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. Climate change has been caused by the developed world, which must bear the costs of abatement and mitigation.
- 2. India is not a significant greenhouse gas (GHG) emitter, and
- 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.
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. To encourage all countries to act urgently to mitigate climate change, and
- 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.