Environment

Creating the climate for India's low-carbon growth story

  • Blog Post Date28 July, 2014
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Varad Pande

Dalberg Global Development Advisors

varad.pande@dalberg.com

The ‘Expert Group on Low Carbon Strategies for Inclusive Growth’ recently laid out a detailed roadmap for India to take on climate change mitigation proactively. In this note, Varad Pande – a member of the Expert Group – outlines the key strengths of the roadmap, and contends that India must now create the political and administrative climate to implement it.

Buried under the din of the changing electoral climate, India took an important step in its fight against climate change this summer. The ‘Expert Group on Low Carbon Strategies for Inclusive Growth’ submitted a report laying out the roadmap for India to take on climate change proactively. Given the renewed interest in the so-called “environment vs. growth” debate, this is of particular significance.

‘We didn’t cause the climate change problem, but we would very much be part of the solution’

The Expert Group was set up in the aftermath of the Copenhagen climate summit of December 2009, which famously took small but important steps in moving the climate change agenda forward. It had become clear in the run up to Copenhagen that India needed to do much more on climate change than just sermonising, which was becoming its staple in international climate change conferences. As part of a new strategy to position India as a ‘deal maker’, India took on a more proactive facilitative role, especially at Copenhagen (Hillary Clinton has a fascinating discussion of one such critical meeting at Copenhagen in her new book, Hard Choices, as does India’s former Environment Minister Jairam Ramesh, a key sherpa at that meeting, in a recent oped). In addition, a number of measures were initiated on the domestic front. India committed to unilaterally reduce the emissions intensity of its Gross Domestic Product (GDP) by 20-25% by 2020 (on a 2005 base) – this was India’s commitment in the Copenhagen Accord (there was domestic opposition to this pledge, but it was overcome). India also added a new term in its planning lexicon, with the 12th Five Year Plan, promising ‘sustainable’ – in addition to ‘faster’ and ‘inclusive’ – growth. This was carried forward at the next climate summit at Cancun in 2010 (for a perspective on India’s role at Cancun, read here).

The message was clear – we didn’t cause the climate change problem, but we would very much be part of the solution. India will do its part in fighting climate change, not because of international pressure, but because it was in India’s own self-interest to do so, given its multiple points of vulnerability.

The use of the phrase “low carbon” itself was a great leap forward, as it was previously considered by many Indian experts to be an anathema. They asked why India should consider reducing its carbon footprint when the problem of climate change was caused by the developed countries. The setting up of the expert group overcame this dogmatic position, making the case that India must consider low-carbon inclusive growth for its own sake, and see it as an opportunity, rather than as a concession to be made at climate change negotiations.

India’s new roadmap to address climate change: Key strengths

There are dime-a-dozen expert committee reports these days which do little more than adorn government departmental bookshelves, so why is this one worthy of anything more?

First, the group itself was truly multi-disciplinary, with 26 representatives drawn from think tanks, industry, government departments, academia, civil society etc. The eclectic composition of the group was critical, given the multi-dimensional and interconnected nature of the climate change problem. It was important that people with diverse perspectives and from different sectors deliberated, debated, defended and eventually defined the range of policy options.

Second, the Report presents a first of its kind, holistic economic model that incorporates faster, inclusive and sustainable growth in one integrated framework. It shows the inter-sectoral implications of different mitigation measures and ensures that policy roadmap is internally consistent across sectors, and not just a long wish list. Importantly, the model provides an institutional tool that can be revisited and rerun by policymakers and negotiators in the future when they want to understand the implications of any particular low-carbon strategy.

Third, the report uses a “multi-benefits” framework, where mitigation of greenhouse gases is only seen as one of many benefits of policy actions. For example, a bigger push on renewable energy means greater energy security through lesser dependence of imports of coal and petroleum, as well as lesser destruction of forests due to reduction in domestic mining of coal. These are benefits in themselves, and these development linkages are critical to justify ‘low carbon’ investments, as India is keen to preserve its ‘right to develop’.

Fourth, the report lays out the implications, trade-offs and costs of achieving both inclusive and low-carbon growth. In the Baseline Inclusive Growth (BIG) scenario1, with an average growth of 7% per year between 2007 and 2030, India’s total emissions are estimated to be 5,271 Mt, and per capita emissions 3.6 tons per capita in 2030. In the Low Carbon Inclusive Growth (LCIG) scenario, while the growth falls slightly to 6.9%, the total emissions fall to 3,830 Mt, and per capita emissions to 2.6 tons per capita in 2030 - a drop of more than 25%. This is the good news that the world is waiting to hear from India.

However, and here’s the catch, the LCIG scenario does not come cheap – it requires substantial additional investment amounting to $834 billion over the two decades 2010-2030. This is the first rigorous ‘costing’ done of India choosing a low-carbon pathway. This also means that we now have rigorous analysis that our negotiators can use to seek international finance to fund India’s incremental climate mitigation actions.

Fifth, the report lays out a clear set of recommendations for different sectors of the economy. These range from fiscal incentives (example, a cess on all fossil fuels to be used to promote renewables, and an energy conservation fund to promote energy efficiency among SMEs) to a reformed renewable purchase obligations (RPO)2 system , a modal shift in freight transport, a national mission on advanced coal technologies and a smart grids roadmap.

Lastly, the Report lays out clear monitorable targets for each of the recommended policy actions and calls for an overarching coordination mechanism – perhaps led by the Planning Commission or the Prime Minister’s Office – to monitor achievement of these targets on a regular basis, given their interconnected nature.

India now has a robust roadmap with which to approach the challenge of climate change by going down the path of carbon inclusive growth. It must now create the political and administrative climate to make it happen.

The author was an advisor to the former Minister for Environment & Forests during the Copenhagen and Cancun climate change summits, and a member of the Low Carbon Expert Group. The Full Report of the Expert Group, chaired by Dr Kirit Parikh, can be found here.

Notes:

  1. This is essentially the scenario where India would make reasonable efforts to be on the low-carbon trajectory, but there would be no proactive push, especially if this involved substantial additional costs and trade-offs with inclusiveness.
  2. Under the Electricity Act 2003, the National Electricity Policy 2005 and the Tariff Policy 2006, Electricity Distribution Companies are obligated to purchase a certain percentage of power from renewable energy sources - this is called a renewal purchase obligation (RPO). Many States have struggled to meet these obligations, despite a market-based mechanism - called Renewable Energy Certificates - being put in place to enable this. It is widely believed that this system needs to be reformed.
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