The Export-Import Bank of the United States plays a big part in the renewable energy market in India and now it is set to make its next big move in the country. The Indian Renewable Energy Development Agency (IREDA) will be receiving the loan and then will use the money in various renewable energy infrastructure projects across the country.
“US Ex-Im Bank has been among the prime lenders to solar power projects in India. It provided debt financing to several projects which became the first solar power projects to be commissioned in India. The largest solar thermal power project in the country has also been financed by the bank. A number of projects under the National Solar Mission have successfully approached the bank.” (cleantechnica.com)
The US Ex-Im Bank provides loan at much lower rates than Indian banks. This is the reason for the major boost in renewable energy use in India in recent years. The largest beneficiary of this growth is First Solar which is estimated to control around 30% of the market in India.
“However, cheap loans weren’t the only thing that came from US Ex-Im Bank’s basket. Solar modules from American manufacturers also made a huge mark in the Indian market. First Solar is the biggest beneficiary of this system. By some estimates, the company enjoys about 30% of the market share in India.” (cleantechnica.com)
This is only the beginning as India plans to expand its use of renewable energy in the coming years. cleantechnica.com reports India will be investing as much as $100 billion and expanding their capacity for clean energy soon.
Despite warnings from the Intergovernmental Panel on Climate Change (IPCC) that the world must phase out up to 70 per cent of fossil fuels by 2050, G20 nations continue to pay lip service to the clean energy transition by spending billions subsidizing new fossil fuel exploration activities.
A new report from Oil Change International (US) and the Overseas Development Institute (UK) has highlighted the perverse incentives given to fossil fuel companies, with G20 governments spending US $88 billion a year searching for new oil, gas, and coal reserves. The US leads the way with $5.1 billion, followed closely by Australia with $3.5 billion, Russia at $2.4 billion and the UK’s $1.2 billion spend.
Oil Change International Director Stephen Kretzmann said: "Five years ago, Australia and other G20 governments pledged to both phase out fossil fuel subsidies and take action to limit climate change. Immediately ending exploration subsidies is the clearest next step on both fronts."
This skewed support for fossil fuels is a direct threat to the global carbon budget, which states that at least two thirds of known fossil fuel reserves have to stay in the ground if the world is to have a good chance of keeping global average warming below 2 Degrees Celsius. The report warns that globally, governments subsidized the production and use of fossil fuels to the tune of $775 billion in 2012, while spending, by comparison, a tiny $101 billion on renewable energy in 2013.
Governments give as much money to companies searching for new fossil fuel sources as they do supporting renewable energy, perversely skewing the playing field in favor of dirty energy sources.
Kevin Watkins, director of the Overseas Development Institute said: "This is real money which could be put into schools or hospitals. It is simply not economic to invest like this. This is the insanity of the situation. They are diverting investment from economic low-carbon alternatives such as solar, wind and hydro-power and they are undermining the prospects for an ambitious UN climate deal in 2015."
The amount given to oil, coal and gas exploration by governments is also more than double the $37 billion the top 20 private oil and gas companies invest in exploration, demonstrating how dependent the fossil fuel industry has become on public money to find and exploit hard-to-reach reserves.
With falling coal and oil prices, such generous public subsidies are essentially propping up fossil fuel that would otherwise be deemed uneconomic. Meanwhile the price of renewable energy continues to fall. According to Rystad Energy, oil and gas exploration expenditure in G20 countries (public and private).
While fossil fuel companies like Peabody Energy are quick to use poor people as a reason to burn more dirty fuel like coal, governments give dirty energy companies vastly more money than it would take to provide power to every person on earth, according to the new research.
The US $88 billion spent on fossil fuel exploration is almost double what the International Energy Agency estimates is needed annually to provide electricity and heat for all by 2030, which makes the “coal is good for humanity” argument seem all the more self serving.
Renewable subsidies made up US $101 billion in 2013, almost as much as the $88 billion spent by the G20 on fossil fuel exploration subsidies, and a fraction of the almost $1 trillion that goes into fossil fuel subsidies in total globally. The report urges G20 leaders to phase out these dirty, inefficient exploration subsidies as a first step to meeting existing commitments to avoid harmful climate change.