Paris Agreement – Implications to India

Part 1 of this Series : Climate Change | An Overview

Part 2 of this Series : Climate Change | Agreements

Part 3 of this Series : Climate Change | CoP

Part 4 of this Series : Climate Change | Paris Agreement

Paris Agreement on Climate change has had many implications for India. Some of the important implications are being discussed here.

  • The BASIC (Brazil, South Africa, India and China) grouping has been needled by the developed countries, especially USA. It would mean that a stronger force which used to deliberate during negotiations for climate change agreements stand divided, giving an obvious edge to the developed countries.
  • Changing the lap from the concerns of developing countries to the lap of developed countries led by USA would have geopolitical concerns. It could be a big blow to a multipolar world that India wishes to maintain.
  • With the successful ratification of the Paris Agreement, India has discarded the criticism levelled by the developed countries of being a spoilsport during multilateral negotiations. India has successfully shown a decisive leadership ability to embrace further responsibilities on the global stage, such as the leadership in the United Nations Security Council.
  • India’s INDCs were already in sync with the Paris Agreement with special focus on solar energy targets, hence, India had no bigger compromises, yet giant strategical gains for the future.
  • India is happy about the fact that Prime Minister Narendra Modi’s words such as ‘equity’, ‘climate justice’, ‘sustainable lifestyle’ and ‘reducing consumption’ have been kept intact in the agreement, showing India’s mettle in the multilateral podiums.
  • India has taken the lead in cunningly establishing ‘International Solar Alliance’ to supplement its costs related with INDCs related to solar energy.
  • With the formal ratification by China, India could not have had kept its cards inside the den for long. Doing otherwise could have had economic consequences with China possibly taking a leap in availing Clean Development Mechanism funding and other carbon offsets.
  • Through the ratification process, India has also brought island States from Africa, Pacific, Caribbean and other marginal groupings into confidence, reassuring our commitment towards climate change reduction commitments.
  • With most of the renewable energy technology patented with the developed world, especially the USA, the developing countries would have to rely heavily on import of such technology, thus affecting the Balance of Trade.


paris-talks1Although India has cleared the air over its commitment to Paris Agreement by highlighting the clauses of technology transfer and Green funding, there could be few short to medium term costs involved in the immediate future.

  • Through the ambitious targets of promoting solar energy (100 GW), India would incur huge costs of upgradation, especially since it has lost the case with USA in WTO regarding domestic content requirements with solar cell equipment technology. With the cost of solar energy coming down slowly, the domestic political fallouts could be big in the near future too when the general public would incur the cost of solar energy.
  • With the embracing of Montreal Protocol recently, India has committed to phase out of Hydrofluorocarbons (HFCs) in a time bound manner. This would involve serious upgradation of existing technologies used in refrigerant industries. But the decision rests on the clause of developing countries claiming full costs of conversion.
  • With the political fallout over Land Acquisition Bill in the last few years, the ambitious targets of afforestation would be difficult to materialise.
  • India is aiming to push the manufacturing sector growth; hence it has to ensure that the balance in demand for power and power generation is maintained during the transition from non-renewable to renewable sources of power generation. Otherwise, there could be a volatility in the economy which would be difficult to tame under the present unfavourable economic conditions worldwide.
  • Shift to renewable energy resources would hit the oil economies of the OPEC countries, ultimately affecting the employment opportunities of the Indian diaspora living in the region.
  • India has to consider the situation where the falling oil economies would suffer from legitimacy crisis and hence may draw down into a civil war like situation. In such event of crisis, it would be our utmost priority to secure the lives of our diaspora living in the region.
  • The living costs of the imported diaspora, saved from such conflict zones might disturb the domestic economy. Such large scale unemployment, if stretched over a long period of time might breed many other social evils.
  • The debilitating oil economies would push themselves towards war to consolidate domestic support (Example – Saudi Arabian intervention in Yemen). Such ripple effects of war may accelerate the problems of Indian diaspora in regions beyond oil economies.
  • In India, the increased unemployment levels, increased demand of resources and inability to increase supply consistently due to lack of factors of production might push the societal conflicts to an unbearable level.
  • As every change invites resistance, the outgoing oil industry in India would try its level best to lobby its interests, both through fair and unfair means which may push the political costs for India.
  • The emerging renewable energy industry might enjoy initial inelastic competition for a short term. Such semi-monopolies might create social unrest due to inflation and supply controls of basic consumer goods, unless the transition and business models are regulated by the Government.

Economiv Fallout

  • The contemporary non-renewable energy economy is suffering a big blow due to demand-supply mismatch, the remnants of which would suffer from the transition towards renewable energy, hence pushing the world into a self- constructed economic recession.
  • Such economic fallouts would pursue political instability in the West Asian region because of increased costs, budget deficits and lowering down of revenue from oil, the signals of which are already evident from the Saudi Arabian economy.
  • With the political instability, the region may further draw down into the black hole of war, the costs of which include humanitarian crisis and arms race including WMDs.
  • With the discreet ‘Petrodollar’ agreement signed during the Yom Kippur War of 1973 between US and Saudi Arabia came to an end in 2010, there is no visible chance for its renewal post-renewable energy shift. This may facilitate a change of alliances in the region and subsequent escalation of conflicts might occur.
  • Economies like Russia, which depend majorly on energy and defence exports would find their chief source of income being eradicated through such multilateral arrangements. In order to compensate the same, they could increase their investment towards defence supplies, threatening the NATO countries and pushing the world into another Cold War. It is already happening.
  • Iran and Saudi Arabia’s Cold War has been heightened in the region due to the fall in oil revenue and the resulting legitimacy crisis in the domestic politics. Such increase in tensions could reignite the third and fourth generation warfare strategies.
  • Eyeing an opportunity from the legitimacy crisis generated through power vacuums, more guerrilla groups (FARC, SILF, Syrian Rebels etc) and terrorist groups (ISIS, AQAP, Jabhat al-Nusra etc) would emerge to fill the void left behind by the uprooted political systems.
  • With an already globalised world, the costs of war, political instability and demand-supply mismatches would flow to adjacent economies and ultimately affect emerging economies like China and India, who are seeking to maximise their exports and expand their channels of relevance in the region beyond Asia.
  • The African continent, already looming under severe economic and political crisis might see heightened tensions, especially when the oil revenues would decline. Countries like Nigeria and West African region who survive mostly due to the oil revenue might push themselves into post-colonisation civil war era.
  • Similarly, the South American region which is already suffering legitimacy crisis in Venezuela, Colombia and Brazil, the battle between Socialism and Neo-Capitalism could be reignited creating civil unrest in the region.
  • An emerging China, finding it unable to meet its energy requirements and pushing itself into a quagmire of economic slowdown might resort to assertive, expansionist and muscle flexing policy towards the neighbours for domestic power consolidation.
  • It would also be interesting to see how the ‘democracies’ with proven fossil fuel reserves like coal, petroleum and gas would pursue the agenda of minimising the non-renewable sources of energy, given that the non-renewable energy industry commands huge control over domestic and international politics.
  • The world has hardly recovered from the 2008 recession; it would be imprudent to push it again into the lap of another with downsizing the energy industries.
  • Until or unless the oil economies do not prepare themselves for a comfortable transition towards diversification of their economy, the threat signal of political legitimacy might loom over their political quarters.


It has been observed that many of the INDCs committed by India rests on the assumption of availing Green Finance and Technology Transfer. However, the last international meeting on climate finance under the UN negotiations showed that developed countries were ‘green-washing’ the existing finance instead of providing additional funds. The international negotiations over next four years are also going to be strongly focussed on building a transparency and disclosure regime that can help countries such as India keep track of what are the real new funding routes opening for the climate or green energy sector and where it would have to deploy its own resources. The international negotiations starting November 8 in Morocco are, in the least, expected to set out deadlines for these rules to be put in place and how the manner in which they will be devised.

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