10 November 2021
India’s net zero
India has committed to reaching net zero by 2070 in one of the biggest and most debated initiatives to be announced at this month’s UN climate change conference.
Prime Minister Narendra Modi made the unexpected promise on the first day of the conference last week, but he also called on developed countries to contribute US$1 trillion to help developing countries transition to lower emissions.
While India is the world’s third-largest emitter of greenhouse gases, Modi argued this should be seen from a per capita perspective: India makes up 17 per cent of the world’s population but only emits five per cent of its carbon.
India’s 2070 target falls short of the 2050 benchmark, which aims to limit global warming to 1.5 degrees, and is less ambitious than China’s 2060 target.
Modi drew immediate criticism last week for holding back global momentum, but he has since won more support because India also made significant short-term promises that will lay the groundwork for achieving its 2070 target.
While the Morrison government has refused to commit Australia to new 2030 targets, by that time India has pledged to provide half of its energy needs with renewable energy and reduce the economy’s carbon intensity to less than 45 per cent.
More Indians travel by train each year than the rest of the world’s population combined, but Modi says that India’s “huge railway system has committed to attain net zero by 2030”.
Modi’s announcement will be concerning to the Australian coal industry, and some politicians, which had been counting on India’s recalcitrance on climate change to underpin coal exports.
But Modi seems to have accepted that India will be among the countries most negatively affected by global warming.
If India can lift its people out of poverty as China has done, but with less carbon intensity, it would make a huge contribution to human development. It deserves some extra support.
Australia ratifies RCEP
The world’s biggest trade agreement – the Regional Comprehensive Economic Partnership – will take effect on 1 January 2022. Last week, Australia provided the last formal ratification needed for it to move forward.
Negotiations began eleven years ago, when RCEP was meant to be an Asian trade group with a broader base than the smaller Trans-Pacific Partnership, then led by the United States. RCEP now has fifteen members, although South Korea, Indonesia, the Philippines and Myanmar have not yet ratified it.
Its members account for almost 30 per cent of global GDP and trade, making it the world’s largest preferential trade agreement, although others have firmer rules.
As India exited the agreement two years ago, Australia won’t benefit much from its trade liberalisation – bilateral agreements already exist between Australia and other RCEP members. But Australian businesses will be more firmly integrated with trade supply chains across the fastest growing part of the world economy.
Following Australia’s ratification of the agreement, trade minister Dan Tehan sought to step around two sensitive issues. He said that the deal did not “change the government’s grave concerns regarding the situation in Myanmar”, and he talked up Australia’s commitment to South-East Asian–led “regional economic architecture” without mentioning RCEP’s biggest member, China.
The implementation of the agreement is likely to be overshadowed by regional tensions over bids by China, Taiwan and the United Kingdom to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (known as the Trans-Pacific Partnership prior to the United States’ withdrawal in 2016).
Last week, Chinese president Xi Jinping stepped up Beijing’s push to join the CPTPP, as well as a digital trade agreement with New Zealand, Chile and Singapore, even though he is exerting more centralised control over the Chinese economy domestically.
With CPTPP signatories such as Malaysia, Singapore and New Zealand seemingly sympathetic to China’s bid for membership, Australia may face some challenges as it tries to square its support for regional economic integration with its security outlook.
The federal government has been urged to find a better way of assessing its investment in Pacific infrastructure as it increases spending to try to rival the influence of China.
An independent review of the new powers and funding granted to Export Finance Australia as part of the government’s Pacific step-up policy has found that the impact of its investments will take a long time to emerge but should still be properly evaluated.
With an extra A$1 billion in capital and the power to support projects that are in the broader national interest, the low-profile EFA is now a key part of the government’s economic diplomacy in the Pacific.
The review, headed by former senior bureaucrat Stephen Sedgwick, recommends that the government support a special monitoring regime to demonstrate that the EFA’s new funding is “applied efficiently and effectively for public policy purposes”.
The review, which was tabled in parliament last week, was completed in October, before the government, via the EFA, invested almost A$1.8 billion in Telstra’s bid to buy telecommunications company Digicel Pacific. The investment represents more than Australia spends on Pacific aid in a year and twice the amount it plans to spend on climate change in the Pacific over five years.
The scale of the investment means it is unlikely to be repeated anytime soon. But it is important that a long-term review process be put in place to ensure that investments are truly beneficial and not made in response to unfounded fears of Chinese competition.