Exclusive: India has pledged $25 mn, to be an anchor investor to help fight climate change in other nations: Ajay Mathur, International Solar Alliance

As far as the Declaration is concerned, what was agreed was that there would be $100 billion of climate finance available this year (2023) from the developed nations. But climate finance will also come from emerging economies like India.

India has pledged to infuse $25 million and be an anchor investor in the International Solar Alliance’s (ISA’s) Global Solar Facility, which would help the private sector invest in solar projects in Africa. Ajay Mathur, Director General of the ISA, spoke to Moneycontrol about the significance of the G20 New Delhi Leaders’ Declaration for climate change and energy transition. He also threw light on the Green Hydrogen Innovation Centre that the ISA is responsible for, as per the 2023 G20 declaration.

Edited excerpts from the interview below:

Q: What are your takeaways on climate change and energy transition from the G20 New Delhi Leaders’ Declaration?

A: The first takeaway is that all countries — the developed and the developing — agreed that there is a need for developed countries to commit resources to fight climate change.

The second is that this support would be extended using public sector funds, including funds with the multilateral development banks (MDBs), and therefore, the MDBs needed to be reformed and recapitalised in order to provide this finance.

The third thing is that all of this requires a financial architecture, which is a move towards sustainable financing for sustainable development.

I am delighted that there has been a New Delhi Leaders' Declaration, because it seemed that there would be no declaration because of the divergent views on the Ukraine crisis. But the fact that we have got this joint communique speaks volumes of the capability of the G20 Secretariat, who must have burnt the midnight oil to make this declaration possible.

Q: The declaration has a chapter on the Green Development Pact, which talks about tripling renewable energy capacity by 2030. However, nothing has changed from the Bali declaration of 2022 with regard to phasing down fossil fuels.

A: The Green Development Pact is important as it talks of enhancing renewables to the point where they become the energy source of choice. By choice I mean that not only do they cost less, but also that they're the most convenient. Therefore, we need to develop solar cold storages, solar pumps, and make them available, so that cost is not a deterrent.

Once that has happened, then you move towards the phase-out or phase-down of fossil fuel based systems. As far as the phase-down or phase-out is concerned, if a country is able to abate emissions by, say, capturing the carbon dioxide that is produced, and is able to store and use it, then that will be acceptable. That's the abated part.

What we are also looking at is that unabated carbon emissions should very quickly go to zero. “Very quickly” as in by 2050 or 2060. For example, India’s goal is to be net zero by 2070, which means that our electricity sector has to get there sometime in the 2050s. So, we will move as much as possible to renewables.

However, coal will continue to be essential, because at night when the sun is not shining that is what we rely on in India. But it will need to be abated with carbon capture and storage.

Watch the interview with ISA chief Ajay Mathur

India has pledged to infuse $25 million and be an anchor investor in the International Solar Alliance’s Global Solar Facility, which would help the private sector invest in solar projects in Africa.

Ajay Mathur, Director General of the ISA, spoke to Moneycontrol about the… pic.twitter.com/PWGgUL0hNj

— Moneycontrol (@moneycontrolcom) September 11, 2023

Q: Talking of climate finance, do you think the declaration dilutes the $100 billion that was to come from the developed countries to the developing nations?

A: As far as the Declaration is concerned, what was agreed was that there would be $100 billion of climate finance available this year (2023) from the developed nations. But climate finance will also come from emerging economies like India.

For example, India is ploughing in a lot of resources through the ISA to fight climate transition in other countries. We are creating a global solar facility, which would help the private sector invest in solar projects in Africa. India has pledged to be an anchor investor and provide $25 million to the ISA. Clearly, countries like India also see themselves as donors in this facility. That’s the first point.

The second is that as we move ahead, we will see climate finance that’s provided by India and other developed and emerging economies being used in a more strategic manner. What that will be, I can't say today. But because money will be used efficiently, what we'll probably see is that more and more of it will be used to help the private sector invest in fighting climate change. That is the only sustainable option for investment in solar and other renewables in the days ahead.

Q: Going forward, what would ISA’s role be in the global energy transition journey?

A: There are three things that are important. The first is to share the latest information on what is working in solar, what technologies are working, what market instruments are working, where are the investments flowing, because that primes leaders and policymakers on how to move.

The second is regulations. Countries need to make friendly regulations so that international private sector investment can flow into new and renewable sources of energy. ISA is providing this regulatory support. We understand that regulations don't occur in a vacuum. A country's history of regulations largely determines the options that are there. So based on that, we suggest two or three ways to go forward, along with the pros and cons.

The third important thing is where to find the kinds of projects that you need, and who executes them? For example, the ISA has identified startups focusing on solar power in Africa. There are 180 which applied, we identified 20, because that was the limit we had. We are now building up their capacity to raise money for technological partnerships and brand building. If some of these guys can become the Amazons of tomorrow, as far as solar services are concerned, that would change the (African) continent.

The final thing is capacity building. Because leaders ask us: all this is great, and we've changed the regulations. Now, who will execute it? So, you need to build local capacity. At ISA, we have trained about 4,000 people till now to make a living from providing solar services. I think we'll just have to dramatically increase that in the years to come.

Q: The G20 Declaration has put the onus on the ISA to build a Green Hydrogen Innovation Centre. What has been the progress on that front?

A: The Green Hydrogen Innovation Centre is ISA's contribution to the global effort to enhance the use of green hydrogen. Solar and renewables can produce the electricity you want, but energy is more than just electricity. Green hydrogen produced by splitting water using renewable power (solar or wind or biomass) provides us the opportunity to provide a fuel which is zero carbon and can be used in industry.

The challenge is, how do I bring the price down? Using solar electricity to produce green hydrogen costs about $5 a kg. The reformation of natural gas as is used today in the fertiliser industry and in refineries etc., which is not entirely green, is about $2 a kg. There is a huge difference in the cost. The challenge, therefore, is that we keep trying to focus on what is happening across the world, so we can share technological knowledge and bring down the costs.

The first thing that the Green Hydrogen Innovation Centre is doing is becoming a repository of information on whatever is happening around the world. There’s a huge amount of information. But how do you look for it? We have designed an artificial intelligence based chatbot which allows you to put in a natural language query on what you're looking for, and it searches across portals and gives you all the latest information on it.

Second, it is helping build human capacity. You can do a programme at your own pace. You do the courses, you pass the exams, and you are certified at the end.

Finally, we want to play matchmaker, where there are developers on one side and financiers on the other. We hope that this will accelerate the production and off-take of green hydrogen in the world.

Q: How far has India progressed in leading the ‘One Sun, One World, One Grid’ (OSOWOG) initiative, which pushes for more transnational grids?

A: So as far as this G20 summit is concerned, there's a broad consensus that OSOWOG is clearly something countries have to move towards. We will move towards interconnecting regional grids. For example, if the Indian grid is connected to the Gulf grid, then, when it is dark in India, there’s sunlight in the Gulf, and the solar electricity generated can flow to India. Similarly, between India and east Asia and so on, what you need are the connecting links. That's what OSOWOG is about.

We have commissioned Électricité de France to carry out a study on this, the first phase is over, the second phase is ongoing, it should be done by October. We hope to be able to then discuss with the various regions, discuss the potential for inter-regional transfer of solar power, and what therefore, would be the requirement for those connecting grids.