not have to actually fight for its rightful place with other issues.

It is not something that depends on the willingness of certain countries to discuss it or not. I think a lot of discussions have been held over the year, between the last COP and this, which have made it possible to make it an agenda item. I think that a lot of countries and civil society voices have been trying to draw attention to the fact that it is not enough to simply create a facility for funding or to create a dialogue process and leave it there. It is important to empower that process, to give it teeth, to actually put money behind the funding facility and to quickly draw up plans to operationalize it and to disperse those funds urgently to where the money is needed the most.

For example, there is a coalition of civil society organizations from the most vulnerable countries called ACT2025, and they have a call to action on their website that I'd encourage listeners to go and have a look at, where they've talked about a few things that can be done at this COP and beyond, to give teeth to this process really, and to make it effective by implementing it sooner rather than later.

I am optimistic that despite all of the issues, all of the different things that are going on in the world, the voices of the most vulnerable countries will not be ignored and are in fact louder than ever. I really hope that this COP, because it is being held in an African country, will actually continue providing a momentum and a boost to these concerns. 

Host: What about the developed countries' reactions? We've already seen reactions, as you've mentioned, such as Denmark making pledges to loss in damage financing, but what about the real big industrial powers like the United States, Germany, France, Canada, and Japan and the like?

Ulka Kelkar: There has been a lot of resistance from many of these countries, particularly the United States for several years now. Resistance to recognizing this, discussing it in the negotiations, and putting money behind it is an issue. But we’re seeing progress. I think there's been some statement from Secretary Kerry also recently saying that he's willing to discuss this.

I think what will also happen is a lot of events happen outside the negotiations. One example, which may seem unrelated, is that of the wildfires in California where PG&E, the electricity company, became bankrupt because it was sued by customers and because it did not take the required measures to prevent these wildfires, even though it knew and had information that due to climate change, the risk of wildfires was increasing. It could have maintained the tree cover by lopping off branches that were likely to catch fire or it could have put its cables underground. But it didn't. It is set to be the first climate bankruptcy in the world. This happened a few years ago. 

Even in the private sector, abstract concepts like loss and damage do have very direct, very financial implications in the real world. Climate change does affect business directly and they may need to think of things not as a compensation, but almost as a way of preventing further damages. Insurance, for example, has been rising year after year.

The other major change that has happened outside the negotiations is the voices of civil society, youth, and protests. As a result, the larger public is becoming aware of these issues. I think that because of what happens outside the negotiations, what happens inside the negotiations where governments negotiate but in response to things that industry wants and civil society wants, I think there may be sometimes a movement, a shift, in issues that seemed very intractable and impossible just a few years before but has become seeming possible just a few years later.

There's a concept called the overton window, where an issue that seems radical, the window just shifts and it becomes almost mainstream. In some sense, that’s already beginning to happen with the concept of loss and damage. 

Host: For everyone's sake, I hope you're right. Before you go, would you be able to share your social media details, either personal or work related, so listeners can follow what you’re working on or what your organization's working on?

Ulka Kelkar: WRI has a very active website, WRI.org, and you'll find a lot of resources, particularly for COP. There is also a lot of data and blogs written by other experts from different countries around the world. We are also active on Twitter. There is a WRI handle as well as a WRI climate handle. We also tweet specifically from WRI India and we’re active on LinkedIn. Personally, at the moment, I'm more active on Twitter at @Ulka Kelkar.