The recent launch of the Climate Action and Finance Mobilisation Dialogue (CAFMD) between the U.S. and India signifies a significant stride in the global fight against climate change. With the U.S. Special Presidential Envoy for Climate teaming up with India’s Union Minister for Environment, Forests, and Climate Change, the initiative acknowledges India’s climate pathway compatibility with keeping global temperatures below 2 degrees celsius by the end of the century, despite its current standoff on committing to a net zero goal.
Climate Action and Finance Mobilisation Dialogue: An Overview
One of the two tracks under the India-US Climate and Clean Energy Agenda 2030 partnership launched at the Leaders’ Summit on Climate in April 2021, CAFMD succeeds the previously inaugurated US-India Strategic Clean Energy Partnership SCEP. It is designed to renew collaboration on climate change and address the financing aspects, providing climate finances primarily through grants and concessional finance as per the Paris Agreement. The purpose goes beyond just financial facilitation; it’s about aligning swift climate action with inclusive and resilient economic development, considering national circumstances and sustainable development priorities.
The Three Pillars: Climate Action, Finance, and Adaptation & Resilience
The edifice of CAFMD rests on three main pillars. The Climate Action Pillar focuses on joint proposals aiming at devising ways to reduce emissions in the forthcoming decade. The Finance Pillar seeks collaboration between the two nations in attracting capital and enhancing the enabling environment for the deployment of 450 GW of renewable energy capacity in India. This pillar will also spearhead innovation in clean energy technologies and promote bilateral clean energy investment and trade. Adaptation and Resilience, the third pillar, highlights cooperation in building capacities to “measure and manage climate risks”.
Unleashing Opportunities for India
The timing could not be more perfect for India to invest in the energy transition. Not only is renewable energy more affordable than ever before, but building a solar farm in India is currently cheaper than anywhere else globally. With investors turning to clean energy and the energy transition already recovering post-pandemic, clean energy investment is set to break the pre-Covid record of 8.4 billion USD invested in one year.
The International Energy Agency predicts that if India capitalizes on the clean energy opportunity, it could soon become the world’s largest market for batteries and solar panels. By the end of the fiscal year 2021-22, India is projected to have an installed power capacity of 476 GW, with expectations to surge at least 817 GW by 2030. The CAFMD could serve as a catalyst in this leap, propelling India to the forefront of the global battle against climate change.