Environment policy needs federalism to play a big role

So far, centre-state environmental policy management, including adaptation, mitigation and financing, has been done in an ad hoc way globally. It would make a lot of sense for federations (and their finance commission-like institutions) to consider centre-state financial and related institutional arrangements to address pressing issues of climate change management.

This is especially true for countries like India that are likely to bear more than their fair share of the climate-action burden, given that it is mostly the actions of others that led the world to this crisis. India also has a high proportion of people directly employed in natural resource dependent sectors. However, thus far, the country has no modern formal climate legislation, at either the federal or state level, beyond the dated Environment Protection Act of 1986, which gave sweeping powers to the central government on environment policy and implementation.

As international financing mechanisms evolve, their conveyance to sub-national levels will be critical to ensure international commitments are met in a unified way across all levels of government.

Global experience: In a growing number of countries, federal governments are taking steps to work in coordination with sub-national governments to ensure alignment in climate change policies and regulations. This includes sharing guidelines, standards and technical specifications to guide sub-national climate action while maintaining consistency with national objectives.

Canada is a good example of a country where the management of climate change with provinces and territories includes a combination of fiscal federalism, collaboration and shared responsibilities. Germany too has a federal system where both the federal government and regional governments have responsibilities for climate change policies. Among emerging markets, Brazil has established platforms and mechanisms for sharing information, data and best practices related to climate change between the federal government and sub-national governments. This helps the latter align their actions with national policies and priorities.

In Australia, collaborative forums such as the Council of Australian Governments and the Energy Ministers’ Meeting facilitate discussions and coordination on climate and energy-related matters, thereby helping develop a cooperative approach across jurisdictions.

In this context, different levels of government in many countries have started adopting measures to develop and implement their own climate policies and initiatives. For example, states like South Australia and Victoria in Australia have implemented ambitious renewable energy targets, feed-in tariff schemes and energy efficiency programmes to drive a clean energy transition and emission reduction within their jurisdictions.

The nature of the financial support that federations have started providing to their sub-national levels of government is also becoming clear in many countries.

In Brazil, the federal government provides financial resources and support to sub-national governments through programmes and initiatives to promote climate change mitigation and adaptation measures. For example, the Amazon Fund supports sustainable land use practices, forest conservation and other initiatives that contribute to climate change mitigation in the Amazon region.

In Canada, the federal government provides financial support to provinces and territories through transfer payments and grants to address climate change. Funding schemes, such as the Low Carbon Economy Fund and the Disaster Mitigation and Adaptation Fund, support mitigation, adaptation and resilience projects at the provincial and territorial levels.

Australia provides grants and funding to state and territory governments to support climate change mitigation and adaptation efforts. This includes programmes like the Climate Solutions Fund and the National Partnership Agreement on Energy Efficiency, which provide financial support for projects related to renewable energy, energy efficiency and emission reduction.

Policy solutions have also emerged that address the critical issue of carbon pricing, nationally as well as by provinces, and the related issue of creating renewable energy capacity.

Canada’s federal government has implemented a national carbon pricing system, under the country’s Greenhouse Gas Pollution Pricing Act, with clear stipulations on carbon pricing by Canadian provinces.

Australia has established a Renewable Energy Target (RET) system that sets goals for increasing the share of renewable energy in the country’s electricity generation and also for driving renewable energy investments and deployment at both the federal and state levels. The country’s state governments have implemented their own renewable energy targets to complement the national RET, fostering a collaborative approach to achieve broader climate goals.

The next part of this article will examine the issue in India’s context.