Decarbonization mustn’t overlook the rich-poor divide
PremiumThe world’s rich minority must give the poor majority room in the limited carbon space of the future
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Have you seen a dinosaur address the UN General Assembly? A rather well-made video message has gone viral, just ahead of the CoP-26 conference in Glasgow. The dinosaur says to the assembly: “I have a wild idea! Don’t choose extinction!" The reference is to the climate crisis. Dinosaurs were driven to extinction by factors beyond their control, but humanity is bent upon driving itself deliberately towards it. The video is part of the UN Development Programme’s campaign against fossil-fuel subsidies, which annually amount to hundreds of billions of dollars, and contribute to global warming. As per an estimate of the Council on Energy, Environment and Water, India’s subsidy bill on coal, gas and oil alone was ₹830 billion in 2018-19, or roughly $11 billion. Another ₹800 billion annual subsidy goes into the transmission and distribution of electricity, which is mainly coal based, and hence an indirect fossil-fuel subsidy. This subsidy works through steep underpricing of power. By comparison, our subsidies on renewable power and electric vehicles till 2018-19 were barely ₹99 billion, i.e. just about one-seventh of the direct subsidy on fossil fuels. With higher global oil prices, subsidies have risen. That spooky “extinction" prediction is based on how close we are to breaching the 1.5° Celsius limit on global warming. Beyond 2° Celsius, we will suffer irreversible change, causing havoc with weather cycles, a rise in ocean levels, the submergence of island nations, as well as droughts, floods and food shortages. No amount of greening the economy or net-zero targets will help thereafter. The 1.5°Celsius ‘Lakshman Rekha’ was collectively agreed upon at the Paris treaty in 2015. Nearly all of the 197 parties at CoP-26 were signatories to that pact, even the US, which walked out of it in 2020 only to return this year. Each country has pledged contributions to the cause of keeping global warming below the danger mark by reducing emissions and cutting down on fossil fuels. Unless the current accumulation of greenhouse gases stops, we are headed for disaster. The planet has a finite “carbon budget"; i.e., how much cumulative carbon dioxide concentration the atmosphere can tolerate and still keep the planet below 2° of warming. Already, our atmospheric carbon dioxide (CO2) concentration is 420 parts per million, which is 50% above pre-industrialization levels. Due to this, the planet was about 1.2° warmer in 2020 than in the pre-industrial age. The latest report of the Intergovernmental Panel on Climate Change reveals that the last decade was the hottest in the past 125,000 years. So global warming is real (as if that needed any confirmation). The report also says that CO2 is the highest in two million years. How to reverse this? Solar is a big part of the answer. Steep carbon taxes, and not subsidies, may also help. It is not the poor, but the rich, with their resource-intensive lifestyles, who need to bear the burden of carbon taxes.
In some ways, India seems to be trying to offset fossil-fuel subsidies with steep excise taxes on petrol and diesel. Last fiscal year, due to the pandemic, fuel con-sumption fell 9%, but excise collections were up 62%. This year, during the first half, it is up another 33%. The consequent inflation is a political hot potato and hurts the poor far more. The government has so far resisted the temptation to reduce excise levies. However, these along with India’s coal cess, are a rather blunt way of charging carbon taxes. What is really needed is for the rich world, including the small segment of high and middle-income earners in developing countries like India, to significantly alter their lifestyles. As professor Chetan Solanki of the Indian Institute of Technology Bombay says, the first law of sustainability is that finite ecological resources must imply finite consumption. Hence, a reduction in consumption may be imperative. The world observes an Earth Overshoot Day, which marks the day when the world started using borrowed or resources stolen from unborn generations. That day fell as early as 29 July this year. Thus, year after year, we steal tomorrow’s resources. Sustainability is the art and science of maximizing economic welfare today without compromising the ability of tomorrow’s generations to do the same. The world is fast running down its carbon budget at its current rate of CO2 emission. Unless drastically cut, we will exhaust the budget in just seven or eight years. Solanki points out that one air-conditioner running for one hour emits one kilogram of CO2. Over a month, a typical high-income household will push out 500kg of CO2, much more damaging to the ecology than all the plastic and other waste that is also thrown out. Solanki is an award-winning ambassador for solar energy, the founder of Energy Swaraj Foundation, and currently on an 11-year bus journey (mostly on solar power) across the country to spread the message of sustainable living far and wide.
India is well ahead in terms of meeting its Paris commitments for renewable-energy capacities. The recent launch of Mission Green Hydrogen in combination with solar power for electrolyzers will go a long way in the country’s decarbonization journey. But, as Solanki and others have pointed out, unless we address the distributional and inequality-causing impact of highly carbon-intensive economic models, our job will remain unfinished. If we all have to avoid extinction, as urged by the dinosaur, then today’s rich minority will need to leave more elbow room for the vast number of poor, so that we can all be accommodated in the limited carbon space of the future.
Ajit Ranade is chief economist at Aditya Birla Group.
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