Originally Published 2009-12-16 00:00:00 Published on Dec 16, 2009
The gap between India and China in this regard is quite big. So it makes sense for India not to make any peaking commitment until it meets the backlog of providing basic energy needs to the majority of the poor
On climate, start thinking domestic, too
Environment minister Jairam Ramesh has done well to assert that India would not agree to any concept of ’peaking emissions’ that is being sought to be introduced in the official draft at Copenhagen. As per this concept, developing nations will be asked to ensure that their overall carbon emissions would peak at some mid-point between now and 2050. Though no time frame has been discussed, the mid-point could technically fall around 2030. This could be a trap, especially for a country like India.

India cannot possibly agree to this because it has a massive backlog—much more than China—in meeting the energy requirements of some 700 million poor who live predominantly in rural areas. While India and  China appear to have similar demographic profiles and development imperatives, China is way ahead of India in terms of meeting the basic needs of the poor. As per the global development indicators brought out by the World Bank, China has only about 10% of its population living on less than $1.25 per day. In India, over 55% of the population lives on less than $1.25 a day, calculated on a PPP basis.

The gap between India and China in this regard is quite big. So it makes sense for India not to make any peaking commitment until it meets the backlog of providing basic energy needs to the majority of the poor. China is in a relatively better position to make a peaking commitment as it is about 15 years ahead of India in basic development indices. This reality must be recognised even as India makes common cause with China at present in terms of offering voluntary cuts in the emission intensity of GDP.

India has voluntarily offered to cut the emission intensity of GDP by 20-25% by 2020 from a 2005 base. This strategy is precisely aimed at retaining a minimum emission space needed to meet the energy and other development needs of the poor. As per a Planning Commission study, India can continue its current development path of 8% to 9% GDP growth over the next ten years and yet lower the carbon intensity of GDP by over 20%. Thus, there is no emission peaking commitment here.

However, India cannot become complacent. While it can retain its minimum emission space, it will come under increasing pressure from the developed world to give a peaking commitment at a later stage. For this a national strategy needs to be put in place immediately to ensure that we follow rational domestic policies to optimise our aggregate emission space for the benefit of the poor. For this the political class and the urban middle class, which has a large carbon footprint, will have to take hard decisions and drive a new consensus in national interest.
Just to illustrate with an example; the US, which is at the high end of the consumption cycle, emits a total of 6,200 million tonnes of CO2 every year. More than half of this is accounted for by energy used by appliances and transport. The energy consumption of households thus dominates the carbon footprint in the US. In India, households still account for only 12% of its current aggregate CO2 emission of 1,200 million tonne per year. India must see the relatively low share of households at this stage as an opportunity and evolve a future development path that does not replicate the pattern followed by the US in terms of carbon intensity of GDP.

Some obvious policy changes will have to be made—and within the next few years—to ensure optimisation of carbon space. The Centre and the states will have to work together in doing this, as many such initiatives will fall in the domain of the states. A national strategy will also require a consensus across political coalitions. For instance, one of the obvious ways to reduce carbon intensity faster will be to rationalise over $40 billion of annual energy subsidies given in the name of the poor. Will the political class have the courage to end this hypocrisy by telling the growing middle class that it will have to give up large parts of these subsidies, which it receives in the name of the poor?

Similarly, will the middle class be willing to pay higher electricity costs on account of setting up coal washeries at the mining pitheads to reduce carbon emissions from coal-fired power? The super-critical power plants will also help in reducing the intensity of emissions, but could cost more. The overall reform of the coal sector is a must to optimise carbon space for the benefit of the poor. Urban transport will have to be restructured with a much greater accent on mass transport. Will the middle class help build a political consensus on this? Taxes and other policy measures may have to be imposed to discourage use of excessive private transport. These are all critical questions that cannot be answered unless a national strategy based on a broad political dialogue between various constituencies emerges. The UPA, therefore, has a critical task at hand and does not have much time going by the trajectory of the climate change negotiations. We don’t even have the luxury of debating these issues endlessly, as is our wont.

There must be a focused national debate on how the next 700 million people will consume a minimum required quantum of electricity, cooking gas, diesel, petrol etc. For India, climate change negotiations are largely about how it manages the energy intensity of future growth.

According to a minimal required growth scenario projected by the Observer Research Foundation (ORF), the following will be the installed electric power capacity by 2032: 3,00,000 mw of coal-fired power, 40,000 mw of nuclear power, 1,05,000 mw of combined cycle gas turbine generated power, and 90,000 mw of hydroelectric power.

To support this capacity, India will need to annually import 300 million tonnes of coal (in addition to producing 1,000 million tonnes of domestic coal), 400 MMSCMD of natural gas (if domestic production remains at 100 MMSCMD because of no major finds), 5.3 million barrels per day of crude oil (88% of total), in addition to domestic production of 0.7 million barrels per day, and uranium for about 25 gw of light water nuclear reactors.

To secure the energy supplies as projected above, India will need $0.7 trillion in capital investment for new generation capacity over the next 23 years, about $1 trillion for transmission and distribution infrastructure, and about $234 billion per year to import fuel by 2032. Given these enormous tasks, India cannot give emission peaking commitments at Copenhagen at this stage. However, it has no option but to proactively transform its own national strategy to move towards a carbon optimal economy, which is fair and equitable within the domestic context. This cannot wait for another day.

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