25 january 2010

‘When BASIC countries negotiate, we’re one voice’

KG Narendranath, MK VENU, The Financial Express, Jan 25, 2010

Environment and forests minister Jairam Ramesh spoke about the Copenhagen Accord, the BASIC quartet and India’s low-carbon growth strategy in an exclusive interview with MK Venu and KG Narendranath. The minister expressed concern at China’s early advances in green technology and emphasized on the need for Indian business to look at the burgeoning sector seriously. Excerpts:

Since the US seems to be inclined to negotiate directly with the BASIC (Brazil, South Africa, India, China) nations, how valid are the Kyoto (Protocol) and the UNFCCC framework going to be?

No doubt, the Copenhagen accord that was agreed to by 29 countries, was made possible through the negotiations between President Obama and the four BASIC heads of states. But the UNFCCC continues to remain the fundamental anchor of all climate change negotiations. And the Kyoto Protocol is the only legally binding instrument negotiated on the international arena.

The US has not ratified the Protocol and China is not obligated to be a member. In today’s context, this is a serious problem as the two countries together account for 45% of global greenhouse gas emissions. With these and other inherent limitations, the Kyoto Protocol may be in intensive care, but it has probably got a fresh lease of life.

At Copenhagen, the mandate was to continue negotiations for the second commitment period, that is post-2012. But UN FCCC remains the anchor.

One of the limitations in all these agreements is the absence of graduation criteria based on economic parameters like per capita income, but I think it is rather late in the game (to include them). To address this problem, all the 194 countries would need to come together and say that they need a new architecture. That seems an unlikely prospect.

Won’t it be easier to apportion the future carbon space if per capita income becomes the parameter?

Absolutely. Graduation is the fundamental principle. Unfortunately, the world is divided into developed countries and developing countries, a very simplistic binary distinction, although the reality is much more complex than that.

I see negotiations becoming increasingly difficult. The Chinese will be hell-bent not to take any legally binding commitment. The Americans clearly don’t want to be a part of an international legally binding regime and their commitments are pretty modest (3-4% reduction by 2020). Of course, they are very aggressive for the year 2050. But , the proof of the pudding is what commitments you are taking for the year 2020. The Europeans are proposing a 20% reduction from 1990 reference levels. The developing countries have said it would be a 25-40% reduction. We are nowhere close to what the actual requirement is, as far as the mid-term target is concerned.

India’s voluntary commitment on reduction of emission intensity of GDP by up to 25% seems to take us much closer to the Chinese position. But there is also a feeling that China would move away from this, once it becomes a fully developed country with a higher per capita income. What will India do at that stage?

China is undoubtedly under great pressure because it is at present the world’s number one greenhouse gas emitter at 23%. They are going to sustain these devils of economic growth. But the Chinese have started to think of the peaking year (the year from which emissions would come down) between 2025 and 2030. The South Africans too have talked about peaking.

Still, I am not sure whether China will ever agree to an internationally binding legal commitment.

Will India also follow the same path and talk about peaking?

No, India is part of a different ball game because we are at present at 5% of world greenhouse gas emissions and by 2020, we could reach about 8-9%. We would be the third largest emitter after China and the US. But mind you, the first (China) and second (the US) will be pretty close at around 25%, and then, the third (India) will be at 8-9%. In per capita terms we will still be very low and won’t exceed 2-2.5 tonne per capita, at most.

But the 20-25% reduction target by 2020 on 2005 reference level is an easily attainable target. In fact, we will do better than this. We only have to continue our trajectory of super-critical power generation and move on to the next stage of ultra super critical stations. The national mission on energy efficiency and the proposed market based mechanism would also help.

The reduction in emission intensity has many collateral benefits. It makes the economy cleaner.

Before you went to Copenhagen, the Prime Minister made a specific statement that as part of the differentiated responsibility clause in UNFCCC framework, we would expect the developed countries to transfer technologies on easier terms. Now you are saying that China may never agree to legally binding target. So where do things stand? Is it reasonable for us to expect technology (from the developed world)?

Make no mistake. Nobody wants to give money in large quantities. There is not even a thing called technology transfer in today’s world. Technology is a commodity which is purchased, negotiated or even stolen (but not transferred). You are, however, going to have technology transactions like that between Bhel and Alstom for super-critical turbines.

In this context, recently Gordon Brown wrote a piece in the Newsweek, where he gave a specific figure of $33 trillion worth of green investment in energy and infrastructure by 2030. Do you think that a lot of this could arise in China and India?

There is a McKinsey report, which I agree to broadly, that 80% of India’s infrastructure required for 2030 is required to be built. This is a phenomenal opportunity for us in the area of green technology. What we have done in IT, we can replicate in GT (green technology). Suzlon is already the world’s fifth largest wind-energy company.

If you look at the top 10 solar-energy companies, four happen to be from China. Chinese have sensed a business opportunity and are taking a strategic gamble that by 2020, they will be the world’s leading supplier of green technology. We see all this as a threat. Some of our industry associations are still stuck in the old mindset. They should see this (GT) as an opportunity.

They say as the West is in decline, the US thinks green investment is their only hope now.

I don’t write the epitaph for the US. The US remains the mightiest innovation engine of technology the world has ever seen and would continue to be in the frontier of technological innovation.The US has got the best scientific talent and technological environment. We can have creative partnerships with the US companies which could help Indian companies to emerge as world leaders, as has been shown in IT and mobile telephony. We have a large enough domestic market for us to be able to position ourselves internationally as well.

One criticism is that while China is investing hugely in technology of their own, India has not done much and we are not doing any strategic thinking.

We don’t because all our thinking on climate change is dictated by international negotiations. We are called upon to do A, B or C by international negotiations. We never have had a strategic domestic agenda. This is a wrong approach we have taken. International negotiation is one of the important aspect of the issue but the more important is domestic strategic agenda and to implement it with a sense of seriousness both in the public and private sectors. You need people to think out of the box. You still have people who are more worried about square bracket and semi colons. There should be strategic domestic agenda to enable India to build this new green infrastructure and also acquire a global leadership role.

Tell us about India’s road map for low carbon growth.

We have set a working group under the chairmanship of Kirit Parikh. It has got a lot of think tanks, economists, engineers and they are looking at the 12th Five-Year Plan. We are committed to a low (carbon) growth development strategy for the 12th and 13th Plans. The Parikh group will prepare sectoral roadmaps for power, port, forest and agriculture.

Do you think that we will compromise our strategic domestic thinking by giving assurance to the US that we will consult them on our national plan?

Consultation and analysis are part of our development activity. We have had trade consultations at the WTO. We have Article IV consultation with the IMF every year on fiscal and monetary policy. These have not eroded our sovereignty in any way. Consultation and analysis are different from scrutiny. We have a transparent system, whatever the government does is available in the public domain.

The Copenhagen Accord has been “taken note of,” but has not been “adopted.” What exactly is the differential?

If it had been ‘adopted’, all the 194 countries would have adopted it. When it has been ‘taken note of,’ only 29 countries are party to it. Other countries saw it but did not adopt it. Most countries did not have objections with the substance of the Copenhagen Accord. They had problems with the process of the Accord. The manner by which the Accord was arrived at was something that caused headaches to many countries.

Going forward, you are suggesting that our position will be closer to the BASIC group for a while?

It is negotiating tactic. We are not on the same boat as China as far as emissions are concerned. But when the BASIC countries negotiate, we are a voice. That is a strength. Note that President Obama came to see us (during the Copenhagen summit) , we did not go to him. If Brazil, South Africa, India and China get together and their position converge, people would listen to them. Even as these countries have differences among them, they also have certain commonality of interests. Politics is driving us to come together.

(To review the Copenhagen accord and also to plan for the future, the environment ministers of the four BASIC countries met here on Sunday).

Will India also not sign a legally binding agreement in the future?

India is prepared to reflect its domestic commitment internationally in any form but a legally binding framework. The government will stick to this commitment.

There is a view that Copenhagen accord would not suffice for achieving the goal to limit global temperature increase to two degree Celsius (above the temperature when industrialisation began).

We are committed to this target (of limiting temperature increase to 2% by 2050), which we had agreed to even before Copenhagen. A more ambitious target would constrict India’s development space. Science is complex and evolving. There is a great deal of probability.

But one thing needs to be recognised is that global warming is a reality and we have to mount a creative response which is rooted in our interest, not as a response to the international negotiation.

Do you think that the temperature can be reduced by two degree Celsius without the West reducing its consumption?

Lifestyles have to change. Emission in the West is lifestyle-induced emission. By and large, emission in countries like India is developmental. We have a high emission segment in our society also. I think the Americans know this. I think that the buildings in America 10 years from now will be dramatically different. The innovation engine of America will definitely come up with some real discontinuities, which will drive costs down.

Do you think that the coming Budget will reflect some of the Copenhagen commitments?

Without commenting on the coming Budget, I would say the kinds of fiscal instruments for green economy—tax breaks, accelerated deprecation etc —are parts of Budgets. Fiscal policy, procurement norms and regulations have very important roles to play in pushing for green technology. These are the issues which the Kirit Parikh Group would examine and would give us a report over the next year for the 12th Plan.

Fiscal policy has a major role to play in determining technological behaviour. Standards are crucial. For example, we should have mandatory fuel efficiency standards to automatically ensure that the transportation sector is efficient. Today the transportation sector accounts for 7-8% of greenhouse gas emissions, but it is reckoned that by the year 2020, the sector would account for anywhere between 15-20%.

Will our political economy realistically allow initiatives that result in costlier power for larger masses?

The per capita consumption of larger masses is so low that they are not going to be adding to the stock of greenhouse gases. The objective of fulfilling the power needs of 400 million people, whose requirements are basic, are built into the framework of 20-25% reduction in carbon emission intensity. There may be some parts (of India) where you cannot extend the grid system of electricity. There you have to have solar energy.

You said there is a huge opportunity of green trading and investment lies. That can only happen if the cost is affordable.

There is no doubt in my mind that in the next 15 years, costs are going to come down dramatically in the area of renewable energies. With the kind of investments Americans are making, it has to come down. Otherwise, how will America fulfill its target of reducing its emissions? This is only by way of improving technology and technology will drive cost down.

Are Indian businesses ready for what you are saying?

I think so. Tatas have already announced they will be carbon-neutral by a target year. Jamshed Godrej and Tata groups are the most advanced ones in the area of green investments. I’m going to meet the Tata officials in early February. They are going to make a presentation about a strategy for the group to become carbon-neutral by a particular year. The new investments that are going to come are going to be at the cutting edge. They have to be at the cutting edge.

Do you think that India can adopt the western pattern of consumption?

I don’t think so. It will be a recipe for suicide.

>>> Back to list