The winds of change are blowing in the U.S. and there is near-certainty that the next American president will commit to some form of mandatory cap on GHG emissions. I’ve been talking to a lot of people to get their take on what the framework for the next global climate change agreement will look like. The answer seems to be a global per capita emissions cap converging to a global average per capita of between 2 and 3 tons (the world is at 7 tons now, the U.S. at 20, China at 5 and India at 1.2). According to the Stern review, this is the target we need to achieve a 50 percent reduction in global emissions by 2050 and limit temperature increases to a manageable (bad, but not dire) 2 - 3°C. In principle, this is the framework to which the Indian PM agreed at the G-8/G-5 summit in Heiligendamm in June 2007. This target places the heaviest burden on developing countries who bear the most responsibility for the rise in atmospheric CO2 concentration since the Industrial Revolution, at the same time ensuring that developing countries adopt a path that is both sustainable and pro-growth.
For India, there are still low-hanging fruits that hold the potential to achieve significant emissions reductions, while propelling growth. First and foremost is energy efficiency. Not only do EE improvements save the end user (industries, SMEs, municipalities, households) money (with the initial investment recovered in as little as a few months), they could reduce overall energy demand by 20% or more (for comparison sake, the current peak supply gap hovers between 10 and 30%). Moreover, EE technologies are proven so the risks are limited. EE represents a significant market opportunity in India. With the possibility of cashing in on carbon credits, EE becomes even more attractive.
Although energy efficiency may seem like a no-brainer and indeed is a win-win situation for all concerned, barriers remain to EE achieving scale. Energy savings companies (ESCOs) have provided an effective model for scaling up EE in other countries. ESCOs develop, install and finance energy efficiency devices for their clients and generally earn profit through retaining a portion of the client’s energy savings. The ESCO market has not developed in India for a variety of reasons. Most Indian ESCOs lack the balance sheet necessary to simultaneously take on multiple large projects. Utility demand side management could potentially be a big market for ESCOs, but ESCOs are wary to enter this arena for fear of the creditworthiness of the utility.
Agriculture demand side management (DSM) represents huge potential energy savings. A staggering 35-40% of total electricity consumption derives from groundwater pumping for agriculture. The USAID-funded WENEXA (Water-Energy Nexus Activity, http://waterenergynexus.com/) project is pioneering work in this area. The key to agricultural DSM, it seems, is to develop the right incentives to ensure that both farmers and utilities/distribution companies benefit from the installation of more efficient water pumps.
At the risk of being glib, addressing climate change in India and everywhere else is really a matter of creating the right incentives—incentives that support innovation and deployment of renewable energy and energy efficiency, promote reforestation and avoided deforestation, support farmers to change agricultural methods and price pollution. The PM’s national action plan for climate change is due in June. Let’s hope this plan includes a mix of appropriate and targeted incentives that will enable India to maintain low per capita emissions, while spurring new economic activity (including new export-oriented mitigation and adaptation technologies).
3 comments:
"A staggering 35-40% of total electricity consumption derives from groundwater pumping for agriculture..."
That doesn't seem correct (you probably got it from Wenexa but I'm not sure if it's true). I've read that 80% of India's power demand originates in urban areas.
I agree completely though that incentives are the way forward. Rather, there ought to be disincentives for pollution / emissions (which automatically create incentives for not polluting). I'm strongly in favor of a revenue neutral carbon tax (see this amazing resource for more). It's one of the ways we can build natural capital into our fundamentally flawed economic system which is the root cause of this problem.
I don't think there's any chance the US is going to agree to 2-3 ton per capita emission cap regardless of who assumes power. They were forced to agree to a limit at Bali (and the rest of the world thought that was a big victory) but they aren't going to concede that much at Copenhagen.
Lastly, 2-3 degree is actually quite dire. Read Monbiot!
Though there are many compromises possible on carbon caps, from India's point of view the most important may be to use the latest technology for cost reduction if it is financed by the international community at very low rates of interest. Solar thermal power for example could be about $0.04/kwhr if the cost of capital was 3%! Low cost biomass cultivation (think bamboo in the northeast or sorghum in drier areas) could produce cellulosic ethanol competitive with $45/barrel oil within 2-3 years! Add carbon negative cement (in development) and we could pay for very low cost infrastructure while making a huge contribution to global carbon emissions
"Solar thermal power for example could be about $0.04/kwhr if the cost of capital was 3%!"
Vinod, that's very interesting. Could you quote a reference for this? Solar thermal does have limitations in terms of size of plants. As they grow bigger the cost for pumping (thermal fuild) increases. In large plants they're pumping it around for miles and miles and it costs them as much as 12-13% of energy they produce. You won't find a solar thermal power plant exceeding 150-200 MW capacity for this reason. Also, the current capital cost for installing a plant is extremely high (in the range of $4000/KW). Compare that with coal's $1000-1500/KW.
I don't know about ethanol. As long as we keep diverting land from edible crops to fuel crops, we wouldn't solve the food crisis. I'm all in favor of making Jatropa from biodiesel though as it can be grown on non arable land.
By carbon negative cement, I believe you mean Geopolymeric cement? That's indeed very promising but we need not wait for it. Geopolymeric _concrete_ can already replace cement in pre-cast concrete applications and it even costs less than Portland cement.
None of this however, will be enough. We are generating 130GW of power today and this is set to triple or quadruple by 2030. Although we need all solutions: renewable energy and low carbon technologies, demand side reduction, industrial energy efficiency and perhaps a bit of geo-engineering too.
But none of that will have any long term effect unless we solve the root cause of this problem - our fundamentally flawed economic model which assumes continuous economic growth while consuming natural resources which are finite.
GDP is history. We need a new model which builds in the cost of natural capital into the way we measure our growth. A carbon tax will be the first step in that direction. I believe, it is by far the most effective policy instrument for tackling climate change.
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