The 21st Century climate challenge

Box 3.11Decarbonizing growth in India3Avoiding dangerous climate change: strategies for mitigationRapid economic growth over the past two decades has createdunprecedented opportunities for poverty reduction in India.Sustained growth, allied to policies that tackle deep socialdisparities, is a basic requirement for overcoming the country’slarge human development deficit. But is there a tension betweenthe national energy security policies needed to support economicgrowth and global climate security?From a global climate change mitigation perspective, rapideconomic growth fuelled by coal in the world’s second mostpopulous country poses an obvious challenge. Yet it also providesan opportunity for international cooperation.India is now the world’s fourth largest emitter of CO 2. Between1990 and 2004, emissions increased by 97 percent—one of thehighest rates of increase in the world. However, per capita energyuse is rising from a low base. The average Indian uses 439 kg ofoil-equivalent energy (kgoe), less than one-half of the average forChina. The comparable figure for the United States is 7,835 kgoe.India’s per capita carbon footprint places the country 128 th in theworld league table.The energy shortfalls behind these fi gures have implicationsfor human development. Around half of India’s population—some500 million people—do not have access to electricity. At a householdlevel, low levels of energy use are refl ected in high levels ofdependence on biofuels (see figure). Meanwhile, persistent powershortages and unreliable supply act as a constraint on economicgrowth, productivity and employment. The all-India average forpeak power shortages is 12 percent.Energy occupies a critical place in India’s developmentplanning. The ambition set out in its Eleventh Five-Year Plan is tosustain economic growth rates in excess of 8–9 percent a year.At this level, energy generation will also have to double. Over thelonger term, sustaining growth at current levels through to 2030 willrequire a fivefold increase in energy generation.Coal is likely to provide most of the increase. With abundantdomestic supplies—India accounts for around 10 percent ofthe world’s known reserves—and concerns over the security ofimported energy supplies, coal will remain the preferred fuel.Business-as-usual scenarios point to an increase in the share ofcoal in power supply and CO 2emissions. Coal–based emissionsare projected to rise from 734 Mt CO 2in 2004, to 1,078 Mt CO 2in2015 and 1,741 Mt CO 2by 2030.Radical changes to this emissions trajectory are possible. Lowlevels of energy efficiency are holding back India’s efforts to increaseenergy supply and expand access to electricity, while driving upemissions. Research carried out by the Planning Commissionestimates that India could generate the same amount of power withone-third less fuel. As shown in this chapter, efficiency gains havethe potential to generate deep cuts in emissions.Technology provides part of the explanation for the low levelsof effi ciency in the coal sector. Over 90 percent of India’s coalgeneration capacity is subcritical, much of it concentrated insmall-scale plants. Improving the efficiency of these plants wouldgenerate large energy sector benefits for India, along with globalclimate change mitigation benefits.Domestic policy reform is one requirement for unlockingefficiency gains. The power sector in India is dominated by largemonopolies that control both power supply and distribution. Moststate power utilities are in a financially weak condition, with averageannual losses running at 40 percent. Uncollected bills, the provisionof heavily subsidized electricity to agriculture (where most benefitsare captured by high income farmers) and wider ineffi cienciesall contribute to these losses. The upshot is that utilities lack thefinancial resources needed to upgrade technology.Current reforms are addressing these problems. The 2003Electricity Act provides a framework for more efficient and equitabletariffs. New regulatory structures have been created, and somestates—such as Andhra Pradesh and Tamil Nadu—have startedto break electricity boards up into more competitive units forgeneration, transmission and distribution.Energy reform in India provides the international communitywith an opportunity to support national policies that will alsoadvance global climate change mitigation goals. Early adoption ofclean coal technologies and best-practice international standardswould enable India to change its emissions trajectory while meetingrising energy demand.Research carried out for this Report by the Tata EnergyResearch Institute estimates thatTraditional energy sourcesan annualized increase in investmentof around US$5 billion isstill dominateneeded for the period 2012–2017 Energy consumptionto support a rapid transition to (July 1999–June 2000, % of total)low-carbon energy generation, Coal Liquid petroleumgas (LPG)over and above current investmentplans. Mobilizing theseKeroseneresources through the type of Dungcakemultilateral mechanisms proposedin this chapter could createFuelwooda win–win outcome for energy Electricityand chipseffi ciency in India and global Source: Government of India 2006a.climate change mitigation.Source: Government of India 2006a, 2006b; Mathur and Bhandari 2007; MIT 2007; Watson et al. 2007.produced little more than information exchange.Much the same is true of the G8’s Plan ofAction for Climate Change, Clean Energy andSustainable Development.The failure to develop substantivecooperation on CCS is particularly worrisome.From a global public goods perspective, thereis an overwhelming interest in developed152 HUMAN DEVELOPMENT REPORT 2007/2008