There’s climate change, but don’t forget the economic weather

The Economic Times , Tuesday, December 01, 2015
Correspondent : V Ranganathan
As the Global Climate Change Convention at Paris is underway, negotiators hope that an agreement will

be reached this time since the US and China have agreed to reduce greenhouse gas emissions, something that China has actually started doing this year. That puts enormous pressure on India to do likewise. But India succumbing to this pressure would be a big mistake. China is playing the renewable card intelligently without jeopardising its development agenda. India, on the other hand, seems to have uncritically followed the green path without a clear assessment of the costs and benefits to its own economy.

For the Paris meeting, India’s mitigation contribution plan aims to get 40 per cent of its electricity from non-fossil fuel by 2030, and reduce its emission intensity by a third from 2005 to 2030, apart from increasing its forest cover. Forest cover has already been increased, thanks to the forest department guarding our reserve forests. Karnataka actually shows an increase in forest cover through satellite maps.

Optimists find the reason for China’s ‘green appearance’ in its ‘renewed commitment’ to renewables. The real reason may be the accidental reduction in emission due to its slowdown in growth. While parading its commitment to renewable energy, China is simultaneously fortifying its conventional energy portfolio. India’s energy consumption is only 0.6 tonne oil equivalent per person, which is about a third of the world average. In terms of conventional electricity capacity, consisting of coal and hydro, India has a capacity of 212 GW – about a fifth of China’s 1,120 GW. Overall, counting conventional, nuclear and renewable energy, India has 280 GW against China’s 1,320 GW (21 per cent). At 13 per cent, India has a larger proportion of higher cost renewable energy in the total electricity than China (9.8 per cent). In both countries, the capacity utilisation of renewable energy would be quite low. For instance, many biomass and wind projects are a failure in India, as is the case in China. India has no solar cellmanufacturing capacity worth its name while China has a thriving solar cell-manufacturing industry, which it has subsidised with the money from Clean Development Mechanism (of which it is the near sole beneficiary) apart from general budget. Thus, while China has impressed the West with its great commitment to renewable energy by outcompeting the US in the solar cell industry, India is seen as the greatest potential threat to climate change. Energy intensity, indicated by the energy-GDP elasticity, has also been coming down for India over the last decade, probably due to services dominating the GDP basket.

In order to protect its own national interest, India must follow China’s strategy — hugely increase its electricity capacity with coal and large hydro on the one hand, and increase its renewables portfolio by increasing its large hydro portfolio, which is the most cost-effective energy source, and reverse the trend of falling hydro share in the hydro-thermal mix from 50:50 to 20:80.

While the US has exploited 90 per cent of its hydro potential and Europe 98 per cent, India has hardly utilised about 15 per cent of its huge hydro potential of about 300 GW lying in the north and northeast of the country. This is mostly due to environmental obstacles, where the NGOs’ role has been less than commendable. There is a total breakdown of communication between the government and the NGOs. So the very stopping of a public hearing, the democratic way of sorting out differences, is regarded as a war won by the NGOs. The World Bank stopped funding the Three Gorges Project in China, which involved massive rehabilitation and on environmental grounds. But China went ahead with the funding of ‘greener’ banks from Europe. A similar situation in India presented itself when former head of the UN Development Program Bradford Morse recommended stopping of World Bank funding for the Sardar Sarovar Project, which it did in 1994 even as the Gujarat government went ahead on its own to build it. Prime Minister Narendra Modi has been repeating the development mantra. His government has also been proactive in considering the economic and environmental trade-offs and speeding up environmental clearances. This should not be wasted by an uncritical embrace of solar and wind energy. The former will burn holes in economic viability, and the latter, like Circe’s winds, will blow you off from the intended trajectory.

So India in Paris should be armed with clarity of thought and a firm determination of its economic and developmental agenda.

 
SOURCE : http://blogs.economictimes.indiatimes.com/et-commentary/theres-climate-change-but-dont-forget-the-economic-weather/
 


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