Aligning growth, politics and climate
Crises, external pressure, economics, and internal disasters are converging. India must step up
As Covid-19 vaccines roll out, the focus has shifted to economic recovery. Yet, we have not had a political conversation about whether the kind of economy we want is in line with what the planet needs. India cannot continue with the folly of a businessas-usual development model. What factors could make political leaders champion a more climate-friendly pathway to prosperity?
Political representatives must deliver on restoring growth and attracting investment. Markets demand it. They must create conditions to revive old jobs and create new ones. People demand it. Without resources of the market or votes of the people, politicians have little future.
Meanwhile, the planet continues to sound warning bells. Take Uttarakhand, where the frequency and intensity of extreme flood events have increased four-fold since 1970. Rising temperatures and micro-climatic changes have ensured that drought/ drought-like situations have doubled.
How can we align the people’s present with the planet’s future? One driver is crisis. Political leaders could have used the pandemic to promote a greener recovery. Renewable energy capacity continued to be contracted during the pandemic. But the share of renewables in the primary energy mix remains marginal, rising from 0.1 to 2% in the past decade. Effort and investment must exponentially increase.
When crises lose steam, enthusiasm for reform wanes. A second driver is external pressure. From United States (US) President Joe Biden’s climate leaders summit (April), the G7 in the United Kingdom (June) to the United Nations’ High Level Dialogue on Energy (September), G20 meetings (October), and Conference of the Parties-26 climate negotiations (November), India will face pressure this year to announce a target year for net-zero emissions.
Bilateral economic relationships will matter more. The European Union (EU) plans to introduce a Carbon Border Adjustment Mechanism as a part of a broader agenda to reduce emissions by at least 55% by 2030 below 1990 levels. The US might also consider border carbon tariffs. Whereas energy-efficient cement producers in India might benefit, its steel and automobile exports could be affected. The EU and the US being significant trading partners, India will likely dispute such unilateral moves. But trade-environment linkages will increasingly influence policy.
Crises are relatively short-lived and countries don’t like being pressured by outsiders. For systemic change to be environmentally and politically sustainable, the interests of the elite and the climate-vulnerable must converge. Budget 2021 did not explicitly envision a low-carbon India, but showed initial signs of such convergence. Consider three major sectors, power, mobility and heavy industry. Of late, power investment has been mostly in renewables — from private sources. As renewables succeed, opposition from thermal power asset owners and distribution companies grows. State-run distribution companies (discoms) are locked into power purchase agreements that force them to buy from inefficient coal power plants, whereas investments in newer plants yield low returns, thanks to low-plant load factors.
Is a new alignment of interests possible? The budget proposed ₹3.5 lakh crore ($48 billion) to help ailing discoms. If support for installing prepaid smart meters were results-linked, the package could improve the balance sheets of discoms. But support should be contingent on stricter enforcement of renewable purchase obligations, respecting contract sanctity. Further, India could save about ₹20,000 crore by shutting down inefficient plants, support their employees, create vastly more jobs (especially in distributed renewables), and level the field for a new power elite.
The automotive sector might resist disruptive and rapid acceleration towards e-mobility. But India’s 2030 vision for e-mobility is a $206-billion opportunity. Aiming to boost the industry and generate direct/indirect jobs, the finance minister announced ₹15,000 crore for public transport and inducting 20,000 city buses using clean fuel. There is also the ongoing FAME-II scheme with ₹10,000 crore approved for hybrid/electric buses. A Green Urban Mobility Challenge (₹3,000 crore) for innovations in non-motorised transport and bus retrofits is promising. Urban mobility can edge towards sustainability, if it addresses the mobility needs of the majority while a potential new auto elite and new workforce emerge.
The hardest task is decarbonising heavy industry. Steel, cement, fertiliser and petrochemicals are growing rapidly, responsible for three-quarters of industrial emissions. This is why the budget’s announcement of a National Hydrogen Mission could be a game-changer. It signals that India is seriously considering an alternative to fossil fuels for strategic industrial sectors. With the potential of 1.9 million jobs in the green hydrogen supply chain, this could deliver the ultimate convergence of interests between big capital and labour.
India continues to witness the wanton destruction of biodiversity and fragile ecosystems from ill-planned and poorly executed infrastructure projects. The contractor-politician nexus will not weaken easily. But these examples indicate a pathway to reform, strengthening the politician’s hand when new market interests and people’s priorities align with sustainable choices. Days after the Chamoli glacial burst, will a climate leader step up in India, build coalitions with an emerging green elite and make the welfare of the people and the planet an electorally winning issue?