Double burden

Print edition : December 18, 2009

At a bulb factory in Kolkata. Giving up the manufacturing route for a service-driven one is choosing a far less equitable path of development.-JAYANTA SHAW/REUTERS

CLIMATE change negotiations have reached an impasse on two crucial questions. One is how the remaining carbon space will be shared among countries and the second is who will bear the costs of the high stock of greenhouse gases that has already accumulated in the atmosphere. If rich countries cut back on their current high-carbon path slowly, the burden of cutting global emissions will fall disproportionately on the global South. This is the strategy that the club of the rich seems to be adopting in the run-up to Copenhagen.

The unfairness of this climate change issue is that while rich countries have caused the problem, thanks to their high stock of carbon dioxide (CO2), its impact will be felt primarily in the global South. Developing countries will have to pay in two ways for the carbon space grabbed by rich countries: they will have to adopt a far more expensive low-carbon trajectory for their development as well as pay for the impact of higher temperatures through costly adaptation measures. Low-lying countries have, of course, the additional danger of losing large parts of their land owing to rising sea levels. That is why early and deep cuts by rich countries are so critical to the developing world.

Unfortunately, India, after making a determined stand about not diluting the basic formulations of Kyoto, seems to be changing its position. It is increasingly clear that there is a strong lobby in the current government that would like to trade off the countrys trajectory of development to the need of a strategic understanding, if not alliance, with the United States. The note privately circulated by Union Minister of Environment and Forests Jairam Ramesh seeks to delink India from the G-77, and argues for softening Indias stance vis-a-vis developed countries and the U.S. It also talks of no theological objections to the Australian proposal, which blurs the distinction between Annex 1 and Non-Annex 1 countries. As one negotiator stated in private, this note concedes all that the U.S. and other developed countries have been asking of India, without their conceding anything in return. Not surprisingly, reports from the Climate Change Negotiations in Barcelona indicate that G-77 is now quite wary of India and what its future position will be.

The private note circulated by Jairam Ramesh has now been followed with a formal position taken by him in the pre-Conference of the Parties (COP) meeting in Copenhagen. India is now talking about giving international commitments on making low carbon sustainable growth a central element of its 12th Plan growth strategy and also offering commitments to reduce energy to GDP intensity (intervention made by Indias Environment Minister at the pre-COP meeting at Copenhagen on November 16, 2009). Without any commitments from rich countries to transfer either knowledge or resources for such a low-carbon path, India might end up forgoing the cheaper coal route of energy generation and then paying whopping monopoly prices for low-carbon technologies. A lock-in to a low-carbon path without any consideration of costs and technology appears to be foolhardy as a negotiating strategy, particularly as rich countries have conceded nothing until date.

The table on page 36 provides some figures on the disparity between per capita consumption of energy and per capita emission between the rich and the developing countries.

Though China is currently the highest emitter, coming ahead of the U.S. by a whisker, and India is the fourth highest emitter, with respect to per capita emissions they are well below the rich countries. India is not even in the same league as China or other emerging economies its per capita income and energy use put it in the bottom 40 per cent of the world. In per capita terms, India consumes energy less than 1/20th of that of the U.S. and its emissions are 1/20th of that of the U.S. It is a poor country, not only by its income levels but by any other indicator, including energy.

A Princeton study (Sharing global CO2 emissions among 1 billion high emitters, Proceedings of the National Academy of Sciences, July 7, 2009) also comes to more or less the same conclusions there are only one million Indians among the one billion high emitters who have to cap their emissions. The fact remains that India is still a poor country and all the talk of becoming a new superpower does not sit well with the reality on the ground.

It is one thing to say that India will reduce its growth rate of energy and quite another to agree with Jairam Ramesh that India will lower not only the energy intensity of its gross domestic product (GDP) but also its emission per unit of energy consumed (follow a low-carbon path).

If we lower the energy intensity of the GDP, are we saying that India will not take to manufacturing in a big way but will continue largely as an agrarian and service economy?

When the Minister says India will follow a low-carbon path, has anyone actually computed the costs of following such a path? Do we have a coherent strategy that integrates the path of development with the climate concerns?

It is true that GDP growth and energy growth need not be tightly coupled. It is possible to have GDP growth without simultaneously increasing energy consumption. This is what rich countries are now doing; once a country reaches a certain level of development, it is possible to change from a manufacturing to a service economy.

The question that India confronts is whether it is possible to reduce the energy intensity of the economy before reaching a minimum level of development? This, no country has done yet. If we take the correlation between energy and other human development indicators, there is a strong correlation up to a certain point, after this it is not so strong. This would indicate that a minimum of energy consumption per capita is required to achieve a certain level of development. One can argue on what this point is, but by any reckoning it lies well above Indias current low level of energy consumption. If we have to provide for development and even a minimum level of energy consumption for the majority of the Indian people, Indias per capita energy consumption will have to increase significantly.

One of the reasons why China could become the manufacturing hub of the world is that it ramped up its installed capacity in electricity and other infrastructure in the past two decades. India, instead, slowed down its rate of electrification from the 1990s, not only losing the manufacturing race but also giving up valuable carbon space.

The difference between a service-driven path of development and manufacturing is that the service sector does not have backward linkages and the consequent multiplier effect in the economy that manufacturing does. Therefore, it creates fewer jobs and cannot pull up the rest of the economy. The service boom can at best help a small minority and create dollar billionaires, as it has done in India. It will not provide mass employment or reduce mass poverty. Therefore, giving up a manufacturing route for a service-driven one, as is being contemplated now, is also choosing a far less equitable path of development.

The low-carbon path that the Minister has offered in Copenhagen can either be a nuclear or a solar route or a combination of the two. Nuclear power could become a major component in the future 40,000 MW by 2020 as was propagated during the India-U.S. nuclear deal. The other route is the 20,000 MW solar thermal plants by 2022, according to the National Solar Mission.

The nuclear programme envisages the immediate offer of 10,000 MW worth of nuclear contracts to U.S. suppliers. No attempts have been made to evaluate the cost of U.S. nuclear plants. Going by the filings before the regulatory commissions in the U.S., Moodys Investor Services agency now estimates the cost of nuclear power to be around $7,500 per KW or about Rs.30 crore per MW. This is about six times that of coal-fired plants. While the Indian technology developed by the Department of Atomic Energy (DAE) would be a lot cheaper, the fact remains that a rapid increase of nuclear power can happen only with large-scale imports. As can be seen, this would then mean paying through the nose for such imports.

The solar thermal route is another possible low-carbon route. Using a solar route, the capital cost would be around Rs.20 to Rs.25 crore per MW or four to five times that of coal-fired plants. But that is not all. Since the plant load factor (PLF) is about 25 per cent for solar plants as against 80 per cent for coal-fired ones, India will have to install about three to four times as much the capital cost for producing the same amount of electricity from solar plants is about 12 to 15 times that of using the coal route or a high-carbon route! So, choosing a low-carbon path, as the government seems to be committing in the climate change negotiations, will impose huge costs on India.

When developing countries talk about financial and technology transfers for the carbon debt that rich countries owe the rest, they are not talking about some notional costs but about the additional burden they will have to bear because of a lack of carbon space today. On the one hand we have to adopt high-cost technologies for reducing emissions, on the other we have to pay monopoly prices to multinational companies to buy such technologies. The demand that rich countries should make financial and technology transfers to developing countries is not a plea for charity. It is small reparation for the additional burden of adopting a low-carbon path by countries such as India.

The unity of developing countries is the key to the success of the Copenhagen negotiations. It is here that India can make or mar the global climate case. In the General Agreement on Tariffs and Trade (GATT), it was Indias about-turn in 1989 on introducing intellectual property rights (IPR) in trade negotiations that led to the trade-related aspects of intellectual property rights (TRIPS) and its devastating consequences on Third World health costs.

The talk of Indias Security Council seat, of the country now being a part of G-20, and of its self-interest governing the climate change negotiations, all create suspicions of a similar about-turn in Copenhagen. Hopefully, the Indian government will realise that it will stand totally isolated and be seen as a subordinate ally of the U.S. if it does a GATT-like volte-face.

Hopefully, an active public opinion and an alert Parliament will not let that happen.

Prabir Purkayastha is an energy analyst with the Delhi Science Forum.

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