Shobhakar Dhakal on Energy, Climate Change, and Regional Integration in South Asia

[00:00:14] - [Speaker 0]
Namaste and welcome to Pods by PEI, a policy discussion series brought to you by Policy Entrepreneurs Inc. My name is Kushi Hang. In today's episode, we have PEI colleague, Shri Arana, in conversation with Doctor. Shubhakar Dakal on energy, climate change, and regional integration in South Asia. Shubakar Dakal currently serves as the Vice President for Academic Affairs at the Asian Institute of Technology in Thailand.

[00:00:41] - [Speaker 0]
His expertise lies in energy policy, climate change mitigation, policy modeling and analysis, among others. Dakal has actively contributed to the international scientific community, serving as coordinating lead author for the Nobel Prize winning IPCC's fifth Assessment Report on Human Settlements, Infrastructure, and Spatial Planning. He was also a member of the author group involved in developing the recent UNEP led global scientific assessment titled Making Peace with Nature. Shubakar and Shia talk about South Asia's energy scenario. The two discuss current status of regional integration efforts to tackle climate change and the role of China and India in the region.

[00:01:25] - [Speaker 0]
We hope you enjoy the conversation.

[00:01:31] - [Speaker 1]
Namaste, I'm Shriarana.

[00:01:33] - [Speaker 2]
Namaste, I'm Sobhakar Dakal.

[00:01:35] - [Speaker 1]
In today's episode, we delve into the complex nexus of climate change, energy security and regionalism with a focus on South Asia. We'll be taking a closer look at how these interconnected issues are shaping the region today and what it means for the people living here. So without further ado, let's begin the podcast. So to set the stage for the discussion, could you give us a brief overview of the energy landscape in South Asia? Could you tell us a bit more about the energy mix in South Asia and its direct and indirect contributions to climate change?

[00:02:04] - [Speaker 2]
Here in South Asia, there are several countries which are very much reliant on fossil fuels. For example, India. In India, the major power sector is very much coal dependent. Similarly, if you look at countries like Bangladesh and Pakistan, they also rely a lot on fossil fuel. For example, Bangladesh has very less resources of their own.

[00:02:29] - [Speaker 2]
But if you look at the other countries in South Asia, for example, Bhutan and Nepal, they have a huge renewable electricity. And also if you look at country like Nepal and Bhutan, their share of the renewable energy is much, much higher. Also they have high potentials to produce clean electricity. So Bhutan and Nepal have a high share of renewable energy. Whereas in case of India, overreliance on coal based thermal power plants and also in Bangladesh, they have a huge huge energy security concern and also Pakistan relies quite a bit on fossil fuel.

[00:03:08] - [Speaker 2]
So given that scenario, for a reason, I think how to address fossil fuel while growing economically. That still remains a major issue for South Asia as we move forward into the path of economic growth. And also when you talk about reconciling economic growth with some of the emerging global problems such as climate change and others.

[00:03:33] - [Speaker 1]
So you're saying that this region is still more on the traditional mix of energy. We don't have the capacity to sort of move from move to a newer, more modern technology of energy. We're still reliant on traditional sources, which is why we're heavy on fossil fuels.

[00:03:51] - [Speaker 2]
If you look at the electricity access, for example, the region has made a huge gain in terms of electricity access. Of course, that electricity comes from fossil fuels, especially in the countries other than Bhutan and Nepal. But also if you look at clean cooking, there there is still a major major problem. And how to move away from solid traditional biomass based system to more sustainable cooking system. Have not looked at the stat itself.

[00:04:26] - [Speaker 2]
But but if you look at for greenhouse gas emission in South Asia, South Asia contributes roughly about eight to 9% of the global greenhouse gas emissions. So out of that, eight to 9% of the global emission, 70% of those greenhouse gases comes from energy sector and only one quarter from agriculture and forest. So energy sector remains a key. Why 70% GHG comes from energy sector? Because energy sector is very much reliant on fossil fuel.

[00:05:04] - [Speaker 2]
And also the countries in this in this region have also made commitments. They have made commitments to Paris Agreement, nationally determined contributions. They also have renewable energy targets. So in order to even meet that, this region needs transition to more renewable energy than what they have at the moment, which is very much reliant on fossil fuel.

[00:05:35] - [Speaker 1]
So like you mentioned, the overreliance of fossil fuel in the region is quite apparent and that is also the case when we take into consideration Nepal's own energy mix, which leaves it vulnerable to price volatility and also supply disruptions as we saw in the twenty fifteen blockade. So there's a growing consensus that we must shift towards a more sustainable energy source both from the perspective of energy security as well as climate change. And while you just gave us an overview of the energy scenario, what measures are being taken to tackle these challenges, the impacts of climate change and how do you think that this transition to cleaner energy sources in South Asia can be made?

[00:06:12] - [Speaker 2]
Transition is definitely difficult. Difficult in the sense that in several countries in South Asia, there is overwhelmingly fossil fuel domination in the country like India, Bangladesh, Pakistan, several countries. So there the energy transition challenge is quite big. For the countries like Nepal and Bhutan, for example, they have abundance renewable energy, especially the clean electricity. So they are in much, much better position.

[00:06:48] - [Speaker 2]
But also these countries, all countries in South Asia have also, as I said earlier, committed to Paris Agreement. They have commitment to net zero emission, carbon neutrality. They have ambitious renewable energy targets. These are implemented for many different reasons. For example, energy security remains a top concern for the region.

[00:07:10] - [Speaker 2]
As you can see, what happened during the global crisis, whether it is Russia, Ukraine crisis, and others, you see that energy sector is very much vulnerable. And any rise in energy price really affects economy quite significantly, and every country try to place some kind of cushioning to the external socks in in in energy prices. So these countries are very much geared towards renewable energy. For example, in case of India, towards the late twenty twenty two, government of India unveiled quite an ambitious plan for 500 gigawatt, you know, installed capacity of renewable energy by 02/1930, which calls for a large investment. Actually, it calls for around 2.44 lakh crores, which also needs to upgrade the transmission system.

[00:08:09] - [Speaker 2]
Similarly, other countries also have similar plans, not at the scale of India. Of course, India is a big country, but every country, they have a renewable energy targets. And and, also, renewable energy is attractive from the perspective of energy security also.

[00:08:26] - [Speaker 1]
So in your opinion, what role can regional cooperation play in order to accelerate the adoption of renewable energy? And can you also provide some examples where successful regional integration initiatives in the energy sector has sort of shown its impact.

[00:08:43] - [Speaker 2]
Now, regional integration is very important. Regional cooperation is very important because energy, clean energy, can be transferred from one country to other countries. And especially this is very important for electricity. For example, solar is available in many places. Wind are available in selected places, but these are the intermittent source of electricity.

[00:09:17] - [Speaker 2]
So still you need some kind of base load. That base load renewable electricity is still a issue because the storage technology and storage prices coming down is still not to the level that we can make intermittent renewable energy, you know, moving forward. So in that case, regional cooperation in this region makes very strong sense because in the countries like Nepal and Bhutan, they have large hydropower potential and huge power surplus is possible from these countries. Whereas in the country like Bangladesh and and India, particularly, they are fossil fuel based economy. But even though renewable and wind will be in the system, are intermittent.

[00:10:10] - [Speaker 2]
So regional cooperation, especially for the Bhutan, Bangladesh, India, and Nepal, BBIN region, especially is is very, very important. And, of course, we also know that we have South Asian Association for Regional Cooperation, SARC. But for many, you know, political, geopolitical reasons, SARC has not been very effective. And, also, that is one key hindrance for South Asia as a reason for energy integration at the moment, but still sub regional level is still quite quite possible. If you look at examples from other region, the nearest to us is ASEAN, association of South Asians Nations.

[00:10:56] - [Speaker 2]
There are lots of integrations happening. Integrations are happening on economic front. Integration is happening on energy cooperation and and many other domain. They have framed up ASEAN energy integration plan. They have planned for ASEAN power grid.

[00:11:14] - [Speaker 2]
They have a plan for Greater Mekong's regional, you know, energy integration plan. So there are many different things happening in in ASEAN from which we can take a lesson. Of course, beyond the ASEAN also, there are lots of such energy integration, especially electricity integration plan. For example, Nord Pool, South South Africa, and in Central Asia, there are lots of such power trading mechanism or energy integration plan in other regions. South Asia can learn from these experiences and see how we can make our energy system better and efficient, environmentally friendly, and economically competitive.

[00:11:55] - [Speaker 2]
So I do see a lot of opportunity in in South Asia, especially for subregional level between at least for four countries, Bhutan, India, Nepal, and Bangladesh, and also even going up to Myanmar and linking up up to Thailand. So these are real possibilities for us, and this integration can really help us.

[00:12:19] - [Speaker 1]
Certainly, and South Asia is particularly vulnerable to the impacts of climate change. There is the rising sea levels, changing monsoon patterns and other extreme weather events. So drawing from your experience in ASEAN, I want to connect its relevance to South Asia. So from what you've observed, how can regional integration contribute to climate mitigation strategies in the face of these shared challenges?

[00:12:45] - [Speaker 2]
ASEAN has lots of good mechanisms and lots of integrations happening. Maybe it's not happening to the speed that we want or we expect, but lot of things are happening compared to South Asia. And and these lessons are very important for us. Of course, one big lesson for us is to put economy upfront. Lesson for us is to open minded collaboration between the countries and also people to people cooperation, institute to institute cooperation, government to government cooperation.

[00:13:25] - [Speaker 2]
That relationship for integration need to be built at multiple levels. Now sometimes if we focus only on so called g to g cooperation, government to government cooperation, there's a room for lots of geopolitics. But if we could build relationship at multiple levels, private sector to private sector, institution to institutions, from, you know, people to people level, then then government to government level, of course. Then that really help us to integrate better. But what is important is to bring lots of market mechanism.

[00:14:00] - [Speaker 2]
Unless market mechanisms are not created, a lot of things really don't move only from G2G collaboration. Yes, G2G collaboration is a first starting point, but ultimately market integration and involvement of private sector is very, very important.

[00:14:18] - [Speaker 1]
So talking in terms of climate change and how we could mitigate some of its impacts, how do you think your experiences from ASEAN could be translated into how this region is working? So from this idea of regional integration and energy security and energy mix, based on your experience of working in the ASEAN region, how do you think we could work towards mitigating those challenges in South Asia?

[00:14:45] - [Speaker 2]
In South Asia, there are several things not happening. Particularly, let's say, one of the priority is, for example, power trade for energy cooperation, but it is not happening much because there are a lot of obstacles. There are a lot of regional obstacles. For example, geopolitics, lack of trust, lack of standardization, lack of coordination. There are lots of risks and uncertainties on benefit and costs.

[00:15:15] - [Speaker 2]
There are a lot of regional issues. And also they have a lot of national issues. For example, less negotiating capacity and also lack of local consensus and politicking. A lot of issues are there. And also sometimes we see that there is a lot of chicken and egg problem.

[00:15:32] - [Speaker 2]
We want to develop market, but there is no adequate generation. There is limited cross border transmission links. There are a lot of bottlenecks in the domestic energy infrastructure also. And as I said earlier also that there's an absence of competitive power market, and at the moment, we rely largely on G2G mechanisms and experiences. So we have to develop or we have not been able to develop institutions and how to break these institutional constraints.

[00:16:06] - [Speaker 2]
I think these are very important. We need a very clear vision for regional market. But now what we can do? What we can lesson, we can learn from other region? In my view, the first and foremost importance is to build a regional trust and political will.

[00:16:26] - [Speaker 2]
Of course, you know, you hear a lot of things in the media, a lot of things are happening, but but ultimately, we have to build a regional trust and political will, and it needs a dialogue across the multiple stakeholders. For example, if we want to promote power trade, it needs strong dialogue, very close dialogue between power ministries and regulators. They need to meet regularly. Universities and research institutes, networks, they need to do a joint research, try to clear out benefits, challenges, opportunities as a neutral knowledge provider. Power companies need to meet regularly.

[00:17:05] - [Speaker 2]
Investor forums and investors dialogue needed. Similarly, NGOs, social actor networks, prominent personalities network, all these things are very, very important to build such trust at multiple level. Of course, there is a huge opportunity for different segments of the society, different stakeholders to work. That is a very important as I said, the first importance is a regional trust and political will. But also, we need to build, sound information based on the scale of benefits and other technical and economic issues because very trusted independent knowledge is very important in order to push, lots of things.

[00:17:50] - [Speaker 2]
For example, if you look at ASEAN, in ASEAN they have something called ASEAN Center for Energy. So ASEAN Center for Energy regularly brings different stakeholders in in energy together, and they also provide lots of independent knowledge products, which works as a very important stimulus for political and other consensus making. And also what is important is to creating sub regional mechanisms also. Sometimes, okay, in case of SRC, we have not been able to develop because of the lot of regional politics. But also, as I said earlier, within the SARC, for example, BBIN or so these things are are we can push forward.

[00:18:36] - [Speaker 2]
So we have seen that even in ASEAN, Greater Mekong subregion, GMS, was quite quite instrumental in in bringing countries together also. So we could enhance or build subregional mechanisms. Sometimes even if South Asia as a whole, there are some challenges at the moment. And, also, infrastructure is very important.

[00:19:00] - [Speaker 1]
No. We'll get to that later. So I wanted you to sort of tackle this issue from a climate mitigation, angle. So for instance, you do talk about ASEAN, what is the reason behind having all these regional integration if you're not tackling what needs to be tackled, which at the point is climate change? How would this regional integration help us meet those climate challenges?

[00:19:25] - [Speaker 2]
Regional integration is very useful and very important. And I would say regional integration is must for climate mitigation. For example, if you look at, you know, nationally determined contribution of NDC of India or Bangladesh, it needs lots of clean electricity. For example, if Nepal and Bhutan, which has large hydropower potentials, for example, Nepal has over 40 gigawatt of potential, Bhutan also have quite a large amount over 20,000 for sure. Now if these countries can sell, can produce clean electricity and sell, then in that case, lots of fossil fuel power plant can be avoided in India and Bangladesh.

[00:20:19] - [Speaker 2]
So even from the perspective from the climate change, clean electricity from Nepal and Bhutan can be fed into India and Bangladesh. And by doing that, large volume of greenhouse gas emission, particularly CO2 mitigation is possible. So this is a very good example from the reason which is possible. But of course, it's possible. But but how to do is still something that we have to think.

[00:20:46] - [Speaker 1]
Okay, so I had mentioned earlier that Nepal's energy security is quite precarious, but it's not just Nepal. If you look at the energy scenario in other South Asian economies as well, There are some critical issues. The region is experiencing rapid economic growth and urbanization. It's leading to increased energy demand and this is especially true for our two giant neighbors, China and India. Both China and India, while they have made significant strides in integrating renewable sources, they are still heavily dependent on coal, like you had earlier mentioned.

[00:21:19] - [Speaker 1]
So in order to meet their energy demand, they're still reliant on coal and this scenario will persist for a long time as things remain at this point. So how can the emerging economies of South Asia balance their energy needs and aspirations, at the same time also adhere to their climate commitments? Where do you see the balance?

[00:21:43] - [Speaker 2]
Balance needs to be met. And I'm not saying this is something easy, but the climate challenge is quite a big challenge and we must do it. And there are technologies which are rapidly developing. For example, we have seen in last few decades the cost of several renewable energy technologies. They have reduced quite significantly, and also the technology has improved a lot.

[00:22:11] - [Speaker 2]
And if you look at some of the projections for the future, the prices are going to go down, and also the technological performance is going to increase. So I do see a lot of potentials from technology. But as you said, again, is that we have to do transition from the current energy structure to the to the new kind of economy. In order to do that, regional cooperation is very, very important.

[00:22:41] - [Speaker 1]
So basically what we're trying to tackle is this need for economies, especially in South Asia, to grow, which means that they are still heavily reliant on certain mixes of energy that is not the best when we take into consideration climate change and its impacts. On the other hand, they also have these climate commitments that they've already adhered to. Now how do they keep that balance of maintaining their economic growth, meeting their economic demands, energy demands, and also growing at a pace which is not unfair to them, but at the same time also meeting their climate commitments?

[00:23:25] - [Speaker 2]
Countries in South Asia definitely they need to grow and energy is a very strong input to the economic growth, so they need energy. But the renewable energy could be a source for that energy and the transition from fossil fuel to renewable energy is needed. Now, in order to do that, as I said earlier, that the price and performance of the renewable energy technologies are coming down with more and more implementation. We expect them to come down further. Now how to make a smooth transition from fossil based economy to the renewable sector economy?

[00:24:04] - [Speaker 2]
It needs a lot of work. It needs to create level playing field by the policymakers. It needs to play a role of investment by the public and private investors. And also it needs a lot of breaking, a lot of barriers. Some some of the barriers are structural barriers.

[00:24:23] - [Speaker 2]
Some of the barriers are market barriers. Some of the barriers are knowledge barriers. We have to break all these barriers. I'm not saying that this is easy, but but I think every country, if you look at the country in South Asia, they have charted out pathways on how to reach to their NDC goal. Now that pathways are different for different countries.

[00:24:47] - [Speaker 2]
For example, in Nepal, in order to meet the net zero emission target of 2,045, quite ambitious plan of Nepal. Nepal is aiming for moving from fossil fuel based transport to the electric transport. Nepal is aiming to move from LPG and fossil fuel based cooking to the electric cooking because electricity can come from clean electricity, which is hydro. And also, Nepal is aiming to increase forest cover so that the carbon sequestration can happen. So similarly, in other countries also, are making the plan.

[00:25:26] - [Speaker 2]
Now the question is that how to accelerate this transition? How to exit transition? Now this requires policy facilitation, requires technology diffusion, and it requires investment. It requires creation of awareness. So a set of different things would be needed, and there are no silver bullets.

[00:25:47] - [Speaker 2]
We have to work on it. We have to work as a package, and we have to put more efforts. We have to scale up best practice technologies, and then we have to move away from fossil based economy to the clean economy. And also, we need to tap economic opportunities created by the clean technologies, you know, job creation opportunities, new kind of economy frontiers countries can explore. So what I'm trying to say here is that you have to put many things together, and there are no silver bullets.

[00:26:23] - [Speaker 2]
And those really depend on the country's one situation, know, their one economic and resource landscape.

[00:26:32] - [Speaker 1]
Could you add a bit more on China and India? Because they are the biggest polluters in the region and their economic activity is not going to stop anytime soon. So in a way to substantiate what's happening in South Asia in terms of development and urbanization, and if you were to use these two countries as examples, how would you suggest that China and India move forward to meet their energy demands but at the same time also meet their climate commitments? I just wanted to bring up these two countries because this is like their turf. So it's China and India.

[00:27:09] - [Speaker 1]
So it's not that they're going to stop just because they have climate commitments and they're not going to use coal. They will still be using that.

[00:27:18] - [Speaker 2]
Yeah, if you look at emission, China is largest emitter. China, US, European Union, India, Russia, you know, so these are some of the top CO two emitters. But this country do have their plans and are trying to move away from fossil fuel based energy system and coal based power system to more and more renewable energy system. So in their NDCs, they have spelled out a range of things, and these things requires lot of technological push. These things require lot of investment prioritization, and this needs strong policy for and one area that, for example, China has used in recent year, which I would say India has yet to do, is the carbon pricing.

[00:28:15] - [Speaker 2]
China has experimented with the cap and trade system in different cities and provinces. Now China is working with it's kind of implemented nationwide cap and trade system. In India, still the carbon pricing, which is a economy wide instrument, is still not there. Of course, carbon pricing might have happened in the form of some other other way, for example, or from a chip and trade, a PAC mechanism for energy efficiency improvement in India. And, also, it might have happened from the voluntary carbon markets, but I would say that we are still much far in in using carbon prices.

[00:28:58] - [Speaker 2]
But, of course, you know, imposing carbon price or thinking about it is something very important and serious also because, after all, if we if we put the carbon price, whether through the cap and trade mechanism or carbon tax, the price has to has to be passed on to someone. So that might have implications. And if you look at Southeast Asia, Singapore is the first country in Southeast Asia to impose carbon tax. From the 01/01/2019, Singapore implemented carbon price, which is 5 Singapore dollar per ton of carbon. Mhmm.

[00:29:42] - [Speaker 2]
Now Indonesia is about to implement 2 US dollar per ton of carbon in the power sector. I mean, carbon pricing could be one mechanism, but, of course, the question comes, again, what is the priority for our countries? We have to be again, there is no silver bullets, and we have to see what makes sense in our in our countries.

[00:30:08] - [Speaker 1]
So because you'd mentioned cross border trade and renewable integration in your earlier statements, I also think that policy harmonization is often a prerequisite for effective regional integration. So in the context of South Asia, what are some of the key policies and partnerships that have facilitated a regional effort towards cleaner and more sustainable energy?

[00:30:30] - [Speaker 2]
I would say that South Asia need to do more. I don't think we have done enough because the regional mechanisms are at the moment not working. Sark is largely defunct. It's not working. So we have not been able to do policy harmonization.

[00:30:49] - [Speaker 2]
I think we should be honest in in acknowledging that. But the question is that how to do it in the future. How to make stronger regional collaboration mechanism? I think we need to put more focus on that because, yes, as individual countries, we try to maximize, and we must try to maximize our priorities. For regional cooperation in South Asia, India has to play a central role.

[00:31:15] - [Speaker 2]
I don't see any debate about it. India being a big country and and economic powerhouse in South Asia, in order to bring South Asia together, India has to play central role. Whether it is at the SART level or at the BBIN level, regional cooperation in South Asia will not be possible without India playing a very central role. So how to make it happen? I think that is where all of us need to think together.

[00:31:49] - [Speaker 2]
China's link with South Asia is perhaps relatively less compared to India. Right? It's much bigger player than India. But for South Asia, I still see India's role is very, very central.

[00:32:05] - [Speaker 1]
Yeah. But you did mention subregional integration, and you also brought out some of the important infrastructure issues that need to be tackled.

[00:32:13] - [Speaker 2]
Yes. Subregional has potentials, as I mentioned earlier, for example, in case of power trade, energy integration, I would say clean electricity integration, BBIN has been lot talked about because geographically, that part of the South Asia is geographically closer also, Bhutan, Bangladesh, Nepal, and India. So there is a lot of potentials, but it has not has happened. But something has happened. For example, Nepal has signed MOU with Bangladesh for power trade.

[00:32:48] - [Speaker 2]
India and Bangladesh already trading some power. The cooperation happening. Bhutan and India already have established trade. Nepal and India has already established trade. But at the moment, many of the things are happening in bilateral basis, G2G basis.

[00:33:07] - [Speaker 2]
How to make it more integrated as a market is something issue. For example, if you look at Southeast Asia in ASEAN, although we had Greater America and Subregion, ASEAN power grid, lot of initiative, most of the power cooperation were G2G and also bilateral. Now the first time we have multilateral electricity cooperation in Southeast Asia, we call it LTMS mechanism Laos, Malaysia, Thailand and Singapore. So for the first time, Lao PDR is selling 100 megawatt of electricity to Singapore from last year through Malaysia and Thailand. So this is the first multilateral, multi country mechanism in even in Southeast Asia.

[00:34:02] - [Speaker 2]
So similar model, we can think in BBIN region between Bhutan, Nepal, India, and and Bangladesh geographically much closer also. And India and Bangladesh needs a lot of power, clean electricity they need, and which Bhutan and Nepal can supply. So that reason is very important. But, of course, the question is that we have to do it, how to do it, how to do it in a way that it's more market based, you know, in integrating different elements together and moving away from politicking and geopolitical concerns only.

[00:34:40] - [Speaker 1]
So when it comes to energy and climate change, infrastructure plays a vital role and when you add the layer of regional integration, its impact is even larger. Key element here is, of course, infrastructure because without the right kind of infrastructure, how do you make that regional effort possible? So in that case, how do you think South Asian countries can collaborate to develop more resilient and sustainable energy infrastructures so that it fosters regional integration?

[00:35:07] - [Speaker 2]
I think in any energy integration discussion, the key issues discussed is about electricity because electricity is very important aspects of energy system. So let me let me focus on electricity itself. Now if you look at the Greater Mekong subregion, for example, they have created cross border connections. You know, you know, over, you know, 3,000 megawatts capacity of these cross border connections has been established in Greater Mekong subregion alone. Similarly, in ASEAN power grid, there are several cross border connections with more than 5,000 megawatt capacity has been developed.

[00:35:55] - [Speaker 2]
Now in BVI in region, for example, you know, the region I was talking about, we have already some infrastructure, but these infrastructures are quite limited. If my numbers are correct, we have roughly around 2,500 megawatt equivalent, you know, cross border electric trade infrastructure in BVIN region. That includes India to Bangladesh, India to Nepal, and and and Bhutan to India. Now how to improve this infrastructure? For example, if we want to bring clean electricity from Bhutan and Nepal to India and Bangladesh, after all, we need to build the transmission lines.

[00:36:32] - [Speaker 2]
Right? So how to build these transmission lines without creating market, without some confidence in the market? People are hesitant to build infrastructure. And without infrastructure, again, generation side may not want to invest in generation. So we do have this chicken and egg problem.

[00:36:50] - [Speaker 2]
Infrastructure versus market access versus the generation transmission. So these things we have to work together as a as a reason. But definitely infrastructure at the moment is a constraint. As we want to integrate more and more, we have to give a due consideration to the infrastructure. If we really want to build integrated power system in South Asia or the subregion like BBIN, we have to put quite a strong focus on transmission infrastructure also, not only on generation.

[00:37:25] - [Speaker 2]
So we need to work on several front as I as I mentioned earlier on generation side, you know, transmission infrastructure in terms of policy harmonization, even things like grid codes and lots of other market regulatory and and the issues that creates level playing field fairly among the market proponents.

[00:37:54] - [Speaker 3]
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[00:38:16] - [Speaker 3]
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[00:38:45] - [Speaker 3]
Now let's get back to the episode.

[00:38:50] - [Speaker 1]
Touching upon climate resiliency, for instance, you say that Nepal and Bhutan, they could be trading with India and Bangladesh on cleaner energy sources. But our own infrastructure is sort of threatened by climate change at this point. So since a lot of our electricity is generated through hydropower and the imminent impacts of climate change and its impact on water flow, the natural disasters that it's prone to and its impact on these structures, it's quite precarious. I mean, we can't just say that we have a certain amount of electricity flowing without taking into consideration that these structures are at risk to climate change.

[00:39:31] - [Speaker 2]
Definitely. I think climate change with the intensity and scale it is happening, I believe that future is going to be different, and maybe the extrapolating past is very difficult for the future. Now what we need to perhaps put lot of attention is also to try to understand impact of climate change in our water resources and also disasters and so many so many other things. So, of course, generally, you know, in very general sense, we can say that Nepal and Bhutan can produce a lot of electricity and sell to India. Of course, that is true.

[00:40:12] - [Speaker 2]
There is no doubt about it. But also we need to understand how vulnerable are we from impacts of climate change, what kind of hydrological change it is going to happen, how we should climate proof our infrastructure to the potential impact of climate change in the future. I think that is very important. And, also, any infrastructure we built, we have to get a sense of what kind of climate impact mitigating strategy we need to adopt in our infrastructure. And just look at what happened in Melanche water supply.

[00:40:48] - [Speaker 2]
Because unexpected events can happen, and those kind of events might increase in the future. So I think here I see lots of need for Nepalese scholarly community, research community to contribute. I think I'd I'd strongly advocate need to do a comprehensive analysis and and the knowledge base on impact of climate change in hydrology and and infrastructure in in water resources and also how to do climate proofing. That is that is necessary. And and these days, these are not anything new also.

[00:41:25] - [Speaker 2]
For example, if we want to ask for money for, let's say, hydropower, even even many multilateral banks such as the ADB, World Bank, it's now they are also are more and more aware of of climate proofing. You have to go through some kind of climate screening, climate proofing kind of mechanism. So donors are also becoming more and more aware. But, of course, we have to build our one capacity to really anticipate change and our one strategy on how to how to understand and mitigate potential impacts of climate change in our natural resources, especially on water resources and hydropower.

[00:42:08] - [Speaker 1]
So do you see more collaboration in terms of building resilient infrastructures within the region?

[00:42:16] - [Speaker 2]
No. I really don't think we have such collaboration mechanism at the moment. Countries are doing on their one. There is not much dialogue, meaningful dialogue, and there is not much meaningful cooperation in this spectrum. So I think this is something that we have to build if we want to go for more regional integration.

[00:42:40] - [Speaker 1]
So having touched upon some of the processes and also the policies that guide these regional efforts, based on your research in the region, are there any notable barriers or obstacles for regional integration efforts that you might want to bring out, especially taking into consideration the energy sector in South Asia?

[00:42:58] - [Speaker 2]
Yeah. I think that's a very interesting question. You know, people always ask me that, oh, South Asia has so much potential to work together. Why it is not happening? So I don't want to indulge too much into geopolitics, but fundamentally, it goes back to political will and regional trust.

[00:43:21] - [Speaker 2]
That's why the role of regional organizations, mechanisms such as SRC and others are very important. For example, European Union was very good initiative. Now the Europe is integrated quite significantly. ASEAN is is trying to do at at multiple level of integration, but South Asia has not been able to do to the level we want. So how to move forward regionally still remains a challenge for us.

[00:43:55] - [Speaker 2]
I think this is also good wake up call for countries in South Asia, and they have to find a way to build a regional trust and that political will need to be built in order to do more and more regional work.

[00:44:12] - [Speaker 1]
So do you also think that this inability to integrate regionally is actually a big hindrance to meeting our own climate change mitigation efforts or adapting to climate change.

[00:44:25] - [Speaker 2]
Yeah. I wouldn't say that, you know, regional collaboration is everything. So, of course, every country has their one peculiar situation and every country can do a lot, you know, based on what they need to do. So, yes, regional cooperation is very important. You know, it's needed.

[00:44:45] - [Speaker 2]
If we can collaborate, cooperate, then we can do things better. But that doesn't mean that country cannot do without regional cooperation. There are lots of things that country do can do it on, and they have been doing also. You know, if you look at, you know, the renewable energy target of the countries, if you look at nationally determined contribution, NDCs, if you look at countries, you know, net zero targets, so countries do have plan, and in their plan, there are some elements of a regional cooperation is needed. But but we should not put everything on the shoulder of regional cooperation also.

[00:45:24] - [Speaker 2]
Of course, we need regional cooperation, but country ultimately need to do on their one.

[00:45:30] - [Speaker 1]
Now drawing from the arguments you've made earlier, I think that climate finance is key. So, Professor Dhakal, coming from this framework of climate justice, accessing climate finance is a crucial first step towards mitigating climate change impacts for much of the developing South Asian economies. What are some of the climate financing mechanisms or options which are available to the countries in South Asia or developing countries as a whole? And also bringing forward the global South's narrative on climate change. How can international organizations and developed countries support these developing nations in mitigating climate change impact?

[00:46:10] - [Speaker 2]
Now climate finance is very important. If you look at, you know, very fundamentals of you are a nation framework convention on climate change, there are several so called means of implementation. Climate finance, technology transfer, and capacity building. These three are very important aspects. And now while the definition of climate finance is sometimes could be multiple, but climate finance is really important because we are saying that we need to move to one point we need to aim for limiting warming to 1.5 degree Celsius, but it needs huge financing.

[00:46:49] - [Speaker 2]
And especially in developing countries, those financing sources are limit. And also, we have seen a lot of discussion on the historical responsibilities of developed countries. And, you know, since the Copenhagen COP meeting of UNFCCC, developed countries have committed to 100,000,000,000 US dollar per year from 2020 onwards. That commitment, that those commitments are still not met, but there's a huge need for financing. Now there are in this case, there are, you know, kind of interesting dynamics here.

[00:47:33] - [Speaker 2]
At one hand, we need more climate financing in order to meet our one aspirations of NDCs, you know, net zero emission in at the level of countries or globally. But in other hand, whatever financing mechanisms are there, we have not been able to access. Right? So now how to improve the capacity in developing countries in order to access existing climate finance or climate finance mechanisms that will be developed in the future. I think this is very important, you know, because now countries are learning, but still accessing climate finance from the existing mechanisms still remains a challenge.

[00:48:20] - [Speaker 2]
For example, you know, every time I go and talk with colleagues at the multilateral banks, they always tell me that we are looking for bankable projects. Now how to improve or how to increase the portfolio of bankable climate projects still remains a challenge. So at one hand, we have to increase the amount of the climate finance, you know, available. At the same time, we have to build the capacity, especially in developing countries, to access existing climate financing. If you look at, you know, global structure of the climate finance, actually, if you draw, you know, a flowchart, it looks like a spaghetti.

[00:49:06] - [Speaker 2]
The reason I'm saying it looks like a spaghetti is that there are so many different mechanisms. You know, there are bilateral funds. They have dedicated carbon funds from the countries, and the money from developed countries flow to developing countries through many different mechanisms. Some of them are bilaterally, through their ad agencies, through some loan agencies, through dedicated carbon funds. Some of the money is channeled through the UN agencies.

[00:49:41] - [Speaker 2]
Some of the money is channeled through the multilateral government banks. Some of the money channels channeled through UN FCCC financial mechanisms. So there are multiple funding streams. For example, for the UN FCCC. UNFCCC mechanisms, at the moment, the most important one is GCF, Green Climate Fund.

[00:50:04] - [Speaker 2]
Then, of course, we have many other funds. For example, you know, global environmental facility. We have adaptation fund. We have LDC fund. We have a special climate change fund.

[00:50:14] - [Speaker 2]
So there are different funds under UNFCCC framework. But also we have many funds not under UNFCCC framework, but managed by the multilateral development banks. For example, CIF, Climate Investment Funds, run by the ADB World Bank and together with other regional multilateral banks. Similarly, we have kind of trust funds from the bank itself, individual banks for their own reasons. So at the end, let's say, Nepal wants to get the money for certain climate projects.

[00:50:52] - [Speaker 2]
Nepal need to have a clear idea what are the different types of the funds are available at different level. Right? Then in order to put our priority, we have to approach to a particular type of fund in some particular way. So that kind of, you know, capacity, that kind of information base is needed in developing country. Now, again, how to make a project portfolio, how to even write a good project proposal, to access climate funds, you know, there needs a lot of capacity building.

[00:51:25] - [Speaker 1]
So these are some of the mechanisms that you mentioned that is purely climate finance oriented. But beyond climate finance mechanisms, are there other mechanisms that sort of incentivize regional efforts to mitigate climate change impacts? And is there also scope for public private partnerships?

[00:51:43] - [Speaker 2]
I mean, I would say that public private cooperation, public private partnership is the must because, yes, government can do certain things, but but government alone cannot do. Even to build the portfolio of climate financing projects, governments needs to work with private sector. And, also, there are many projects which are very commercial in nature. Many of the mitigation projects are very much in the private sector's domain. You know, still many adaptation projects are still in many public sector domain, but the mitigation projects are already in the private sector domain.

[00:52:20] - [Speaker 2]
So governments need to work with the private sector, but there's absolutely no no doubt about it. How to sensitize private sector? How to bring them along to the climate priorities? You know, as we move along is fundamentally very important because even from the climate financing side, okay, public climate financing is one aspect, but again, we have to bring money from different segments to meet our one climate mitigation and adaptation goals. So private sector is very fundamental.

[00:52:53] - [Speaker 2]
And also private sector is already engaged in several initiatives. For example, CDM, clean development mechanism, which which came from Kyoto Protocol from 1997. Now the private sector was very much involved in in CDM mechanism. It's already, of course, still going on. And, also, there is a huge, I wouldn't say too huge, but it's still quite significant voluntary carbon market.

[00:53:26] - [Speaker 2]
Private sector can also get engaged in the voluntary carbon market. So at the nutshell, I would say that involvement of private sector is very important, not only to make a project portfolio, not only to do a carbon crediting mechanisms, but also to bringing in private money, private financing into the into this entire climate mitigation and adaptation gambit.

[00:53:53] - [Speaker 1]
Could you also add a little more on the technology transfer if that's possible through the involvement of private entities?

[00:53:59] - [Speaker 2]
Technology transfer is one of the so called means of implementation of UNR Nation Framework Convention on Climate Change. In order to meet that aim, under the UN Framework Convention, there are few mechanisms. For example, CTCN or technology mechanism has been developed. But my one perception is that we have not been too much successful on on technology transfer sense. You know, there are a lot of studies done, for example, whether CDM really transfer technology or not.

[00:54:38] - [Speaker 2]
In some area, maybe some, but in others not. But my own perception is that we need to do more on technology transfer. Of course, technology transfer is a complex issue. Lot of things are involved there, including, IPR, intellectual property rights, and and many other commercial aspects of technology transfer. This is one area I still feel that we need to do better.

[00:55:04] - [Speaker 2]
Maybe on climate financing front, we have done something, at least a $100,000,000,000 sort of in a commitment, but I would like to see stronger mechanism on technology transfer.

[00:55:17] - [Speaker 1]
Okay. So now that we're coming to the end of the episode, looking ahead, do you see future opportunities for South Asian countries to sort of leverage regional integration in the energy sector? And will it be a more sustainable, low carbon future that you see in the future?

[00:55:32] - [Speaker 2]
I'm very optimistic, Surya, because it's not a question of we should, but we must. I think given the rate climate is changing, given the scale of global challenge that we have, I think it's not a question of if, but it's a question of must. And and, you know, regional cooperation, regional collaboration on multiple fronts, creating market for the clean energy, working together, policy harmonization, climate financing, technology transfer. These things are really necessary. So if we can't collaborate regionally and globally, then simply we can't meet our objectives to limiting warming to a reasonable level to reduce dangerous inter anthropogenic interference to climate system.

[00:56:26] - [Speaker 2]
So I think I would say it's not a question of whether we can, but it's a it's a question of we must.

[00:56:33] - [Speaker 1]
Thank you so much, professor, for making time and talking about this very important topic. Are there any last minute notes that you'd like to leave for our listeners?

[00:56:43] - [Speaker 2]
Sometimes, you know, many people feel that climate agenda is just a leisurely agenda. Let me emphasize it's not. Science has been very clear and loud that we can't wait to ruin our planet. Science has been very clear that the cost of inaction is very high compared to cost of action. Of course, those costs are distributed in different ways, in different geographical locations.

[00:57:15] - [Speaker 2]
That's why we have a difficulty to work together sometimes. But but I think these are real problems. We have real challenges, and we can't let climate change overtake us. We we have serious sustainability issue here. So I think I'd only say that we need to work together.

[00:57:39] - [Speaker 1]
Thank you so much.

[00:57:41] - [Speaker 2]
Thank you. Pleasure to share my thoughts.

[00:57:45] - [Speaker 1]
And with that, it's a wrap.

[00:57:57] - [Speaker 0]
Thanks for listening to POTS by PEI. I hope you enjoyed Shriya's conversation with Doctor. Shubakar Takal on energy, climate change and regional integration in South Asia. Today's episode was produced by Nirjuna Rai with support from Ritesh Sapkota, Sonia Jimmy and me, Khushi Han. The episode was edited by Ritesh Sapkota.

[00:58:17] - [Speaker 0]
Our theme music is courtesy of Rohit Shakya from Zindaba. If you liked today's episode, please subscribe to our podcast. Also, please do us a favor by sharing us on social media and leaving a review on Spotify, Apple Podcasts, Google Podcasts, or wherever you listen to the show. For PEI's video related content,

[00:58:36] - [Speaker 1]
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[00:58:37] - [Speaker 0]
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[00:59:01] - [Speaker 0]
We will see you soon in our next episode.