Research area: Climate Policy
What Shapes Green Industrial Policy Objectives and Design? A Comparative Policy Analysis of Renewable Energy Auctions in India and South Africa
Abstract
The article compares the renewable energy auctions of India and South Africa, two countries with different institutional approaches to governing markets and different political-economic constraints, to understand how these factors shaped similar policy objectives to be prioritised differently through their auction design. It finds that India’s market-based governance approach and its electricity sector politics resulted in the prioritisation of electricity price objectives while South Africa’s developmental state approach prioritised industry localisation and employment creation objectives through policy design. The survival of India’s politics-centered approach over South Africa’s problem-centered policy design has implications for countries implementing multiple-objective policies.
Read moreThe Indian Carbon Market: Institutional, Regulatory, and Market Considerations
Introduction
India is at a critical juncture in its climate policy journey. In the near-term, it aims to reduce the emissions intensity of its GDP by 45% below 2005 levels by 2030. Its longer-term goal is to reach net-zero emissions by 2070. Meeting these targets will require a combination of policy interventions, technological advancements, regulatory mechanisms, and financial support.
As part of this broader transition, India is developing a national carbon market under the Energy Conservation (Amendment) Act 2022 (See Fig. 1 for a timeline of developments around the CCTS). The Carbon Credit and Trading Scheme (CCTS), notified by the Ministry of Power (MoP) in June 2023, lays the foundation for a carbon market that seeks to balance economic growth with climate goals.
The effectiveness of the CCTS will depend on several interlinked factors- clear governance structures, credible price signals, transparent processes, institutional capacity, and harmonisation with existing domestic programs and global frameworks. Recognising the complexity of these issues, Prayas Energy Group (PEG) and Sustainable Futures Collaborative (SFC) convened a closed-door roundtable under the Chatham House rules on March 20, 2025 in New Delhi, which brought together participants from across policy think tanks, regulatory consultancies, industry, industry associations, and civil society organisations. It served as a platform to exchange diverse perspectives on the institutional, regulatory, and market-related elements of the CCTS. This brief reflects the key insights that emerged from the discussion, highlighting seven broad yet interlinked issues central to the design and operationalisation of the CCTS.
Navigating India’s Climate Futures Requires a Nuanced and Transparent Approach to Modelling
India stands at a critical juncture in its development journey. As the country strives to lift millions out of poverty and achieve sustained, inclusive economic growth, it is also grappling with the urgent challenge of climate change. Balancing these dual priorities requires robust policy frameworks, often informed by emissions-economy models or climate models—analytical tools that can simulate the impacts of economic activities on greenhouse gas emissions.
However, in rapidly evolving contexts like India, where socio-economic and demographic shifts are ongoing and energy use has historically been low, modelling alone is not sufficient. A more holistic interpretation is necessary — one that considers emerging trends, evolving policy landscapes, and alternative development pathways unique to India’s context.
Recent analysis of India’s energy, economic, and emissions future reveals significant divergences across studies largely due to differences in models and input assumptions. These inputs, such as GDP growth, rate of urbanisation, sectoral energy intensity, economic structure, technology costs, and other factors, underpin how models simulate future scenarios. For example, higher GDP growth assumptions may project increased energy demand and emissions, while lower renewable energy cost assumptions may suggest faster clean energy adoption. Even small changes in assumptions can lead to very different results. This underscores that insights from modelling studies are only as reliable as the methods used to generate them. A more nuanced and transparent approach to modelling is therefore essential—one that allows policymakers to better understand the scope, limitations, and defensibility of study findings.
About ‘The Climate Futures Project’
The Climate Futures Project (TCFP), an initiative of the Sustainable Futures Collaborative, aims to foster the informed use of emissions-economy modelling studies by decision makers, scientists, journalists and concerned citizens. Originally co-developed by the Centre for Policy Research (CPR) and the Indian Institute of Technology (IIT) Delhi, the project applies a common framework to assess, compare, and interpret the assumptions and implications of modelling studies1.
The framework has two parts to it. The first part provides a structured method to evaluate modelling studies across five key criteria like whether the inputs are credible and transparent; whether the choice of model is appropriate to the objective of the research undertaken; how robustly the scenarios are constructed; if and how the study considers uncertainties; and whether the study outputs are transparent and validated. Each criterion is assessed through sub-criteria and assigned a score of adequate, partially adequate, or inadequate.
The second part of the framework focuses on interpretation of model outcomes along a set of parameters. Studies are carefully assessed for what they say/ imply for what socioeconomic development patterns are being locked in, how the energy transition will be managed, what emissions are projected, what the investment needs are, how the study thinks about social equity and natural resource impacts, and what it will imply for India’s energy security. This interpretive lens helps unpack the real-world relevance of technical outputs.
Reasons for divergence in modelling studies
Understanding why modelling studies diverge begins with examining their foundational inputs. A widely cited framework by John P. Weyant, Director of Energy Modeling Forum (EMF) at Stanford University, formerly founded and chaired Integrated Assessment Modeling Consortium (IAMC), outlines five categories of assumptions that influence model outcomes: baseline economic assumptions (reference case), policy design (e.g., carbon taxes vs. mandates), substitution possibilities (adoption of alternatives), technological change (e.g., innovation pace), and benefit inclusion (e.g., health or energy security gains). This framework remains influential because it underscores the need to critically assess model assumptions to ensure robust and well-informed policy decisions.
Research supports this view. Fischer and Morgenstern (2005) and Barker et al. (2006) showed that baseline assumptions alone could lead to emissions forecasts for 2100 varying by a factor of six across models. Even under the same climate policy, models like IGEM and ADAGE yielded different results—with permit price estimates differing by 20% and GDP loss projections varying twofold2. Similarly, global modelling exercises like the MIT Integrated Global System Model (IGSM) demonstrate how varying emissions pathway assumptions can produce temperature outcomes ranging from 0.9°C to 4.0°C. A 2014 study using top energy-environment-economy models to evaluate U.S. emissions reduction pathways found considerable variation in energy strategies, carbon prices, and mitigation costs, largely due to differing technology assumptions. These examples illustrate how model structure and input assumptions fundamentally shape results.
The need for transparency, comprehensiveness, and credibility in models
Such differences highlight the importance of evaluating the five core criteria — inputs, model choice, scenarios, uncertainties, and outputs — for their transparency, comprehensiveness, and credibility.
Transparency is critical to avoid misinterpretation. Without it, models can seem like impenetrable “black boxes,” accessible only to a few experts. As emphasised by the Intergovernmental Panel on Climate Change (IPCC 2022), clearly documenting assumptions, data sources, methodologies, and uncertainties enhances both the credibility and utility of emissions scenarios. It’s not only what’s in the model that matters but what’s left out can be just as influential. Omissions in model design, such as technology options, cost assumptions, or sectoral data, can skew results. Transparency, therefore, is not a technicality but a foundation for trustworthy, policy-relevant modelling.
Comprehensiveness requires that modelling choices and methods are well-articulated. This includes scenario design, data timestamps, and uncertainty ranges. Can another researcher replicate the pathway? Are uncertainty estimates clearly stated? Has the model acknowledged its own limitations? Comprehensiveness ensures that transparency is matched with methodological clarity.
Credibility rests on epistemic validation. Modelling inputs should be based on empirical data, with uncertainties tested against real-world shocks like energy price fluctuations or delayed behavioural shifts. Outputs should be validated through peer review, comparisons with historical data, and cross-model benchmarking. Importantly, studies should acknowledge their limitations—whether related to data, structure, or computational constraints—to properly contextualise findings.
Together, these criteria form a triad of analytical integrity that ensures robustly designed climate policies. By reinforcing the credibility, comprehensiveness, and transparency of modelling studies—and recognising their key role in shaping policy—this approach enhances the utility of future modelling efforts. TCFP seeks to revive a critical dialogue around modelling in India, fostering deeper understanding and informed engagement among stakeholders.
As India advances its low-carbon transition and prepares for the next updates to its Nationally Determined Contributions, prioritising transparent and well-contextualised modelling approaches will be key to designing effective, forward-looking climate strategies.
Footnotes
- TCFP has evaluated modelling studies conducted by institutions such as the International Energy Agency (IEA), The Energy and Resources Institute (TERI), the Council on Energy, Environment, and Water (CEEW), and McKinsey & Company, with ongoing assessments of other studies. ↩︎
- IGEM and ADAGE are general equilibrium models that can simulate the effects of a policy on all sectors of the economy. ↩︎
Domesticating Climate Change: The Evolution of Indian Climate Politics and Policy
Now for a green Bharat abhiyaan
Unpacking COP29’s NCQG: What Happened, Why, and What Now?
The much-anticipated New Collective Quantified Goal (NCQG) for climate finance took centre stage at COP29, the outcome of a three-year process to determine an update to the $100 billion that developed countries had committed to provide annually by 2020 in 2009. The final text set a goal of at least $300 billion per year by 2035, with developed countries taking the lead, from a wide array of public and private sources, and encouraging voluntary contributions from developing countries. This $300 billion goal is part of a broader stated ambition to scale up climate finance to $1.3 trillion per year by 2035 from all sources.
The outcome has drawn sharp criticism from developing countries – including India – which see it as insufficient to meet their climate finance needs and as shifting responsibility away from developed countries. Civil society groups and experts have widely echoed these sentiments, relying on the overused “COP-out” label.
Amid all the widespread criticism, this blog examines where the NCQG outcome falls short, explores whether developed countries have a defence, and looks ahead to how future COPs – and India specifically – can work to enhance climate finance and accountability.
Why the NCQG outcome is disappointing for developing countries
Developing countries have unanimously expressed disappointment with the NCQG outcome for three principal reasons.
It doesn’t take needs into account at all: The UNFCCC’s Standing Committee on Finance notes that the costed needs alone of just 98 developing countries amount to about $5.0–6.8 trillion by 2030, or on average $455–584 billion annually. Broader estimates indicate needs of about $1 trillion annually by 2030. In this context, the pledge of $300 billion – set as it is five years beyond these estimates – falls significantly short of the scale of support required for adequate climate action.
It also reflects a lack of ambition by developed countries when considering that finance flows will have to increase annually only by 7.6% between 2022 and 2035 to reach this amount, whereas they had increased by 9.2% per year between 2013 and 2022. Further, adjusting for global inflation between 2009 and 2024, the real increase of the quantum is only 1.86 times the $100 billion annual target for 2020.
With this, the urgent need for rapidly and comprehensively scaling up funding clearly remains unmet.
It offers no clarity on – or accountability from – funding sources: The phrasing of the broader goal in the decision text weakens accountability and leaves significant room for interpretation. For instance, it “Calls on all actors…to enable the scaling up of financing… from all public and private sources to at least USD 1.3 trillion per year.”
This framing is comparatively less stringent in tone, limits the expectations from concessional public finance (thereby risking over-reliance on private finance, which is often unaligned with developing countries’ priorities), and does not assign specific responsibilities to any particular groups, such as developed countries or MDBs. Even for the more concrete $300 billion target, developed countries are only tasked with “taking the lead,” while the text simultaneously encourages developing countries to “to make contributions…on a voluntary basis1,” which would appear to go against the developed country obligations outlined in Article 9 of the Paris Agreement. Lastly, there appears to be a voluntary agreement that the “alternative sources” that will count towards these goals will include all MDB climate finance to developing countries, rather than just the portion attributable to developed countries.
Put this way, the decision text presents a clear risk of shifting responsibility away from developed countries, undermining the principle of equity enshrined in the UNFCCC and the Paris Agreement.
It does not sufficiently prioritise adaptation: While the NCQG aims to balance the allocation of finance between mitigation and adaptation, it offers no clarity on how to achieve this balance. Least Developed Countries (LDCs) and Small Island Developing States (SIDS), already grappling with disproportionate climate impacts, are left with vague assurances rather than actionable pathways towards meeting their real and immediate adaptation needs. Some developing countries have also expressed unhappiness with the exclusion of loss and damage (L&D) as a category from the intended allocations of this quantum.
On these grounds – an inadequate quantum, limited accountability, and poor reflection of their priorities – developing countries have credible reasons to voice discontent. When we consider that developed countries only proposed a first concrete quantum on the penultimate day of negotiations, this does seem like a bad faith exercise that has once again kicked real action further down the road.
Do developed countries have a valid counterpoint?
A few factors – typically put forth by developed countries – may have contributed to limiting the NCQG quantum and determining its framing.
Developed countries are dealing with new and old pressures: Advanced economies are grappling with slowing growth, projected at 1.8% in 2025, well below the 2000–2019 average of 3.8%, which is exacerbated by rising inflation, declining investments, a shrinking labour force and ageing populations, and elevated debt levels2. Additionally, growing concerns about the socioeconomic consequences of climate policies have led to pushback from domestic interest groups, particularly in fossil fuel-dependent regions.
National security considerations may have also diverted resources from climate action. For instance, the Russia-Ukraine war has led to ramped-up funding for short-term energy security, reducing the focus on climate goals. Developed countries have also faced fiscal constraints due to Brexit, the Covid-19 pandemic, and illegal immigration, among other challenges.
These internal and external pressures mean that many developed countries may have – somewhat understandably – prioritised domestic challenges over international climate commitments. On the other hand, it is notable that 2023 U.S. federal spending alone was $6.3 trillion, while its international climate finance contributions were only $9.5 billion, less than 0.15% of this total. This illustrates that climate finance allocations remain extremely modest compared to these countries’ substantial spending abilities, with limited justification for their crowding out.
The US may exit the Paris Agreement: There is a clear likelihood of the United States, which is responsible for the largest share of historical emissions, of once again leaving the Paris Agreement under its incoming presidency. As a consequence, the European Union (EU) and other developed countries may end up having to shoulder a proportionately larger share of the climate action agenda. The possibility of US withdrawal will almost certainly have limited the quantum of the NCQG, and the EU’s ability to lead the delivery of even this modest quantum – as comparatively lower historical emitters and with their internal constraints – would be a laudable achievement that should go some way towards earning them global trust and credibility.
Present and future emissions trends cannot be ignored: Developed countries highlight the importance of also addressing present and future emissions. China is now by far the largest producer and consumer of coal, followed by India. Some experts note that the binary distinction between developed and developing countries is no longer helpful due to the diversity in incomes and emissions across countries, and that some large developing countries should also start becoming providers of climate finance. These calls are based on data that suggests that 42 percent of all greenhouse gas emissions since 1850 have been emitted in the last 30 years, and more than two-third of that has come from developing countries.
These arguments however sidestep the fact that the US is currently the largest oil producer the world has ever seen, that per capita emissions in developing countries continue to be very low, and that their large and rising absolute emissions reflect a continued failure of developed countries to provide meaningful climate finance thus far.
There is historical precedence to the framing of the NCQG: While the NCQG has been criticised for its loose framing, the Copenhagen Accord in which developed countries had committed to the 2020 $100 billion target had used very similar text: “…developed countries commit to a goal of mobilizing jointly $100 billion dollars a year by 2020…from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources.” Similarly, paragraph 3 of Article 9 of the Paris Agreement states that “developed country Parties should continue to take the lead in mobilizing climate finance from a wide variety of sources…” By these yardsticks, the framing of the NCQG cannot be considered to be watered down, although equally, it also doesn’t increase accountability above the historical floors and risks including pre-existing and/or marginally climate-relevant finance within developed country contributions.
Similarly, developed countries argue that calls to include allocations for loss and damage within the NCQG quantum go beyond the Paris Agreement, the objectives of which are limited to mitigation, adaptation, and realigning finance towards consistency with these.
What does this all mean?
The NCQG outcome reflects the divide between developed and developing country perspectives on climate finance. Developing countries’ justifiable disappointment stems from the glaring gap between the quantum and actual needs, the lack of accountability from developed countries, and insufficient attention to adaptation and loss and damage. Developed countries – grappling with domestic constraints – emphasise the need for shared responsibilities that reflect future realities, even as their constraints fail to justify the inadequacy of the goal. The precedents in historical COP outcomes present a weak defence; the NCQG text reflects the framing of previous decisions but risks diluting the quality and concessionality of finance.
Climate negotiations are political processes, in which developed countries aim to limit their liabilities, while developing countries have an incentive to overstate their needs, reach agreement, and then voice dissatisfaction with outcomes. The extent to which the NCQG quantum falls short of the true additional amounts that are required remains to be seen. But it seems as though the open-endedness that was essential to securing consensus for previous decisions such as the Paris Agreement has also provided a ‘get out of jail free’ card to developed countries in the NCQG.
In this context, the NCQG represents a compromise, yet again, for developing countries. Perhaps a foreseeable one, seeing how developed countries had struggled to deliver even their $100 billion promise. But progress in future negotiations will now require greater understanding of each country’s domestic challenges, and working around them to revisit and ratchet both the quantum and the accountability. This will need to happen rapidly, to ensure that multilateralism retains its trust and effectiveness in meaningfully addressing climate change.
What does it mean for India? As a climate leader and a voice of the global South, India should continue to push for greater collective ambition and responsibility, particularly from developed nations, through successive COPs. At the same time, given the inadequacy of current multilateral progress, it is in India’s interests to increasingly rely on domestic (or minilateral) finance arrangements and thereby increase resilience to future COP failures. This will require strengthening and reorienting its financial system, using a careful mix of complementary policies and regulations, and aligning it more closely with industrial policy. It is critical to constructively and speedily navigate the path beyond this disappointing outcome. Our climate and economic futures might hang in the balance.
Additional References
- Notably, some large developing countries have already been significant providers of climate finance, and this clause in the decision text may allow for this climate finance to be formally counted ↩︎
- The U.S. faces challenges including a projected current account deficit of 2.5% of GDP and high inflation. The EU struggles with low GDP growth (0.8% in 2024), declining inflation, and labor market weaknesses, particularly in Germany, the UK, and France ↩︎
Is net zero net positive? – Opportunities and challenges for pursuing a socio-economically sensitive net-zero transition for India
Abstract
At COP26 in Glasgow, India announced a long-term ambition to achieve net-zero greenhouse gas emissions by 2070. Existing emissions-economy modelling studies highlight that India’s emissions show no sign of peaking before mid-century and will not reach net zero by 2070 in a business-as-usual scenario with current policies. Using a mixed methodology of expert elicitation and system dynamics modelling, this article examines the policy gap that needs to be bridged for India to realize its net zero by 2070 commitment. The study discusses a socio-economically sensitive policy mix that could set India on a trajectory to peak its emissions in a decade and zero out its carbon dioxide (CO2) emissions by mid-century, leaving about one gigaton of other greenhouse gases to be decarbonized by 2070 to meet India’s net-zero goal. The policy mix realizes this goal while maintaining the government’s fiscal stability, and increasing employment and GDP beyond business-as-usual. The trajectory reported here is one of many possible low-carbon development pathways that could potentially be a net socio-economic positive for India. However, barriers such as the country’s lack of clean energy innovation and industrial policies, the gap between its domestic manufacturing capacity and deployment requirements, individual sector readiness for decarbonization, and the distributional implications of government revenue shifts through the energy transition remain significant challenges that need to be addressed to realize these potential socio-economic benefits of decarbonization.
Read moreRatcheting Ambition in Climate Finance: Key Challenges and Goals for COP29
Introduction
The 29th Conference of the Parties (COP29) to the United Nations Framework Convention on Climate Change (UNFCCC), scheduled to be held in Baku, Azerbaijan, in November 2024, presents another pivotal moment in global climate action. A key area of focus at COP29 will be the decision on a New Collective Quantified Goal (NCQG) for climate finance, which is meant to replace the 2009 pledge by developed countries to provide $100 billion annually to developing countries by 2020.
Seen as a key symbol of trust, transparency, and cooperation between developed and developing countries, the NCQG is a crucial lever for strengthening the shared responsibility and mutual commitment essential for tackling the climate crisis.
This issue brief provides an overview of key issues to watch in NCQG discussions, exploring the role and relevance of the NCQG, strategies for its effective implementation, and implications of the outcome for broader climate diplomacy. The brief is based on insights shared during SFC’s recent webinar, “Climate Finance at COP 29: What New, Collective, Quantified Ambition?”, held on October 28, 2024, which aimed to summarise and contextualise the current state of play in climate finance negotiations as COP29 approaches.
The speakers for this webinar were Joe Thwaites, Senior Advocate at the Natural Resources Defense Council (NRDC); Jonathan Beynon, Senior Policy Associate at the Center for Global Development (CGD); and Avantika Goswami, Programme Manager at the Centre for Science and Environment (CSE). The session was moderated by Aman Srivastava, Fellow and Coordinator, Climate Policy, at the Sustainable Futures Collaborative (SFC).
The Regulatory and Market Landscape for Climate Finance Into India’s Renewable Energy Sector
Executive summary
India’s clean energy landscape has developed rapidly over the last decade, enabled by an improving policy and regulatory architecture. Nevertheless, challenges remain that have impacted the scale and direction of climate finance flows to this sector, particularly from international sources. As India aims to further ramp up the pace of its RE deployment, both large- and small-scale, this brief analyzes these challenges from regulatory, institutional mandate, coordination and market development angles, and explores ways to address them.
Based on a literature review and 13 expert interviews in the large scale renewable energy, rooftop solar, and energy efficiency sectors, we find that regulatory challenges are relatively minor in the large scale RE sector, and that this may cause international funders to channel finance accordingly. In other words, the established governance structure facilitates a relatively easy flow of climate finance. On the other hand, the small scale renewables and energy efficiency sectors have received comparatively less policy support, and a lack of awareness and scale contributes to considerably less funding flowing to these sectors.
Overall, while the government has an important role to play in continuing to improve the policy and regulatory environment for clean energy finance – including international flows into the country – there is an equal role for funders to adapt their funding processes and scopes to the domestic context. Harmonizing these parallel efforts will require improved coordination between the various actors, including through more defined processes for consultations within the overall institutional architecture for climate action in India.