Dear ‘The Economist’, climate change is a global predicament

News: The Economist recently published a series of reports blaming countries like China and India for much of the carbon-emissions problem.

Such international media focus on just Indian and Chinese carbon emissions is unfair and doesn’t help the larger cause of climate change.

There is no denying that, in 2020, in absolute terms, China and India emitted more carbon dioxide than the US and Europe.

However, labelling carbon emissions as a chiefly India-China problem is injustice to the cause and doesn’t help solve it.

Nor does it help alleviate the structural issues ailing the transition of developing economies like India towards cleaner sources of energy.

Why it is unfair to blame that carbon emissions are chiefly an India-China problem?

Firstly, per capita carbon dioxide emissions of developed countries are still higher than India and China per capita emissions. For instance, in 2020, the per capita carbon dioxide emission of the US was 1.9 times that of China and eight times that of India.

Secondly, such a simplistic picture hides the complete truth. For instance, Although China was responsible for more carbon emissions than US and EU put together, in 2020, but it was also the world leader in solar and wind power, EV cars, and high-speed rail transport.

Thirdly, In the Indian case, the production of solar power has been rising, the government has set ambitious targets on electric vehicles to reduce India’s dependence on petrol and diesel, and reduce emissions in the process.

However, there are certain structure challenges for India while transiting towards a clean energy economy.

What are the structural challenges for India that hampers India’s transition towards clean energy?

Firstly, Coal-based power continues to be the dominant source of energy. In 2010-11, it formed 54% of the power produced. In this context, growth of electric vehicles that end up using electric energy derived from coal will have no impact on the net carbon emissions.

Secondly, if solar-power capacity expands fast, then many coal-based power plants will end up in further financial trouble than they already are, and this will create problems for banks which have lent them money.

Thirdly, As per the British economist Lord Nicholas Stern ‘climate change results from history’s greatest market failure—the failure to attach a price to the costs of carbon dioxide emissions’

In this backdrop, it is widely believed that taxing fossil fuels at high rate will bring down the consumption of fossil fuels. In India, the government already taxes petrol and diesel at a very high rate. So, despite attaching costs, the market failure argument doesn’t hold good for India.

Fourthly, the impact on fiscal resources: If electric vehicles become popular, tax collections from petrol and diesel are likely to come down.

Source: This post is based on the article “Dear ‘The Economist’, climate change is a global predicament” published in Live mint on 24th November 2021.