Mains Paper 2: IR | Important International institutions, agencies & fora, their structure, mandate
From UPSC perspective, the following things are important:
Prelims level: International Solar Alliance, World Solar Bank
Mains level: India’s renewable energy commitments and efforts in that direction
ISA plans SPV for new projects
- The International Solar Alliance (ISA) plans to approach multilateral development banks (MDBs) such as Asian Infrastructure Investment Bank (AIIB) to create a special purpose vehicle (SPV) to specifically finance solar projects.
- This SPV aimed at financing $150 billion would become a World Solar Bank.
- The concept note for the solar bank will be shortly circulated by ISA to all eight MDBs with which the first treaty-based international government organization based in India has signed joint declarations.
Proposed World Solar Bank
- The proposal for a World Solar Bank comes against the backdrop of ISA’s mission to undertake joint efforts required to reduce the cost of finance and the cost of technology.
- It needs to mobilize more than $1,000 billion of investments by 2030 for massive deployment of solar energy and pave the way for future technologies.
- ISA has inked joint declarations with the World Bank, African Development Bank, Asian Development Bank, AIIB, New Development Bank, European Investment Bank, European Bank for Reconstruction and Development and the Green Climate Fund (GCF) for enhancing cooperation in the solar energy area.
Seeking help from AIIB
- China has a 31.02% stake in AIIB, while India, with 8.72% stake, is the second-largest stakeholder.
- ISA also plans to leverage AIIB’s reach to build a global solar energy ecosystem.
- According to the contours of the initial plan, five common member countries between ISA and AIIB will be identified for financing more solar projects by the Beijing-headquartered bank.
- ISA also plans to draw up a two-year playbook for training manpower, thereby creating local employment in countries where AIIB has financed solar projects.
Other works by ISA
- ISA has also been working on a $300-billion risk mitigation fund as part of a strategy to create a sustainable financing architecture for solar projects worldwide.
- India has sought project financing totaling $2.40 billion from the AIIB. The bank will also invest $200 million in the National Investment and Infrastructure Fund (NIIF) of India.
- The fund will be used to insure solar power projects against risks such as default in payment by electricity procurers, foreign exchange fluctuations and regime change.
- This, in turn, will help attract investors to space.
Blueprint of the ISA Plan
- The idea is that ISA aims to tie up with those member countries, where AIIB has sanctioned projects for the training of people who will look after these project
- Why projects fail is because there is nobody to take care of them. Hence ISA is establishing backward linkages.
- ISA is trying to identify their member countries of AIIB and ISA member countries who are common.
- Out of those countries, it will select five countries, where AIIB can actually give more projects (financing).
International Solar Alliance
- The International Solar Alliance (ISA) is an alliance of more than 121 countries, most of them being sunshine countries, which lie either completely or partly between the Tropic of Cancer and the Tropic of Capricorn
- The primary objective of the alliance is to work for efficient exploitation of solar energy to reduce dependence on fossil fuels
- The alliance is a treaty-based inter-governmental organization
- The alliance is also called International Agency for Solar Policy and Application (IASPA)
- The International Solar Alliance (ISA) is to be headquartered in India
- The initiative was launched by PM Narendra Modi at the India Africa Summit and a meeting of member countries ahead of the 2015 United Nations Climate Change Conference in Paris in November 2015