Edge of Climate Change
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|Murali Krishnan||November 23rd 2009|
Center for Public Integrity and Indo-Asian News Service
The image of the new India is that of a nation on the move: rapid economic growth, a rising middle class, big infrastructure projects, and global business deals. All these suggest that India may be the next China, the next economic superpower to emerge from the developing world.
But there is another side to the world’s largest democracy: About 60 percent of Indians live on less than $2 per day. Over half the country’s billion-plus people lack formal access to electricity. In some of India’s more crowded states, like Bihar and Uttar Pradesh, with a combined population of 250 million residents, have no electricity for a good part of the day. Villages in much of India’s outback are not connected to a power grid at all.
It is against this stark backdrop — against the pressing national imperative to reduce poverty and improve education and healthcare — that India grapples with how to address climate change. For years, the Indian government has viewed global warming through this domestic lens, arguing that mandated caps on greenhouse gas emissions would stunt its explosive economic growth and that, in any case, the industrialized world should bear the responsibility of relieving a problem it started decades ago.On these points, Indian officials and industry leaders seem of one mind. To the extent there is a lobby on climate change policy, it appears part of the normal back-and-forth between government and business over how to move the economy forward. Environmental non-governmental organizations (NGOs), who would advocate tougher measures, have little voice in the discussion. “Opinions of NGOs are sought on some policy issues. But when it comes to occupying a seat on the high table, especially during negotiations, they have none,” says Joydeep Gupta, secretary of the Forum of Environmental Journalists in India.
Still, there is growing discussion over climate change in India, including debate over how quickly the nation should move to moderate its own greenhouse gas emissions. Indeed, although India has never taken an excessively hard-line position, it now says it will do its part to curb emissions. As it heads to Copenhagen next month for negotiations over a new climate treaty, India wants to be, in the words of Jairam Ramesh, the country’s environment minister, “a dealmaker not a deal breaker.”
The subtle shift in India’s stance on global warming comes as Prime Minister Manmohan Singh and climate treaty negotiators are pushing to adopt a more internationalist posture on both climate change and trade, while seeking also to enhance India’s global stature. India recently signed a landmark civilian nuclear deal with the United States, a partnership that promises to improve its energy security and lay the groundwork for engaging in international nuclear-related commerce.
The stakes are considerable. India is the world’s fifth-highest emitter of the greenhouse gases that contribute to climate change. The country’s per capita annual emissions of greenhouse gases are 1.2 metric tons, but are expected to nearly double to 2.1 tons by 2020 and then more than triple to 3.5 tons by 2030. By contrast, U.S. per capita carbon emissions are more than 18 tons, and the world average is 5 tons.
Although India has stopped short of endorsing legally binding global targets for cutting emissions, it has proposed domestic measures that include increasing its use of renewable energy, stricter fuel efficiency standards, mandatory green building codes, cuts in energy consumption, and construction of more efficient coal-based plants. New legislation has been proposed for the Indian parliament that would establish broad, specific cuts for carbon emissions.
But India’s guiding climate principle, the foundation of its international platform, is that its greenhouse gas emissions on a per capita basis will never exceed average per capita emissions in the developed world. The Indian government argues that the per capita target is a legitimate measure, an onerous challenge, and a significant commitment. Critics argue that the goal is insufficient; because India has more than one billion people, they say, any increase in its per capita emissions could still add dramatically to global warming. Indian officials counter that the source of the problem is not population, but consumption.
A Slowness To Respond
Despite the shift in India’s stand, there remain significant disparities between the Indian government’s declarations on climate change and its execution of policies. This is due partly because the government has been slow to act with new regulations, and private industry, which has fueled an economy growing at seven to eight percent a year, has made few substantial moves to mitigate its contribution to global warming or to develop ways to adapt to it.
As far back as June 2008, for instance, Prime Minister Singh announced the country’s ambitious National Action Plan on Climate Change (NAPCC), an approach to address global warming through eight national initiatives, or missions. The measures are targeted in particular at promoting use of solar energy, energy efficiency, and sustainable habitats and agriculture.
But to date, none of the missions have gotten off the ground, and this year’s federal budget makes virtually no allocation for measures to curb climate change. Malini Mehra, founder of the Center for Social Markets and the producer of a documentary on business and climate change, says Indian industry is not doing enough to pressure the government to adopt a more proactive stance on climate or the sustainability agenda. “[Industry] has been passive and reactive,” says Mehra. “Unlike in many countries, there has been no progressive lobby formed to push a business case for climate leadership. That is why the government has gotten away with casting climate change as someone else’s problem and just a cost for India.”
That sort of inaction characterizes the energy sector, as well. The Energy Conservation Act of 2001, for example, identified 15 large energy-intensive industries for improvements in efficiency. But it was not until 2007 that the government notified company officials in nine industrial sectors of what the law required. The sectors include aluminum, cement, chloralkali, pulp and paper, fertilizers, power generation plants, steel, textiles, and railways. They were to appoint an energy manager, file energy consumption reports every year, and conduct energy audits. They were also required to adhere to strict energy-consumption norms specified by the government. To date, however, no returns have been filed by any of the sectors. And six other energy-intensive industries — sugar, chemicals, transport, petrochemicals, ports and conventional buildings — have yet to be notified at all.
“It takes time for these processes to kick off,” said Ajay Mathur, head of the Bureau of Energy Efficiency, which along with the Ministry of Power is charged with preparing the conservation plan. “Some of the sectors have begun filing their returns, and I need to check on them.” Shyam Saran, Singh’s special envoy on climate change, justified the delay, saying the measures were still a “work in progress.” He said full implementation of the laws would require cabinet decisions and further legislation. “That is the stage we are in — trying to work out how we go about implementing these recommendations that have already been accepted in principle by the Prime Minister’s council on climate change.” The remaining six sectors, he added, are being considered by the council one by one.
At the same time, the energy efficiency bureau has announced it would make energy ratings mandatory for electrical appliances, including air conditioners and refrigerators. The new rule, to take effect in January 2010, requires fluorescent lights to bear labels with information about the product’s energy consumption. By June, 2010, the government is expected to expand the efficiency ratings system to cover electric motors, television sets, and stoves using liquid propane gas. Manufacturers would have to comply with the law whether their products were sold domestically or abroad. However, industry sources said the deadline for the law’s implementation would be extended because appliance manufacturers were not in a position to make the necessary changes by that time and the government was not pressuring them to do so.
The government’s relaxed stance also means that industry is showing few signs of urgency in cutting down its greenhouse gas emissions. For instance, Tata Group, the international conglomerate that is India’s largest corporation, has only just begun to address climate change. In May, Tata retained consultants McKinsey and Co. and Ernst & Young to assist its top five polluting companies in reducing their carbon footprint. Acccording to Tata, those companies, Tata Steel, Tata Motors, Tata Power, Tata Chemicals, and Tata Consultancy Services, together contribute 80 percent of the group’s overall emissions. Tata Steel’s CO2 emissions are currently two tons per ton of liquid steel, whereas the ideal world standard is 1.5 ton of CO2 per ton of liquid steel. Admitting that the group had been slow off the mark, Tata Sons Director Jamshed J. Irani said the firm — the Tata Group’s primary holding company – planned to reduce its greenhouse gas emissions based on global benchmarks over the next three years.
A recent report by the independent U.K.-based Carbon Disclosure Project suggested how far Indian companies have to go. The report, which covered 200 Indian companies, including 95 from energy-intensive sectors, found that only a few firms actively accounted for their greenhouse gas-emissions. It found that 40 percent of companies engage with policymakers on possible responses to climate change, including taxation, regulation, and carbon trading, but it found that fewer than 20 companies, many of them multinationals, were engaged in emissions trading. The study found that although the majority of companies that responded to the survey have emissions-reduction targets in place, they are subjective instead of quantitative, and they lack timelines for achievement.
A Million New Cars a Year
Transportation is a particular hot spot for India’s carbon emissions growth. More than one million cars are being added to India’s roads every year — a growth rate averaging 10.2 percent annually over the last five years. The transportation sector is working on developing alternative fuels for both energy security and emission reduction. According to the Society of Indian Automobile Manufacturers (SIAM), which represents India’s major vehicle and engine manufacturers, new emission standards will soon take effect. By April 2010, Euro IV emission norms, based on 2005 EU standards, are expected be in place in 13 Indian cities, and Euro 111 norms, based on 2000 standards, will take effect in the rest of the country. There will soon be one standard across India, says Dilip Chenoy, director general of SIAM. “There is a roadmap, and we are trying to push for it to be voluntary ahead of government,” he said. He added that “the government has also set up a task force for preparing the hydrogen road map. Technical feasibility studies will be carried out.”
Despite the progress on emissions, environmental groups have long argued that the auto industry is delaying the development of alternative fuels and resisting adoption of higher fuel-efficiency standards. D. Raghunandan of the Delhi Science Forum, a non-profit organization engaged in science and technology policy, argues that even though auto companies have made efforts to reduce emissions, they have received huge concessions from the government, including preventing new fuel efficiency standards from being implemented. “Emission norms are different from efficiency norms,” he says. “How many of the auto majors are willing to invest in engine technology, research and development, and lighter vehicles?”
Raghunandan says the government was obligated to include auto fuel efficiency as a mandated norm under the NAPCC Missions. “It was being resisted by SIAM for long,” he says. “But how these standards are going to be worked out, and under which legislation the auto majors will come under, is still a long [time] away.” SIAM, on the other hand, has been lobbying for a system in which just one regulator would be responsible for safety, emissions, and fuel efficiency. “We are working along with the Ministry of Surface and Road Transport to set up this regulator. We cannot be notified under two Acts,” insists Chenoy.
Chandra Bhushan, associate director of the New Delhi-based Centre for Science & Environment, which has chronicled the climate debate for years, says his organization has been emphasizing the need for stronger fuel-efficiency standards. “The auto industry is pushing for voluntary standards, but we want it to be mandatory,” he says. “Indian industry is hiding behind the government and doesn’t want to take on legal commitments.”
Lobbying for Green Technology Funds
Indian industry has also been lobbying heavily in the area of green technology, seeking to profit from so-called Clean Development Mechanisms (CDM), arrangements under the Kyoto Protocol that allow industrialized countries to cut the costs of their own emission commitments by investing in projects that reduce emissions in developing countries. CDM projects fall in the areas of energy efficiency, alternative fuels, industrial processes, municipal solid waste, and renewable energy. As of March of this year, 398 out of total 1,455 projects registered worldwide by the CDM executive board are from India. (China is first with 453 projects.) The National CDM Authority in India has accorded host country approval to 1,226 projects, helping attract more than US$3.06 billion in investment.
But, despite the industry lobbying, the investments have failed to have any effect on the market for energy efficiency in India, and the government itself admits that the high transaction costs of clean development mechanisms tend to make them unviable. Worldwide, most CDM projects have involved only marginal technology transfer from industrialized countries to developing ones, and there is no mechanism to encourage India-based research and development for green technologies. “Lobbying for CDMs is certainly big, but so far has mostly involved relatively smaller players,” says Raghunandan.
Financing is expected to become a key sticking point as India’s climate treaty negotiators demand that developed countries create a global mechanism for diffusion of green technologies. At a recent conference co-hosted by the environment ministry and the U.N. Department of Economic and Social Affairs, Prime Minister Singh made it clear that he wants to reduce the time between the first commercialization of new technologies and their large-scale adoption in developing countries.
NGOs expect lobbying by Indian industry to intensify as the climate change initiatives take root, global negotiations advance, and India assumes greater climate obligations. “At the moment, there are few, if any, targets for Indian industry, although with the missions there may be some in certain sectors,” says Raghunandan. “However, my understanding is that for most technologies required in the short term are relevant to energy savings, process modulation, use of solar heating for process heat, fuel-efficiency in automobiles, solar photovoltaic, and solar thermal.”
The corporate sector is poised to work with the eight climate missions and to move beyond treating climate change as a matter of corporate social responsibility to treating it as a key condition shaping its strategy. As businesses go forward, observers say, they will be seeking funding to facilitate technology transfers to India. The big question is who will provide that financing. Most intellectual property is owned by private companies that are unwilling to share their knowledge with countries like China and India, which have poor legal protection of intellectual property rights. The resulting fear is that technologies will either be copied or reverse-engineered.
For the moment, India is sticking to its position that there will be no compromise on its per capita principle for cutting emissions. “India is going to be a high-growth, low per-capita-emitting country, even if we assume for the time being that GDP growth will average 8 to 8.5 percent,” said Ramesh, the environment minister, in a recent speech. And the proposed domestic legislation could have a major impact with its targets for emission cuts — a first for Indian industry. But given the inertia of both business and government on climate change so far, it remains to be seen when these plans will actually get off the ground.
Murali Krishnan is national affairs editor with Indo-Asian News Service, a New Delhi-based news agency where he investigates security issues and corruption. His work also appear at the Center for Public Integrity from where this article was adapted.