This is India’s moment to lead on the environment
India’s spectacular economic progress has lifted millions out of poverty and has increased the share of residents with electricity access to more than 90%. However, economic progress has also brought intolerable pollution not only in Delhi and other major cities, but also near coal using power generation plants.
Air pollution from fossil fuels causes between one and five lakh premature deaths in India a year, from higher rates of respiratory and heart diseases, stroke, and cancer. India is also vulnerable to global warming, because its agriculture is exposed to extreme weather and changing precipitation patterns, and a large share of its population lives in coastal areas at risk from rising sea levels.
It is time for India to take bolder steps to modernise its energy sector and lead on the environment, leveraging its technological/ engineering know-how on the global stage.
Mitigating local air pollution and climate change will require curbing the use of coal in power generation and industry, which accounts for the bulk of India’s carbon dioxide emissions. Positive initial steps include the National Action Plan on Climate Change, leadership of the Solar Alliance, and the Clean Energy Cess on coal production.
But coal is entrenched because of history, large reserves, and existing infrastructure, as well as vested interests in this sector. A more ambitious and comprehensive policy package can ensure that the transition to a modern, cleaner energy sector is effective, fair and acceptable, as discussed in the IMF’s Fiscal Monitor.
Continued reliance on coal would not benefit the average Indian family or firm. This is because coal is not especially cheap in India: per unit of energy, it costs about the same as in other emerging market and advanced economies.
Solar is now already cheaper than coal in many countries and – according to IRENA and some estimates – in India too, for installation costs and especially in the north-west. Over the next decade, the costs of renewable power generation in India can drop even further if a domestic renewables industry gains scale, creating jobs at home in the process.
Even so, fiscal incentives to speed up the shift away from coal to cleaner energy sources should be at the heart of India’s strategy. The simplest approach would be progressively to increase the coal cess by Rs 5,000 per ton of coal by 2030, from its currently modest Rs 400 per ton. Annual carbon emissions and fossil fuel air pollution deaths in 2030 would fall by nearly 40%.
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The impact on vulnerable households can be mitigated while access to electricity is further expanded. A higher coal cess could increase electricity prices over 10 years by up to 70% (less if the shift from coal to renewables is smooth), with a greater burden on wealthier households who use the most electricity.
Coal cess revenues could be used to boost transfers to low-income households through the social safety net system and to fund additional public investments in health, education and infrastructure. Another option is to return a portion of the coal cess revenues as a per unit of energy rebate to power distribution companies: the cess would still cause a shift towards greener energy but the rebate would limit electricity price increases.
Under any approach, support will be needed to ensure a better future also for displaced coal workers, through retraining and new job programmes, and for coal-mining communities, through local investment.
A portion of the revenues could also be dedicated to assisting the clean energy transition. Expanding renewable energy capacity will require upgrading the power grid, simplifying land acquisition for renewables plants, and fostering domestic production of solar panels.
Shifting away from coal and making the right investments in low-carbon infrastructure will be critical. Choices made today – such as railways and compact urban growth versus roads and sprawling growth – will have lasting implications for decades to come. And while coal use is retained, clean technologies like sulphur dioxide filters in smokestacks could be applied.
On the global stage, India has a vital role in curbing climate change and catalysing action by other countries. Aside from its status as a major economy, India is the third largest emitter (behind China and the United States) of heat-trapping carbon dioxide – though its per capita emissions are lower, and it contributed less to the stock of greenhouse gases than the advanced economies.
India could work with other large emitters to catalyse greater ambition through an agreement whereby participants would impose a minimum price on carbon emissions or achieve the equivalent emissions outcome through other instruments. It could also make a strong case for emerging economies to have a lower price floor than advanced economies.
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India’s leadership on the environment and its choices on energy and infrastructure will have a direct impact on the global fight against climate change and on the well-being of its citizens.
Source : The Times Of India | Written by Paolo Mauro, Ian Parry & Catherine Pattillo
