Green India, Green the World
As the countdown to COP28 in Dubai begins, it is clear that the path to a net zero world has to go through India. EPISODE #151
Dear Reader,
A very Happy Monday to you and presume all of you had a very Happy Diwali.
In a few weeks from now, the world’s high table to combat climate change will convene in Dubai. COP or the Conference of Parties takes place in extremely testy circumstances—the regional wars that began with the Russia-Ukraine conflict have now spread to the Middle East even as the perils of climate change continue to worsen.
COP-28 was expected to do a reality check on the commitments made by countries over the last few meetings and measure the challenge of a rapid global warming. Mitigation will be the key strategy and within this energy transition will dominate conversations. It is clear that India is rapidly coming of age and will be among the growth centers of the world. In this backdrop what India does or does not do will impact the world.
The big question is whether India will opt to be part of the solution or like in the past, fall back on its zero-sum strategy of being the problem. Recent policy actions suggest that India sees itself in a new light and is willing to make sacrifices for global good. This week I explore this theme.
A big shoutout to Surendra, Gautam, Balesh, Premasundaran and Vandana for your informed responses, kind appreciation and amplification of last week’s column. Once again, grateful for the conversation initiated by all you readers. Gratitude also to all those who responded on Twitter and Linkedin.
The cover picture is sourced from Pixels and is taken by Markus Spiske.
Unfortunately, Twitter has disabled amplification of Substack links—perils of social media monopolies operating in a walled garden framework. I would be grateful therefore if you could spread the word. Nothing to beat the word of mouth.
Reader participation and amplification is key to growing this newsletter community. And, many thanks to readers who hit the like button😊.
The Climate Change Challenge
Fifty years ago the world was rocked by an oil price shock. Worldwide, economies, including India, suffered a massive setback.
The 1973-1974 oil crisis was triggered after major oil producers imposed an embargo, ratcheting up prices to record highs. Exposed to the vulnerability of a world dependent on oil imports, countries were forced to explore energy alternatives—nuclear and hydropower—to achieve energy efficiency and low emissions.
In India’s case, this was the moment when the government rethink about the prevalent socialist model of growth commenced—which eventually culminated in the Sixth Plan document, released in 1980, that set down the contours of India’s ideological pivot towards a market-based economy.
Five decades later history repeats itself with an even more dangerous twist. Yet policy planners, unlike in the 1970s, have more policy options at their disposal today—especially with respect to access to a range of clean technologies like solar and wind power.
Not only can they address energy insecurities, but these clean technologies can solve for climate crisis. The challenge this time though is to generate consensus to implement these solutions. This is because without collective action, the world cannot stave off the climate challenge it faces.
The latest energy price shock was triggered after global supply chains witnessed an upheaval in the aftermath of the Russia-Ukraine conflict. While this is forcing countries to reimagine their energy mix by reducing reliance on hydrocarbons, the world is also staring at a possible annihilation—given the massive legacy of emissions generated by developed countries like the United States and more recently China—as global warming is poised at the tipping point.
This sorry circumstance brings up the inclement backdrop to the upcoming Conference of Parties or COP-28 to be held in Dubai. A world that is deeply divided and facing geopolitical fragmentation, has diminished the prospects for a collective response required to head off global warming.
The dangerous circumstances facing the world was summed up in the report released late last month by the United Nations on ‘Interconnected Disasters’. The report bluntly states that indiscriminate extraction of water resources, damage to nature and biodiversity, and acts polluting both earth and space have reduced options to deal with disasters. Worse, it introduces new risks and amplifies existing ones.
Dr. Zita Sebesvari, one of the lead authors of the report and UNU-EHS Deputy Director, said:
“With these risk tipping points, it is as though we are approaching a cliff that we cannot see clearly ahead of us, and once we fall off the cliff, we can’t easily go back.”
If the challenge is daunting and the fallout scary, more worrying is that the world distracted by regional wars and growing geoeconomic fragmentation is unwilling to respond responsibly to save the world.
This is an irony, because, studies released over the last few weeks, note that the world has actually moved in the last few years to mend its ways—especially in undertaking a pivot in the energy mix, by reducing dependence on hydrocarbons.
The Positives
The International Energy Agency (IEA)—the Paris-based body created by a clutch of industrialised countries in the aftermath of the first oil shock 50 years ago to create energy conservation policies and and entity that has since evolved into the global body facilitating energy cooperation—released its annual World Energy Outlook (WEO),2023.
It shows that fossil fuel consumption will peak by 2030. The graphic above shows that the decline thereafter will be most pronounced in the consumption of coal.
This projection is based on The Stated Policies Scenario (STEPS) laid down for each country. The report notes that the share of coal, oil and natural gas, in total global energy supply was stuck at 80%. However, based on STEPS, this will drop to 73% by 2030.
This change in direction though welcome and significant has a caveat. Regardless of the fact that clean technologies—like rapidly growing use of Electric Vehicles, projected to account for 50% of all vehicles in the United States by 2030—there is a very important subtext: China.
As the IEA notes, China changed (check the graphic below) the energy world in the last 10 years:
It accounted for almost two-thirds of the rise in global oil use;
Nearly one-third of the increase in natural gas;
And was the dominant player in coal markets worldwide.
Now China is changing.
For one, its economic growth has peaked. The heady days of near double-digit growth are history and the economy is exploring a much lower growth trajectory.
Second, it has also emerged as one of the biggest hubs in the world for consuming and sourcing clean energy equipment whether they be for EVs or solar power.
Accordingly, the IEA forecasts:
“If China’s near-term growth were to slow by another percentage point, this would reduce 2030 coal demand by an amount almost equal to the volume currently consumed by the whole of Europe. Oil import volumes would decline by 5% and LNG imports by more than 20%, with major implications for global balances.”
Focus on India
A diminished growth prospect for China together with the ongoing geopolitical reset has put the spotlight on the Indian economy. It is viewed as the lighthouse of the global economy in the future.
Internally, India, as reported in last week’s newsletter, has set itself an audacious task to grow its economy to a staggering $30 trillion by 2047—from its current size of $3.4 trillion.
As the above graphic, sourced from IEA, shows, India has a very low share in global energy supply, electricity demand and cars per thousand people.
At present, in terms of energy supply, China accounts for 160 EJ (exajoules is unit used to measure energy or work) and the United States for 94 EJ—India’s share on the other hand is only 42 EJs. It is similar for other metrics too.
This situation would change once India sets off on the growth path to becoming a $30 trillion economy.
Meeting its energy needs in a sustainable way therefore will go a long way in greening the world. Especially with respect to adoption of clean electrification, improvements in efficiency and a switch to either lower or zero-carbon fuels.
As the IEA puts it, if India was to implement these strategies:
“It means every dollar of value added by India’s industry results in 30% less carbon dioxide (CO2) by 2030 than it does today, and each kilometre driven by a passenger car, on average, emits 25% less CO2. Some 60% of two and three-wheelers sold in 2030 are electric, a share ten times higher than today.”
Implicit in this is that India sees itself as part of the solution. However, this entails a massive fiscal cost.
According to a study by McKinsey, this could cost anywhere between $7.2 trillion (double the present size of the Indian economy) and $12.1 trillion, depending on the trajectory India adopts. Clearly, this scale of resources cannot be generated internally.
By committing to go net-zero by 2070 and accelerating green investments through a range of policy fixes and subsidies, India has shown its commitment to a global cause. More importantly its intention of being part of the solution.
It is now upto the developed world to hold up its side of the bargain—and make up for its legacy contributions to global emissions—and cough up the money, technology to enable this transition. The thing is that this is equally true for other future growth hubs like Indonesia and Africa.
All eyes on Dubai.
Recommended Viewing/Reading
Sharing the latest post of Capital Calculus on StratNews Global.
Little over a fortnight ago the Niti Aayog shared a sneak peak of its audacious vision document India@2047. It set a target of $30 trillion for the Indian economy in 2047. Understandably, this was the big headline in the papers next day.
Frankly it is much more. It is about India becoming strong, both militarily and diplomatically. To achieve this India has to become a strong economy. To explore this thesis, I spoke to Dharmakirti Joshi, chief economist, Crisil.
Sharing the link below. Do watch and share your thoughts.
Till we meet again next week, stay safe.
Dear Anil
Thanks a lot for covering COP 28. The acronym itself is very interesting. It's almost like all the participating countries have to act like cops and take to task all the people responsible for global warming. On the one hand we have countries gathered together hoping to save the earth. On the other hand we have countries at war which are annihilating people and property. Once these wars are over, how many years will it take them to limp back to normalcy?
No Nature, No Future is something we all are aware of. Yet, we seem to be making all efforts to ruin our. In front of my eyes I've seen beautiful paddy fields vanishing to be replaced by buildings. There are lakes which are first choked by water hyacinths, converted to landfills and eventually converted to residential complexes. I feel that our generation has definitely let down the future generations.
Ever since the world has shrunk, we have experienced Interconnected Progress as well as Diasters. No country can survive in isolation anymore. India is no doubt a part of the solution but what about the massive fiscal cost? This will definitely be a delicate balancing act for our country but I'm hopeful that in the future we will be a part of the solution and not a problem. Time will tell.
I view this issue slightly differently. India should endeavour to get back its green cover as it existed in 1920-30-40s!!! Today most of indian land mass is denuded and barren due to cutting of trees and grazing. This will be a big boost to decarbonization process. Secondly, we should not worry much about finance being available from the West for our climate initiatives. We start doing everything required, be it solar, wind, geothermal or nuclear. COP or no COP, India must do it for its own future.