Despite the bottom half of the carbon pyramid facing the unequal impact of climate change, India’s current climate policies continue to favour the top 10 percent.
This article is part of the series Comprehensive Energy Monitor: India and the World
Amongst countries in South and Southeast Asia, the ratio of the income of the top 10 percent to the bottom 50 percent is 22 for India which is much higher than 17 for Thailand, a military dictatorship.Globally, on average each individual emitted just over 6.5 tCO2 in 2021. In 2019, the bottom 50 percent of the world population emitted only 1.6 tCO2 per person accounting for 12 percent of emissions while the middle 40 percent emitted 6.6 tCO2 per person accounting for about 40 percent of total emissions. The top 10 percent emitting 31 tCO2 per person accounted for 47.6 of total emissions and the top 1 percent or about 77.1 million people emitting 110 tCO2 accounted for 16.8 percent of emissions. The top 0.1 percent or just 7.7 million people emitted 467 tCO2 per person and the top 0.01 percent or just 770,000 people emitted a staggering 2531 tCO2 per person in 2019.
Just before COP 26, the Government of India welcomed the launch of climate equity monitor (CEM), an online dashboard for assessing, at the international level, equity in climate action, inequalities in emissions, energy and resource consumption across the world.Climate policies recommended by WIR 2022 that target the bottom 50 and the middle 40 percent of the population include public investment in renewable energy supply, protection for those affected by the transition to cleaner energy sources, construction of zero carbon social housing, cash transfer for increase in fossil fuel energy prices. Policies that target the top 10 percent include wealth or corporate taxes with pollution top-up. The suggestion of a global carbon incentive (GCI) to address carbon inequality from Raghuram Rajan, former Governor of the Reserve Bank of India to address global carbon inequality is also a credible option. Under GCI, every country that emits more than the global average of around 5 tCO2 per person would pay annually an amount calculated by multiplying the excess emissions per person by the population and the GCI into a global GCI fund. Countries below the global per person average would receive a commensurate pay-out. With a per person emission way below the cut-off of 5 tCO2, India would not pay anything but instead receive a pay-out from richer countries. If the initial GCI is set at US$ 10/tCO2 emissions above the global average, substantial sums can be raised to address carbon inequality. If the idea of a GCI is applied to address ‘within country’ carbon inequality in India, the top 10 percent or 138 million people will have to pay-out a total of over US$5.2 billion annually. This is about a third what the government spends on climate change each year. Compared to the current carbon price of close to €80/tCO2 at the EU ETS (European union emission trading system) in December 2021, the GCI of US$10/tCO2 is very low but it is a good starting point. The key bureaucratic challenge would be to identify the top 10 percent of carbon emitters, but it is not impossible.
Using the nested inequalities climate economy (NICE) model, the study shows that an equal per person refund of carbon tax (or equivalent such as the GCI) revenues can pay large and immediate dividends for improving well-being, reducing inequality, and alleviating poverty.The conclusions of an academic study on this subject that found that humans, even as young children and babies, actually prefer living in a world in which inequality exists is relevant in this context. It sounds counter-intuitive, but the study showed that when people find themselves in a situation where everyone is equal, many become bitter as those who work hard are not rewarded, and slackers are over-rewarded. This makes inequality ‘fair’ when those in the top 10 percent are framed as hard workers and those below as slackers. But climate change, like the pandemic, is a problem that does not respect borders or man-made barriers and labels. Policies that favour the top 10 percent may be ineffective in saving them when the bottom 90 percent crumbles under the weight of climate change.
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