Climate Change: The Indian Story

(Authors : Avanish Verma and Prof Swati Gupta are avid climate affair bloggers and experts in carbon finance )

Has India finally woken up to climate concerns in India? 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 and carbon mitigation
oriented in opposite directions. Various initiatives such as “Make in India“ and “Smart Cities“ which
focusses 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? With
the unrealistic proposed targets of achieving 40% power capacity through renewable sources by 2030,
India will offer 35% reduction in the greenhouse gas emission intensity of its economy below 2005 levels
to the world. Currently, India is looking at 20-25% reduction by 2020 which government is in believe to
achieve in due course.

byUS-China bilateral treaty on climate recognizes the right of China to develop as other developed
nations did, the world’s largest democracy, which is standing on doorsteps of Industrial revolution, is
justified in demanding similar privilege. Commented [SG1]: No match with the content, so thought to
add more on india and its vision.
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*, 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 and above 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 is more or less final, there run up 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 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!!

Although experts says with a GDP growth of 8- 9% percent , India can expect to achieve almost 40%
reduction in GHG over 2007 level, India shall be hesitant to go so aggressive, given the undesirable
results of voluntary pledge taken at Copenhagen and Cancun. Against a pledge of 20-25% reduction at
Copenhagen India has managed to achieve paltry 18.3% reduction only.

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 words “Poverty is the biggest
Pollutant”. Given the fact that India is on under economic transition, it is highly unlikely India will come
up with sector wise quantitative numbers for emission reduction. 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 would allow
India to grow emissions but reduce emission impact per unit of GDP.

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 emission intensity (it has to be noted that policy does not include hydropower and
nuclear).

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 !!
* Socio Economic and Caste Census 2011