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The Stern Review on the Economics of Climate Change and India's Position

P. K. Gautam was a Consultant at Manohar Parrikar Institute for Defence Studies and Analyses, New Delhi. Click here for detail profile.
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  • December 27, 2006

    Sir Nicholas Stern, former chief economist of the World Bank and head of the British government's economic service, and his team submitted the report titled The Economics of Climate Change in October 2006. The report consolidates the research on the scientific evidence of climate change and concludes that evidence is now overwhelming: climate change is a serious global threat. Using economic models it estimates that if we do not act, the overall costs and risks of climate change will be equivalent to losing at least 5 per cent of the global gross domestic product (GDP) each year, now and forever. In contrast, the costs of action - reducing greenhouse gas emissions to avoid the worst impacts of climate change - can be limited to around 1 per cent of global GDP each year.

    The review emphasises that climate change demands an international response, based on a shared understanding of long-term goals and agreements on the framework of action. The key elements of future international framework should include: emission trading, technology co-operation, action to reduce deforestation, and adaptation.

    India's New National Environmental Policy Position

    Due to the near absence of media coverage, an equally important report that failed to capture media attention in India was the National Environmental Policy 2006. It states: "While climate change is a global environmental issue, different countries bear different levels of responsibility for increase in atmospheric GHGs concentrations. Further, the adverse impacts of climate change will fall disproportionately on those who have the least responsibility for causing the problem, in particular, developing countries, including India."

    The policy further clarifies that, "India's GHG emissions in 1994 were 1228 million ton (Mt) CO2 equivalent, which is below 3% of global GHG emissions." This in per capita terms is a quarter of the global average and minuscule when compared with the emissions of industrialised countries. What is important is that in terms of the GHG intensity of the economy in Purchasing Power Parity terms, India emitted a little above 0.4 ton CO2 equivalent per US $1000 in 2002, which is lower than the global average.

    In terms of primary energy use, India's share of renewable energy (being a non-GHG emitting energy form) at 36 per cent is far higher than industrialized countries can hope to reach in many decades. Since GHG emissions are directly linked to economic activity, India's economic growth will necessarily involve increase in GHG emissions from the current extremely low levels. Any constraints on the emissions of GHG by India, whether directly by way of emissions targets or indirectly will reduce growth rates. Moreover, India's policies for sustainable development, which promotes energy efficiency, appropriate mix of fuels and primary energy sources including nuclear, hydro and renewable sources, energy pricing, pollution abatement, afforestation, mass transport, and differentially higher growth rates of less energy intensive services sectors as compared to manufacturing, results in a relatively GHGs benign growth path.

    The policy concludes that "Anthropogenic climate change, significant responsibility for which clearly does not lie with India or other developing countries, may, on the other hand, have likely adverse impacts on India's precipitation patterns, ecosystems, agricultural potential, forests, water resources, coastal and marine resources, besides increase in range of several disease vectors. Large-scale resources would clearly be required for adaptation measures for climate change impacts, if catastrophic human misery is to be avoided."

    The principle of common but differentiated responsibilities needs to applied. India was never the cause of the excess stocks of GHG molecules that are now residing in the atmosphere and causing climate change. What is essential is equal per capita entitlements to all countries and this needs to be the yardstick for emissions. However, strategies to adapt to the adverse effect of climate change would need to be worked out in the planning process.

    Other Issues Connected to India's Energy Use

    Eighty per cent of India cooks using "carbon neutral" biomass. Yet, some western agencies want us to believe that un-burnt residue and soot from biomass are more powerful pollutants than carbon from fossil fuel. This myth wants us to believe that "poverty is the greatest polluter." India thus needs to be very clear about the contours of the emerging ecopolitics. A similar case in point was the methane emission data from Indian cattle. Exaggerated figures in this regard were wrongly quoted in the 1990s by some Western countries who contended that India thus contributed substantially to climate change. Once the Indian government challenged the data the matter was dropped and instead our own data -- which was substantially lower than what the West has calculated -- was accepted as correct. There is therefore need for in-country research that meets international standards to demonstrate the benign impact of biomass based coking fuel on climate change.

    In the area of hydrocarbons we need to use more gas and obtain the technology to convert coal to gas. This is necessary to avoid tipping climate events. Carbon intensity of the economy would emerge as the key issue to mitigate climate change. Gas is the least carbon intensive among hydrocarbons. India must therefore use more of it. It would be necessary to show how gas grids from Iran, Turkmenistan, Myanmar and possibly Bangladesh as well as LNG imports from West Asia are imperative for the global climate regime since gas contributes the least to pollution. Thus both economic and environmental factors push for the need for plentiful use of gas by India.

    In a vulnerable Indian subcontinent, the breakdown of economies due to climate change would result in emerging flashpoints. As the melting of Himalayan glaciers suggest, climate change and reduction in snow over the Himalayas would imply losing hydroelectric potential. It would also impact severely on agriculture. Resource grab by South Asian countries including China of the shared rivers is one possibility. Though the acquisition of oversees oil/gas acreage is now considered a business challenge between India and China, armed conflict over fresh water may be a reality if climate change is abrupt and severe. The Indus Water Treaty may also collapse due to extreme events and reduced flows in rivers. Evidence from the geopolitical history of the 20th century and the "resource war" thesis suggests that violent conflict may erupt due to environmental factors. This suggests that attempts should be made to resolve the climate crisis before it gets worse and out of control.


    The Stern Review is an important landmark document which urges us to tackle climate change. But at no time the responsibility for the excessive stocks of GHG can be laid on India. Our priority is adaptation first. Mitigation, though not mandated by the Kyoto Protocol, is inherent in our developmental strategies. Issues of climate change and global warming will dominate global energy geopolitics in the foreseeable future. In the recently concluded bilateral energy dialogue of the IDSA with the Peace Research Institute Oslo (PRIO), the Director of PRIO rightly pointed out that one "enormous" challenge is that of climate change. Carbon dioxide sequestration and capture was identified as the key to tackle this threat. To that end multilateral forums like the International Energy Forum and Carbon Sequestration Leadership Forum may provide timely breakthrough technologies for reduction in CO2 emissions.