By Raymond E. Vickery Jr.
November 22, 2015
When the nations of the world meet in Paris later this month, the focus will be on climate change as well as terrorism. Of the two, climate change has the long-run potential to be more deadly and disruptive than the terrorism that recently reared its ugly head in Paris.
What India finally offers in Paris and how the United States and the developed world respond to that offer may well determine the success or failure of the effort to stave off environmental disaster by holding the world’s temperature increase to 2° Centigrade over pre-industrial temperatures at the end of this century.
India has made a climate change offer in the form of its “Intended Nationally Determined Contribution” (“INDC”), and its final position will be built on its INDC. However, U.S. Secretary of State John Kerry already has singled out India for criticism as “more cautious” and “more restrained” than others. India is the third largest greenhouse gas emitter and a primary leader of the “G-77” group of developing nations. Many members of this now 134-country strong group will be strongly influenced by what India does. Thus, the reality is that no satisfactory deal is likely to be reached without India.
The stakes could hardly be higher for the world, for India, and for the United States. The litany of calamities predicted by most responsible scientists if there is failure to hold the temperature increase below 2° C is long and well known. Rising and warming seas, changes in the quality and availability of water, decreases in food production, unbearable heat, and more highly destructive weather events will affect most nations.
However, no other major country is likely to suffer more than India. India is already enduring summers that melt roads and kill people. Some 60 percent of its population makes its living from agriculture, which will be particularly affected. Most farmers will be hit by drought while some will be flooded. A large portion of the Indian population lives in coastal areas and low-lying islands. These areas will be subject to more and deeper flooding and consequent population displacement. Northern India is dependent in large part on runoff from glaciers that are shrinking in the face of climate change. Already, rampant disease vectors are increasing in scope and deadliness. For India, climate change is a slow-moving disaster.
The United States will also suffer from climate change, but, being the richest nation on earth, it will have the means to protect its population to a far greater extent than does India. Since the United States prizes its relationship with India, there are other national interests that will be affected by the impact of what India and the United States do together on climate change. The U.S. now views its long-term security and the spread of democratic values as dependent on a rebalance to Asia. An India disproportionately ravaged by climate change and at odds with the U.S. on this issue will not be the strong and vibrant democratic partner necessary to balance an authoritarian China to make a success of this strategy.
In U.S. political terms, domestic acceptance of the sacrifices necessary to meet climate change goals will be impossible if significant efforts in the country are seen as ineffective because of indefinitely rising greenhouse gas emissions from India. China has pledged to end its increases in CO2 emissions by around 2030. India has made no such pledge. Even though India is in a very different developmental situation than China, India is widely viewed as the recalcitrant party. The prediction that Indian CO2 emissions will surpass those of the U.S. by the middle of the century adds to this perception. Many in the United States ask, “What is the use of Americans making significant sacrifices to ameliorate climate change if these sacrifices will be negated by India’s increasing emissions?”
For some time, India sought to negate this perception by relying solely on the “climate justice” argument, and this position is still prominent in its INDC. According to this argument, the developed economies caused the problem by their profligate burning of hydrocarbons and dumping their greenhouse gas refuse into the atmosphere. It is only just that India has a right to increase its emissions indefinitely in the name of uplifting the poor and bringing electricity to the more than 300 million Indians who are without electrical power. There can be no ‘climate justice’ “when the per capita emissions of many developed countries vary between 7 to 15 metric tonnes, [and] the per capita emissions in India were only about 1.56 metric tonnes in 2010.” Amid this backdrop, India cannot be asked to cut its emissions. Further, as India’s Minister of Power, New and Renewable Energy, and Coal Piyush Goyal has argued to the author and others, the just principle should be “polluter pays.”
All of this is true. However, all nations have arguments built on “justice” or “fairness” for not doing more in regard to climate change. If all parties hold to these positions, the result will be that the 2° C. target will be exceeded and an environmental catastrophe will ensue. Most nations are concerned about others being “free riders” — that is to say reaping the benefits of a satisfactory agreement without making a sufficient contribution. One person’s “climate justice” is often seen as another’s “free rider.” Many argue that India simply wants to free ride as a beneficiary of the sacrifices of others.
Fortunately for India, the United States, and the world, India in its INDC has now moved beyond its traditional “climate justice” position. India’s offer came only shortly before the midnight October 1 United Nations deadline and long after the other top greenhouse gas emitters, including the U.S., China, and the European Union, had made their offers. However, when it did come, the Indian INDC was substantive and provided a way forward.
India’s climate change offer consists mainly of three parts: (1) to reduce India’s emissions intensity per unit of GDP 33 percent to 35 percent from 2005 levels by 2030; (2) to achieve “about” 40 percent installed electric power capacity from non-fossil fuels by 2030; and (3) to create an additional “carbon sink” of 2.5 to 3 billion tons of CO2 equivalent through afforestation by 2030.
It is difficult to compare India’s offer directly with those of the other leading atmosphere polluters. This is so not only because of the variations in capacities for reduction but also because of differences in terms, time periods, and methods of calculation. For example, the United States offers to increase its share of electricity from renewables to 20 percent and India offers an increase to 40 percent. But the Indian offer includes electricity from hydro where the U.S. offer excludes it, and the Indian target date is 2030 whereas the U.S target date is five years earlier at 2025. India offers to “save carbon emissions to the tune of 3.4 million tons” while the U.S. says it will cut greenhouse gases by 26-28 percent by 2025. Clearly these offers are not equivalent, but the U.S. already emits so much more in carbon emissions that it is difficult to measure the relative quality of the offers.
Nevertheless, a coalition of non-partisan research organizations, known as the Climate Action Tracker, has rated the Indian offer significantly above that of the United States and just behind those of the E.U. and China. Even so, considering the cumulative impact of all the offers that have been submitted, the United Nations Environmental Program reports an “emissions gap” indicating the world is less than halfway to the emissions cuts necessary to reach the 2° C target. All will have to do more than their initial offers, and the good news is that the Indian INDC offers a way forward.
As Prime Minister Narendra Modi has just emphasized at the meeting of the G-20 in Turkey, the Indian way forward includes the many initiatives of his government that affect climate change. The part of India’s offer that has received the most favorable comment is the goal of having 100 gigawatts of solar and 75 gigawatts of electric power from other renewable sources by 2022. Coupled with this is a focus on financing mechanisms necessary to move from reliance on coal, diesel, and gasoline to more clean energy. India has imposed a Rs. 200 (approximately $3.20) per ton tax on coal that is going directly to renewables and has cut subsidies and raised taxes on oil and gasoline. Most importantly, India has begun to focus on what it will cost to make the transition to clean energy and the role of the private sector and outside financing necessary to make the shift.
India in its INDC seems to recognize for the first time the role private finance must play in reaching its clean energy goals. India has placed a price tag of $2.5 trillion on its needs for clean energy capital between 2015 and 2030. Obviously, this amount of money, multiplied by the needs of other developing nations, will not come from domestic or international governmental sources alone. Thus, India indicates that it is willing to turn to the domestic and foreign private sector in conjunction with governmental sourcing to obtain financing. It is authorizing issuance of tax-free investment bonds and is highlighting the role of its own private sector through Corporate Social Responsibility schemes and direct business action to address climate change.
Minister Goyal has gone out of his way to participate in Secretary Kerry’s Climate and Clean Energy Investment Forum. He met recently with private sector finance representatives in Mumbai on the subject of clean energy, and the Government of India has set up RE–Invest, an elaborate program to encourage private investment in renewables.
Thus, India has accepted in principle the proposition that private financing in conjunction with carbon taxation and public finance is the way forward to meet its climate change goals. However, the question remains as to whether India will move far enough away from its traditional statist economic approach and insistence on aid from the United States and other developed countries to reach a satisfactory agreement in Paris. Conversely, no deal is possible in Paris unless the United States and the other developed economies are able sufficiently to suppress their own uses of carbon based fuels while mobilizing sufficient financing from both their private and public sectors to assist India and the other developing nations.
There are mixed signals from both India and the United States on these questions. In its INDC, India still clings to some of the language of the past. India warns against “commercial opportunity” in regard to climate change. It asks that clean energy technologies be transferred “free of Intellectual Property Rights (IPR) costs” and asks for a regime where “facilitative technology transfer replaces an exploitive market driven mechanism.” Whether India will be willing to make the domestic reforms in electricity pricing that could provide reliable income streams sufficient to attract private capital is still very problematic.
India still seems to place undue reliance on foreign government contributions to a UN “Green Climate Fund” to fund its clean energy needs. It is unlikely that the United States will be able to meet even Obama’s commitment of $3 billion for the Green Climate Fund. Even “mobilizing” $100 billion, as pledged in Copenhagen by the developed economies, pales by comparison with the $2.5 trillion India says it needs. The United States and other developed nations must work closely with their private sector funding sources to have any hope of mobilizing the capital needed by India and other developing countries for the development and implementation of clean energy and amelioration techniques. It is unclear that the U.S. and the governments of other developed countries are doing so.
Thus, a successful outcome in Paris requires a deal between India and the United States which will, by extension, encompass the other developing and developed countries. This deal will require a balancing between India’s willingness to move sufficiently toward market-driven financing and a United States ability to sweeten its financial offerings with a combination of public and private financing. Indian insistence on a strict “polluter pays” concept without a willingness to accommodate market principles or a U.S. insistence that India find its way forward without significant subsidized assistance will not result in a satisfactory outcome. Whatever happens in Paris, it will be only a step on the journey to bending the curve of pollution that threatens the planet. The need for accommodation between developing countries as represented by India and the developed countries as represented by the United States will remain if the journey is to reach the goal of averting catastrophic climate change.
Raymond E. Vickery Jr. is Counsel to Hogan Lovells and Senior Advisor to the Albright Stonebridge Group. He formerly was a Wilson Center Public Policy Scholar and Assistant Secretary of Commerce in the Clinton Administration.
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