Interview: Carbon Markets can work for development, says World Bank Expert

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Neeraj Prasad from World Bank Institute shares his views on the PAT scheme potential for India and international organizations.

Neeraj Prasad is Manager for the Climate Change Practice of the World Bank Institute. He counts morethan thirty-two years in a career spent in public service and has supported and led Environment sector operations in the South Asia and East Asia & Pacific regions for the World Bank, and was team leader of the China HFC-23 project, which remains to date the single largest Carbon Finance transaction ever undertaken by the World Bank.

Can you tell us about the Climate Change strategy of the World Bank related to India – some of its key initiatives and programmes?
The World Bank does not have a climate change strategy for individual countries, but rather its work in this regard is guided by the "Strategic Framework for Development and Climate Change" which was issued in 2008. Our mission is to work for a world free of poverty, and we address climate issues because it is the poorest sections that will feel the most disproportionate impacts of climate change, and will be the most vulnerable. These priorities are the same for India. You can find more details on India specific projects and initiatives at our website (link). Our projects in India are in the areas of infrastructure, health, rural development, rural water supply and sanitation, job creation and reconstruction.

Which Indian industry sectors has World Bank targeted for the environmental sustainability programmes? 
In India the directions and priorities are all driven by the National Action Plan for Climate Change issued by the Central Government.  As far as the industrial sector is concerned, this has implications for the solar and the energy efficiency missions. In addition, tackling climate change is inextricably linked to providing clean energy access for low carbon growth; India still has a sizeable population segment (more than 40%) that does not have access to electricity. More details will be available from the Bank’s New Delhi office, but these have been our primary areas of focus.

Last year, the Bank provided a loan of $1 billion to Powergrid , the national power transmission utility, to help expand the power transmission network, as also a $330 million loan to strengthen electricity transmission and distribution in Haryana. The bank also approved $430 million to finance the Mumbai Urban Transport Project to  improve the suburban railway system in the Mumbai Metropolitan Region. We are also helping to tap hydropower resources from the Himalayas, and to rehabilitate old coal-fired plants. Other engagements include water (a new Drought Adaptation Initiative in Andhra Pradesh), integrated coastal zone management, etc.

What are your thoughts on the Indian carbon market?
For many years, India was rated as the most project friendly destination for CDM projects. With more than 20% of CDM projects worldwide, it is second only to China, and has successfully seen projects to registration and issuance in a number of sectors. It has an efficient and transparent project approval system. So, depending on future eligibility criteria, whatever shape future markets have, India can be expected to be a key player.

What is your personal take on the responsibilities of developed countries to contribute towards climate finance, and what role do facilitators like World Bank play in this?
The traditional argument is that climate change is largely a result of energy and industrial options adopted in the western world from the Industrial Revolution onwards, and therefore the responsibility for addressing it lies with them. But historical responsibilities apart, it is now in the developing world that growth and energy needs are greatest, and unless these needs are also met though low carbon pathways, the world as a whole will not be able to successfully address climate impacts.

The World Bank has demonstrated for years that carbon markets can work for development, and also that equitable governance structures are feasible in a multilateral context for climate financing (e.g. theClimate Investment Funds). We continue to support capacity development programmes for enabling access to climate financing in key sectors.

Do you have any specific recommendations for facilitating carbon finance programmes in India – both at a policy and an institutional level?
India has established itself as a global leader by launching the PAT scheme. Very few countries have been able to establish baselines and action plans for all their major industries, and once trading begins, PAT will truly have shown the way. Especially for a country of India’s dimensions, this is very creditable. We need to see what the future shape of carbon markets will be before examining potential carbon finance programmes. But schemes focused on domestic actions will likely be just as important as offset instruments.

At COP 17, this year, we hope to see the voice of developing countries reflected prominently in the COP text, particularly on issues of food security (Climate-smart agriculture) and energy access. Any support coming from climate decisions to these issues would be very welcome.

This interview has been conducted by Pramita Sen from the India Carbon Outlook editorial team.

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Author: Pramita Sen