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25 February 2017 Editorial

 

25 FEBRUARY 2017

A significant victory 

There could not have been a clearer mandate in the 2017 civic polls in Maharashtra. Except for Thane, where the Shiv Sena managed a comfortable victory, and Mumbai, where it squeaked ahead of the BJP by two seats, the BJP won every city corporation easily. Of the 1,268 municipal seats, the party won 628, more than tripling its 2012 tally. There could not be a better affirmation of support for the party in power at the State as well as its Chief Minister, who staked his political reputation on the polls. Besides fielding competitive candidates in places where the party had a strong base, the BJP’s strategy to woo viable contestants from other parties in places where it was weak yielded strong returns. The Congress and the Nationalist Congress Party were reduced to minor players in most of the corporations. In Mumbai, the Shiv Sena has, for the first time since it came to power nearly 25 years ago, seen a close competitor in the BJP; there is now a chance that the mayor could be elected from outside the Sena. While the Marathi-dominated areas of the city helped the regionalist party consolidate support, its reduced win ratio, of only 37% of the seats contested as opposed to over 50% in previous civic polls, suggests that it can no longer count Mumbai as an undisputed stronghold. The politics of regional identity and patronage may have helped the Sena become the single largest party in India’s richest municipal corporation. But its reduced win ratio is a reflection of its dismal performance in ensuring civic works, with sanitation, infrastructure, public health and education in poor shape in the city.

The BJP will be content with its strong performance, which has followed civic poll victories in Chandigarh and Madhya Pradesh and in some Legislative Council elections in Uttar Pradesh. This may not reflect a popular endorsement of the demonetisation move, as its supporters argue, but at the very least it suggests that ‘notebandi’ is highly unlikely to hurt the BJP’s prospects in the ongoing Assembly elections. It is impossible to not contrast the BJP’s success with the performance of the Congress in the recent civic polls. Clearly, the BJP has become the central pole of Indian politics, a position the Congress occupied for a long time. This is not only due to the BJP-run Central government’s record. The party has an able corps of regional leaders, Devendra Fadnavis and Shivraj Singh Chouhan among them, which allows for it to compete effectively at the regional level. The Congress, on the other hand, seems lacking not just in a strategy to regain national relevance but also in its ability to revive itself regionally due to the absence of a cache of regional leaders.

Shining bright

The clearance from the Cabinet Committee on Economic Affairs for a plan to double the capacity of solar power installed in dedicated solar parks to 40 gigawatts by 2020, with partial government fiscal assistance, is in line with the goal of creating a base of 100 gigawatts by 2022. Expansion of solar power capacity is among the more efficient means to meet the commitment to keep carbon emissions in check under the Paris Agreement on climate change, and it can provide the multiplier effect of creating additional employment, with overall economic dividends. As the International Renewable Energy Agency notes in its report titled REthinking Energy 2017: Accelerating the global energy transformation, globally, jobs in solar energy have witnessed the fastest growth since 2011 among various renewable energy sectors. Asia has harnessed the potential the most, providing 60% of all renewable energy employment, while China enjoys the bulk of this with a thriving solar photovoltaic and thermal manufacturing industry, besides installations. Apart from measures to scale up generating capacity, India should take a close look at competitive manufacturing of the full chain of photovoltaics and open training facilities to produce the human resources the industry will need in the years ahead. Renewables and new energy storage technologies are on course to overshadow traditional fossil fuel-based sources of power as the costs decline.

Low-cost financing channels hold the key to quick augmentation of solar generating capacity. The trend in some emerging economies, including India, has been a reduction in public financing of renewable energy projects over the last five years. This has implications for equity in the long run, and electricity regulators should fix tariffs taking into account the reduction in the levelised cost of electricity (the average break-even price over a project’s lifetime). Yet, recourse to other funding options, including regulated debt instruments such as green bonds, would be necessary to achieve early, ambitious targets. Without realistic purchase prices, utilities could resort to curtailment of renewable power sources on non-technical considerations, affecting investments. Tamil Nadu, a solar leader in the country, resorted to curtailments last year, a phenomenon that has perhaps muted industry interest in its recent 500 MW tender. The funding mix for renewables, therefore, should give climate financing an important role. At the Paris UN Climate Change Conference, developed countries pledged to raise $100 billion a year by 2020 for mitigation, and more in later years, a promise that needs to be vigorously pursued. Besides promoting phase two of the solar parks plan, and powering public facilities such as railway stations and stadia using solar power, the Centre should put in place arrangements that make it easier for every citizen and small business to adopt rooftop solar. This is crucial to achieving the overall goal of 100 GW from this plentiful source of energy by 2022, and to raise the share of renewables in the total energy mix to 40 per cent in the next decade.

What are green bonds?

  • A green bond is like any other regular bond but with one key difference: the money raised by the issuer are earmarked towards financing ’green’ projects, i.e. assets or business activities that are environment-friendly. Such projects could be in the areas of renewable energy , clean transportation and sustainable water management.
  • Green bonds enhances an issuer’s reputation, as it helps in showcasing their commitment to wards sustainable development.

When did the concept start?

  • In 2007, green bonds were launched by few development banks such as the European Investment Bank and the World Bank.
  • Subsequently, in 2013, corporates too started participating, which led to its overall growth.
  • In IndiaYes Bank was the first bank to come out with an issue worth Rs 1,000 crore in 2015.
  • Following this, few other banks too had green bond issuances.
  • CLP India, was the first Indian company to tap this route.

What are the avenues where these funds can be invested?

  • Sebi’s indicative list includes renewable and sustainable energy such as wind and solar, clean transportation, sustainable water management, climate change adaptation, energy efficiency, sustainable waste management and land use and biodiversity conservation.

 

 

 

 

 

 

 

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