Climate Change: Indian Perspectives Post Copenhagen

Prodipto Ghosh, Ph.DDistinguished Fellow

The Energy & Resources Institute20 August 2010

The Energy Challenge

Some 600 million fellow Indians, c. 10% of global population, live without electricity! Traditional biomass is the primary cooking fuel for over 700 million Indians 34.7% and 79.9% population below income level of $1 and $2 a day respectively Lack of access to commercial energy leads to Illiteracy, Gender

Inequality/Disempowerment, High IMR and MMR, Poor Health & and hence a low HDI India’s per capita commercial energy consumption is about 20% of the world average,

4% that of the US and 28% that of China Sustained GDP growth of 8-9% a year will enable India over the next 25 years to lift the

bottom 40% of her citizens to an acceptable level of economic & social well being – this will require provision of modern energy to them

2

Myth 1:

“India has a very high level of energy intensity (inefficiency?) of its economy (and has done nothing about it)!”

3

India’s Decreasing Energy Intensity

4

Energy intensity of GDP (kgoe/$ 2000 PPP) based on IEA data

0.15

0.17

0.19

0.21

0.23

0.25

0.27

0.29

0.311971

1975

1980

1985

1990

1995

1999

2000

2001

2002

2003

2004

2005

TP

ES

(kg

oe)/

GD

P (

$200

0 P

PP

)

5

G Cal / tcs

9.3

9.08.9

8.88.7 8.7

8.48.3

8.18.0 7.9

7.77.6 7.5

7.3

7

7.5

8

8.5

9

9.5

10

199

0-9

1

199

1-9

2

199

2-9

3

199

3-9

4

199

4-9

5

199

5-9

6

199

6-9

7

199

7-9

8

199

8-9

9

199

9-0

0

20

00

-01

20

01-

02

20

02

-03

20

03

-04

20

04

-05

Specific Energy Consumption in Integrated Steel Plants

Source: Steel Authority of India Ltd.

22% reduction in SEC from 1990-91 to

2004-05

Actual impact higher as

share of D/R rising

6Source: BEE, 2007

7Source: BEE, 2007

Trends in Energy Consumption of Ammonia & Urea Plants

8

12.48

8.87

9.3

6.59

6

7

8

9

10

11

12

13

Gca

l/to

n

AMMONIA UREA

25% REDUCTION

26% REDUCTION

World’s Best: 7.0 Gcal/ton of Ammonia

India’s Best: 7.2 Gcal/ton of Ammonia

FAI Target: 6.5 Gcal/ton of Ammonia

Already average of top 25% ammonia plants more efficient than world’s top 25% plants

Source: Fertiliser Association of India (FAI)

9

0%

50%

100%

150%

200%

250%

CO2 2004/GDP in 2000$ at PPP % of US GDP in 2000$ at PPP per Capita % of US

The fossil fuel CO2 intensity of the Indian economy in 2004 was the same as Japan; better than Germany!

Data: “Growth and CO2 Emissions – How do different countries fare?” : Roger Bacon and Soma Bhattacharya: World Bank, 2007:

Myth 2:

“India’s low per-capita GHG emissions reflect its low per capita incomes, but India is extremely inefficient when it comes to CO2 intensity of consumption!”

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GHG emissions depend upon lifestyles!

• India’s low per-capita GHG emissions are only partly due to poverty. A significant part is due to inherently sustainable lifestyles that do not change significantly as people become better-off!

• Some international comparisons illustrate the point:

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12Source: TERI analysis (various data sources)

CO2 emission from food sector--from Field (production) to Table (processed food)-excluding cooking

0.1 0.1

1.7 1.8 1.9 2.02.2

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

2.50

India China UnitedKingdom

Germany Netherlands Australia United States

ton

CO

2/m

kca

l of

food

ene

rgy

Production related CO2 emission (tonne CO2/million kcal of food energy)

Processing related CO2 emissions (tonne CO2/million kcal of food energy)

Total CO2 emissions (tonne CO2/million kcal of food energy)

13

30

47.353

70

0

20

40

60

80

US Germany Japan India

48

10

23

0

5

10

15

20

25

USA UK Germany India

Average rate of recycling (%) (excl. re-use)

GHG emissions from waste (gm/’000$GDPppp)

Municipal solid waste

Source: TERI Analysis, based on National Communications of different countries

16

118

193

0

50

100

150

200

250

India EU (15 countries) USA

14

Estimated CO2 emissions from passenger transport

(gm/passenger-km)

Source: TERI Analysis, various data sources

Per-capita consumption of construction materials per-unit of inhabited land area

1 43 451794

1599

1907

74 220.4

630

456

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Aluminium Cement Steel

(thou

sand

ton

nes/

capi

ta/s

q. k

ilom

etre

s)

I ndia J apan EU- 15 USA

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What will India’s GHG emissions be in the future?

What does it cost to mitigate GHG emissions?

Results of three coordinated modeling studies:

NCAER-CGE: GDP growth rate projections till 2030

7.0

7.5

8.0

8.5

9.0

9.5

2005

-06

2007

-08

2009

-10

2011

-12

2013

-14

2015

-16

2017

-18

2019

-20

2021

-22

2023

-24

2025

-26

2027

-28

2029

-30

Year

Gro

wth

rat

e (in

per

cent

age)

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While GDP growth slows slightly till 2030, the CAGR of GDP is 8.84%

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India’s Per capita GHG emissions till 2030

18

0

1

2

3

4

5

6

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032

McKinsey

NCAER-CGE

IRADe-AA

TERI-MoEF

TERI-Poznan

Year

Per capita emissions, tons CO2e

Per capita GHG emissions projections for India from 5 studies in Illustrative Scenarios (2010-2030)

The projections range from 2.77 tons/capita CO2e (NCAER-CGE) to 5.0 tons/capita CO2 (TERI-Poznan). Except for the last all studies indicate that India’s per capita GHG emissions in 2030 will be below the 2005 global average of 4.22 tons!

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India’s Aggregate GHG emissions till 2030

19

012345678

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032

McKinsey

NCAER-CGE

IRADe-AA

TERI-MoEF

TERI-Poznan

Year

Total GHG emissions, billion tons CO2e

Aggregate GHG emissions projections for India from 5 studies in Illustrative Scenarios (2010-2030)

The projections range from 4.0 billion tons CO2e (NCAER-CGE) to 7.3 billion tons (TERI-Poznan)

Declines in energy and CO2e intensities of the economy:

0.10

0.15

0.20

0.25

0.30

0.35

0.40

2003

-04

2005

-06

2007

-08

2009

-10

2011

-12

2013

-14

2015

-16

2017

-18

2019

-20

2021

-22

2023

-24

2025

-26

2027

-28

2029

-30

Year

kg C

O2/U

S$ of

GDP

at P

PP

0.02

0.04

0.06

0.08

0.10

0.12

Yearkg

oe/$

GDP

at PP

P

20

CO2e intensity, kg/$GDP at PPP

Energy intensity, Kgoe/$GDP at PPP

Both CO2e and energy intensities of the economy decline steadily till 2030. Even at present they are among the lowest in the world!

Costs of GHG Mitigation

• Model results for:

NCAER-CGE: GHG mitigation and GDP losses from imposition of carbon taxes

TERI-MoEF: Energy system incremental investment and economic costs from CO2 constraints

Undiscounted Incremental Investment Cost for CO2

Reductions from Illustrative Scenario (2011-31)

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Undiscounted Incremental Investment

0

100

200

300

400

500

600

700

800

0% 5% 10% 15% 20% 25% 30%

Progressive CO2 emissions reduction from illustrative scenario in year 2031(in %)

Bill

ion

US

$

10% reduction: ~ US$ 215 Billion

20% reduction: ~ US$ 493 Billion

30% reduction: ~ US$ 798 Billion

Undiscounted Incremental Energy System Cost for

CO2 reductions from Illustrative Scenario (2011-31)

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10% reduction: ~ US$ 240 Billion

20% reduction: ~ US$ 499 Billion

30% reduction: ~ US$ 1062 Billion

Undiscounted Incremental System Cost

0

200

400

600

800

1000

1200

0% 5% 10% 15% 20% 25% 30%

Progressive CO2 emission reduction from Illustrative scenario in year 2031(in %)

Bill

ion

US

$

Loss of GDP in the Carbon Tax Scenario (2010-11 to 2030-31)

-668-1194

-2173

-4013-5000

-4000

-3000

-2000

-1000

0

$10 Carbon Tax $20 Carbon Tax $40 Carbon Tax $80 Carbon TaxScenarios

Loss

of G

DP

REV +ve

Undiscounted Cummulative GDP Loss

US $ billion (constant 2005)

Loss of GDP in the Carbon Tax Scenario (2010-11 to 2030-31)

-632-1109

-2035

-3563-4000

-3000

-2000

-1000

0

$10 Carbon Tax $20 Carbon Tax $40 Carbon Tax $80 Carbon TaxScenarios

Loss

of G

DP

REV neutral

Undiscounted Cummulative GDP Loss

US $ billion (constant 2005)

Myth 3:

“Indian policymakers are oblivious to the potentially catastrophic impacts of climate change on its people!”

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Adaptation to Climate Change

• India is historically vulnerable to climate variability: floods, droughts, vector borne disease, cyclones, ocean storm surges, etc.

• For over 6 decades, India has had large, nationally funded programmes to address climate variability and disasters.

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28

0

2

4

6

8

10

12

14

1997-98 1998-99 1999-2000

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Years

Perc

ent E

xpen

ditu

re

Expenditure on adaptation as % of total Govt. expenditure

Expenditure on adaptation as % of GDP

India’s fiscal expenditures on programs directly related to adaptation to climate variability was 2.63% of GDP in 2006-07! This is more than its annual defence expenditure.

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The Global Regime:

The Story So far…

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Myth: The climate change negotiations are about “saving the only planet we have!”

Working paradigm of (all) negotiators: Climate Change negotiations are primarily economic negotiations, to determine future global economic patterns and strategic potentials.

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-0.5000 -0.4000 -0.3000 -0.2000 -0.1000 0.0000 0.1000 0.2000 0.3000 0.4000

United States of America

Germany

United Kingdom

Canada

France

J apan

Australia

Italy

Denmark

Sweden

Norway

Qatar

Saudi Arabia

Uruguay

South Africa

Cuba

Peru

Uganda

Brazil

Nigeria

Bangladesh

Indonesia

China

India

Historical Responsibility for Climate Change of Selected Developing and Developed Countries, 1850-2005

Recap: Bali Road Map

• Negotiations under Art 3.9 of Kyoto Protocol for second commitment period after 2012 + some proposed amendments (AWG-KP)

• Negotiations under the UNFCCC for a comprehensive “Long-term cooperative action” (AWG-LCA)

• 9 Negotiation sessions held between Bali (Dec 2007 and Copenhagen (Dec 2009)

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Bali Road Map…Slow progress was made in the negotiations in both tracks due

to deep differences in objectives of countries (and mistrust about their intentions).

Before Copenhagen it became clear that closure was not feasible a Copenhagen, and that negotiations would have to continue

The idea was mooted by several developed countries that Copenhagen should yield a “Political Declaration”, and give a mandate for negotiations under both tracks to continue

After an extremely convoluted process, the Copenhagen accord was negotiated at the level of Heads of State/Governments

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Copenhagen Accord

• Status: Not a multilateral outcome under the UNFCCC, a best a Plurilateral Accord between acceding States. Legally binding nature of accord is in doubt, but clearly, in political terms acceding Parties commit themselves to its provisions.

• Will require extensive further negotiations before it can be operationalized (if at all). However, since Accord is not endorsed by the UNFCCC, the question is in which forum will it be operationalized?

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• Copenhagen: Overall Political Assessment

• India and BASIC: Significantly protected their development space; emerged as strong collective political bloc with common interests; significance beyond climate change

• US: Obtained its pre-conditons for passage of “cap and trade” Bill in US Congress, i.e. Internationazed action by China & India, transparency wrt their actions, Financing architecture to invlve WB, existing MFIs). However, actual passage of Bill remains in doubt.

• EU: Clear loser: None of its key objectives were met: apportionment of carbon space distorted in favour of developed countries; comparability of mitigation actions with US; legally binding commitments of all developed countries and emerging economies. Hold over SIDS and LDCs is fragile

• G-77: Copenhagen revealed significant divergences within group!

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Prospects:

• Copenhagen Accord has received only tepid endorsement from several major Parties (and no explicit endorsement by China, India). Unlikely to be operationalized w/o closure on AWG-LCA and AWG-KP

• Announced goals are extremely modest in relation to scale of problem

• Fate of US energy and climate Bill is key! Passage (and prospects of negotiations are impacted by controversy over IPCC findings, economic downturn, upcoming Congressional elections).

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