India just annouced a bold solar energy plan, part of its broader ambition to go from a major polluter — the world’s fourth worst on carbon emissions — to a leader in the green space.
The proposal, “Solar India,” would generate 20GW of clean electricity by 2020, part of a $21 billion, 30-year green program. Reuters reports.
The only problem is, India doesn’t want to pay for it. As The Guardian notes, India scrapped its orignal plan to pay $19 billion because it thinks developed countries should pay for clean tech in emerging markets.
So what’s India really up to? Leverage.
There are big U.N. climate change talks in December, and India will almost certainly push rich countries for money, even if they have to chip in too. As Deutsche Bank explains in a report released today:
Funding requirements: funding needs for the plan are estimated at up to ~$22 billion
over a 30 year term at current exchange rates, and a Solar Fund will be established for
this purpose. Initially funded by the central government, the fund will source its
requirements via a tax imposed on fossil fuels. We believe the funding costs are grossly
underestimated, and will have to be revised substantially higher given the goal of
building a solar power industry from the ground-up.
…The Indian view is likely that international financing and technology at an affordable cost are
necessary ingredients if a clean energy paradigm is to take hold, and facilitate a transition
away from fossil fuels. Under a finalised Solar India plan, we suspect India will stick to its
aggressive solar power growth targets but will seek to achieve those targets by demanding
technological and financial support from developed nations. Anything less could well
contradict a likely India position at the global warming treaty negotiations. If a meaningful
agreement can be reached in which developed/rich nations fund/collaborate with the Solar
India plan (with similar templates across the developing world), then a vexing issue in climate
change talks – rapid economic growth in developing countries but with low-carbon emissions
– could begin to be better addressed. On the flip side, developed countries could benefit
from increased trade and global scale for their clean energy industries while addressing
global warming issue more effectively. The broader economics of such a hypothetical
arrangement have yet to be defined.
Get ready for some open hands in Denmark, folks.
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