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Climate Change: The Indian Story

Has India finally woken up to its climate concerns?  The recent signing of MoU between US and India on energy security, climate change, and clean energy does convince that India is committed to contribute positively in limiting the global temperature rise to agreed 2 degree by 2050.

India, however seems to be in a paradox with Industrialization vector and climate & carbon mitigation oriented in opposite directions. Various initiatives such as  “Make in India“  and  “Smart Cities“ which  focuses on manufacturing and rapid urbanization are currently dependent for its success on high carbon measures while energy transition in India is a distant dream despite recent focus on Solar and Wind energy.  The long wait for Grid Parity and commercially viable renewable energy could be a major bottleneck in India’s growth story.

While it is argued that an economy can develop through low carbon means as well, the larger question is does India have the finances and time frame to adapt to such shift in strategy for immediate future?

Although Carbon is blamed for majority of pollution, the biggest pollutants for the country are poor affordability and need for energy. With a per capita GNI of 5640 USD (2014’) among one of lowest in world and almost 92% of 18 Crore rural households still earning less than 10000 INR monthly ( as per the Socio Economic and Caste Census 2011), poverty has forced majority of Indians (counting to 49% 0f households) to live on traditional fuels such as wood, dung, charcoal instead of electricity and LPG leading to health hazards among citizens.  At a recent reply during parliament session government admitted that almost 35000 people in India died in last 9 years owing to air pollution. While these numbers are debatable (with unofficial numbers in multiples of officially quoted numbers) one fact that emerges out is that India has started to admit the impact of carbon on the health of its citizen which was denied before.

China, U.S and India, the three largest greenhouse gas emitters in same order, are expected to play a critical role in shaping the success of The Conference of Parties (CoP) in Paris scheduled in December this year. 57 countries have declared their INDC with European Union and Norway leading the way with 30% and 40% reduction in Greenhouse Gas emissions respectively by 2030 over the 1990 levels.  Similarly United States intends to achieve an economy-wide target of reducing its greenhouse gas emissions by 24-26% percent below its 2005 level in 2025 and to make best efforts to reduce its emissions by 28 percent. China is with the vision of reducing its emission between 60 and 65% below 2005 levels by 2030. They are also looking to raise non fossil fuel by 20% of total primary energy supply during same period. Economy observers are gloomy with figures stated by the countries stating hard to achieve numbers. They are of the view with the uncertainty surrounding and economy condition, the countries need to mark flexibility with the targets.

While the draft of the proposed agreement for Paris meet is more or less final, the run up to the CoP has not been smooth. The Bonn meeting clearly shows a divide between developing and developed countries. Developing nations representing through G77 and BASIC group have been requesting developed nations to deliver not just on emissions cut but also carbon financing & technology sharing. Also developed nations are expected to have higher commitment of emission reduction and create carbon space for developing Nations. However given the fact most Developed nations are currently witnessing economic meltdown it is highly unlikely that they would recede to all demands of G77 and BASIC.

Why India needs Comprehensive Policy

India’s stance on Climate Change is critical since India is aggressively pushing for a permanent seat in UN Security Council and hence its position on Climate policy is being looked upon with great Interest. India under the Modi Government has made right noise to begin with by converting Ministry of Environment and Forests into Ministry of Environment, Forests and Climate Change. Aggressive targets in Solar and Wind have also sent positive signals. Further, given the vulnerable Coastline, Melting Glaciers and presence of pollutants beneath Himalayas it is only in interest of India to develop a comprehensive climate policy since it is lesser equipped to handle any climate fatalities as compared to developed nations. Recent floods in Uttaranchal should be a wakeup call for India!!

What will India do!!

With the proposed targets of achieving 40% power capacity through renewable sources by 2030 coupled with expected GDP rate of 8-9%, India will offer 35% reduction in the greenhouse gas emission intensity of its economy below 2005 levels to the world. However given the social development agenda , India shall be hesitant to go so aggressive, despite the success in meeting the targets of voluntary pledge taken at Copenhagen and Cancun. Against a pledge of 20-25% voluntary reduction, India has managed to achieve 18.3% reduction  till now. It is expected that India shall surpass the self-imposed target at Cancun.

India has decided to unveil its climate policy on 1st October 15’ a day before Mahatma’s Birthday. It is anybody’s guess that the policy is likely to be themed around Mahatma’s words “Poverty is the biggest Pollutant”. Given the fact that India is under economic transition, it is highly unlikely India will come up with sector wise quantitative numbers for emission reduction. Further unlike developed nations India is unlikely to come with absolute reduction targets. India’s emissions targets by 2030 are likely to be top line based on emission intensity reduction of carbon per unit of Dollar spend or GDP. This will allow India to grow emissions but reduce emission impact per unit of GDP.

The world`s largest democracy, standing on doorsteps of Industrial revolution,  will also draw strength for its inclusive policy from the recent US-China bilateral treaty on climate recognizing the right of China to develop as other developed nations did.

India would require an approach which leads to inclusive and balanced growth. Apart from carbon mitigation measures Adaptation, Capacity Building, Technology transfer and innovative carbon financing without being dependent on funding from developed countries should be the focal point of policy.

Government deserves applause for identifying synergies between growth and sustainability through focus on areas such as Renewables Energy, Energy Efficiency, Water Management, Building Management, Low carbon measures, Greener Transport and Pollution Management.  Effective implementation of schemes such as Renewable Purchase Obligation and energy efficiency certificates could be major facilitator in achieving reduced emission intensity

Another initiative could be to form a joint working group with Coal dominant nations such as China, South Africa and come up with common strategy to mitigate carbon emissions. The Policy should focus on picking up low hanging fruits immediately with major contributions coming from large scale enterprises. Small and medium scale enterprises have limited scope of mitigation and should be covered under phase –II.

The funding challenge!!

However government would require huge investment to convert this policy into execution and hence the contentious issue of carbon finance would come into picture. India has been vocal in advocating that 100 billion USD/ year green Climate fund is not suffienet to energize climate revolution which would require trillions and trillions. India has rightly pointed that even in these funds very little progress has been made and only 58% of funds have been signed off. Further rules with respect to usage are also not transparent with rumors of Japanese using these funds for setting up Coal based project in Indonesia undermining the very intent of this fund.

While the 100 Billion USD fund include contributions from both public and private sector of developed nations, India and other developing nations have been contemplating that 100 billion contribution should be from public segment only and private investment received from developed nations should be over and above the 100 billion fund.

Another challenge which India would face is in field of adaptation wherein private investments are not forthcoming and would need to be funded by public sector only.

An interesting alternative to handle the sensitive issue of funding and simultaneously put across aggressive targets would be placing two proposals before the world, one using internal accruals of the country and other based on what country could achieve if it receives financial support and technology from nations who had the privilege to develop earlier.

Hopefully this would help India gather more support for a security council!!

Authors : Avanish Verma and Prof Swati Gupta are avid climate affair bloggers and experts in carbon finance. Avnish is a an IIM A Alumni and Swati is a professor at University of Petroleum and Energy Studies.

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of The Indian Iris and The Indian Iris does not assume any responsibility or liability for the same.

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One comment

  1. An interesting discussion is definitely worth comment.
    I believe that you need to write more on this subject matter, it might not
    be a taboo matter but typically people don’t talk about such topics.
    To the next! All the best!! finance courses like best example!

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