“In the end, we are not following this track, in agreement between India and us,” said Jochen Flasbarth, state secretary in the German ministry for economic cooperation and development. “We realised that the approach is not attractive for India,” he told Clean Energy Wire in an interview at the UN climate change conference COP29 in Baku, capital of Azerbaijan.
Why India is rebuffing a coal-to-clean deal with rich nations
It has been clear for some time that the agreement is unlikely to materialise, but the governments have never been as clear as the state secretary about the end of the talks.
“I can speak openly about it because I openly discussed it with my Indian friends,” Flasbarth said.
To push forward the climate-friendly transition in emerging nations through financial as well as technical support and capacity building, the COP26 UN climate change conference in Glasgow in 2021 birthed the world’s first JETP. The U.S., the UK, France, Germany and the European Union had joined together and made a deal worth 8.5 billion U.S. dollars with South Africa to help the country move away from coal.
Under Germany’s presidency, the large economies in the Group of Seven (G7) agreed to establish similar partnerships with Indonesia, Senegal, Vietnam – and India. India’s prime minister Narendra Modi attended the summit in southern Germany in 2022.
India’s reluctance
The other partnerships came through, but a little over two years later, negotiations on a JETP for India are discontinued.
India, the world’s most populous nation with an ever-growing energy demand, has resisted a coal-focused JETP from the time conversations with wealthy countries began, seeking instead one focused on renewable energy and investment in skills.
The country remains heavily dependent on coal to meet its energy demand and increased coal production by 12 percent in 2023-24 (compared to 2022-23), with the government aiming for an up to seven percent annual rise in production over the next six years to reach 1.5 billion tonnes in domestic coal production by 2030.
The country is also investing big in renewable energy projects, aiming to achieve 500 GW in clean energy capacity by 2030.
Flasbarth’s statement has not come as a surprise for analysts tracking dialogue on JETP, though they said this was the first official statement on the matter.
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An Indian analyst familiar with the country’s reluctance with a JETP said the United States and Germany were leading the discussions, but India had not shown much interest. “But this has never been spoken about,” the analyst said, who asked to remain anonymous, because they were not authorised to speak to the media on behalf of their organisation. The analyst added that the International Partners’ Group (IPG) of donor countries, which was trying to get India to the table, will not pursue a JETP anymore.
A coal-focused JETP, like the one with South Africa and Indonesia, would not have worked for India as the fossil fuel not only remains a stable source of energy but is also an income source.
Analysts say that a JETP arrangement does not capture the complexities of the transition of a coal-dependent nation like India, where at least five states have coal-dependent economies and where ten to 15 million people depend directly or indirectly on the planet-heating fossil fuel, according to researchers.
Trade unions had also feared that a JETP focused largely on technical and financial issues would ignore the social aspect of transition.
And then there was the question of lending.
“For G7 countries India was a key country under consideration for striking a JETP. However, the momentum has faded over the past year,” said Srestha Banerjee, director of just transition at the International Forum for Environment, Sustainability & Technology (iFOREST), a global research and policy think tank. “The Indian government has been measured about entering into a JETP given their nature, which has been loan heavy.”
While India is “cautious about taking on additional loans through these partnerships,” it remains open to international engagement and also financial support, which must not increase the debt burden of developing countries, Banerjee said.
Germany’s Flasbarth argued that the architecture of the JETPs has the advantage that donor countries coordinate well. “It means that the different donor countries do not knock on the recipient’s door every few days with a slightly different approach on how to achieve a climate-friendly economy,” he said. “I see this as an advantage, as do many of our recipient countries. India does not.”
Renewables financing as way forward
Flasbarth sees a key reason for the end of the talks in “some kind of suspicion over whether the country remains in the driver’s seat” on its plans for a just transition. He said donor governments had repeatedly tried to assure that the worries were unfounded, “because you cannot organise a transition in your own country without ownership over the essential decisions.”
“As there was a lot of this suspicion, we put the approach aside, and discussed other ways with India,” said the state secretary.
Instead of the coal exit, a key focus of cooperation could be renewable energies. “India targets 500 gigawatts of solar power, but the country is not on track,” said Flasbarth. “We talked about what we could do together to get this done.” Germany had helped organise an investors’ conference on renewable energy with a focus on India, as well as started a joint discussion on diversifying global supply chains, he said.
“We as Germans have learned our lessons about where you end up with mono-dependencies, in our case with gas,” said Flasbarth. “We do not want that to happen again in the transformative industries, and countries like India also do not desire that.”
Putting a pause on the JETP is not necessarily a “negative thing,” said Madhura Joshi, a senior associate with climate change think tank E3G, where she leads the work on India’s energy transition, as it opens an avenue for taking forward conversation on renewable energy.
India, she said, was pursuing a long-term transition plan with more ambition expected on renewable energy and storage. The transition could now be strategically planned to align with the country’s adaptation plans and also to finance flow, she said.
India could use this opportunity to consider developing a country platform in partnership with multilateral development banks to garner public, private and international investments to finance action, she said.
This article was produced as part of the COP29 Cross-Border Energy Transition Reporting Fellowship, a programme organised by Clean Energy Wire and the Stanley Center for Peace and Security and originally published in Clean Energy Wire.