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Decoupling energy consumption from economic growth

India is particularly vulnerable to climate change?with scarce economic resources, a long coastline, snow-fed rivers, over three quarters of its population living below $2 a day, and 650 million people dependent on weather-based agriculture and forest products.

India is particularly vulnerable to climate change?with scarce economic resources, a long coastline, snow-fed rivers, over three quarters of its population living below $2 a day, and 650 million people dependent on weather-based agriculture and forest products. It is particularly vulnerable to disruptions, droughts and floods induced by climate change.

India is a world leader in many major fields, but also in poverty figures and killer diseases. While on many aggregate developmental parameters, India ranks among the top-10 countries of the world, it is ranked in the bottom-half alongside the most laggard nations if these national indicators were converted into per capita developmental indicators?specifically for two-thirds of the poor population. There are vast disparities in per-capita incomes, resource and asset holdings, and energy consumption patterns across the India population. Notwithstanding that India still houses almost 40% of global energy-poor and providing them clean and modern energy would imply a high growth in Indian energy and greenhouse gas emissions in future, India committed at Copenhagen climate change summit last year to reduce its GHG intensity of GDP by 20-25% during 2005-2020. India had reduced this by around 17% during 1990-2005 and a similar reduction is indeed possible in the future as well. But it would require multiple GHG mitigation actions by the Indian government through its federal institutions, by industry and business, by the civil society and by the people at large, especially the better-offs. These actions would require double decoupling?decoupling economic growth from energy, and also energy from carbon emissions. If India were to present ?meaningful action? on climate change, it is therefore likely to be as a suite of measures, and not absolute targets on GHG emissions. Such a basket of options could contain voluntary trading schemes such as Perform Achieve and Trade (PAT), renewable energy targets, demand-side energy efficiency, sectoral benchmarks, adaptation packages, and so on.

There is no silver bullet for what constitutes meaningful action on climate change. The issue at this point is on our readiness to implement actions in a reasonable timeframe. How prepared are we to implement these as a nation even if we assume that we have all the right policies in place? Where would the requisite data come from? Do we have sufficient reporting systems in place for energy and greenhouse gas emissions at firm level? Is the country ready at least in terms of data, which is the starting point?

Decoupling economic growth from energy consumption would require improving energy efficiency of doing business?be it for producing energy resources, for construction and manufacturing, for transport and supply chains, and for all other products and services. Energy improvement has to be sector-specific and could be achieved gradually in phases across industries. The proposed PAT initiative of the Bureau of Energy Efficiency is a step in the right direction. But PAT has left some flanks open that could subvert it?such as insufficient discussions with the industry while creating efficiency baselines, and a mechanism for early price discovery of energy efficiency certificates. The latter could be done through issuance or part auctioning of allowances. Further, baseline creation could be a huge task as has been the experience of similar schemes the world over. Energy consumption numbers and the connected greenhouse gas emissions have to be estimated for each and every entity before its desired performance levels could be decided and monitored. Plus, in our eagerness to prove India?s climate credentials to the developed world, who themselves have been faltering in extending GHG mitigation commitments beyond 2012, India may be forgoing low-hanging fruits of carbon credits if PAT is taken by international community as defining Indian industry?s baseline for GHG emissions. Indian industry could thus miss an opportunity of getting carbon finance while also improving its energy efficiency.

As the global negotiations move onto Cancun, negotiators are beginning to acknowledge the existence of readiness costs for governments and businesses to implement carbon mitigation and adaptation strategies, which would involve substantial resources, especially for developing countries. These readiness costs could be up to half of the prevailing carbon prices.

India needs to take action on multiple fronts on data management and information generation. Existing detailed data has to be put in the public domain. Data gaps need to be filled for creating meaningful policies, such as mapping solar radiations throughout the country in order to utilise solar power generation potential optimally. PAT negations and data analysis also fall in this category. We need data-intensive modelling to target mitigation and adaptation measures, such as estimating sectoral and regional economic losses and probability of their likelihoods due to climate change. The question remains, has India moved beyond mere rhetoric and looking at data, information and knowledge needs to move onto the next level of meaningful action on climate change?

The author is professor, IIM Ahmedabad

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First published on: 06-12-2010 at 00:09 IST
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