India Insights

The Indian government this week published its strategy for tackling the threat posed by climate change. However, The National Action Plan on Climate Change (NAPCC) lacks any firm commitment to cutting carbon emissions, which are set to rise as a direct result of economic development.

A recent study by MasterCard Worldwide Insights called “Urbanization and Environmental Challenges in Asia Pacific, Middle East and Africa” found that of 21 leading cities Mumbai and New Delhi came bottom when comparing indicators under government control, one of which was air quality. While the weighting given by MasterCard to different environmental issues is open to debate there can be no doubt that India has a major environmental problem that is set to get worse.

Consider the following, according to the International Energy Agency the growth of the Chinese and Indian economies will raise global energy demand by 50% before 2030 and India will become the third largest carbon emitter by 2015 (with China and the US ahead of them).

Add to this the fact that India imports 70% of its oil and gas while relying on coal to generate half of its electricity and you get a sense of the current tension between creating energy and tackling environmental issues, however, looking forward the problem looks even worse.

According to McKinsey & Co’s report “Powering India, The Road to 2017″, India needs to almost triple its existing power capacity by 2017, the equivalent of 30 gigawatts per year (or adding half the UK’s electricity generating capacity to the Indian grid annually). Clearly the governments priority is generating energy to power economic and social advancement, how it is produced and where it comes from are secondary issues.

The NAPCC sets out eight areas to focus on, one of which is increasing solar power in India’s energy mix and there is some evidence to support Prime Minister Manmohan Singh’s desire to see the sun “occupy centre stage”. Moser Baer, a domestic DVD maker has invested US$ 250 million in a partnership with Applied Materials, a US semiconductor maker, between them they are committed to making film-based solar panels. They estimate that energy production from solar panels alone could grow to generate 2 gigawatts of energy by 2010. A good start but only a fraction of what is required.

Considering the fact that the Indian government has optimistically pledged to abolish poverty by 2040, it is easy to understand why no formal commitments have been made, economic development comes first and this is understandable given the high rates of poverty. While the eyes of the world may be on India and fingers are being pointed in its direction by more developed ‘greener’ countries the international community has to remember that per capita the US produces about 20 tonnes of emissions compared with India’s 1.2 tonnes.

Astutely Prime Minister Singh has pledged to the G8 that India’s carbon emissions per capita will never exceed those of developed nations, a clever ploy that provides his country with plenty of environmental wiggle room as it seeks to raise living standards through a growing economy, this promise also challenges more developed nations to put there own house in order.

What the Indian government has to realise is that while they may be able to buy some time, the long term impact on the population that they wish to help advance could be catastrophic. The Peterson Institute for International Economics estimates that if global temperatures rise by 4.4 degrees celsius by 2080, India’s agricultural output is projected to fall by 30%.

Powering a growing economy is one thing, feeding a growing population is something entirely different.