The Economics of Global Warming

Climate Change is a topic that needs no introduction. It has been in the news at every level for over two decades now. So much of it has been banded around that most of us (myself included) turn a blind eye to the after effects of climate change. But this morning, a short article in the a daily caught my attention. It read something like “India could have lost 3% of its GDP due to global warming”.

What I found intriguing about it was that I had never imagined that the cost of global warming (read climate change) could be measured in terms of GDP of a country. The article further went on to say that India could lose 10% of the GDP in the extreme scenario of a 3 degree Celsuis rise in global temperatures. Said in a different way, India’s GDP could be 25% higher were it not for the costs of global warming. Now that’s something we can all relate to. GDP, simply speaking, is the monetary value of all finished goods and services produced in a country usually in a single year. It is perhaps the most common economic parameter used world over to express prosperity or the lack of it. A 25% higher GDP means – in a very crude sense – would mean that our GDP per capita (currently around USD 2100) would rise up to around USD 2600 which means roughly INR 40000 more per person in the country in a year. Now that’s relatable! It’s like a bonus given by your employer…when you least expected it.

My mind wandered and as usual I started to blame the powers-that-be in the country. The government does not do enough. Why can’t the Indian think tank take steps to mitigate the effect of global warming & ensure economic prosperity through better GDP etc. Or is it that the Government is taking some measures but they aren’t enough? Upon further research, I came up with some startling finds.

India is on well on track to meet its Paris Agreement targets—to reduce emissions intensity by 33% to 35% of its gross domestic product (GDP) by 2030 from 2005 levels and achieve 40% of installed power capacity from non-fossil fuels by 2030. India is halfway toward meeting its domestic goal of 175 GW renewables by 2022, with renewables reaching 88 GW—23.5% of India’s total installed capacity. Factoring in large hydro and nuclear, India’s non-fossil fuels totalled 38% of the country’s installed capacity. Advancing renewable energy and charting a low carbon future is the main focus of India’s commitment. The country’s emissions intensity has reduced by 21% over the period 2005-2014. By 2030, India’s emissions intensity is projected to be even lower—in the range of 35% to 50%.

While this may sound like music to our ears, but let’s not forget that India is the world’s third-largest greenhouse gas emitter and second most populous country (the first two being China and USA and the fourth being Russia). India’s total emissions in 2019 were 132 million tonnes of carbon dioxide equivalent while emissions have been on the decline for the first time in forty years. The country’s per capita emissions (i.e. average emission released per person) remain low, at 1.94 tCO2/capita – less than half the global average of 4.2 tCO2/capita.

But wait – how did we get to this point virtually unnoticed. Well, India has a body called the National Action Plan on Climate Change (NAPCC) that aims to chart a low carbon development path for India. The NAPCC outlines India’s strategic mission to promote sustainable economic development while encouraging private sector action on climate mitigation and adaptation. This national plan lays a foundation for achieving India’s Paris Agreement targets while balancing national priorities. Despite the two waves of Covid-19 which the country experienced and the ensuing lockdowns across the geography, the NAPCC has done a very commendable job of staying on target. Whether it is increasing the share of renewable energy sources (13% in 2015 to 24% in 2020), or reaching the lowest solar tariff in the world in July 2020  at $0.0316)/kWh for a 2 GW project in Karnataka or advancing electric mobility in public transportation fleets, four-wheelers, three-wheelers, and privately owned two-wheelers, as well as, electric vehicle charging infrastructure or coming up with an updated Energy Conservation Building Code (ECBC) which as of August 2020 was adopted by 13 Indian States or adopting the ultra-low sulphur emission targets (BSVI) for vehicles, the NAPCC has really played a magnificent role in ensuring that India keeps its promise to meet the Paris Agreement targets. I firmly believe that this is something that we all can be proud of.

The simple fact is that no single solution can address every cause and effect of global climate change—it will take collective, significant actions at all levels to preserve the planet and protect our future. The Government, through NAPCC, is already doing it’s best and I’m certain that key industry players are in alignment with it. Now, it’s upto us as ordinary but aware citizens of the country play our part in strongly supporting our policy makers. So, the next time your friends or relatives who lives outside India complains about pollution and power cuts in our country, don’t hesitate to let them know that at least we have a very strong commitment to meet the targets that we made at an important international stage. Not many countries can say that about themselves…..

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