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Sumant Sinha: Degrees of urgency

According to reports, as a new government takes charge shortly, it will be expected to revive economic growth, fix inflation, bring down interest rates, and tackle unemployment. But besides these, one of the most significant challenges for the new government will be to draw up a comprehensive agenda to tackle the climate change issue. The threat of climate change is real, long-term and irreversible. The mean annual increase in temperature by the end of the century in South Asia is projected to be 3.3°C – with the minimum-maximum range being 2.7 and 4.7°C. Around seven million people are projected to be displaced due to, among other factors, submersion of parts of Mumbai and Chennai, if global temperatures were to rise by a mere 2°C.

A World Bank report says that India experiences loss of two per cent of total GDP in extreme monsoon conditions. At 4°C warming, an extremely wet monsoon that currently has a chance of occurring only once in 100 years is projected to occur every 10 years by the end of the century. It is imperative for the new government to give due importance to climate change and bring forth a forward-looking climate change policy. The good news is that apart from being a moral imperative, it also can make good business sense.

In R&D, the development and deployment of clean energy technologies and their potential in India remains largely untapped. So far India has been a laggard in clean technology research. Government should not only promote research at government institutions but also incentivise private sector investment in research related to clean technologies. We should strive to be at the forefront of research of technologies in areas such as energy storage, smart grids, water treatment, etc. The transition to a clean energy economy is not in conflict with energy security or affordability – indeed it can be a part of the solution and a huge driver of innovation.

In addition, India should strive to be a manufacturing hub for the clean energy industry. Government should give impetus to manufacture and export equipment such as solar panels, water treatment equipment, etc. The aim should be to become competitive internationally rather than just protecting domestic industries. If scale can be increased through properly targeted incentives it would reduce the cost of manufacturing and make the country more competitive internationally. Manufacturing will also create opportunities for growth and employment.

Clear and predictable policy support is also vital to keep the climate change agenda on track. In 2013, as much as 43 per cent of new capacity addition in power generation globally was through renewables. In India, the total renewable energy contribution sits at a low percentage of 6.4 per cent in 2012-13. The new government should strive for more of renewable share in the energy basket and match the global average. The Indian grid needs to be redesigned around renewables rather than conventional.

From the financing standpoint, to build the corpus of the National Clean Energy Fund, a clean energy cess of Rs 50 per tonne on coal has been levied since 2010. This is significantly lower than global standards for a carbon tax, of $4-30 per tonne of coal. The new government should increase this cess to at least Rs 100 per tonne, and its ambit should be expanded to all hydrocarbon fuels in proportion to the externalities produced in terms of equivalent carbon emissions.

In addition, there should be a penalty on polluting industries like manufacturing, transportation and aviation. Fuel for transportation and aviation should be taxed based on carbon emissions and health impact. This would promote the use of cleaner fuels. Any hazardous waste from industries, even if it is under the maximum allowable limits, should be taxed. This would give an impetus to cleaner effluent treatment technologies. Equally, hybrid and electric vehicles should be incentivised with tax sops by the new government. It turns out that the characteristics of city driving in India – heavy traffic, aggressive driving style, and few freeways – make our country an ideal place for saving fuel with hybrid vehicles. That’s according to new research supported by the Clean Energy Ministerial’s Electric Vehicles Initiative (EVI) and conducted by scientists at the US Department of Energy’s Lawrence Berkeley National Laboratory (LBNL). In a pair of studies using real-world driving conditions, the researchers found that hybrid cars are significantly more fuel-efficient in India and China than they are in the United States.

In our pursuit of a diversified energy portfolio, India can adopt other innovative and important measures, such as conversion of waste-to-energy, which has multiple benefits. With an increase in income and lifestyle change of people, the per capita waste generation has considerably increased in the last 10-15 years. To provide stimulus to waste-to-energy conversion, the new government should hand over the entire waste management system to private industry or non-governmental organisations with an incentive to those who deploy efficient ways of converting that waste to energy. There are two-pronged benefits in converting waste to energy. First, it will free up scarce land that would otherwise have been used for landfills; and, second, energy recovery from urban and industrial wastes will supplement conventional sources and put India on the path to energy independence.

Lastly, the new government should enhance leadership and accountability through regular monitoring, evaluation, and review of climate change policies. The government should also take steps to bring awareness to the masses about issues of climate change and communicate clearly its measures towards environmental responsibility. India will be hard hit by the impacts of climate change. We can continue to ignore it at our cost, or take actions that will not only benefit future generations, but also create exciting new business and employment opportunities.

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