WHEN AN IN­DIAN CITY SHUT DOWN COAL PLANTS

POL­LU­TION IS NOT MERELY THE PRICE TO BE PAID FOR GROWTH; IT IS ALSO A DRAG ON THE SAME GROWTH

Resource Digest - - NEWS -

Coal power plants be­ing shut down for pol­lut­ing the air." That is hardly the kind of head­line you would ex­pect from In­dia, but that was what was an­nounced by the Delhi govern­ment in De­cem­ber last year, as the city choked on its own fumes. At the global cli­mate talks in Paris, how­ever, In­dia was de­mand­ing the car­bon space to grow, and to pro­vide en­ergy for all its cit­i­zens. In other words, it was re­serv­ing the right to build more coal-fired plants.

Sup­pose there were no global cli­mate com­mit­ments re­quired of In­dia and it had un­lim­ited car­bon space to grow. Would it not, for its own sake, es­chew the most pol­lut­ing power plants? Is that not what it is do­ing in the cap­i­tal city of Delhi now?

Here is what has hap­pened: The Delhi govern­ment sent no­tices to two power plants in the city - Badarpur (705 Mw) and Ra­jghat (135 Mw) - to shut op­er­a­tions in the first week of De­cem­ber 2015 to con­trol pol­lu­tion. The Badarpur plant is owned by Na­tional Ther­mal Power Cor­po­ra­tion, a govern­ment-owned com­pany which is also listed on the In­dian stock ex­change. It is not clear if the shut­down is tem­po­rary or per­ma­nent. It is also not clear who will bear the cost of the shut­down.

A study by the Cen­tre for Sci­ence and En­vi­ron­ment ear­lier last year found that In­dia's coal-pow­ered plants were some of the most in­ef­fi­cient in the world. It looked at ef­fi­ciency of coal and wa­ter use, air and wa­ter pol­lu­tion and ash man­age­ment at 47 plants and found that more than half were vi­o­lat­ing al­ready lax air pol­lu­tion stan­dards. The Badarpur plant, in­ci­den­tally, was among those with the low­est ef­fi­ciency. Its old­est unit is over 40 years old.

The other mea­sure to ease the smog in the cap­i­tal city of In­dia was a ban on reg­is­tra­tion of cer­tain diesel-pow­ered ve­hi­cles. This led to a build-up of an un­sold stock of cars as well as a de­cline in the share prices of the main man­u­fac­tur­ers of diesel ve­hi­cles such as Tata Mo­tors and Mahin­dra & Mahin­dra.

To limit the num­ber of ve­hi­cles on the roads of Delhi - the coun­try's big­gest auto mar­ket – the govern­ment also an­nounced a plan to al­low only even-num­bered ve­hi­cles on the roads on even dates, and odd num­bered ve­hi­cles on odd dates. Such a move could push sin­gle-car fam­i­lies to­wards own­ing two cars (of the even and odd va­ri­ety) but it can safely be as­sumed that the new car will not be a diesel ve­hi­cle.

The like­li­hood of such ex­treme steps be­ing taken in other smoggy In­dian cities is rather high. Pre­sum­ably, the cities vy­ing for the "smart" la­bel would strive for clean air, among other things. The In­dian govern­ment has set a tar­get of de­vel­op­ing 100 smart cities.

In­dian cities are not rid­ing on this smog road alone. Shang­hai or­dered schools to keep chil­dren in­doors and fac­to­ries to limit pro­duc­tion, as air con­tam­i­nants in China's com­mer­cial hub reached the high­est lev­els in two years. Some con­struc­tion was also halted. Ear­lier, Bei­jing's en­vi­ron­men­tal pro­tec­tion bureau is­sued a red alert, sus­pend­ing schools, re­strict­ing car travel, lim­it­ing in­dus­trial pro­duc­tion and ban­ning fire­works as smog lev­els rose. Paris was in the news a few months ago when it im­posed a par­tial driv­ing ban and made pub­lic trans­port free for a day to con­trol smog. A new set of re­stric­tions is un­der dis­cus­sion.

Air pol­lu­tion is not merely the price to be paid for growth. It is also a drag on the same growth. The in­verse cor­re­la­tion be­tween air pol­lu­tion and growth is what is com­ing to the fore now.

Busi­nesses de­pen­dent on spew­ing pol­lu­tants in the air, wa­ter or soil would do well to recog­nise the threat that looms from con­sumer or govern­ment ac­tion. They could face a tem­po­rary or per­ma­nent ban on op­er­a­tion, or be asked to pay for spew­ing pol­lu­tants. Ad­di­tion­ally, there are rep­u­ta­tional risks to con­tend with. The pol­icy ad­vice for such busi­nesses would be to di­ver­sify, de-risk and de­car­bonise to the ex­tent they can.

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