The agenda for Canadian Prime Minister Justin Trudeau’s visit to India this week includes trade, education, infrastructure and skill development. Climate change action could boost collaboration in all of these areas and should not be left off the table. Both Canada and India are moving domestic climate change agendas forward and both have launched significant diplomatic efforts to bolster clean energy around the world.
In 2016 India launched the International Solar Alliance (ISA), partnering with 121 other countries to increase the use of solar power in developing countries. India itself has pledged a target of installing 175 GW of renewables, including 100 GW of solar, by 2022. The ISA facilitates joint efforts of solar-rich countries to achieve economies of scale and reduce the cost of finance and the cost of technology, making solar power more affordable for remote and inaccessible communities. The ISA seeks to mobilize more than USD 1 trillion in investments needed by 2030. France, the United Kingdom and the Netherlands have already joined ISA as a gateway to a huge and increasingly important market. Canada’s capital and technology can be put to use in this market as well.
Meanwhile, Canada, together with the United Kingdom, launched the Powering Past Coal Alliance (PPCA) in 2017. The PPCA unites over 30 national and subnational governments as well as some companies whose ambition is “to accelerate clean growth and climate protection through the phase-out of … existing traditional coal power” and to place “a moratorium on any new traditional coal power stations.” Though Delhi already has a coal moratorium and the plummeting costs of renewable energy are making coal non-competitive in many other parts of India, no Indian entities have joined the PPCA yet.
One more factor required to facilitate a scaled uptake of clean energy is the further removal of barriers to fossil fuels, including fossil fuel subsidies. As members of the G20, both India and Canada have committed to phasing out fossil fuel subsidies that encourage wasteful consumption in 2009. Both countries have made progress on the ground. India’s pricing reforms, mainly for gasoline (2010) and diesel (2014), cut the country’s energy subsidies bill in 2014 by USD 15 billion. Canada has recently phased out the Atlantic Investment Tax Credit for oil and gas and is reforming some other fossil fuel production subsidies.
Nonetheless, according to the latest estimates by the Global Subsidies Initiative, Canada’s fossil fuel subsidy bill still amounts to approximately USD 2.6 billion (CAD 3.3 billion) in support to oil and gas producers, while India provides USD 19 billion (INR 124,530 crore) as support to both fossil fuel production and consumption. Many of these subsidies are not targeted and benefit the rich instead of the poor.
More transparency and further reform of fossil fuel subsidies in Canada and India will help eliminate mixed signals for investors and redirect financial flows into clean energy. Unlike many other G20 members, neither India nor Canada has undertaken voluntary peer reviews of their fossil fuel subsidies—something they can potentially do together like three other pairs of countries have (the United States and China; Germany and Mexico; Italy and Indonesia).
Redirecting savings from subsidy reform can help support the implementation of the UN Sustainable Development Goals, including advancing education, healthcare, access to clean and affordable energy, and a just transition for workers and countries from economies based on fossil fuels to low-carbon futures. Fossil fuel subsidy reform is a complementary policy for a switch to clean energy and coal phase-outs. IISD and other think tanks have demonstrated this from experiences ranging from Ontario, Canada, to Beijing and Shanxi in China; and from South Wales, United Kingdom, to many states in India. In particular, IISD came out with a series of policy briefs that sets out a suite of detailed policy interventions that could be implemented to achieve a systemic transition from kerosene to solar for lighting in rural India.
As chair of the G7 this year, Canada has a leadership role to play in shaping the international response to climate change in wealthy countries. And as one of the largest economies of the BRICS, India plays a significant role in that group’s climate action. If serious about action in the interests of sustainable development, Canada should join the ISA and facilitate access to finance for its developing member states. Likewise, Indian cities such as Delhi, Ahmedabad, Raipur, Gwalior or Patna and Indian companies such as Mahindra Group should join the coal phase-out efforts of the PPCA. These moves would send a significant market signal that momentum on the transition away from fossil fuels towards clean energy is picking up.
 BRICS is composed of a group of five major emerging economies: Brazil, Russia, India, China and South Africa.
Photo Credit: Alirod Ameri via Flickr