Economic Highlights

New Delhi, 7 December 2015

Warming Hits S Asia

‘CLIMATE FINANCE’ CRITICAL

By Shivaji Sarkar

India, despite the threat of a severe economic crisis due to the changing climate, has taken the most inclusive stand at the Conference of Parties (CoP-21) at Paris. Prime Minister Narendra Modi’s stern warning to the affluent countries having “luxury of choices” should sharply reduce emissions is indeed welcome. Those who have polluted the nation for over 200 years cannot block the progress of the poor nations.

India has vowed to pursue a 33 to 35 per cent reduction to the emissions intensity of its economy by 2030 from 2005 levels. However, a large coalition of developing countries in the talks say it is unfair to expect them to stop using cheap, abundant coal and other fossil fuels unless the rich nations give them enough and technology to help them build cleaner energy systems.

Way back in 2010, the rich nations agreed to deliver $100 billion a year by 2020 in so-called climate finance, from public and private sources, and the OECD recently reported that at least $62 billion was provided in 2014. But India and other countries have questioned this figure and insist the Paris accord must require wealthy countries to deliver more than $100 billion a year after 2020. The ADB states that South Asia needs $73 billion every year till 2100 to adapt to the negative impacts of climate change.

Developed countries are balking at including a specific figure in the agreement, arguing that today’s governments cannot be responsible for setting budgets so far ahead.

Undeniably, the change in climate is a major global challenge. “But we in India face consequences. We see the risk to our farmers. Rising oceans threaten 7500 km of coastline and 1300 islands. We worry about the glaciers that feed our rivers and nurture our civilization”, stated Modi. He had to give a rebuff to the US Secretary of State John Kerry’s comments that India has been more cautious, a little more restrained, in its embrace of this new paradigm, and it is a challenge.

If at all, India is not cautious but definitely concerned. The Asian Development Bank (ADB) study ‘Assessing the Costs of the Climate Change and Adaptation in South Asia’ shows that there is a lot more danger to India and its South Asian neighbours than one can perceive. Its newly released data suggests that South Asia could be particularly badly hit if the world continues on its current fossil-fuel intensive path.

Climate change impacts stand to slash up to 9 per cent off the South Asian economy every year by the end of this century, and the human and financial toll could be even higher if the damage from floods, droughts and other extreme weather events is included. The recent-most case in India being that of Chennai which is inundated by floods. 

The report predicts that by 2050, the collective economy of six countries—Bangladesh, Bhutan, India, the Maldives, Nepal and Sri Lanka -- will lose an average 1.8 per cent of its annual gross domestic product, rising to 8.8 per cent by 2100. 

India alone would lose sizable farm production as the globe warms up due to excess or fall in rainfall and various other natural disasters as well as reduced energy production from hydro-power. This would affect India’s goal to increase renewable energy generation. Loss of farm production is sadly highlighted in the increasing number of farmers’ suicides in the country. .

A rise in average warming will increase energy requirements for cooling but reduce the energy needed for warming. It will increase energy demand for irrigation. Increases in intensity and frequency of extreme events such as storms and sea level rise may cause more electrical system failures.

The ‘mission innovation’ launched at Paris to accelerate public and private global clean energy novelty may also suffer. Therefore, Modi has assured to cooperate with the US so that “innovation is backed by means to make it accessible to all”.

But the big question is whether this is the solution? Since the Industrial Revolution, carbon emissions (CO₂₎ from burning of fossil fuels have been building up in the atmosphere. The concentration of CO₂ is now approaching 400 parts per million (ppm), up from 280 ppm prior to 1800. If we were to stop all emissions immediately, the CO₂ concentration would also start to decline to the level of 1980 by 2300 AD. In the next 300 years, nature may recoup the last 30 years of our emissions, says scientists.

So what India wants and what is to happen is not easy. The central bone of contention has long thwarted climate talks: the divide between wealthy countries that grew rich from burning fossil fuels after the industrial revolution and poor countries trying to emulate their prosperity.

A large coalition of developing countries in the talks says it is unfair to expect them to stop using cheap, abundant coal and other fossil fuels unless rich nations give them abundant money and technology to help them build cleaner energy systems.

So if the rich are holding out, why should John Kerry ask poorer countries to sign a global deal requiring five-year review periods and other measures wanted by richer countries? There is also widespread recognition that emissions reduction pledges fall short of the action needed to prevent dangerous levels of global warming above 2 degrees. The group Climate Action Tracker says even if everything is on track, the world would warm by 2.7 degrees by 2100. The US-based group Climate Interactive put the figure at 3.5 degrees.

Developing countries are set to absorb much of the losses caused by climate change, various studies have pointed out. Rating agencies are beginning to factor these effects into their assessments.

Inflation is likely to rise over time, driven by rising food prices and an increase in the cost of energy. Although the climate of some countries is predicted to become more accommodative to agricultural yields in the medium term, the long-run implications of rising temperatures are likely to reduce global crop yields. It is also likely to have an impact on industrial activities as large number of people would be afflicted by poverty and less purchasing power.

The concern and firm stand of India is justified. It affects 1.43 billion people of South Asia. The economic cost is too high. The battle for a fairer deal would continue to the next climate summit. But any leeway to the rich would severely hit the poor not only here but the world over. ---INFA

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