The role of German development cooperation in meeting emission targets : a case study of India

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THE ROLE OF GERMAN DEVELOPMENT COOPERATION IN MEETING EMISSION TARGETS:

A CASE STUDY OF INDIA

MASTER OF SCIENCE THESIS

NAME: BARBARA HERMANN EMAIL: BARBARA_SOPHIE@ICOULD.COM UVA ID: 11433841 WORD COUNT: 25,880

SUPERVISOR: PROFESSOR DOCTOR JOYEETA GUPTA SECOND READER: DOCTOR COURTNEY VEGELIN

INTERNATIONAL DEVELOPMENT STUDIES

GRADUATE SCHOOL OF SOCIAL SCIENCES

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ABSTRACT

Policies and instruments are needed for developing countries to become less carbon- intensive in order to mitigate climate change in line with the goals set in the Paris Agreement. Development cooperation is one area of international assistance, in which developed nations, as the biggest past and current emitters, can financially and technically assist climate mitigation action in developing countries. Little academic work exists on the role of development cooperation in the decarbonization of developing countries. This study aims to address this lacuna by analyzing what role German development cooperation has in meeting emission targets in India. The analysis is embedded in the theories of sustainable development, the right to promote sustainable development and the principle of common but differentiated responsibilities. It is based on a literature review, analysis of 34 policy documents and 80 semi-structured interviews conducted with experts from academia, civil society, government and the private sector in Berlin and New Delhi. Furthermore, the study is part of a larger comparative study collaborated on with MSc researchers Burrows and Legg, who respectively explored the role of UK and US development cooperation in India. The main finding of this study is that, although direct financing of coal power plants through development cooperation has been virtually phased out since 2014, Germany’s role in decarbonization efforts remains unclear. This is because, first, climate mitigation aspects have been incorporated into German development cooperation policies and instruments, but they have not been coherently mainstreamed. Second, while Germany’s influence on the development pathway of India through its technical and financial projects enables an environment conducive to climate mitigation, it also allows for the continuous support of fossil fuel-intensive path-dependencies. Third, a fragmented development cooperation architecture contributes to the incoherent position of Germany’s development cooperation on decarbonization. This fragmentation is characterized by the Indian government driving priority-setting;; Germany lacking negotiating power to push for decarbonization and the private sector playing an influential role. Fourth, commercial interests largely drive the support for scaling up renewables and energy efficiency, but also for the support for fossil fuels infrastructure in the past. Overall, the study concludes that decarbonization goals are being undermined, thus reducing the prospects for meaningful climate mitigation through sustainable development. Answering the overarching research question, this thesis finds that Germany’s development cooperation plays an ambiguous role in the decarbonization of India’s energy system. This study recommends to resolve contradictions between development mandates and develop a coherent decarbonization strategy. Further research areas, such as the role of export credit agencies in the energy transition of developing countries, are also outlined.

Keywords: development cooperation, aid, fossil fuels, climate mitigation, energy

transition, low-carbon development, India, Germany, BMZ, GIZ, KFW.

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ACKNOWLEDGMENTS

Collaborating with Louise Burrows and Vivienne Legg for the past six months, has been the most valuable aspect I take out of this experience and the very reason why this thesis was feasible to begin with. I accredit our team work, the sense of respect and trust we had for each other from the very beginning and our endless – and often heated – discussions, to the depth of this thesis. I thank them sincerely for the friendship that evolved in the process and which made everything easier. This collaboration was only possible because of Prof. Joyeeta Gupta, who encouraged us to work together, and provided much constructive criticism. Her stimulating guidance inspired me deeply. It meant to always dig deeper and ask the right questions. Furthermore, I thank the people who agreed to be interviewed for this thesis in India and Germany. The time they afforded me and the insights they so candidly provided shaped this thesis. My time spent in New Delhi was an opportunity to get to know and learn from an array of cultures. The openness and friendship I was offered by the people I met is a gift I take with me throughout my life. Lastly and (always) most importantly, I thank my family and closest friends who have supported me throughout this process in ways I cannot accurately put down in paper. It is for you that I try to do my best.

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TABLE OF CONTENT

ABSTRACT ... 2

ACKNOWLEDGMENTS ... 3

LIST OF TABLES ... 6

LIST OF FIGURES ... 6

LIST OF ABBREVIATIONS ... 7

CHAPTER I: RESEARCH PROBLEM ... 9

1.1 INTRODUCTION ... 9

1.2. PROBLEM DEFINITION ... 9

1.2.1.

Real life problem ... 9

1.2.2. Gap in knowledge ... 12

1.3. RESEARCH QUESTION ... 13

1.4. CHOICE OF CASE STUDY ... 13

1.5. FOCUS AND LIMITATIONS ... 14

1.6. STRUCTURE OF THESIS ... 15

CHAPTER II: THEORETICAL FRAMEWORK ... 15

2.1. INTRODUCTION ... 15

2.2. SUSTAINABLE DEVELOPMENT AND CLIMATE MITIGATION ... 15

2.3. THE RIGHT TO PROMOTE SUSTAINABLE DEVELOPMENT ... 17

2.4. OPERATIONALIZATION OF SUSTAINABLE DEVELOPMENT IN DEVELOPMENT COOPERATION IN RELATION TO CLIMATE CHANGE ... 19

2.4.1. Theory of development cooperation ... 19

2.4.2. Mainstreaming of climate change in development cooperation ... 20

2.4.3. Operationalization of sustainable development in development cooperation ... 20

2.5. CONCLUSION ... 21

CHAPTER III: METHODOLOGY ... 22

3.2. METHODS ... 22

3.2.1. Philosophical stance ... 22

3.2.2. Conceptual scheme ... 22

3.2.3. Units of analysis ... 23

3.3. RESEARCH DESIGN ... 23

3.3.1: Sampling strategy: Interview participants and case-‐study ... 24

3.3.2: Phase I: Literature review ... 25

3.3.3. Phase II: Content analysis of policy documents and review of non-‐academic sources ... 25

3.3.4: Phase III: Data collection ... 26

3.3.5: Phase IV: Data analysis ... 27

3.4. LIMITATIONS OF RESEARCH ... 28

3.5. ETHICAL CONSIDERATIONS ... 29

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4.2. GERMANY’S POSITION ON CLIMATE CHANGE ... 30

4.2.1. German development cooperation: key actors and figures ... 31

4.3. INDIA’S POSITION ON CLIMATE CHANGE ... 33

4.4 RELATIONSHIP BETWEEN GERMANY AND INDIA ... 35

CHAPTER V: FINDINGS AND ANALYSIS ... 36

5.1 INTRODUCTION ... 36

5.2. EVOLUTION OF GERMANY’S DEVELOPMENT COOPERATION POLICIES AND INSTRUMENTS IN RELATION TO CLIMATE MITIGATION ... 36

5.2.1 Evolution of policies ... 36

5.2.2. Evolution of instruments ... 39

5.3. CLIMATE MITIGATION CONTRADICTIONS IN DEVELOPMENT ACTIVITIES ... 41

5.3.1. Development activities supporting climate mitigation ... 42

5.3.2. Development activities supporting fossil fuel infrastructure ... 46

5.4. INFLUENCE OF ACTORS AND INSTITUTIONS ON INDO-‐GERMAN DEVELOPMENT COOPERATION ... 48

5.4.1. Multi-‐ministerial implementation and incoherence in implementing agencies ... 49

5.4.2. Relationship between donor and recipient countries ... 49

5.4.3. German expertise and private sector involvement ... 51

CHAPTER VI: DISCUSSION AND CONCLUSION ... 53

6.2. MAINSTREAMING CLIMATE MITIGATION INTO POLICY AND INSTRUMENTS ... 54

6.3. FRAGMENTATION OF DEVELOPMENT COOPERATION ARCHITECTURE ... 55

6.4. IMPACT ON DEVELOPMENT PATHWAY ... 56

6.5. RECOMMENDATIONS ... 57

6.6. REFLECTIONS ON RESEARCH METHODOLOGY ... 58

6.7. SUGGESTIONS FOR FURTHER RESEARCH ... 59

REFERENCES ... 60

ANNEX I: DEFINITION OF TERMS ... 70

ANNEX II: OPERATIONALISATION TABLE ... 72

ANNEX III: INTERVIEW GUIDE ... 76

ANNEX IV: TABLES OF CONDUCTED INTERVIEWS ... 77

ANNEX V: TRANSPARENCY TABLE OF CONDUCTED INTERVIEWS ... 78

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LIST OF TABLES

Table 1: Germany’s position on climate change ... 31

Table 2: India’s position on climate change ... 34

Table 3: Development cooperation in Germany's coalition treaties 1994-2017 ... 36

Table 4: Stance on climate mitigation and fossil fuels in German development policies ... 38

Table 5: ODA funds spent on renewable energy 2010-2014 ... 40

Table 6: ODA funds spent on fossil fuel power stations 2010-2014 ... 40

Table 7: Climate mitigation-related development projects 1994-2017 ... 43

Table 8: Climate mitigation-related development projects in India 1994-2017 ... 43

Table 9: Current German development cooperation projects in India 2013-2017 ... 45

Table 10: Fossil fuel-related projects in BMZ database ... 46

Table 11: List of coal financing projects in India by KFW 2008-2013 ... 47

Table 12: Reasons for and against fossil fuel financing ... 52

Table 13: Stages of mainstreaming in Germany’s development cooperation ... 54

Table 14: Definition of terms ... 70

Table 15: Operationalisation table of the study ... 72

Table 16: Interview conducted individually ... 77

Table 17: Interviews conducted in group ... 77

Table 18: Transparency table of interviews conducted individually ... 78

Table 19: Transparency table of interviews conducted in group ... 79

LIST OF FIGURES Figure 1: Conceptual scheme ... 23

Figure 2: Main actors in Germany’s development cooperation ... 32

Figure 3: Operationalization of the conceptual scheme ... 53

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LIST OF ABBREVIATIONS

ADB Asian Development Bank BEE Bureau of Energy Efficiency

BGR Federal Institute for Geosciences and Natural Resources (Bundesanstalt für

Geowissenschaften und Rohstoffe)

BMUB Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (Bundesministerium für Umwelt, Naturschutz, Bau und

Reaktorsicherheit)

BMWi Federal Ministry for Economic Affairs and Energy (Bundesministerium für

Wirtschaft und Energie)

BMZ Federal Ministry for Economic Cooperation and Development

(Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung)

CBDRRC Common but Differentiated Responsibilities and Respective Capabilities DAC Development Assistance Committee

DED Deutscher Entwicklungsdienst

DEG German Investment Corporation (Deutsche Investitions- und

Entwicklungsgesellschaft)

EIA Environmental Impact Assessment ESIA Environmental and Social Impact Assessment

EU European Union

GCF Green Climate Fund GHG Greenhouse Gas

GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit (German Society

for International Cooperation)

GNI Gross National Income

GW Gigawatt

IFI International Financial Institutions IGEF Indo-German Energy Forum

IPCC Intergovernmental Panel on Climate Change IREDA Indian Renewable Energy Development Agency INDCs Intended Nationally Defined Contributions

KFW Reconstruction Credit Institute (Kreditanstalt für Wiederaufbau) LED Light Emitting Diodes

MA Millennium Assessment

MNRE Ministry of New and Renewable Energy

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MSc Master of Science

NDC National Determined Contributions NTPC National Thermal Power Corporation NGO Non-Governmental Organization ODA Overseas Development Assistance

OECD Organization for Economic Cooperation and Development OOF Other Official Flows

PAT Perform Achieve Trade Scheme

PTB National Meterology Institute (Physikalisch-Technische Bundesanstalt) ppm Parts per Million

RtPSD Right to Promote Sustainable Development RtD Right to Development

UK United Kingdom

UNFCCC United Nations Framework Convention on Climate Change US United States

USGCRP United States Global Research Program WTO World Trade Organization

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CHAPTER I: RESEARCH PROBLEM 1.1 Introduction

The time to transition to a global low-carbon development pathway is long overdue. The international community has pledged to mitigate the detrimental impacts of climate change, which are expected to contribute to geopolitical instability, threaten economic development and peace, as well as result in unprecedented human suffering. Although often portrayed as a future concern, consequences of global warming are felt today and especially felt by the most marginalized groups of society. A quintessential step – perhaps the most important of all – is transitioning to low-carbon energy use by almost entirely phasing out fossil fuels in the next 80 years (section 1.2.1.). The focus has conventionally been on the responsibility of developed nations to transition, as these have historically been the biggest emitters of greenhouse gas (GHG) emissions and the main contributors to climate change. However, developing countries and especially emerging economies, such as India, are expected to become the biggest emitters of the future. If temperature rise is to be limited to 1.5-2°C above pre-industrial levels, in order to avoid dangerous climate change impacts, developing countries too must participate in the global transition to low-carbon and sustainable development (section 1.2.1). Striving for the 1.5-2°C limit above pre-industrial levels is in their interest, as paradoxically, developing countries have contributed the least to global warming, but will be mostly affected by it. Moreover, a low-carbon development pathway brings economic, social and environmental co-benefits to developing countries. Nonetheless, such a transition is costly in financial and technical terms, thus unfairly burdening the global South. Therefore, developed nations, carrying more responsibility, and having more financial and technical capabilities, have committed themselves to assist in this transition through international cooperation providing new and additional funds of climate finance (section 2.2- 2.5).

Against this backdrop, the purpose of this thesis is to examine the role of development cooperation in reducing and preventing GHG emissions, by studying the example of German development cooperation in India (1.3). It is part of a larger comparative study, which also explores the role of the UK and US development cooperation (section 1.4). This study highlights the relevance of studying development cooperation within the climate mitigation context, as it can have an impact on the development pathway countries in the global South take. The following sections of Chapter I shed light on this research problem in depth (section 1.2.1.), as well as the gap in knowledge this study aims to address with a set of research sub-questions (section 1.2.2). Furthermore, the choice of case study (section 1.4.), as well as the focus and limitations of the study are elaborated on (section 1.5).

1.2. Problem Definition

1.2.1. Real life problem

There is overwhelming scientific consensus that anthropogenic GHG emissions driven by economic and population growth since the industrialization have resulted in the warming of the atmosphere and the oceans, as well as the melting of ice and the rising of sea levels

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(IPCC, 2013: 4;; IPCC, 2014: 2). These observed changes in the climate have, and will, impact natural and biological systems, and consequently human systems, as all three are intrinsically connected (Millennium Ecosystem Assessment, 2005: 377). Some impacts, such as the extensive bleaching of coral reefs which leads to loss of marine life and threatens the livelihood of coastal communities, have already been felt globally. If average temperature increases above 2°C over pre-industrial levels, impacts are expected to worsen and have severe social and economic consequences. Among others, crop yields in tropical areas will decrease due to droughts and heat waves, ultimately posing a risk to food security and access;; coastal and low-lying areas dealing with coastal flooding and erosion will face infrastructure and security risks, threatening their own physical and cultural survival (IPCC, 2014(2): 17-18). This long-term climate variability and increase in extreme weather events is projected to trigger mass displacement and increase risks of violent conflict. These are also predicted to weaken overall economic growth, increase inequality and exacerbate poverty (ibid: 19-20). Developing countries are particularly vulnerable to these impacts due to fewer social, technological and financial resources and capabilities to adapt to changes in biological systems. (IPCC, 2001: 8;; UNFCCC, 2007: 5). Furthermore, groups in society, especially within developing countries, which experience multidimensional inequalities1 are expected to be especially vulnerable to these impacts and their existing vulnerabilities will be exacerbated (IPCC, 2014b: 6). Overall, climate change is expected to hamper and undermine the sustainable development of poorer countries and especially the most vulnerable people within them (UNFCCC, 2007: 5).

The Intergovernmental Panel for Climate Change (IPCC) concludes that, it is necessary to limit the average temperature rise of the climate to 1.5-2°C above pre-industrial levels to avoid dangerous climate change impacts. In other mitigation and non-mitigation scenarios, in which temperature rises above 2°C above pre-industrial levels, catastrophic consequences are projected, in which the likelihood of severe and irreversible impacts are higher. The 1.5- 2°C objective requires drastic changes in contemporary global development pathways (IPCC, 2014(3): 10). Most importantly, anthropogenic GHG emissions, which are recognized as the prime drivers of climate change, must be drastically reduced in the coming decades (IPCC, 2013: 19). The urgency of the matter highlighted by the scientific community, has led to a global drive to take action (UNFCCC, 1992). This movement, which started very slowly two decades ago, saw nearly 200 governments agree to hold the average temperature to well below 2°C in 2015 (Paris Agreement, 2015: art. 2). In doing so, countries have committed themselves to pursue domestic mitigation measures with the aim to get to virtually zero GHG emission between 2050 and 2100 (ibid: art. 4). A quintessential step towards this goal, is that the main source of GHGs, i.e. the use of fossil fuels, must be almost entirely phased out by 2100 and substantially cut by mid-century (IPCC, 2014c: 10). Decarbonizing electricity generation supplies by 2100 is a key component in this mitigation mix, as energy is the main source of fossil fuel emission (PBL Netherlands Environmental Assessment Agency, 2017: 3). Furthermore, decarbonizing energy supplies can take place quicker than in the industry and transport sector (IPCC, 2014c: 20). Industrialized countries have a greater role in mitigation, because they have historically been the biggest emitters of GHGs and thus are the main contributors to climate change (section 2.3). However, if carbon-intensive development strategies taken by industrialized nations are repeated by developing countries, and especially by emerging economies such as India, another

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substantial increase in GHGs can be expected before a global transition to greener energy occurs and GHG emissions are significantly reduced (Halsnæs et al., 2011: 984). The International Energy Agency (IEA) predicts that 93 per cent of additional energy demand in coming years will come from emerging economies and developing countries as a consequence of their demographic and economic growth and that fossil fuels will still be the predominant source of energy in 2035 (Carbonnier and Grinevald, 2011: 4). Therefore, not only development strategies for industrialized countries should become less carbon- intensive, but also those of developing countries.

Developing countries at different stages of development have the opportunity to transition or leapfrog (Annex I) conventional development trajectories before locking into a pathway that is carbon-intensive. Lock-in refers to the phenomenon in which investing into carbon- intensive technologies leads to the continuous use, diffusion and reinforcement of fossil fuel infrastructure and processes, ultimately leading to path-dependency (Klitkou et al., 2015: 22- 3). This path-dependency exists because once long-lasting infrastructures and systems are build, they are difficult to transition away from because of massive institutional, economic and technological challenges. This is especially true in the energy sector, as fossil fuel-fired power plants are difficult to replace once built due to their high costs of construction and long life-span. Instead of going through the conventional pathway of industrialized nations, developing countries could leapfrog or transition directly to the use of efficient and environmentally-friendly technologies (Gupta and van der Grijp, 2010: 15). The theory of sustainable development and the right to promote sustainable development (RtPSD) highlight that transition to a low-carbon development benefits developing countries. First, it increases the probability of mitigating potentially catastrophic climate change impacts predicted to particularly affect the global South. Second, it minimizes the social, economic and environmental costs attached to those impacts and third, it lessens the potential costs of adaptation measures in the long-term (section 2.2-2.3). Lastly, these theoretical perspectives emphasize that an early transition away from carbon-intensive pathways brings economic, environmental and social benefits to the (section 2.2.-2.3). Global action – or inaction – in the near future determines the risks climate change will pose to human life in the coming decades (IPCC, 2014c: 9, 11).

The process of decarbonization itself places an uneven and expensive burden on developing countries that hinder their development. In the climate negotiations it became clear that substantial resources would have to be transferred from industrialized to developing nations to help them deal with climate mitigation and adaptation (Gupta and van der Grijp, 2010: 18;; Sterner and Damon, 2010: 7168). In the form of ‘new and additional resources’, which must be separate to official development assistance (ODA), financial resources and transfer of technology must be provided (FCCC, 1992: art. 4(3)). This is rooted in the principle of

common but differentiated responsibilities, which emphasizes that industrialized nations, as

the primary emitters of GHGs, need to compensate developing countries for the burden placed on them (section 2.3.2). One vehicle of international cooperation, in which financial resources and technology meant for climate mitigation are increasingly being transferred, is development cooperation. Germany for instance, which is studied in this thesis, uses development cooperation as the main mechanism for the transfer of finance and technologies for climate mitigation (section 4.2). The past decade in fact, have shown an increasing trend towards incorporating climate mitigation into development cooperation, as development cooperation already have the infrastructure in place to engage with developing

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countries and because activities should not encourage carbon-intensive pathways which undermine global mitigation goals to begin with (Gupta and van der Grijp, 2010: 24).

1.2.2. Gap in knowledge

A literature review (section 3.4.2) on the research problem stated above reveals that although literature on climate change, development and development cooperation abounds (Sobhan, 2002;; Halsnæs, 2011;; Marquardt et al, 2016), there is a clear gap in academic knowledge, regarding the role of development cooperation in decarbonization. An online search in English and German, using multiple search engines, such as Google Scholar, Amsterdam University library and online journals, such as Environmental Science and

Policy, Energy Policy, Environmental Innovation and Societal Transitions, Climate Policy and the European Journal of Development Research suggest the following:

The academic discourse focuses on the interconnected relationship between climate change and development cooperation (ibid);; how development cooperation is increasingly becoming environmentally focused (Hicks et at., 2008);; and how mitigation activities through development cooperation are increasingly being implemented (Marquardt et al., 2016;; Moellendorf, 2011;; Nunnemkamp and Thiele, 2006). Although studies on the mainstreaming of climate adaptation in countries such as Germany, exist (Iro, 2012;; Sietz et al, 2011;; OECD, 2009), few deal with the mainstreaming of climate mitigation targets and measures within the development cooperation architecture (section 2.4.2;; Gupta and van der Grijp, 2010). An academic discussion on the question of whether development cooperation should – or has – incorporated strategies to support decarbonization efforts in developing countries, is missing. Prominent international reports such as the IPCC, which indicates that international cooperation is needed to reduce GHG emissions, are silent on development cooperation (IPCC, 2014: 5). A link between development cooperation and fossil fuel financing has been established in few occasions in academic literature (Halsnæs, 2011;; Gupta and van der Grijp, 2010;; Hicks et al., 2008), although studies by civil society have demonstrated at great length how countries, such as Germany, are supporting fossil fuel infrastructure and processes through their development assistance (Urgewald, 2013;; Oil for Change, 2014;; Oil for Change, 2016).

Lastly, although a comparison of “green aid” to “brown aid” has been made before in order to determine whether development cooperation in general and in Germany has increasingly become more environmentally conscious (Hicks et al., 2008), academic literature in the past ten years has not done the same to compare development cooperation activities supporting climate mitigation, on one hand, to those supporting fossil fuel infrastructure and processes, on the other hand. Such a comparison is necessary in order to gain an accurate display of how much development cooperation is truly contributing to the reduction of GHG emissions in developing countries. The purpose of this thesis is to address the role of development cooperation in meeting global decarbonization goals today and in the future. Specifically, the question of whether development cooperation activities are systematically supporting a low- carbon development pathway and the phasing out of fossil fuels in developing countries, is addressed (Chapter VI). This thesis answers this gap in knowledge by examining the areas of research outlined above.

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1.3. Research question

This thesis poses the following questions:

In light of the Climate Convention of 1992 and the Paris Agreement of 2015 to reduce greenhouse gas emissions, what is the role of Germany’s development cooperation, and how can it progress, to meet emission targets?

1. Sub-question: How have development cooperation policies and instruments evolved to account for climate mitigation?

- What are the current policies and instruments and how have they evolved?

2. Sub-question: How is development cooperation allocated and used for fossil fuel and climate change mitigation projects?

- Are projects directly or indirectly encouraging fossil fuel and climate change mitigation projects?

- What actors in the decision-making process drive the allocation and design of projects?

- Is the process donor or recipient driven?

- Do third parties influence the decision-making process?

3. Sub-question: What are the reasons behind development cooperation policies and instruments in encouraging or phasing out the use of fossil fuels?

- Why are such policies and instruments being used?

- What are the social, economic and environmental reasons?

4. Sub Question: What further development cooperation policies can be used to encourage the phase out of fossil fuels?

- What policy recommendations can be made to make development cooperation more effective in meeting climate change mitigation targets?

1.4. Choice of case study

The issue of development cooperation is specific to countries. Therefore, it is necessary to narrow down the scope of study and gain an in-depth understanding of the development cooperation strategy of a specific country. In this way, incoherence and invalid generalizations can be avoided. The case of Germany has been selected for this thesis, because of the following three reasons: First, the country is among the three largest donors of development assistance (BMZ, 2015). Second, it stands out as one of the most influential industrialized countries in climate-focused activities in development cooperation and it uses development cooperation as its main vehicle to channel climate finance (Marquardt et al., 2016: 23;; Gupta and van der Grijp, 2010: 73). Third, a dichotomy in Germany’s development activities further merit an academic study: Germany appears to support fossil fuel infrastructure though its development cooperation simultaneously to its climate activities (Van der Burg and Pickard, 2014;; Müller and Paasch, 2016). In order to understand Germany’s development activities in detail, India has been chosen as a case study of a recipient country of Germany’s development cooperation. Indo-German development

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cooperation does not only date back over 50 years, but India has also been the largest recipient of German aid for a number of years (section 4.3). The case selection strategy for India is elaborated on in Methodology (section 3.3.1).

Lastly, this thesis is part of a larger comparative study collaborated on with MSc researchers L. Burrows and V. Legg, who respectively explored the role of UK and US development cooperation in India. Together, these three countries represent the three largest donors of overseas development assistance (ODA) and all three implement development activities in India.2_{We decided to join efforts for this study in order to make the project more feasible.} The significant gap in knowledge (section 1.2.2) called for a more team-based approach to the research problem, to find stronger evidence and compare findings. Peer-discussions among us provided external checks and clarified biases to the research process (Creswell, 2013: 251). In order to keep the theses comparable in nature, elements of the study were designed in collaboration with L. Burrows and V. Legg. The thesis proposal, methodology (Chapter III), definition of terms (Annex I), as well as the operationalization table (Annex II) and the interview questions guide (VIII) were developed in group. The theories used in the theoretical framework (Chapter IV), as well as the general structure of the thesis were conceptualized in the group as well (section 1.5). Keeping these elements similar makes it possible to publish comparative articles based on the thesis later on.

1.5. Focus and limitations

Although there is a range of climate mitigation measures, including inter alia carbon sinks and reforestation, this study focuses on the phasing out of fossil fuels, as this is the main action against climate change. An additional focus is fossil fuel energy generation, i.e. the main driver behind climate change. GHG emitted by industry will be looked at only to a limited extent, while methane emissions from agriculture and livestock will not be considered in this study (section 1.2.). Coal will be given emphasis, while oil and gas are examined to a lesser extent. This is because Germany’s development cooperation has historically dealt with coal investment to a much larger extent than other fossil fuels (section 4.1 and 5.4.). Fourth, within the umbrella of development cooperation, this thesis focuses on official development assistance (ODA) and examines other official flows (OFFs) marginally. Climate finance is only looked at within the framework of development cooperation. Other mechanisms implementing climate finance are not examined.

Lastly, although this study aims to illustrate different perspectives, it operates within a framework, which takes a number of theoretical positions. First, it accepts that development pathways have a direct impact on the climate (section 1.2.1. and 2.2). Second, it assumes that development cooperation plays some kind of role in the development pathway of countries in the global South (section 2.4.1). Third, climate change, development and development cooperation are regarded as three interconnected issues. Fourth, it argues that in order to reduce GHG emissions, all nations, must transition away from carbon-intensive to sustainable development pathways (section 2.2.). These theoretical positions are further discussed in the Theoretical Framework (Chapter II), yet it is important to state at this point that these assumptions limit the set of conclusions that can be made in this thesis.

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1.6. Structure of thesis

The next chapter deals with the theories and academic debates, in which the research problem is embedded and through which it is analyzed (Chapter II). Chapter III illustrates the methodology of the study, whilst Chapter IV gives it a contextual background. These first four chapters are meant to give the reader the necessary background to comprehend the analysis and discussion. Chapter V presents the analysis of the findings. The sub-section deal with the research sub-questions. Lastly, the Discussion and Conclusion (Chapter VI) answers the main research question, while discussing the results presented in Chapter V and linking both to the theories dealt in the Theoretical Framework (Chapter II). This chapter also outlines a number of recommendations, as well as further research areas.

CHAPTER II: THEORETICAL FRAMEWORK

2.1. Introduction

In order to understand the concepts relevant to this study, it is necessary to place the research problem within the relevant theoretical debates. The chapter seeks to answer, first, whether climate mitigation is in the interest of developing countries and second, where the technical and financial responsibilities lie for transiting to a low-carbon development pathway. In doing so, this section provides theoretical insight into how developing countries can contribute to GHG emission reduction targets without compromising their development. The following sections address the theory of sustainable development as the overarching theoretical framework of this thesis (section 2.2.), the right to promote sustainable development and its relation to the principle of common but differentiated responsibilities (section 2.3.), as well as the theory and operationalization of development cooperation in relation to climate mitigation and sustainable development (section 2.4.).

2.2. Sustainable development and climate mitigation

Sustainable development is development “that meets the needs of the present without compromising the ability of the future” by taking into account inter- and intra-generational equality (World Commission on Environment and Development, 1987: 43). It is enshrined in a number of international agreements, such as in the Rio Declaration on Environment and Development (General Assembly, 1992: principle 1), the UNFCCC (UN, 1992: article 3) and the Convention on Biological Diversity (UN, 1992b: article 8). It is the predominant development theory that recognizes that the well-being of the economy, the environment and society are inextricably connected and dependent on each other. It calls for a balanced relationship between environmental, social and economic factors. Sustainable development also highlights that focusing on economic gains may in the short term lead to economic development, but if social and environmental aspects are not taken into account, long-term impacts can have vast repercussions on the economy too (Strange and Bayley, 2008: 25). Therefore, sustainable development calls for closing the development gap with strategies that balance the three pillars of development (economic, environmental and social) and which do not harm long-term goals and future generations. Furthermore, it also recognizes

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that development concerns must be addressed beyond borders (Strange and Bayley, 2008: 24-27). Critics of sustainable development hold that that the theory perpetuates a Western construct that focuses on economic growth, as well as that its broad definition enables actors to interpret the concept to their benefit and mould it according to political interest (Hove, 2004: 53). Nonetheless, it has become the dominant development theory within academic and political discourse and it is widely used in Germany’s development cooperation as an operational framework (section 5.3).

The following aspects of sustainable development are relevant for this thesis: First, sustainable development is largely accredited for the theoretical shift of regarding climate change as a development issue, rather than solely a technocratic one (Gupta and van der Grijp, 2010: 36-37). Climate change significantly degrades natural systems and in the process it disrupts food production, damages infrastructure and settlements, leads to displacement of people and impacts their security, health, and access to other basic material needs (Millennium Ecosystem Assessment, 2005: 17;; IPCC, 2014b: 6). Therefore, this theory allows climate change to be addressed as part of a larger development agenda (Halsnæs et al., 2011: 983). Sustainable development therefore highlights that natural and biological systems are intrinsically connected with human systems and changes in the former lead to detrimental consequences in the latter (ibid). Therefore, climate mitigation is essential for the survival and development of developing countries. Sustainable development theory highlights that climate change especially amplifies existing risks of vulnerable, marginalized and poor groups of people in developing countries (IPCC, 2014: 13). This is because of the existing multi-dimensional inequalities, uneven development processes, poor governance, lower coping capabilities and a dearth of resources are present in developing countries (Gupta and van der Grijp, 2010: 8;; IPCC, 2014(2): 6).

Second, significantly reducing GHG emissions can be achieved by operationalizing sustainable development into development (Halsnæs et al., 2011: 984).

Tackling climate

mitigation through a sustainable development path significantly reduces the costs attached to decarbonization (ibid: 985). This is because conventional development pathways lead to the reinforcement of fossil fuel infrastructure and processes, ultimately resulting in path- dependency (Klitkou et al., 2015: 22-3). Path-dependency results from long-lasting infrastructures and systems, which are difficult to transition away from without facing massive institutional, economic and technological challenges (section 1.2.1). Sustainable development therefore highlights the potentially huge economic costs of a fossil fuel phasing out and that postponing action increases challenges (Stern, 2008: 12;; Strange and Bayley, 2008: 25). In the energy sector for instance, fossil fuel-fired power plants are difficult to replace once built due to their high costs of construction and long life-span.

Third, through a sustainable development approach, transition towards decarbonization and the achievement of a low-carbon development can be achieved without compromising the economic development of a nation, as goals of sustainable development are compatible with those of decarbonization (Halsæes et al, 2011: 984). This is because decarbonization embedded in a sustainable development framework does not hamper economic and social aspirations. In fact, it can bring economic, social and environmental co-benefits that promote development goals. For instance, decarbonizing the electricity and transport sector reduces local air pollution, an environmental damage that impacts people’s health (ibid: 985;; Smith and Heigler, 2008: 12). Further co-benefits are increased energy efficiency and security

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(Markandya and Halsnæs, 2002: 2), improved access to energy, increased well-being and increased employment. In some cases, these co-benefits in the short term outweigh the importance of climate mitigation benefits (Ürge-Vorsatz et al, 2014: 552, 562). Therefore, sustainable development theory allows for an analysis on how to enable decarbonization while maintaining environmental, economic and social considerations balanced (Uitto et al., 2017: 201;; Midille et al., 2005: 3623). Thus, instead of the conventional pathway of industrialized nations, a sustainable development approach makes transition or leapfrogging directly to efficient and environmentally-friendly technologies possible and attractive (Gupta and van der Grijp, 2010: 15).

2.3. The Right to promote sustainable development

The 1992 UNFCCC states that ‘parties have a right to, and should, promote sustainable development’ (UNFCCC, 1992: art. 3.4). This right is understood within the constraints of sustainable development, emphasizing on ecological aspects and aiming to reconcile the right of current and future generations. In doing so, it establishes a legitimate right for states to promote sustainable development (Moellendorf, 2011: 433;; Gupta and Arts, 2017: 7). Furthermore, the right to promote sustainable development (RtPSD) is included as one of the core principles in the Paris Agreement (PA, 2015: art. 6). Nonetheless, the use of the wording ‘should’ rather than ‘shall’ makes the right at best a soft obligation under international law (Gupta and Arts, 2017: 4, 6,7). In order to understand how the RtPSD came about, it is necessary to compare it to the right to development (RtD). The latter exists since the 1960s and is embedded in a number of international documents, such as in the New International Economic Order and the UNGA Declaration on Social Progress and Development and most recently in the preamble of the Paris Agreement (Gupta and Arts, 2017: 5). The RtD enables and promotes the development of individuals and people, rather than states as is the case of RtPSD, and calls for development to be equitable and participatory at the national and international level (Sengupta, 2002: 848;; Kirchmeier, 2006: 10). It enhances the self-determination and sovereignty of developing countries over their natural resources and excludes environmental and ecological considerations arguing that these hamper development (Gupta and van der Grijp, 2010: 117;; Gupta and Arts, 2017: 7). The inclusion of the RtD in the 1992 UNFCCC was debated but ultimately excluded from the final text. Instead, the RtPSD was established. This was largely attributed to a political move by industrialized countries, particularly the US. Instead of phrasing it as ‘parties have a right to, and should promote, sustainable development’, the comma was moved to the word ‘should’, drastically changing the meaning the right could have had, i.e. ‘right to sustainable development’, to a RtPSD (Gupta and Arts, 2017: 4). The fear by industrialized countries was that the RtD implied a ‘right to everything’, including a legal obligation to provide development assistance to uphold to a human right (Gupta and van der Grijp, 2010: 121).

In relation to the global GHG emission reduction targets, the RtPSD is in line with global mitigation goals. It includes environmental considerations and thereby does not excuse developing countries from reducing GHG emissions (Moellendorf, 2011: 433). Therefore, it acknowledges that climate change must be dealt with through development (UNFCCC, 1992: art. 3(4);; Gupta and Arts, 2017: 7). This contrasts with the RtD, which relies on carbon-intensive economic growth and allows for an unrestricted ‘right to emit’ GHG emissions (Rajagopal, 2013: 894;; Gupta and Arts, 2017: 11). This is not in line with

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sustainable development goals and therefore undermines social, economic and environmental aspirations that must be balanced (Moellendorf, 2011: 433;; Gupta and Arts, 2017: 7). It is therefore short-sighted and ignores the urgency of climate mitigation, particularly decarbonization. The RtPSD promotes climate mitigation for the sustainable development of developing countries, for instance by promoting climate polices and measures to be integrated into national policies and instruments (Sterner and Damon, 2011: 7168;; Gupta and Arts, 2017: 7). It is however true that decarbonization poses a further challenge to the development of poorer countries, as it requires financial and technical resources, it does not have. Nonetheless, it can be argued that the RtPSD is linked to the principle of common but differentiated responsibilities and respective capabilities (CBDRRC), as it is also anchored in the 1992 climate convention and the Paris Agreement and considered another core principle in the climate regime (UNFCCC, 1992: art. 4;; PA, 2015: art. 3). If the RtPSD is interpreted in line with the CBDRRC, it recognizes not only that developing countries have a right and should promote sustainable development in line with climate mitigation, but also that Annex I countries, carrying more responsibility and having more capabilities, must assist them in that process by transferring financial and technical assistance.

The CBDRRC became part of the climate regime in the 1990s, when it became clear that there was a significant difference, first, between how much industrialised countries and developing nations had contributed to the problem of climate change and second, their ability to resolving it (Brunnée and Streck, 2013: 589;; Williams and Montes, 2017: 116). Therefore, the CBDRRC recognizes that, in the pursuit of limiting temperature rise, a difference in responsibilities, as well as a difference in respective capabilities, exists (Williams and Montes, 2017: 116). In doing so, the principle puts industrialized countries under the obligation to lead the fight against climate change nationally and internationally (ibid). Within this narrative, industrialized nations must provide finance and technology transfer to developing countries in order to promote a low-carbon development pathway (UNFCCC, 1992: art. 4). In fact, the climate convention recognizes that the extent to which developing countries will be able to successfully transition or leapfrog to a low-carbon development depends on the contributions that must be provided by industrialized countries. Furthermore, such contributions must also promote sustainable development in line with the RtPSD (Williams and Montes, 2017: 116). Industrialized countries therefore committed themselves at the COP 15 and in the Paris Agreement to mobilize US$ 100 billion per year by 2020 (ibid). This commitment is supposed to be ‘new and additional’ to other commitments already made, such as the 1970 Monterrey pledge for industrialized countries to send 0.7 percent of their GNI to developing countries (ODA). The ‘new and additional’ aspect to the pledge was particularly pushed by developing nations, as they feared that development assistance, which is supposed to be directed at eradicating poverty, would increasingly be substituted with climate change-related assistance and thereby, instead of adding finance to the existing commitments, funds would be fudged (Stadelmann et al., 2011: 1).

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2.4. Operationalization of sustainable development in development cooperation in relation to climate change

2.4.1. Theory of development cooperation

Development cooperation reflects the relationship between donor countries which transfer development assistance to recipient countries. It is understood as a post-colonial and post- war phenomenon (Gupta and van der Grijp, 2010: 43). Originally, the purpose of development was to enhance global stability and peace (Gupta and van der Grijp, 2010: 43). The economic reasoning was to achieve poverty reduction by filling “the resource gaps” in developing countries (Sobhan, 2002: 540). Although some hold that development assistance is primarily altruistic and meant for poverty alleviation and disaster relief, others find that an enlightened self-interest seeking the wide-spreading of democracy, as well as political, security, economic and strategic interest drive development cooperation (Gupta and van der Grijp, 2010: 47). National interests are in fact often main drivers. Donors largely pursued their own interests in the 1970s, despite the fact that the decade was perceived as driven by altruistic values (Nunnenkamp and Thiele, 2006: 1178). Thus, development cooperation is heavily shaped by political processes and structural changes in the international system, such as decolonization and the end of the Cold War (Thérien 2002: 449). Additionally, dominant political ideologies of every decade since World War II, namely the egalitarian Left and the market-driven Right, have shaped international development (Thérien, 2002: 450). Development cooperation in the 1940s focused on post-war reconstruction and assistance (Left), the 1950s on infrastructure and facilitation of trade (Right) and the 1960s created international financial institutions for economic stability (Right). In the 1970s a new focus on meeting basic needs emerged (Left) and in the 1980s a focus on redesigning national policies took place driven by the Washington consensus (Right). Since the 1990s, there has been more emphasis on basic needs, good governance, integration of environmental values and the creation of the Millennium- and Sustainable Development Goals (Left) (Thérien, 2002: 452-459;; Gupta and van der Grijp, 2010: 43).

This academic discourse reveals, that there is incoherence regarding the rhetoric of donors (i.e. mainly altruistic motives and policies) and their actual behaviour (e.g. economic interests) (Nunnenkamp and Thiele, 2006: 1200). Climate negotiations are taking place in a political climate that favours the dominant sustainable development theory. Nonetheless, even though mitigation and adaptation commitments have been agreed upon (section 2.3), climate-friendly technologies are being transferred at a slower rate than promised and business-as-usual technologies transfers have increased under development cooperation (Gupta and van der Grijp, 2010: 313). Similarly, the monetary resources that have been provided by industrialized countries for climate cooperation are far less than those committed to (Gupta and van der Grijp, 2010: 305-306). The academic discourse also indicates, that these contradictory motives, which often result in trade-offs in favour of the donor countries’ interests, compromise the effectiveness of development assistance (Sobhan, 2002: 540;; Asongu, 2015: 3;; Gupta et al., 2015: 548). This academic debate must however be taken with a pinch of salt, as national and international assessments on the effectiveness of aid have methodological problems and the use of sample analysis has often been wrongly generalized (Gupta and van der Grijp, 2010: 50).