'US fund pullout may scale back India's climate change policy'

BMI Research, a Fitch Group company, today said the withdrawal of US funding could result in scaling back of the climate change policy in India.
"...(Donald) Trump's (US President-elect) pledge to stop US funding to all UN climate change programmes is likely to be a point of contention as Modi has been one of the most vocal proponents of developed countries helping developing nations with access to finance and technology for climate change mitigation efforts," it said in a report.
While US President-elect Trump has labelled climate change a hoax and threatened to pull out of the Paris emissions deal, US Secretary of State John Kerry had earlier said that most Americans wanted the problem addressed.

Although Prime Minister Narendra Modi is a strong supporter of renewable energy, "We do not rule out the chance of environmental policy slippage over the coming years, as the associated costs of meeting the country's very ambitious renewables targets...And the difficulties of integrating projects into the grid without battery storage technology results in a weakening of support at the national level," it said.
This could be compounded further by the election of Donald Trump as US president and his vehement stance against climate change policy - which has the potential to undermine the commitment to the agreement from other countries, including India, it said.

Aggressive bidding and the rapid fall in tariff prices in India's solar power auctions have the potential to jeopardise the economic feasibility of the project pipeline, as it squeezes the returns on offer for the project developer and may result in project cancellations if the price is too low to cover costs.

Although initially viewed as a positive sign for the prospects of India's solar sector, the lowering of prices at such a rapid rate has the potential to knock confidence in the market if projects fall through and do not progress past the 'planning stage' of the development pipeline, it said.

This risk is particularly pertinent for project financiers, and could lead to a tightening of available funding for the Indian solar sector.
The government has ambitious plans for deployment of 175 GW renewable power capacities by 2022, including 100 GW in solar energy.