Economics Trumps Environment at G8

by William Yeatman on July 17, 2008

"It is the economy, stupid!" The economic and political concerns dampened the desire of world leaders at the Group of Eight (G-8) summit in Japan to ride the hot air balloon of climate change. That's no surprise. In any contest between a present crisis and future threat, the present always wins. The G-8 leaders are hardcore politicians and recognize that in hard times, politicians must not get carried away by the future. This explains why they agreed to a future goal: 50% reduction in carbon emission by 2050, without any signposts towards that goal for the present.

The politicos seem to have drawn their lessons from the Kyoto Protocol, two decades earlier, when they burnt their fingers by accepting short-term goals of emission cuts by 2012. Those targets will, of course, elude most signatories. And so, the leaders at this G-8 meet expressed a desire to reduce emissions by 2050, when few can be held accountable.

Clearly, it suited all not to push the agenda too far. With the economic slowdown, funding for new investments in alternative energy and desire for technology transfer will inevitably get squeezed. Consequently, there is little inducement for major emerging economies to even consider climate goals. This prospect was not lost among the climate change community. As the G-8 leaders were gathering in Japan, the Intergovernmental Panel on Climate Change (IPCC) made a pitch to the European Union to take the lead role. A group of senior corporate executives publicly appealed for funds to facilitate the development of

energy- and emission-related technologies. It was clear that, in hard times, everyone could do with some spare funds!

The National Action Plan for Climate Change (NAPCC) that Prime Minister Manmohan Singh released a week before he left for the G-8 summit seems to have accepted this political reality. And so, India found itself in a comfortable situation at the side meetings at G-8; none of the core points of NAPCC was questioned.

With oil prices at record highs, it is natural that NAPCC will be seen more in the context of energy security, not just climate change.

Virtually all the eight missions of NAPCC are policies identified much earlier, but progress has been mixed. NAPCC talks of benchmarking certain energy-intensive sectors. But some of the sectors that have seen dramatic improvement in energy efficiency are those that experienced greater global competition. So the lesson is that, rather than setting industry-specific benchmarks, deepening the reforms process can greatly help in improving industrial competitiveness and efficiency.

Perhaps, it is this relationship between economy, energy efficiency and emissions which made Singh assert that India is unlikely to cross the per capita energy consumption and emission levels of richer, industrialized countries. Increased commerce and competition will motivate Indian companies to leapfrog to higher levels of efficiency with increased access to global technologies.

However, it has dawned on policymakers that there is a real and rising threat of using climate change arguments to restrict commerce. With economic slowdown, the political climate could easily turn protectionist in the richer countries. Thus, it is even more important for India to identify and argue for the economic and environmental benefits of liberalization and free trade.

A key element of India's position is that the developmental aspirations of its people cannot be sacrificed for emission targets. India's per capita emission, at 1.2 tonne, is far lower than the world average of 3 tonnes-plus, and a fraction of that in rich countries. Besides, the "historical responsibility" for the anthropogenic greenhouse gases

(GHGs) in the atmosphere lay squarely with the developed world. NAPCC also questions the role of man-made GHGs – it observes changes in climatic behaviour in India, such as a 0.4 degree Centigrade increase in surface temperature over the past century or about 1mm per year sea-level rise in northern Indian Ocean or wider variation in rainfall patterns. Yet, it affirms that no firm link between documented changes and warming due to anthropogenic climate change has yet been established.

This vital question needs to be read along with the last of NAPCC missions, which talks of the strategic knowledge sharing platform to identify challenges of, and response to, climate change and funding for focused research. This can help open the debate to more critical scientific scrutiny and generate more creative policy responses.

IPCC's repeated assertion that there is a scientific consensus behind its reports and policy prescriptions reflects its own unscientific foundation. Science progresses by continuously questioning existing orthodoxy. The earth's climate may or may not be changing, but the global economic slowdown and the rise of India among the emerging economies have opened a window of opportunity to change the climate of discourse, by grounding it to real-world concerns. Ultimately, the hard reality is that the political leaders can no longer afford to sacrifice the poor today for the sake of the rich tomorrow. India can legitimately play a leadership role and change the climate of discussion on climate change.

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