PM IAS DEC 20 NEWS ANALYSIS

Carbon Markets

In News

• Recently, the Parliament passed the Energy Conservation (Amendment) Bill, 2022 on declining the Opposition’s demands to send it for scrutiny to a parliamentary committee and amid concerns expressed by members over carbon markets. 

Carbon Markets

• About:
  • It is a mitigation strategy which is becoming popular with several countries to meet their nationally determined contributions (NDCs).
  • Article 6 of the Paris Agreement provides for the use of international carbon markets by countries to fulfill their NDCs.
  • The U.N. international carbon market envisioned in Article 6 of the Paris Agreement is yet to kick off as multilateral discussions are still underway about how the inter-country carbon market will function. 
  • Under the proposed market, countries would be able to offset their emissions by buying credits generated by greenhouse gas-reducing projects in other countries. 
• Significance:
  • Carbon markets are essentially a tool for putting a price on carbon emissions.
  • They establish trading systems where carbon credits or allowances can be bought and sold. 
  • A United Nations Development Program (UNDP) release this year noted that interest in carbon markets is growing globally, i.e, 83% of NDCs submitted by countries mention their intent to make use of international market mechanisms to reduce greenhouse gas emissions.
  • The World Bank estimates that trading in carbon credits could reduce the cost of implementing NDCs by more than half — by as much as $250 billion by 2030.
• Carbon Credit: 
  • A carbon credit is a kind of tradable permit that, per United Nations standards, equals one tonne of carbon dioxide removed, reduced, or sequestered from the atmosphere. 
• Carbon allowances or caps:
  • Caps are determined by countries or governments according to their emission reduction targets.

Types of Carbon Markets

• Voluntary markets
  • Those in which emitters— corporations, private individuals, and others— buy carbon credits to offset the emission of one tonne of CO₂ or equivalent greenhouse gases.
  • Such carbon credits are created by activities which reduce CO₂ from the air, such as afforestation. 
  • In a voluntary market, a corporation looking to compensate for its unavoidable GHG emissions purchases carbon credits from an entity engaged in projects that reduce, remove, capture, or avoid emissions. 
  • In voluntary markets, credits are verified by private firms as per popular standards. There are also traders and online registries where climate projects are listed and certified credits can be bought.
  • As for voluntary carbon markets, their current global value is comparatively smaller at $2 billion.
• Compliance Markets:
  • Set up by policies at the national, regional, and/or international level— are officially regulated. 
  • Compliance markets mostly operate under a principle called ‘cap-and-trade”, most popular in the European Union (EU).
  • Under the EU’s emissions trading system (ETS) launched in 2005, member countries set a cap or limit for emissions in different sectors, such as power, oil, manufacturing, agriculture, and waste management. 
  • This cap is determined as per the climate targets of countries and is lowered successively to reduce emissions.
  • Last year, the value of global markets for tradeable carbon allowances or permits grew by 164% to a record 760 billion euros ($851 billion), according to an analysis by Refinitiv. 
  • The EU’s ETS contributed the most to this increase, accounting for 90% of the global value at 683 billion euros. 
• Other national and sub-national compliance carbon markets:
  • China launched the world’s largest ETS in 2021, estimated to cover around one-seventh of the global carbon emissions from the burning of fossil fuels. 
  • Markets also operate or are under development in North America, Australia, Japan, South Korea, Switzerland, and New Zealand.

Challenges to carbon markets

• Questionable Authenticity & Double Counting:
  • The UNDP points out serious concerns pertaining to carbon markets- ranging from double counting of greenhouse gas reductions and quality and authenticity of climate projects that generate credits to poor market transparency. 
• Greenwashing:
  • There are also concerns about what critics call greenwashing—companies may buy credits, simply offsetting carbon footprints instead of reducing their overall emissions or investing in clean technologies.
• Lack of Transparency:
  • The UNDP emphasises that for carbon markets to be successful, “emission reductions and removals must be real and aligned with the country’s NDCs”. 
  • It says that there must be “transparency in the institutional and financial infrastructure for carbon market transactions”.
• No Guarantee of Climate Mitigation:
  • As for regulated or compliance markets, ETSs may not automatically reinforce climate mitigation instruments. 
  • The International Monetary Fund points out that including high emission-generating sectors under trading schemes to offset their emissions by buying allowances may increase emissions on net and provide no automatic mechanism for prioritizing cost-effective projects in the offsetting sector.

Energy Conservation (Amendment) Bill, 2022 

• On carbon markets:
  • The Bill empowers the Centre to specify a carbon credits trading scheme. 
  • Under the Bill, the central government or an authorised agency will issue carbon credit certificates to companies or even individuals registered and compliant with the scheme. 
  • These carbon credit certificates will be tradeable in nature. Other persons would be able to buy carbon credit certificates on a voluntary basis.
• Raised Concerns:
  • The Bill does not provide clarity on the mechanism to be used for the trading of carbon credit certificates— whether it will be like the cap-and-trade schemes or use another method— and who will regulate such trading. 
  • Members also raised questions about the right ministry to bring in a scheme of this nature, pointing out that while carbon market schemes in other jurisdictions like the U.S., United Kingdom, and Switzerland are framed by their environment ministries, the Indian Bill was tabled by the power ministry instead of the Ministry of Environment, Forest, and Climate Change (MoEFCC).
  • The Bill does not specify whether certificates under already existing schemes would also be interchangeable with carbon credit certificates and tradeable for reducing carbon emissions.
    • Notably, two types of tradeable certificates are already issued in India— Renewable Energy Certificates (RECs) and Energy Savings Certificates (ESCs). 
    • These are issued when companies use renewable energy or save energy, which are also activities which reduce carbon emissions. 
    • The question, thus, is whether all these certificates could be exchanged with each other. 
  • There are concerns about whether overlapping schemes may dilute the overall impact of carbon trading.

Way Ahead

• India needs to align public financial flows with announced targets on energy transition, to leverage private finance.

Nationally Determined Contribution (NDC)NDCs are climate commitments by countries setting targets to achieve net-zero emissions. Nearly 170 countries have submitted their NDCs so far as part of the 2015 Paris Agreement, which they have agreed to update every five years. According to India’s 2015 NDC, the country had announced that -It will work towards improving the emissions intensity of its GDP by 33-35% below the 2005 level, by 2030.By 2030, cumulative electric power installed capacity from non-fossil sources will reach 40%; Creation of additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree cover.In August 2022, India formally updated contributions (NDC) that include:Reducing the emissions intensity of the GDP by 45% by 2030, compared to the 2005 level. By 2030, India also plans to achieve about 50% of cumulative electric power installed capacity from non-fossil fuel-based energy resources. To accomplish this, India will use low-cost international finance, including the Green Climate Fund (GCF). The updated NDC is a step towards India’s goal to reach net-zero emissions by 2070.

Situating Democracy in Ambedkar’s Moral Discourse

In News

• An article, ‘Situating Democracy in Ambedkar’s Moral Discourse’ looks at how Ambedkar situates morality in his discourse of democracy.

About

• Multiple Studies on Ambedkar:
  • There have been many studies on Dr. B.R. Ambedkar’s conceptualisation of democracy, predominantly explained through the lens of social, political and economic philosophies. 
• Mistakes of One-Dimensional Study:
  • Many authors have failed to explore the multitudes of Ambedkar’s idea of democracy, and through a one-dimensional study of his work, situated him within a dichotomous framework of social democracy versus liberal or political democracy. 

The Buddha and His Dhamma: Ambedkar’s last work

• Democracy as a way of life:
  • It sheds light on how he understood democracy as a concept that affected every aspect of human life; it was essentially a way of life. 
  • Buddha, Kabir and Mahatma Phule’s philosophies played an important role in Ambedkar’s own engagement with democracy. 
• Critical of Extreme Individualism:
  • He was also critical of extreme individualism that was a possible outcome of Buddhism, as such characteristics failed to engage in activism that challenged social order. 
  • Thus, he believed that there needed to be a balance between individualism and fraternity for a harmonious society.
• Focus on Moral Aspect:
  • While the pillars of democracy are equality, liberty and fraternity, it needs to be looked at through a moral lens as well. 
  • Ambedkar used the lens of morality in investigating the caste system, the Hindu social system, the nature of religion and Indian history. 
• Importance to Practicality: 
  • Ambedkar gave utmost importance to practicality. 
  • For him, concepts and theories needed to be tested as they were supposed to be practised in society. 
  • He used rationality and critical reasoning to analyze any subject matter, because he believed that a subject must first pass the test of rationality, failing which it must be rejected, altered or modified.
• Moral Democracy beyond Caste System:
  • Ambedkar realised that the caste system did not go hand in hand with such an understanding of moral democracy. 
  • This was because the traditional caste structure was of a hierarchical rule, with no mutual respect among individuals, and complete subjugation of one group by another.
• New Structure Using Principles of Buddhism:
  • While it is well known that Ambedkar’s moral principles were rooted in Buddhist philosophies.
  • It was difficult to place Ambedkar’s framework of democracy within these rigid religious structures and socio-political systems, especially since he brought the most marginalised communities into the fold of democracy. 
  • Thus, Ambedkar attempts to construct a new structure based on the principles of Buddhism.

Types of Morality

• Ambedkar divides morality into social morality and constitutional morality. 
• Social Morality:
  • He explains that social morality was built through interaction and such interaction was based on the mutual recognition of human beings.
  • Yet, under the rigid systems of caste and religion, such interaction was not possible as one did not accept another person as a respectable human being due to their religion or caste background. 
  • Social morality was based on equality among human beings and a recognition of respect. 
• Constitutional morality:
  • Constitutional morality for Ambedkar was a prerequisite to maintaining a system of democracy in a country. 
  • He believed that only through a negation of hereditary rule, laws that represented all people, with people’s representatives and a State which has the confidence of the people, can democracy be maintained. 
  • One single person or political party could not represent the needs or will of all the people.

Role of Religion in Democracy

• According to Ambedkar, the roots of democracy lie within the realm of religion, without which associated living was not possible. 
• Thus, instead of removing aspects of religion completely, he attempts to reconstruct a new version of democracy that accepts the democratic aspects of religions like Buddhism. 
• Ambedkar realized that in order to conceptualize democracy as a way of life, it was important to distinguish principles and rules in society.
  • He explained that while religion must be restricted to principles, as intellectual methods of judging things;
  • It was rules, or the habitual ways of doing things that must be subscribed to operationalise democracy.

Ambedkar on Moral Democracy

• In The Buddha and His Dhamma, Ambedkar elaborated how the concepts of Dhamma emerge as a ‘morally transformative’ concept that dismantles regressive social relations. It includes –
  • Prajna or thinking and understanding, 
  • Sila or good action and 
  • Karuna or kindness,
• An integration of such rules helps in transforming the traditional approach to democracy in order to create a new form of democracy based on the concepts of morality. 
• Ambedkar envisioned democracy — a moral project, where there was a harmonious amalgamation of the concepts of equality, liberty and fraternity.
• Ambedkar’s conceptualisation of moral democracy rejects the traditional caste-based religion that hinders social interaction and universalises negative particularistic values, replacing them with positive particularistic values and moral orders that bind human beings together.
• He wanted to construct a morally rational system of democracy though he was aware that a mere reconstruction of a system could not change society as it was the change in mutual relationships and respect and a sense of responsibility that could lead to a change in society.

Ambedkar on Indian Society

• Ambedkar’s concept of moral democracy must also be studied through the lenses of-
  • Particularism – a political theory where one group promotes its own interests without regard to the interests of larger groups and 
  • Universality – a theory that some ideas have universal application or applicability. 
• Negative Value of Caste System:
  • His analysis of Indian society explains that the caste system is a negative particularistic value in the Hindu religion. 
  • The upper castes, according to Ambedkar, universalise the negative particularity (their dominance over the other groups) and particularise the negative universal morality (wherein the caste system and the subsequent alienation of certain groups is justified). 
  • This negative social relation is essentially ‘undemocratic’. 
• Proponent of Democratic Processes of Buddhism:
  • It is to fight such separation that Ambedkar attempted to bring the democratic processes of Buddhism into the discourse of modern democracy. 
  • According to him, Buddhist Sanghas were spaces where debates, discussions and dissent were encouraged. 
  • Moreover, the practice of ‘voting’, which they called ‘Salapatraka Grahakas‘, began in Sanghas, laying down moral grounds or principles of social freedom and public reason

Global Minimum Tax

In News

• Recently, the Members of the European Union agreed in principle to implement a minimum tax of 15% on big businesses.
  • The global corporate minimum tax was approved at the G20 Leaders Summit in Rome in 2021.

Background

• 136 countries had agreed on a plan to redistribute tax rights across jurisdictions and enforce a minimum tax rate of 15% on large multinational corporations in 2021. 

What is Global Minimum Tax?

• Meaning: It is a proposal to impose a minimum rate of taxation on corporate income in most countries of the world by international agreement.
  • The agreement established a two-pillar solution revising tax rules to address profit shifting and tax base erosion caused by tax avoidance practices. 
• OECD’s Plan: EU members have agreed to implement a minimum tax rate of 15% on big businesses in accordance with Pillar 2 of the global tax agreement framed by the Organisation for Economic Cooperation and Development (OECD).
  • Pillar 1 of the OECD’s tax plan, on the other hand, tries to address the question of taxing rights.
• Governments will be equipped to impose additional taxes in case companies are found to be paying taxes that are considered too low.  

Facts/ DataCorporate tax avoidance costs countries anywhere from $100 billion to $240 billion annually.It is equivalent to 4-10% of global corporate income tax revenues.The existing international tax rules are based on agreements made in the 1920s and are today enshrined in the global network of bilateral tax treaties.Old rules provide that the profits of a foreign company can only be taxed in another country where the foreign company has a physical presence. Most countries only tax the domestic business income of their MNCs but not foreign income on the assumption that foreign business profits will be taxed where they are earned.

What is the need for a global minimum tax?

• Decreasing taxes: Corporate tax rates across the world have been dropping over the last few decades because of competition between governments to spur economic growth through greater private investments.
  • Global corporate tax rates have fallen from over 40% in the 1980s to under 25% in 2020.
• Race to the bottom: The OECD’s tax plan tries to put an end to this race to the bottom which has made it harder for governments to shore up the revenues required to fund their rising spending budgets. 
• Deteriorating Fiscal Health: The minimum tax proposal is particularly relevant at a time when the fiscal state of governments across the world has deteriorated as seen in the worsening of public debt metrics.

Major Challenges

• Denial by Tax Havens: Some governments, particularly those of traditional tax havens, are likely to disagree and stall the implementation of the OECD’s tax plan.
• Issue for a developed country: Large U.S. tech companies may have to pay more taxes to governments of developing countries.
• Lack of compensation: Low tax jurisdictions are likely to resist the OECD’s plan unless they are compensated sufficiently in other ways.
• Internal rift: within the EU, countries such as Poland have already tried to stall the adoption of the global minimum tax proposal citing various non-economic reasons.
• Formation of global tax cartel: the OECD’s plan essentially tries to form a global tax cartel; it will always face the risk of losing out to low-tax jurisdictions outside the cartel and cheating by members within the cartel.
• Developing countries are disproportionately affected because they tend to rely more heavily on corporate income taxes than advanced economies.

Significance of the move

• Boost global tax revenues: It is estimated that the minimum tax rate would boost global tax revenues by $150 billion annually.
• Ending tax havens: This is to ensure that big businesses with global operations do not benefit by domiciling themselves in tax havens to save on taxes.
  • Large multinational companies have traditionally paid taxes in their home countries even though they did most of their business in foreign countries.
• Taxing rights: The OECD plan tries to give more taxing rights to the governments of countries where large businesses conduct a substantial amount of their business.
• Countries both within and outside the cartel will have the incentive to boost investments and economic growth within their respective jurisdictions by offering lower tax rates to businesses.

Way Forward/ Suggestions

• High tax jurisdictions like the EU are more likely to fully adopt the minimum tax plan as it saves them from having to compete against low tax jurisdictions.
• The plan will also help counter rising global inequality by making it tougher for large businesses to pay low taxes by availing the services of tax havens.
• Without tax competition between governments, the world would be taxed a lot more than it is today, thus adversely affecting global economic growth

North-east Insurgency

In News

• Recently, the Information and Broadcasting Minister said that the insurgency-related violence in the northeast has declined by 80%.

About

• Northeast India (NEI) today comprises eight states of India: Sikkim and the “seven sister states” of Assam, Arunachal Pradesh (ALP), Nagaland, Manipur, Mizoram, Tripura and Meghalaya.
  • NEI is bounded by Tibet Autonomous Region (TAR), Nepal, Bhutan, Myanmar and Bangladesh.
• NEI has been witnessing insurgency since the 1950s.

Reasons for Insurgency in NEI

• Multi-Ethnic Region: NEI is the most ethnically diverse region in India. It is home to around 40 million people including 213 of the 635 tribal groups listed by the Anthropological Survey of India. The situation gets further aggravated due to inter-tribal rivalries, which fuel tribal/ethnic insurgencies. 
• Underdeveloped Region: Due to the difficult terrain configuration of jungles and mountains, infrastructural development in NEI has generally been slow. This has widened the schism between the NEI and mainstream India, and further increased a sense of disenchantment with the GoI.
• Lack of Economic Development: GoI’s economic policies have also fuelled resentment and insecurity amongst the people. Thus, the youth are easily lured by various insurgent groups to earn easy money.
• Sense of Isolation, Deprivation and Exploitation: Distance from New Delhi and meagre representation in the Lok Sabha has further reduced the vox populi being heard in the corridors of powers, leading to more disillusionment in the dialogue process, thereby making call of the gun more attractive. 
• Demographic Changes: The influx of refugees from now Bangladesh into Assam led to a dramatic change in the demographic landscape of the region. 
• External Support: The insurgencies in the NEI have been supported by erstwhile East Pakistan in the late 1950s; and in early 1960s, in the form of training of personnel of Naga Army and giving them weapons. Later, China also provided weapons and moral support.

Way Forward/ Suggestions

• Strengthening law and agencies: The government had worked on the legal front by strengthening the Unlawful Activities Prevention Act (UAPA) and taken steps at the enforcement level by giving the National Investigation Agency (NIA) a truly federal structure through amendments to the relevant law.
• Probe agencies have achieved a conviction rate of 94% in cases of terror financing.
• Landmark agreements: The government has worked to create an atmosphere of lasting peace across the northeastern region through a series of peace pacts such as the Bodo Accord, Bru-Reang Agreement, NLFT-Tripura Agreement, Karbi Anglong Agreement and the Assam-Meghalaya Inter State Boundary Agreement.
• The Armed Forces Special Powers Act (AFSPA) has been rolled back from large parts of the northeast, including the whole of Tripura and Meghalaya, and 60% of Assam.
• Continued Efforts by Civil Society: Notwithstanding the progress in peace talks, efforts by the civil society for rapprochement with the insurgent organisations must continue. This enables a respectable way out for the insurgent leaders and leads to a win-win situation for all the stakeholders.
• Sanctity of Indo-Myanmar International Border (IB): India shares approximately 1400 km long IB with Myanmar in states of Arunachal Pradesh, Nagaland, Manipur and Mizoram.14 The sanctity of the same must, therefore, be strengthened to preclude insurgents from crossing the border at will.

Kunming-Montreal Global Biodiversity Framework

In News 

• The 15th Conference of Parties (COP15) to the UN Convention on Biological Diversity (CBD) adopted the Kunming-Montreal Global Biodiversity Framework (GBF).

About Kunming-Montreal Global Biodiversity Framework

• The framework has 23 targets that the world needs to achieve by 2030.
• The targets are ambitious, considering that biodiversity is in a poor state.
  • In 2020, the world failed to meet the last set of targets, the Aichi Targets. 
    • Countries would need to ensure success this time around. 
• Delegates were able to build consensus around the deal’s most ambitious target of protecting 30% of the world’s land and seas by the decade’s end, a goal known as 30-by-30.
• The deal also directs countries to allocate $200 billion per year for biodiversity initiatives from both the public and private sectors.
• The Global Environment Facility has been requested to establish a Special Trust Fund to support the implementation of the Global Biodiversity Framework (“GBF Fund”). 
  • This is to ensure successful implementation.

Objectives 

• It hopes to arrest the ongoing loss of terrestrial and marine biodiversity.
  • It means people around the world can hope for real progress to halt biodiversity loss and protect and restore our lands and seas in a way that safeguards our planet and respects the rights of indigenous peoples and local communities.

About the Convention on Biological Diversity (CBD)Opened for signature in 1992 at the Earth Summit in Rio de Janeiro, and entering into force in December 1993The CBD is an international treaty for the conservation of biodiversity, the sustainable use of the components of biodiversity and the equitable sharing of the benefits derived from the use of genetic resources.With 196 Parties, the CBD has near universal participation among countries.The Cartagena Protocol on Biosafety and the Nagoya Protocol on Access and Benefit-Sharing are supplementary agreements to the CBD. The Cartagena Protocol, which entered into force 11 September 2003, seeks to protect biodiversity from the potential risks posed by living modified organisms resulting from modern biotechnology.

RBI Gold Bonds

In News

• The Reserve Bank of India (RBI) has announced the Sovereign Gold Bond Scheme 2022-23 – Series III.

What are Gold Bonds?

• Gold bonds are government securities denominated in grams of gold. 
• They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. 
• The bond is issued by the RBI on behalf of the government.
  • While the tenor of bonds is eight years, it can be redeemed after five years.

Benefits 

• These bonds offer a superior alternative to holding gold in physical form. 
• The risks and costs of storage are eliminated.
•  Investors are assured of the market value of gold at the time of maturity and periodical interest.
•  It’s free from issues like making charges and purity in the case of gold in jewellery form. 
• The bonds are held in the books of the RBI or in Demat form eliminating the risk of loss. 

Panda Task Force

In News

• The Parliament has discussed the inclusion of various communities in the Scheduled Tribes lists but recently opposition MPs have questioned the government about the list of communities that were already recommended for inclusion on a priority basis over eight years ago by a government task force (Panda Task Force). 

About Panda Task Force

• It was constituted in February 2014 under the leadership of erstwhile Tribal Affairs Secretary Hrusikesh Panda.
• It had compiled a comprehensive list of over 40 communities from across the country that it felt should be included in ST lists on a priority basis.
  • Of those communities, nine are in Odisha, 26 are part of the tea tribes in Assam, eight are in Chhattisgarh, and a few are in Andhra Pradesh and Tamil Nadu.
• Recommendations
  • The task force had concluded that as many as 26 of the tea tribes of Assam, those who were forcibly taken as indentured labourers from states like Bihar, Jharkhand, and Odisha, should be included in the ST list.
    • It justified this “based on the key principle that the ‘indentured labourers’ are a category which is distinct from ‘voluntary migration’”. 
  • Keeping with the same principle, it had also recommended for inclusion of tribal communities of Maharashtra, Gujarat, and Madhya Pradesh that had been displaced on account of the Narmada Dam Project as this too qualified as “involuntary migration
  • It also had recommended the inclusion of various Devnagri versions of tribes in the ST list of Chhattisgarh