The Indian Economy Blog

June 12, 2007

Climate Change: Why India Must Act

Filed under: Energy,Environment,Growth,Politics — Dweep @ 1:22 pm

The recent G8 summit did not achieve what Angela Merkel may have hoped for – a new treaty with binding CO2 emissions cuts for the world’s major polluters – USA, China, and India. While both India and China were under considerable pressure to accept such targets, they resisted, promising only to “cooperate”.

India’s position on climate change is simple:

  1. 1. Climate change has been caused by the developed world, which must bear the costs of abatement and mitigation.
  2. 2. India is not a significant greenhouse gas (GHG) emitter, and
  3. 3. It will not accept binding emission cuts, without compensation, as that would conflict with the overarching goals of economic growth.

This position may be good for international negotiations. But as a policy, it is ethically indefensible, logically and economically inconsistent, and worse – a wasted opportunity.

Ethically Indefensible: The Futility of Taking the High Road
India’s primary logic is based on ethical reasoning. While India is the fifth largest CO2 emitter, on a per-capita basis its emissions remain very low. Since the developing world did not cause the problem it should not pay the price of repairing it, nor suffer its consequences. Prime Minister Manmohan Singh called this the “principle of common but differentiated responsibility,” on the eve of the G8 Summit.

Yet, this ignores reality. It is today accepted that despite our best efforts global warming will occur and its costs borne mostly by the poor. According to a report by Lehman Brothers cold countries such as Russia will actually benefit (receiving a GDP boost of 0.5%), while the regions to suffer the most will be India, Africa, and Europe (see graph). Critically, the poor regions – including India – will also lack resources to help their populations adapt to changes, or insure their consequences.

Given this reality, sitting on a pedestal and crying foul about who is responsible for climate change will not help. The Indian government’s primary responsibility is not to apportion blame for the world’s ills. It is to take action to protect its population against those ills.

Economically Inconsistent: Industrial vs. Agricultural Growth
The other argument is economic – mitigation is costly and threatens India’s economic growth. If India is to act, it should be compensated for lost GDP growth.

Again, a desirable goal, but one that also ignores reality. First, the West is unlikely to compensate India if it does not agree to be part of an international mitigation effort. Second, by not acting India endangers the very growth it wishes to protect.

As numerous studies have concluded, climate change will significantly impact weather patterns across the world. In India, it also threatens Himalayan glaciers that supply much of India’s freshwater supplies (the Gangotri glacier has been retreating since measurements began in 1842, but its rate of retreat has almost doubled from around 62 feet per year between 1935 and 1971). The likely long-term impacts are increased droughts and cyclones, higher temperatures, and scarcity of freshwater supplies.

These changes threaten India’s growth in the very important agricultural sector. For instance, the World Bank estimates (original article at FT.com) that climate change could cause crop yields to fall by 30% by mid-century. Contrast this with the government’s own target of raising agricultural growth from 2% to a trend average of 4% in the eleventh five-year plan, and the inconsistency becomes obvious. While the manufacturing and service sectors may indeed grow, it is hard to understand how that will compensate the 70% of India’s population living in rural areas, much of it dependent on the monsoons.

Perpetuating Inaction
There is one final reason for action – that inaction by India perpetuates inaction by others. The US has long held that it will not accept emissions targets unless India and China follow suit. India’s inaction is therefore doubly harmful, providing “a figleaf for US inaction”. Further, with India – and China’s – absence from international climate change negotiations, the needs of developing countries remain unaccounted for.

Given the inevitability of global warming, and given that India will bear a disproportionate cost of that change, India’s policy objectives need to be reversed:

  1. 1. To encourage all countries to act urgently to mitigate climate change, and
  2. 2. To develop an international mechanism that allows poor countries to mitigate, adapt to or insure against climate change, drawing resources from the developed world.

Turning Challenge into Opportunity
India’s lethargy to act has prevented both from happening. And in the process, the policymakers are loosing a major socio-economic opportunity.

Climate change may be a threat, but it is also transforming industries and creating new ones. As proof, consider the North American cleantech venture capital industry which grew by 78% in 2006 to $2.9billion (PE & VC funding grew 167%)! Over half of this goes into clean and renewable energies, but that is not the only sector and the US not the only country benefiting. Israel is the largest investor in the water segment of the cleantech industry. In great need, venture capitalists have seen great opportunity. The PM can very well demand cheap access to low-carbon technology, but he should be spending at least as much time encouraging R&D and investment in those very technologies. If nothing else, he’d be hedging his bets.

Second, moving to a low-carbon economy can actually save money. The Economist, in its special of June 2nd points out the cost of cutting carbon through various technologies (Irrational incandescence – see chart below).

The odd thing is that simple things – better fuel-efficiency, insulation, water heating, CFLs – actually save money. Admittedly, these are areas hard to get at for policymakers, since they affect distributed stakeholders. Yet, India cannot hide behind protecting its GDP growth. If anything, the government should accept binding cuts, then use that as an excuse to force its industries and consumers to become more energy efficient.

Finally, India’s position is a wasted political opportunity to shape the international climate change framework. By doing nothing, India can expect nothing in return. More and more, India does not look like a leader, but a laggard – and a unhappy one at that. What the country needs is to accept the need for binding cuts, specify a compensatory system that provides access to IPR and funding, and then start negotiations in earnest. This is particularly important now, when the world still wants our participation. Once the US and China (which published a policy paper prior to the G8 summit) take a definitive lead on the issue, we will be left not with the opportunity to shape an international framework, but with the responsibility to accept whatever is decided on in our absence.

This post does not argue what India should ask for, or can reasonably expect. It simply makes clear that there is an urgent need for India to act – in its own interest – to mitigate climate change. There is also an social and economic opportunity in doing so, with the costs of inaction likely to outweigh the costs of action. And finally, climate change presents a political opportunity to shape – to India’s benefit – an international framework (as India is doing with the Indo-US Nuclear Agreement).

It is time the Indian government moved beyond posturing, and did something.

21 Comments »

  1. The following comment was emailed to me by Himanshu Gupta, who was foiled by the IEB spambot.

    A very apt post Dweep. You’ve analyzed the issue exhaustively, to point out that Climate Change can be an opportunity too for India rather than just a growth-eating monster. I loved the bit “India’s position is a wasted political opportunity to shape the international climate change framework. By doing nothing, India can expect nothing in return. More and more, India does not look like a leader, but a laggard – and a unhappy one at that

    However, I don’t agree with your solution:
    “If anything, the government should accept binding cuts, then use that as an excuse to force its industries and consumers to become more energy efficient.”

    Yes, Climate Change can be an opportunity for India, but that doesn’t mean that India should agree to cut its emissions by half by 2050 (A target promised by most nations at G8) because India’s growth trajectory isn’t still very clear, with a large populace still living in Villages and involved in Agriculture.

    By agreeing to Emission cuts, India would be risking putting a lot of strain on its resources in future. What India should agree and try to implement, should be promotion of clean-fuel and energy saving technologies. The decision to use CNG instead of gasoline in automobiles in Delhi which was a state initiative, can be a role model here. Also, your point to put more stress on R&D efforts with this regard is spot on.

    Ultimately, I agree with your stance that India needs to change its uncooperative attitude towards Climate Change initiatives, but I’m against binding emission cuts. Because When You’ve 60% of your population involved in Agriculture, You can’t rely on Service Sector only to leap-frog such a huge mass of people to growth trajectory. A manufacturing revolution has to take place, if more people have to be brought inside the Indian growth story. How this revolution will take place isn’t very clear and therefore India can jeopardies its chances if it goes for some arbitrary emission targets.

    The Developed nations can commit to emission targets because they are better placed to gauge their energy requirements. In case of India, A blind step in this regard can be detrimental to its future Industrial growth.

    Comment by Dweep — June 14, 2007 @ 9:23 pm

  2. Himanshu,
    Thanks for emailing me your comment.

    Let me clarify what I meant by accepting emission cuts. The sentence you quote is only relevant for internal consumption – moving India to a low-carbon economy through external pressure.

    My solution does propose binding cuts. This is partly because binding cuts are necessary for mitigating climate change substantially. Voluntary cuts simply do not work. The other reason is that if India wishes to be part of any international framework, such targets will be essential.

    However, emissions cuts do not need to come at the cost of economic growth, as you seem to suggest. Quite the contrary – the Economist points out several areas where such a move actually saves money. So all we need to do is figure out how much energy we can save by moving to CFLs, high efficiency manufacturing, etc. and accept cuts of that level – the logic of “differentiated responsibility” can be used to accept lower cuts than for the OECD. And simply for accepting binding cuts, India can demand some compensation. That, however, is a matter for international negotiation…

    Comment by Dweep — June 14, 2007 @ 9:29 pm

  3. For someone who gives the impression of a free market liberal, you sure do have plenty of top-down state-mandated solutions.
    As for the reasoning that the developed world has caused most of the pollution and warming, here is another take-
    “Modern humans first emerged about 100,000 years ago. For the next 99,800 years or so, nothing happened. Well, not quite nothing. There were wars, political intrigue, the invention of agriculture — but none of that stuff had much effect on the quality of people’s lives. Almost everyone lived on the modern equivalent of $400 to $600 a year, just above the subsistence level. True, there were always tiny aristocracies who lived far better, but numerically they were quite insignificant.

    Then — just a couple of hundred years ago, maybe 10 generations — people started getting richer. And richer and richer …

    This process was started by the West (i.e., the historical polluters). Europe and the US didn’t “steal” this wealth from oppressed colonies; they invented a new way of organizing society that allows new wealth to be created. Consider the accumulated carbon emissions as part of the R&D cost.

    Along with all that CO2 the West put in the air, it also put the MMR vaccine, the limited liability corporation, the high-efficiency power turbine and so on. The West invented the basic tools for increasing wealth that the successful parts of the developing world are now using to escape poverty and incidentally emit more carbon.

    I’ll be all for making US and European taxpayers bear a disproportionate share of the load for the cost of carbon when the governments of China and India agree to payments to me in perpetuity for every useful invention created by the Western world that is deployed in those countries to drive growth.”
    Source-
    http://planetgore.nationalreview.com/post/?q=NDQ1NTg3YWVkYmRmOWY4ZWNiZTdiNTZjMWI1NjA4NWQ=

    http://libertynewscentral.blogspot.com/

    Comment by Gurmeet — June 15, 2007 @ 1:22 am

  4. Hi Dweep, I’d again disagree with you. You say

    My solution does propose binding cuts. This is partly because binding cuts are necessary for mitigating climate change substantially. Voluntary cuts simply do not work

    I’d like to know what are your views on Indian Government’s proposal for Job Reservations in Private companies, as you do not really believe in Voluntary action on part of Corporates. As Here too, The ultimate aim is to remove inequality in Society which is as noble an intention as slowing Climate change. The point here is, Do you really think that Indian Government wouldn’t introduce one more License Permit Raj in the garb of reducing carbon emissions. I personally feel, The better way would be to promote Carbon trading through Market forces.

    I’m not against India becoming a part of Climate change counter or control groups. In that regard, You’ve already given some fantastic arguments. Also, The example given by you in last comment – The Economist one, pertains more to my line of view i.e. promoting clean and energy saving technologies. Indian can promise during International negotiations that It would do its fullest to move towards such clean technologies but regarding a clear-cut emission cut targets, It can’t promise anything at this moment because the present responsibility on its shoulders – to bring millions out of poverty, is too big to be overlooked, for just some posturing as a Climate change champion.

    Comment by Himanshu Gupta — June 18, 2007 @ 10:11 am

  5. [...] The Indian Economy Blog on India’s way of dealing with the G8 talks on climate change, and why the country must take some actions. Share This [...]

    Pingback by Global Voices Online » India: Climate Change and G8 — June 18, 2007 @ 10:36 pm

  6. [...] Following my previous post on climate change, Nitin pointed me to a paper in the EPW on mitigating climate change in India (also available at GDNet). The authors analyze the impact of economic instruments such as a carbon tax on carbon emissions to conclude that, “the amount of reduction of carbon emissions is not substantial enough to suggest that economic instruments (carbon taxation) would be the right ones for mitigating emissions.” But it is their reasons for this conclusion that are particularly important. [...]

    Pingback by The Indian Economy Blog » Mitigating Climate Change: Prospects For India — June 20, 2007 @ 9:27 pm

  7. [...] The July edition of Pragati, (the Indian National Interest review) has just been released. It includes my article on climate change, making a case for India’s engagement on the issue (note an earlier version of the article first appeared on the IEB). [...]

    Pingback by Climate Change: Moving Beyond Principle - The Discomfort Zone — July 3, 2007 @ 12:49 am

  8. [...] And these depravities are certainly sitting in the back of Indian prime minister Manmohan Singh’s mind when he argues that developed countries should take responsibility for their greenhouse gas emissions, especially while India, China and the rest of the developing world struggle to provide basic necessities for their citizens. “Due care,” he argues, “must be taken not to allow growth and development prospects in the developing world to be undermined or constrained”, and this is precisely the stance India took at the recent Group of Eight summit in Germany last month. As Indian Foreign Secretary Shiv Shankar Menon told the BBC, global warming was largely created by the industrialized nations; therefore, those nations should assume more of the burden for fixing the problems. Unfortunately, this argument displeases many from within and without India. Himanshu Thakkar, South Asia coordinator of Dams, Rivers and People, calls India’s position a “stonewalling and negative approach” Likewise, one of the authors of the Indian Economy Blog calls this stance “ethically indefensible, logically and economically inconsistent, and worse – a wasted opportunity”. Those who see environmentally friendly practices vital to the success of the global economy and the future of our world, must side with these arguments and argue against India’s refusal to act. Considering it will face innumerable problems in the future (4), India should be leading the way to combat climate change. [...]

    Pingback by First World Problem / Third World Threat: Why India must lead the campaign against climate change — The Seminal :: Independent Media and Politics — July 6, 2007 @ 10:16 pm

  9. Hi,

    Just reading the comments here, i would like to share some of my own:

    It is universally agreed that the problem, so to speak, of global warming has been created by the west. Although the world owes most of its industrial and modern development to the west and currently ‘rich’ nations. Please note that the very essence of business in the west has been the creation of a need and then proposing solutions for its abatement. this was fine till the time geo-political issues and commercialism was at bay.

    We all know that as always, it is the west again that has the necessary technology to help abate global warming. Be it better insulation or be it better power generation/technologies which use a fraction of the energy which traditionally has been used. India and other developing nations do not have access to this primary technology and would either have to licence it from the west or wait till some great indian company acquires this technology from the west (mostly at the time a newer technology is available to replace the acquired technology). developing nations therefore will be ‘buying’ these technologies from the west or be controlled stringently by the technology transfers they receive.

    in either case, it seems to me that this is another opportunity the west is propagating to earn money, which is not necessarily bad…….its just the looking out for number 1 syndrome. given this, the indian and chinese reply to these developments is befitting given that we are still developing the technologies at an abysmally low speed.

    global warning is a problem which will effect us in every possible way discovered and yet to be discovered. however the fear psychosis used at the moment of imminent danger is yet to be proven substantially.

    Comment by Ritesh — July 9, 2007 @ 4:58 pm

  10. [...] I have previously discussed why India must embrace climate change action and push for an international treaty, on the IEB and Pragati. An upcoming article will discuss further what India’s negotiating strategy needs to be. [...]

    Pingback by The Politics of Negotiating Climate Change: Implications for India at The Discomfort Zone — August 6, 2007 @ 1:39 pm

  11. [...] I have previously discussed why India must embrace climate change action and push for an international treaty, on the IEB and Pragati. An upcoming article will discuss further what India’s negotiating strategy needs to be. [...]

    Pingback by The Indian Economy Blog » The Politics of Negotiating Climate Change — August 6, 2007 @ 1:49 pm

  12. [...] There are two things interesting about this report. First, there is now clearly enough momentum within the US for climate change action that domestic legislation will take place. More important, lobby groups (such as labor unions) will ensure that such legislation gets extended to the international arena, so some form of post-Kyoto framework is not a certainty. Unfortunately, by clinging desperately – and for far too long – to their ethical stance on climate change, India and other developing nations seem to have missed the opportunity to shape that international framework, loosing a great opportunity for bargaining on trade and technology transfer (see previous post on IEB, or here). They must now face the consequences. [...]

    Pingback by US To Lead Climate Change Plans at The Discomfort Zone — September 26, 2007 @ 12:52 pm

  13. [...] There are both ethical and economic arguments for India to participate in global climate change action. After all, climate change threatens India more than most countries yet its inaction engenders inaction by the US and other major emitters. Climate change is also an economic opportunity, which has created new industries such as cleantech, and provides developing countries the ability to leapfrog to a low-carbon economy now, rather than transitioning to one later (see also Beyond Principle (IEB, or Pragati July 2007). [...]

    Pingback by Climate Change and India: Negotiating A Friendly Global Policy at The Discomfort Zone — October 1, 2007 @ 6:53 pm

  14. Maybe we are going about this thing all wrong — trying to attack the many arms of the Climate Change problem instead of going for its eye.

    On the face of it, Climate Change is a problem of excess CO2 emissions. But analyse deeper, and one finds that it’s a problem of overconsumption by all of us, individuals, corporates, government.

    Analyse still deeper, and one finds that overconsumption is triggered by and funded by CREDIT. There is an overabundance of bank credit — far out of proportion to actual earnings and savings — that gives people the power to overspend and overconsume.

    So this is where the cancerous tumour can be clearly isolated from human flesh. This is where we can start cutting away surgically, methodically, without hurting too many people.

    CONSUMER CREDIT — loans extended by banks for purchase of new vehicles and consumer appliances — is a major artery feeding this tumour. Easy loans warp our purchasing decisions, making our desires seem like needs.

    Two calls from an aggressive marketer of car loans is all I need to make me feel that I NEED to step up from my family car to an SUV.

    CREDIT CARDS make one feel really wealthy, by enabling one to securely carry large amounts equivalent to many months’ earnings in ones wallet.

    And when you do that, you are potentially able to do all those wonderful, beautiful, generous things that you see in TV commercials like buying your wife a diamond solitaire, booking the Presidential suite for your wedding anniversary or surprising her with a couple of air-tickets to Paris.

    Consumer credit and credit-cards are the hot air causing the great big Economic Growth balloon to go up… and up… and up.

    Driven by this excessive consumer demand, a number of industries flourish, new corporates are created, and new factories get built, diversified, expanded, acquired… We aren’t only borrowing economically, we are borrowing ecologically.

    Suggested line of action: At an individual level, we should stop buying things with credit, and stop using our credit cards. It is worth cutting up our credit cards. Let us stop borrowing from the future.

    And as a community of concerned citizens, let us lobby for a clampdown on consumer credit. Let us write to the government, to our Central Banks and to individual banks and bankers.

    Let each person in the banking industry be targetted with this message: Cap and roll back. Let us ask for a freeze of consumer credit at current levels this year, and a 50% reduction in the amounts of credit given each year.

    This would give the economy about three years to adjust to the changing scenario.

    Three years is 36 months — far more time than the economy and its stakeholders get for adjustment when the stock-markets crash. So why delay, postpone and vacillate?

    Warmly,
    Krishnaraj Rao

    Comment by Krishnaraj Rao — December 29, 2007 @ 3:05 pm

  15. [...] weather patterns that can be easily disrupted by rising temperatures. Therefore, India should be at the forefront of efforts to establish a post-Kyoto treaty for collective action. Even as its involvement is [...]

    Pingback by India and the Politics of Climate Change Negotiations at Blogbharti — February 20, 2008 @ 10:07 am

  16. [...] Such cooperation could be pursued for two reasons. The first is merely existential – anything that triggers a collective mitigation response from the developed world helps India. But a more compelling argument is political – by not participating in negotiations India risks the creation of a framework that does not reflect its concerns (see Why India Must Act). [...]

    Pingback by The Discomfort Zone | India and the Politics of Climate Change — February 28, 2008 @ 4:10 pm

  17. We are more to Benefit from this climate change,
    India should cooperate with everybody on Global warming. We are forgetting, Sun shines 365 days of the year and in abundance in the developing world, our fore fathers have recycled everything and have been using bio-degradble material since a long time. ex jute bags, cow dung, wood, list goes on..by agreeing to climate change we will definitely have a low GDP, but that does kill the population…we will preserve the weather for our children…grand children. Brothers and sisters of developing world, we have not got intoxicated with modern amenities, we can adjust to power cuts..we can live without modern aminities, what we cannot live is without water, pure air and food. For food, water, and quality air we to grow trees everywhere. Trees lower the temperture, attracts moisture, gives food. Lets plant more trees… that’s the secret for the developing world. Build more natural lakes which are small.

    If 5 billion people of the developing world plant 10 trees each, i dont think we will ever hear global warming.

    Comment by Subrahmanyam Jamisetty — April 6, 2008 @ 11:19 am

  18. Well…First & the foremost the world is one. So whatever be the consequences of the large scale climate change, mother nature is going to distribute it impartially. So it becomes extremely vital for us to understand that the efforts towards a cleaner world have to be made by all. Be it a developed country, developing country or an underdeveloped one, Co2 emissions are Co2 emissions & global warming is global warming. Perhaps the argument made by the developed countries or perhaps by China & India on their behalf is economically valid & crucial for their own primary industrial economies, but a efficient technology like advancement in solar energy, hydrogen cell fuel etc. stand to benefit them to in the longer race. Because as you know, renewable sources of energy that according to my knowledge contribute to a great sphere of hazardous emissions. Well, what stand does India play in the whole gamut? India is home to world’s two global warming tipping destinations….Deccan Plateau & Andhra Pradesh. Besides, we cannot even assure ourselves of any promising technology without depending upon the ones that are cleaner & costlier.

    However, the whole issue of developing countries can perhaps be solved with an increased co operation & mutual understanding between the developed & developing nations. We need to recognize that the poor countries have the right to economic development, but we also need to acknowledge the vulnerability of the poor countries to the effects of climate change. And coincidentally or otherwise, it is mainly the poor countries {Esp. African} due to their geography that’ll have to face the most extremes of global warming.

    The latest evidence collated by the International Panel on Climate Change (IPCC) predicts that the global average temperature will rise by between 1.5C and 4.5C if human activities double the amount of carbon dioxide (CO2) in the atmosphere. In addition, under such circumstances, our world is not in a position to portray stubbornness against global welfare. It is for this reason that President Bush’s commitment to environmental welfare was criticized when announced that he won’t be ratifying Kyoto Protocol on account of its potential to damage the country financially. Yet we find that, out of total CO2 emissions – 5,410 million metric tons per year – almost a quarter of the World’s total CO2 emissions account USA as their source

    We need to recognize that…THIS WORL IS ONE………

    Comment by M. Hemalatha — May 8, 2008 @ 1:27 pm

  19. The articles gives a good insight on the problems faced by India in its “developmental” course to progress. i strongly agree to the India’s view that the climate change is caused more by the developed nations (over the years)and hence progress of the developing nations should not be hampered by such issues.

    nitin@asc

    Comment by Nitin — November 13, 2008 @ 2:19 pm

  20. Hemalatha,

    We the poor nations suffer the most, the temperatures are felt severely, horrible horrible that’s what the common man is feeling, he is dying…poor farmers cannot go for work, cant earn their food because of this weather. One world is a good philosophy. Take the western nations, they have a mandatory forest cover…did you hear horrible hot weather or lack of rains in the west..NO. The poor nations are hit so hard, rich nations cannot understand. We have to take care of the rising temperature and extend our help to the other poor nations. It will be good if the rich nations cut emissions, that will not help us, nor Our grand fathers cannot come and help us out from their graves…we have to stand on our feet.

    we need 25 billion trees in 15 years, it will reduce temperature, attract moisture and make life pleasing. DO NOT expect(ONE WORLD) will help us to provide food, water and good weather for the 1.25 Billion Indians, we have to roll our sleeves and start kicking our feet. If the world is cooperating on climate change that’s very welcome.

    Comment by Subrahmanyam Jamisetty — April 29, 2009 @ 8:50 pm

  21. The global warming and climate change doom and gloom are the propaganda of the ultra liberal and environmental extremists to control everyone’s lives through government action.
    The world is just fine.It’s been here for billions of years.We are here may be since few million years and the so called man-made carbon emission has been goin may be for last 150 years.
    It’s so presumptous and arrogant to think that our actions are altering the very nature of this almighty globe.There is no clear consensus even in the scientific community about this issue.The mainstream media do not want to report the other side of this story.

    Comment by Kovai Jagatheswaran — April 30, 2009 @ 5:41 am

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