10 October 2014

India's climate change strategy: Expanding differentiated responsibility

Samir Saran and Will Poff-Webster
07 October 2014

Introduction 

As the world prepares for the upcoming climate change negotiations in Lima in 2014 and Paris in 2015, there is an expectation that the talks be more decisive than previous attempts at consensus from Kyoto to Copenhagen. Yet the assumption that the undeniable science of climate change will by itself compel action on an issue that has thus far proved the mother of all collective action problems ignores the failures of past conferences. For Lima and Paris to succeed in achieving consensus, the issue of equitable response to the climate crisis must be creatively reimagined. Equity has been a challenge for climate consensus since the 1992 Rio Earth Summit first articulated that, "In view of the different contributions to global environmental degradation, States have common but differentiated responsibilities."1 

In meeting this challenge of articulating responsibilities for a climate that all share but only some have impacted substantially, India's challenge is increasingly the world's challenge. How can India acknowledge and respond to existing trends—the increasing urgency of confronting climate change, the energy-intensive process of achieving a semblance of development, and widening wealth gaps between rich and poor—while maintaining its focus on bringing its hundreds of millions of citizens out of poverty? In a larger sense, how can the world prevent climate degradation amid existing inequality and the aspiration of billions to rise out of poverty? 

Maintaining equity between India and earlier developers 

For India, the actualisation of differentiated responsibility remains central to any climate agreement. Developed countries and China have already undergone energy-intensive industrial development (and largely coal-fired electrification) to bring their people out of poverty, consuming much of the world's carbon budget in the process. From Britain's use of the steam engine in the early nineteenth century to China's exponentially increasing coal capacity over the last decade, carbon-polluting energy has been essential to providing jobs for the millions who seek them in each successive industrial revolution.2 India's coming industrial revolution and necessary shift to manufacturing, with twelve million new workers entering the workforce each year, cannot be avoided lest those millions lose the possibility of a better life.3 India's economic transition, coming at a time when the world is finally moving toward a collective response to climate change, represents a great challenge to maintaining economic equity between India and previously industrializing powers. After all, the cost of access to prosperity must not be the highest for latecomers to industrialization. In other words, poverty cannot be frozen by a dateline. 

India has acted to engage these contrasting priorities, by committing to a 20-25 percent reduction in carbon intensity by 2020—a natural consequence of increasing efficiency in the energy sector, but also a step to ensure the government's promise that India's per capita emissions will not go above those of wealthy countries.4 But equity suggests that India resist any effort to tie its energy intensity reduction to China's, as the two countries have vastly different existing energy consumption and generation footprints. India starts from a lower polluting baseline compared to China and even to developed economies that have shed manufacturing—India's use of energy per purchasing power parity dollar of economic output is 0.33 kg CO2, compared to China at 0.60 and developed countries like the United States at 0.48.5 The tendency to see China and India in hyphenated terms as large economies with growing emissions ignores the fundamental differences in their current contribution to climate change and to their vastly different economic and development landscapes. 

Toward an Indian strategy 

The need for global action against climate change has prompted diplomats in the developed world to speak of "win- win" situations—that transitioning to renewable energy will allow economies to reap the benefits of green jobs growth while reducing emissions. At least in India, this rhetoric rings false. Barring as-yet-insufficient technology, stuttering monetary transfer, or commercial funding from the developed world, coal will remain significantly cheaper than all other sources of energy through 2030 and perhaps beyond.6Renewables suffer from high variability in supply and base load restrictions on Indian power grids. Renewable energy development, which would be appealing from a simplistic "first, do no harm" perspective, collapses upon closer scrutiny: how should India assess the harm of more of its citizens remaining in poverty for every increase in marginal energy cost? The ethical aspect has a political dimension as well: India's parliament will not countenance ratifying the Paris proposal unless it allows maximal focus on poverty alleviation. And even if it does, democracies have other ways to negate bad agreements, federalism being chief among them. While this is a matter for another study in itself, it must be noted that in the Indian context, the country must be viewed as a collection of thirty nations in a union. The Paris proposal must work for Indian states, or it will fail the ultimate test of implementation. 

To negotiate action on climate change despite these challenges, India should promote a more fine-tuned form of differentiated responsibility — not just between countries, but within them as well. International debate thus far has been dominated by equity between countries, yet recent globalisation has caused increasing intra-national inequality as global inequality decreases.7 Even proposals for differentiated responsibility within federal systems, whether EU members, Chinese provinces, or American or Indian states, suffer from inadequate consideration of the far greater inequality within each of these smaller entities.8 India should solve this problem by introducing international emissions standards for large corporations. For instance, all corporations valued above $1 billion (or another suitable cut-off) should be subject to internationally binding efficiency standards, regardless of national origin. By decoupling protection of the poor from protection of wealthy corporations that reside within the same borders, India will focus its negotiating power on protecting its most vulnerable citizens, while also addressing large multinational corporations often unconstrained by state power. Allegations that India's wealthy corporations hide behind its government's focus on poverty would be allayed, and the world would be able to address climate change with differentiation and therefore equity—targeting those able to pay rather than the global poor. This would also compel the "rich" countries to act against the "carbon gaming" of their transnational corporations. 

Market-oriented change 

Such a negotiation strategy would enshrine an expanded differentiated responsibility, helping to solve equity concerns. Corporate emissions standards would nonetheless face several practical obstacles—balancing mandatory and transparent compliance with national sovereignty; preventing economic distortions that might inefficiently incentivize corporations to remain below $1 billion valuation or break into subsidiaries; and solving the larger challenge of corporate tax havens that would be ripe for exploitation under any international standards. As these are important issues for global governance to solve regardless, an equitable response to climate change can provide the impetus. 

India can supplement this new proposal with more traditional methods of reducing emissions. India is leading the way in developing countries' efforts on energy efficiency, a key opportunity for the eventual low-carbon transition—and one that remains truly "win-win" because energy saved from low-cost sources further reduces cost. In the latter part of the last decade alone, India's Bureau of Energy Efficiency (BEE) doubled its energy savings in avoided generation capacity each year.9 New economic instruments like demand-side management hold the potential to reduce energy use by up to 25 percent, and the Bombay Stock Exchange's GREENEX Index on energy-efficient stocks shows that the private sector is already taking action through market mechanisms to improve its energy efficiency.10 Lima and Paris can capitalize on such early beginnings to turn India's ideas and experimentation into global systemic change. 

Summing up 

India's challenge at the upcoming global climate talks is twofold. First, it is now time to look beyond the India-China hyphenation; it is unhelpful to India's cause and situation. It is time to walk alone and seek specific exemptions or exceptions for India's scale and diversity of realities. 

Second, India needs to take leadership and identify constructive ways to move forward on climate change mitigation while not sacrificing the imperative of poverty alleviation. By the same token, the world's challenge is to develop a holistic global framework that can manage the climate change threat in a world of differentiated responsibility. 

By introducing intra-national differentiation between wealthy corporations and impoverished populations, Indian negotiators can help move the upcoming talks beyond past failures. These big corporations also account for a large carbon treasury and can be a low hanging fruit for both emissions reduction imperatives and to fashion a new sustainable business paradigm. Through leadership on this and other issues like energy efficiency, India can ensure its commitment both to the development of its citizens and the maintenance of the ecosystem. 

1. "Rio Declaration on Climate and Environment," The United Nations Conference on Environment and Development,http://www.unep.org/Documents.Multilingual/Default.asp?documentid=78&articleid=1163.

2. "China Approves Massive New Coal Capacity Despite Pollution Fears," Reuters, http://uk.reuters.com/article/2014/01/07/china-coal-idUKL3N0K90H720140107.

3. "Why India Must Revive Its Manufacturing Sector," The Diplomat, http://thediplomat.com/2014/02/why-india-must-revive-its-

4. "India Vows 20-25% Carbon Intensity Cuts," The Times of India, http://timesofindia.indiatimes.com/india/India-vows-20-25- carbon-intensity-cuts/articleshow/5298030.cms; "India to Reduce Carbon Intensity by 24% by 2020," The Guardian,http://www.theguardian.com/environment/2009/dec/02/india-carbon-intensity-target.

5. "An Assessment of India's 2020 Carbon Intensity Target," Grantham Institute for Climate Change,https://workspace.imperial.ac.uk/climatechange/Public/pdfs/Grantham%20Report/India_2020_Grantham%20Report%20GR4. pdf.

6. "Energy in India: The Future is Black," The Economist, http://www.economist.com/node/21543138.

7. "Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession," Centre for Economic Policy Research,http://www.voxeu.org/article/global-income-distribution-1988.

8. "New Players on the World Stage: Chinese Provinces and Indian States," The Brookings Institute,http://www.brookings.edu/research/essays/2013/new-players-on-the-world-stage.

9. "Verified Energy Savings with the Activities of Bureau of Energy Efficiency for the year 2009-10," National Productivity Council,http://220.156.189.23/miscellaneous/documents/energy_saving_achieved/document/Verified%20Savings%20Report%20for%202009-10.doc.


(The writers are with Observer Research Foundation, Delhi. This paper was presented at the Council of Councils Sixth Regional Conference, September 28-30, 2014) 

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