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Pollution, climate change, and growth in India

To mark the 10-year anniversary of the IGC, a research conference on Evidence for Inclusive growth was organised in New Delhi on 10th September 2019, with a panel discussion titled “Pollution, climate change, and growth in India”. The panellists for the discussion were Michael Greenstone (Director, Energy Policy Institute at the University of Chicago; Research Programme Director, IGC), Nicholas Stern (Chair, Grantham Research Institute, LSE; Senior Advisor, IGC), and Ulka Kelkar (Climate Director, World Resources Institute). The session was chaired by Kanika Chawla (Director, CEEW Centre for Energy Finance).

Setting the context: Kanika Chawla

Kanika set the stage by mentioning that in India, the conversation on the issue of climate change has been going on for a long time. India has displayed its leadership with regard to resolving this issue by deploying large amounts of renewable energy and setting up ambitious targets. However, there are various challenges when pollution, climate change, and growth are considered simultaneously. Given that India is aiming to become a $5 trillion economy, various sets of challenges arise when one starts to think of climate action.

Drivers of climate action in the Indian context: Nicholas Stern

Professor Stern has been working in India for around 45 years. According to him, two things are very important for the drivers of climate action in India: (i) understanding the problem, and (ii) understanding what can be done with the problem. Right from the Himalayas to down South, the demography of India is enormously vulnerable to climate change. Giving an example from a village in Palanpur, which is on the Indo-Gangetic plain, he highlighted that if the snows and glaciers disappeared, water levels would drop as everything would shoot out down into the Bay of Bengal.  With regard to monsoon due to climate change, how monsoons are changing has become a major uncertainty. Apart from water, rising temperatures will matter too. Some parts of northern India would have wet bulb temperature –  a combination of temperature and humidity which gets above 35 degrees – with the repercussion that one cannot be outside for more than a couple of hours. The effect of climate change in India will be such that many areas which are densely populated will become unhabitable. Migrations within India will take place on a larger scale.

As per the latest Intergovernmental Panel on Climate Change (IPCC) report, over the next 20 years, the world would have to cut emissions by 40% or more for a 2-degree reduction in temperature. With a growth rate of 3% or more, output is expected to roughly double. Which implies that in 20 years, the world would have to cut emissions per unit of output by 80%. If we want to stabilise at 1.5 degrees, we have to go to net zero by roughly 2050. To stabilise concentration, we must be net zero, which means we have to stabilise concentration at 4 degrees. Thus, the earlier we reach net zero, the lower the temperature that must be stabilised. If we look at 1.5 or 2 degrees, we are talking net zero by 2050 or 2070. Emissions, therefore, need to be reduced to zero right across the spectrum: energy, transport, buildings. We need zero carbon power by roughly around 2040. In each case, we need to reduce demand for those products by providing better alternatives, which means looking to different kinds of alternative sources. A report by Energy Transition called ‘Mission possible’ looks at different ways to reach net-zero carbon emissions in some important areas like steel, transport, cement, plastics, shipping and aviation.

India has an advantage in building places where one can move, breathe, and be productive. With sustainable infrastructure, there will come the story of growth which will boost demand, especially in a demand-constrained country. It will sharpen supply, and unleash Schumpeterian innovation, discovery, investment, and growth over the medium term. In this growth environment, investment will be of different forms and nature, especially infrastructure investments. But what we cannot do necessarily is turn the investment opportunities into real investment projects that depend on good policy, a good infrastructure plan, and the right kind of pricing. Good policies will attract investments along with the right kind of finance available in the right place and at the right time. How does one go about solving the matching problem then? Conditional on policy, a lot will depend on standards and design, pricing, and getting rid of fossil fuels and fertiliser subsidies.

Approaching industrial emissions: Michael Greenstone

Professor Greenstone emphasised global energy as the main challenge of which climate change is an important part. The three legs of this according to him are:

  1. How to get access to reliable and inexpensive sources of energy. The way we currently construct energy markets pushes us to use fossil fuels as it does not account for externalities (pollution, CO2) that accompanies the release of fossils fuels combustion.
  2. Same fossil fuels that power economic growth are also causing health problems.
  3. Same fossil fuels which emit CO2 and air pollution lead to disruptive climate change.

Now, the central issue is how can different societies find ways to achieve the following three different goals?

Goal 1: Reliable and Inexpensive Energy

Goal 2: Local Environmental Quality

Goal 3: Mitigate the Probability of Disruptive Climate Change

Societies will decide based on their different income levels, values, politics, etc., but there is no single goal. However, societies need to strike a balance.

In the context of its global energy challenge, India relies heavily on fossil fuels and has a very high concentration of PM 2.5. Moreover, the mean and median temperatures have increased over time. The hot days are what is more important because that is where there is a very non-linear relationship between temperature and measures of well-being. India is going to be a very high risk in mortality associated with climate change. It needs to manage climate change as well as find a balancing act between the three goals, not all of which point in the same direction. It can be very easy to get rid of particulates pollution and CO2; unfortunately, it will likely come at the expense of growth. The expense is going to be more likely for countries which are at lower income levels to begin with.

There is a solution path for India which is the need to focus on particulates which are killing people today. In principle, it can be done without greatly increasing costs of energy. In practice, however, implementation is a function of political will. Consequences of climate change need to be better communicated and when people demand change, the government is likely to respond.

Encouraging climate action: Ulka Kelkar

Ulka began by mentioning a study carried out by WRI on India Restoration Atlas, which found that India has nearly 180 million hectares of restoration potential not just protecting forests but also doing agro-forestry on rain-fed cultivated areas. This can sequester 3 to 4.3 billion tons of above- ground carbon by 2040. Giving an example from field work in the Siddhi district of Madhya Pradesh, she explained how if done right (i.e. if the right trees are planted in the right place and with the support of the communities), then in just one district one can generate wage income opportunities of around 10 million USD.

The most cost-effective way of carbon mitigation is by giving land titles to indigenous communities in forests. Working with communities is more important than trying to keep them out. Farmers are leasing out land for solar parks and the landless labourers or pastoral communities who were dependent on that land for their livelihoods are now being kept out. CEEW has done a study which shows that renewable energy in India will provide 3 to 3.3 lakh jobs in five years in a workforce which is growing around 5 lakhs a year. Therefore, a lot of these pieces need to come together to generate demand for climate action.

Preventing missteps

Professor Stern emphasised that we need to learn more quickly from our mistakes and try to anticipate beforehand the kind of things that can go wrong. By 2030, India’s emissions will probably overtake China. If India does not hit net zero within 30 or 40 years, the world will not hit net zero. We have to recognise how fast we have to change.

Professor Greenstone mentioned that carbon pricing is very much a part of it in terms of giving it as a signal, but the signal needs to be strong enough to actually spur innovation and communication around it needs to be managed well.

Ulka explained that there are several case studies of how action by non-state sub-national actors is driving greater ambition by national governments. Climate change answers lie in larger institutional and social changes.

Final remarks: Nicholas Stern

Economics is about choices. Here we will have to choose the kind of growth path that we work to follow and this will involve city design, different approaches to energy, and resource efficiency of different kinds. And for this, people need to understand how damaging climate change is.

Watch the entire event session here:

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