Nopenhagen
While it is clear that a major chunk of the US $100 billion a year fund that the accord talks about will come from private businesses, it is not clear how the fund will be raised or who will administer it. It is also not clear where it will be invested. As PricewaterhouseCoopers’ Prashant Singh pointed out, “Business needs a clearer sense of direction if it is to make the enormous investments needed to shift towards a low-carbon economy. That clarity has not come out of the Copenhagen accord.” “The implications for investment flows are very clear. We’re irreversibly on a low-carbon path,” said Rajeev Chandrashekhar, Rajya Sabha MP and entrepreneur. “But before shifting his platform to a newer or higher cost technology, any businessman will want to know how the cost of this move is going to be compensated. That clarity is yet to emerge.” Chandrashekhar anticipates that this will come once domestic legislation follows in the wake of the international agreement.
Observers point out that the issue is not as simple as that. “The accord has moved away from what developing country businesses were looking for—clarity on adaptation, mitigation and carbon finance. We were hoping to see a scaleup in these areas. Now we will have to wait for a year to see what shape the funding mechanism takes at Mexico, or we may be looking at a situation where the funding is bilateral with the US or other contributors dictating terms,” said a Mumbai-based analyst.
Another analyst with an international consultancy firm remarked, “We have the example of GEF which has been in existence since the 1980s, but which has so far invested only US $4.5 billion in projects; the entire overseas development assistance is around US $60 billion-70 billion. This accord promises to add another US $100 billion to that amount, but it does not say where the money will come from or how it will be invested. We are not sure that the amount can be absorbed in developing countries under the existing circumstances, that is, without technology transfer platforms in place.”
It is certain that the low carbon growth path is here to stay—and that means increasing investments in wind, solar and bio-mass technologies for power generation. What is not certain is the level of monitoring that individual businesses will have to submit to. “Given the ambiguity in the accord and the way it is worded – ‘consultation and analysis’, we may very well see a situation when developed countries impose business specific or plant specific restrictions on imports. It could develop into something similar what happened on child labourrelated products. Import restrictions may come up on cement from a certain plant or steel from another plant,” said a senior government official on condition of anonymity. That the US wants to monitor domestic actions by India and China is already clear from statements made by White House advisor David Axelrod, who said three day after the summit closed that the US would not only “review” domestic actions by these countries but “challenge” them if it thought that targets were not being met or were being fudged. Though Jairam Ramesh, the minister for environment and forests, rubbished the statement as an incorrect interpretation of the words “international consultation and analysis” mentioned in the accord document, it is however a clear statement of the US’ intentions.
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