Equity question

IT is an unfortunate irony that India, with a third of the worlds poor and less than one-third the per capita carbon dioxide (CO2) emissions of the world average, is seen as a stumbling block to an international treaty on climate change. Irony, because Indias apparent obstinacy belies a less-known fact: its low emissions result not only from low income levels, but also from energy policies and lifestyle patterns that benefit climate change. That is why Indias CO2 emissions per unit of gross domestic product (GDP) is comparable to that of the United States and the European Union, despite its reliance on coal. What is unfortunate is that the focus of international negotiations seems to be shifting towards domestic actions in developing countries, while developed nations particularly the U.S. fail to take on aggressive commitments to reduce emissions. Domestic legislation in the U.S. and the E.U., if implemented, would reduce their emissions to 5 and 20 per cent below the 1990 levels by 2020, while cuts of at least 25-40 per cent are needed to avoid dangerous levels of climate change.

Indian negotiators are caught between a rock and a hard place. If they continue to push for equal per capita shares as a precondition for any further action, they risk giving developed nations further cause for abandoning their own commitments, resulting in no international agreement. But India will be among the first to suffer the impact of future climate change, given its vulnerability to the monsoons, dependence on the Himalayan snow cover, and the potential influx of climate migrants, among other challenges. With an increasingly limited global carbon budget, even the unlikely event of the Organisation for Economic Cooperation and Development (OECD) countries stopping their emissions entirely will not suffice to prevent dangerous climate change as long as there is continued growth from developing countries. This means that India, too, must find a way to reduce its emissions soon, though how soon, by how much, and through what means constitute the crux of the issue.

If India were to take on binding commitments over and above its existing, and any future voluntary, actions that limit its emissions growth, that might help move an agreement along. But India, along with other developing countries, faces a daunting challenge to alleviate poverty. Nearly one in two Indians is poor and has little or no access to sanitation, clean drinking water, adequate housing, health care, and modern energy services. The lowest fifth of Indian society has seen little improvement in its quality of life in decades, despite many government-led programmes. With an emphasis on equitable growth, it is conceivable that India can widen access and meet the basic needs of the poor with only a minor cost in carbon terms. Yet, without having conducted an adequate analysis of what is economically and politically feasible, the government would risk putting too much on the table. India could then face a triple burden involving hard climate impacts, a mammoth task of pulling 400 million people out of poverty, and having to pursue a low-carbon growth path at its own cost.

Obviously, there are no easy answers to this. India has obligations under the Bali Action Plan to develop and undertake a set of Nationally Appropriate Mitigation Actions (NAMA) that are measurable, reportable and verifiable, in exchange for technical and financial assistance. But in fulfilling these obligations, India must resist international pressures to blur the distinction between actions and commitments taken in the developing and developed nations, in line with the principles of common but differentiated responsibilities embodied in the Framework Convention on Climate Change. India then needs to do a far better job of shifting its priorities towards equitable growth while communicating its record and policies, rather than just its moral stance, on climate change.

Compared with rich countries, India seems to be on low-carbon growth path. As pointed out in a recent report, An Overview of Indian Energy Trends, released by Prayas Energy Group, Indias carbon and energy intensities (emissions and energy per unit of the GDP adjusted to purchasing power parity) are significantly below those of China and comparable to those of the U.S. and the E.U. Chinas carbon intensity is double that of the other three. Three broad factors contribute to Indias low-carbon intensity: a trend of reducing the energy intensity of economic activity; a steady and sizable increase in renewable electric capacity; and a historically low-carbon lifestyle and urban development. Policy has played a role in driving down energy and carbon intensity, particularly in the recent past, even if many of these have been driven by motivations unrelated to climate considerations.

The Indian economys reducing energy intensity is driven by a number of factors, including structural shifts in the economy towards less energy-intensive activities and efficiency improvements in energy-intensive industries. The service sector, which is less energy-intensive than manufacturing and agriculture, grew from 44 per cent in 1990 to 52 per cent in 2005 in terms of a share of the GDP. Industry also has shown a steady decoupling of growth from energy use: it has grown at 5.9 per cent and 3 per cent a year, respectively. In addition, industries such as cement and steel have seen major improvements in their energy intensity.

Part of the reason for this shift is that Indian industrial energy and electricity prices are relatively high. Mainly as a result of cross-subsidies to agriculture, Indian industries pay for electricity at rates that are 50 per cent higher than those in the U.S. and China (see Figure 1). Indian petrol prices are also 60 per cent higher than those in the U.S. in market exchange terms (and several times higher when adjusted for cost of living). Even diesel prices are higher than those in the U.S. and China. For the U.S. to have equivalent energy prices to those in India today, it would have to charge a carbon tax of over $100/tonne of CO2 for gasoline and $30/tonne for industrial electricity. But Indias large price subsidies result in major distortions and inefficiencies in consumption. Targeting these subsidies to the poor better could enhance development and reduce emissions.

Most Indian consumers are concerned about energy conservation for largely economic reasons. Data show that about two-thirds of all lamps in India are fluorescent lamps. A series of energy efficiency programmes by the Bureau of Energy Efficiency (BEE), including standards and labelling for appliances, building codes and industrial process efficiency targeting, are likely to increase the penetration of energy-efficient appliances in industry and in commercial and residential applications. They have culminated in a National Mission on Enhanced Energy Efficiency (NMEEE), which includes innovative programmes such as mandatory targets and tradable efficiency credits, capacity building, and financial and risk support to energy service companies.

Renewable capacity (primarily wind) comprises about 10 per cent of Indias installed electric capacity (and 4.5 per cent of energy generated), compared with 4 per cent in the U.S. (3 per cent of energy generated). While Indias renewables policies can be criticised on many grounds, such as their high prices, climate is not one of them. Indias comparatively high share of renewables appears even more aggressive against the backdrop of its emissions contribution and low income (see Figure 2). Further, Indias wind resources are inferior to those in the U.S., the E.U. and China, making its energy relatively more expensive. Indias investments in renewables ought to count for more than a similar unit of investment in these countries.

Wind power (~ 10 GW) has grown at a rate of 26 per cent annually since 2000. Modern renewable and hydro capacity addition comprised 50 per cent of all capacity additions in the last decade. Seventeen States, which account for roughly 92 per cent of the power consumed in the country, have mandated targets for purchases of renewables, which range up to over 10 per cent by 2012.

Going forward, the National Solar Mission plans to offer large public subsidies and envisages 20 GW of solar capacity additions by 2020. This is highly noteworthy because solar is one of the most promising renewable energy options today. India plans to spend as much as 0.1 per cent of its GDP to promote solar energy.

In transport, up to three quarters of passenger demand in India comes from rail, bus and non-motorised forms of transport. Of those who own vehicles, 80 per cent drive two-wheelers because high fuel prices reduce growth of consumption. The freight intensity in India also compares favourably with the U.S. and China, again owing to the comparably high share of rail. This may change to some extent with the high growth in the number of cars and trucks. Still, there are only 12 light duty vehicles for every 1,000 persons compared with 800 vehicles in the U.S. today and about 450 in Europe. Indias transport energy demand today equals just the increase in transport demand in the U.S. between 1999 and 2005. Against this backdrop, severe concerns of safety, congestion, noise and pollution should take priority over carbon emissions in Indias transport policies.

The typical Indian lifestyle even in middle-class settings encourages relatively low energy consumption. According to one study, households in India have one-third the energy intensity of American households with the same expenditure adjusted for purchasing power parity.

The growing density of urban spaces forces people to live in smaller homes, which take less energy to build and to cool. Despite growing meat consumption, Indias aggregate meat consumption is less than a sixth of that of the U.S. and a 12th of that of China. This is important as the direct emissions from meat production contribute 18 per cent of global greenhouse gas emissions.

India has much to do to fulfil its share of even a fair climate deal. The government needs to articulate rapidly a strategy for NAMA that takes advantage of the low-hanging fruit and gives due consideration to local environment and equity issues (and not only to economic growth). Use of employment guarantee funds for social forestry is a good example of potential synergies between multiple objectives. India should also prioritise the use of its scarce resources to implement mitigation actions. For example, ensuring that all new household and commercial electric appliances meet economically appropriate efficiency standards can avoid building an ultra mega power plant (4,000 MW) each year.

This will cost a fraction of what it would cost to build this capacity from solar or wind instead. Moreover, it would increase jobs instead of increasing conflicts over land and water for building power plants. Most importantly, the government needs to initiate a well-structured domestic consultation process for developing NAMA, which also transparently informs the international audience about the countrys serious intentions.

India faces a unique predicament with climate change no other country has as much at stake both in preventing climate change and in avoiding costly mitigation. Internationally, it needs to showcase its low carbon trends alongside its development challenges to correct distorted perceptions about its standing as the fourth largest emitter, but it should simultaneously take on constructive actions at home that make use of its advantages and are consistent with pro-poor priorities. It implies having to take the equity question seriously, both internationally and domestically, to continue along its low-carbon pathway without providing cause to be indicted for hiding behind its poor.

Narasimha D. Rao is Research Scholar in environment and resources at Stanford University, U.S.

Girish Sant is Coordinator, Prayas Energy Group, Pune.

Sudhir Chella Rajan is Professor at the Humanities and Social Sciences Department, Indian Institute of Technology Madras.