Model Answer

Introduction

Climate budgeting is essential for integrating climate concerns into India’s development agenda, as it helps identify, classify, and categorize climate-related expenditures within the government’s budgetary structure. This enables accurate estimation, diligent monitoring, and systematic tracking of climate-related finances. However, India currently lacks a specific framework or guidelines to allocate a budget for climate change interventions.

Reasons for Climate Budgeting

1. International Reporting Requirements

Climate budgeting can help India meet its international reporting obligations, such as the Enhanced Transparency Framework (ETF) under the UNFCCC. By tracking climate finance expenditures, India can efficiently report its contributions towards national climate targets in Biennial Transparency Reports (BTR), fulfilling global commitments.

2. Strengthening Climate Finance Frameworks

Integrating climate finance into the budget allows for better identification of eligible projects, enhancing frameworks like green bonds. This, in turn, facilitates investments in climate-friendly initiatives, ensuring that financial instruments align with climate goals.

3. Estimating the Climate Finance Gap

Climate budgeting enables the estimation of the finance gap, providing evidence of existing climate expenditures. For example, Indonesia used climate budgeting to analyze this gap, helping create innovative financial models to address the shortfall.

4. Robust Policy-Making

By quantifying investments required to reduce emissions, climate budgeting aids in prioritizing climate actions. This process supports the State Action Plans on Climate Change, allowing for better management of climate finance and more robust policy decisions.

5. Preventing Underreporting

Climate budgeting helps prevent the underreporting of development projects with significant climate co-benefits. For example, PMKSY (Pradhan Mantri Krishi Sinchayee Yojana), which focuses on water conservation, is not typically reported as a climate adaptation or mitigation initiative.

Conclusion

Several Indian states, such as Maharashtra, Assam, Chhattisgarh, Bihar, Odisha, and Kerala, have already initiated budget coding exercises to track the climate relevance of development projects. This emphasizes the need for a national framework for climate budgeting to improve transparency, accountability, and the effectiveness of climate finance management.

Model Answer

1. Preventing Climate Crisis: According to the IPCC report 2018, GHG emissions must reach net zero by 2050 to limit global warming to below 1.5°C and avoid the worst impacts of climate change. This target was incorporated in the Glasgow Climate Pact at COP26 (2021).
2. Protecting Human Health: Reducing emissions can significantly reduce air pollution. A study in GeoHealth journal states that lowering emissions from power plants in G20 countries could prevent nearly 300,000 deaths by 2040.
3. Promoting Innovation and Economic Growth: Transitioning to net-zero emissions stimulates innovation in clean technologies, which can drive economic growth. The shift towards renewable energy and cleaner production methods will create new business opportunities.
4. Ensuring Energy Security: Renewable energy sources, unlike fossil fuels, are not subject to price volatility and can provide stable, sustainable energy, enhancing national energy security.

India’s Strategy for Achieving Net Zero

India aims to achieve net-zero emissions by 2070. To reach this target, the country has adopted the following strategies:

1. Low Carbon Electricity Systems:
   • The National Electricity Plan 2023 aims to achieve 500 GW of non-fossil fuel-based energy by 2030.
   • The PLI scheme (2022) promotes domestic manufacturing of solar modules.
   • The Energy Storage Obligation and National Hydrogen Energy Mission (2023) focus on enhancing renewable energy capabilities.
2. Integrated Transport System:
   • India signed the 100% EV Declaration at COP26 and plans to electrify all two-wheelers by 2026.
   • The FAME scheme and Bharat Stage VI emissions standards aim to reduce vehicular emissions.
3. Low Emission Industrial Systems:
   • The Carbon Credit Trading Scheme (CCTS) and amendments to the Energy Conservation Act (2022) encourage energy efficiency and emission reduction in industries.
4. Sustainable Urbanization:
   • Initiatives like the Energy Conservation Building Code (ECBC) and Energy Efficiency Services Limited (EESL) promote sustainable urban development.

Conclusion

Through these actions, India aims to transition to a low-carbon economy while contributing to global climate action.

Model Answer

Reducing Greenhouse Gas (GHG) Emissions

Carbon trading is a key mechanism in addressing climate change by reducing GHG emissions. It provides a market-based solution where entities that exceed their emissions targets can buy credits from those who reduce their emissions, creating financial incentives for emission reductions. For example, trading in sulfur dioxide permits successfully helped reduce acid rain in the U.S. Carbon trading systems have been adopted globally, covering over 21% of global emissions by 2021, up from 15% in 2020-Effectiveness and Flexibility**
Carbon trading is often more cost-effective than imposing direct regulations or taxes on emissions, allowing industries to meet emissions targets without the heavy burden of direct control measures. This flexibility helps reduce the overall societal costs of combating climate change .

Alih the Paris Agreement

Carbon markets align with Article 6 of the Paris Agreement, encouraging international cooperation by facilitating the trade of carbon credits. This fosters a collective global effort to achieve emissions reduction goals .

Promoting Innd Financial Benefits

The system incentivizes industries to innovate and adopt cleaner technologies to reduce emissions. It also offers financial rewards for entities that emit less than their allowed limits by enabling them to sell unused credits .

Key Features oon Credit Trading Scheme (CCTS) 2023

Governance and Oversight

The Ministry of Power has set up the CCTS framework to regulate carbon markets in India. The National Steering Committee (NSC), led by the secretaries of Power and Environment, provides direct oversight of the Indian carbon market .

Role of Bureau of Energy Effic)

BEE will administer the carbon market, setting emission reduction targets, issuing carbon credit certificates, and accrediting carbon verification agencies .

Regulatory Bodies and Functions

• Tntroller of India Limited will act as the registry for the Indian carbon market.
• The Central Electricity Regulatory Commission will regulate trading activities .

The CCTS 2023 is an essential step in India’s climgy, helping to integrate domestic efforts with global initiatives for climate mitigation.

Model Answer

The Arctic ice caps are receding at an alarming rate, with a 13% loss per decade and a 95% decrease in the oldest, thickest ice over the past 30 years. If unchecked emissions continue, the Arctic could experience ice-free summers by 2040. This has far-reaching implications for global climate, marine ecosystems, and the global economy.

Impact on Global Climate

• Global Warming: As the ice caps shrink, they expose darker ocean or land beneath, which absorbs more sunlight, thereby increasing global temperatures. Additionally, thawing ice and permafrost release methane, further accelerating climate change.
• Modification of Climate Patterns: The loss of ice leads to less reflected heat, which could intensify global heatwaves. Simultaneously, the destabilization of the Polar Jet Stream can cause colder winters as it shifts south, bringing frigid air into mid-latitude regions.

Impact on Marine Ecosystem

• Habitat Loss: Ice-dependent species such as seals, walruses, and penguins face habitat destruction, making them vulnerable to extinction .
• Altered Food Chains: The melting of sea ice disrupts the algae growth on which zooplankton, fish, and seals depend, thus disturbing the entire marine food web.
• Ocean Salinity: Freshwater influx from melting ice alters ocean salinity, harming species like corals and mollusks that depend on specific salt concentrations .

Impact on the Global Economy

• Shipping Routes: Melting ice opens up new shipping lanes, such as the Northern Sea Route, reducing shipping distances and costs .
• Resource Extraction: The receding ice enables access to previously unreachable resources, including oil, gas, and minerals.
• Tourism: The retreat of ice has boosted polar tourism, benefiting local economies.

Conclusion

The receding ice caps in the Arctic pose severe risks to both the environment and the global economy. Addressing this issue requires reducing greenhouse gas emissions, investing in adaptive infrastructure, and promoting international cooperation for mitigation efforts.