New Delhi: May 20, 2015
India has taken a number of green actions, including imposing significantly higher taxation of petroleum products and reenergizing the renewable energy sector. It can make a positive contribution to the forthcoming Paris negotiations on climate change.
Later this year, Heads of States from around the world will meet in Paris to conclude negotiations on a new agreement under the United Nations Framework Convention on Climate Change (UNFCCC) by December 2015. The expectation is one of action by all countries on climate change from 2020 onwards in accordance with the principle of common but differentiated responsibilities.
The Intergovernmental Panel on Climate Change (IPCC) in its recent report – the Fifth Assessment Report (AR5), published in 2014 — has observed that, there has been an increasing trend in the anthropogenic emissions of greenhouse gases (GHG) since the advent of the industrial revolution, with about half of the anthropogenic carbon dioxide (CO2) emissions during this period occurring in the last 40 years. The period 1983-2012 is likely to have been the warmest 30 year period of the last 1400 years. CO2 emissions from fossil fuel combustion and industrial processes contributed a major portion of total GHG emissions during the period 1970 – 2010.
The change in the climate system is likely to have adverse impacts on livelihoods, cropping pattern and food security. Extreme heat events are likely to be longer and more intense in addition to changes in the precipitation patterns. Adverse impacts are likely to be felt more acutely in tropical zone countries such as India, and within India, the poor will be more exposed.
India can make a significant contribution in addressing climate change. Unlike some countries, it has taken substantial actions to eliminate petroleum subsidies and gone beyond to impose substantial taxes on these products. These actions have taken India from a carbon subsidization regime to one of significant carbon taxation regime—from a negative price to an implicit positive price on carbon emissions. And the shift has been large. For example, the effect of the recent actions since October 2014 has been a de facto carbon tax equivalent to US$ 60 per ton of CO2 in the case of (unbranded) petrol and nearly US$ 42 per ton in the case of (unbranded) diesel. In absolute terms, the implicit carbon tax (US$ 140 for petrol and US$ 64 for diesel) is substantially above what is now considered a reasonable initial tax on CO2 emissions of US$ 25 per ton.
Reconciling India’s climate change goals and energy imperatives will require a major technological breakthrough to make the burning of coal cleaner and greener. If India is to focus on becoming green, correspondingly the world must devote more resources into coal technology research. That means greater international public investment in R&D for improving coal technologies. And if the private sector is to be incentivized to undertake this research, high and rising carbon pricing by advanced countries must become an immediate priority. (An elaboration of the contours of a new type of global deal and the required contribution from advanced and emerging economies can be found in Aaditya Mattoo and Arvind Subramanian’s Greenprint: A New Approach to Cooperation on Climate Change).