Can poor countries afford to go green?

November 25, 2022 12:15 am | Updated 01:42 pm IST

A crude oil refinery in Kochi.

A crude oil refinery in Kochi. | Photo Credit: AP

The 27th United Nations Climate Change Conference (COP27) concluded on November 20 in Sharm el-Sheikh Egypt. Nearly 200 countries pledged to set up a ‘loss and damage fund’ to help vulnerable countries affected by climate change. Developing countries have welcomed this development, which has been a long-time demand. Developed nations, however, are not satisfied with the level of commitment that poor countries have shown towards cutting down greenhouse gas emissions and phasing out fossil fuels. In a discussion moderated by Prashanth Perumal J., Navroz Dubash and Tejal Kanitkar discuss issues surrounding the cost of going green. Edited excerpts:

What is the likely economic cost of climate change? How can poor countries weigh the cost of climate change against the economic cost of cutting down on fossil fuel use?

Navroz K. Dubash: It is well established that the cost of climate change impact is considerable to economies. As temperatures rise, the cost of not addressing climate change is likely to rise. There’s enough science to suggest that this cost is high. The question of weighing the relative costs of trying to mitigate climate change against the cost of climate change impact is more complex. We must not think about mitigation as a distinct thing, but instead think about the kinds of transitions that are required to bring about mitigation. For example, there is a shift towards lower emission energy systems around the world; that’s a technological shift and the cost of those technologies has decreased to the point where they are now more or less cost competitive with coal-fired power plants. It makes economic sense to invest in these technologies. But the transition is difficult and is going to be costly. I think that’s how we should frame this, not whether but how we have to get there, and also how those costs are borne.

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Tejal Kanitkar: First, are the costs of the fight against climate change high? Yes. The fight is long and includes not just mitigation costs. Often the focus is solely on estimates for the cost of mitigation. Many of these estimates are speculative, and we can err on either side. For example, even 15 years ago, we could not have anticipated the sharp drop in solar prices that we’re seeing today. However, what makes the fight against climate change much harder is that for developing countries, much of our infrastructure is yet to be built. How possible is it to build this with just renewable energy technologies? There is a discourse around the opportunity offered by renewable energy that downplays the serious trade-offs that exist in moving away from known technology too soon.

Is it fair to expect developing countries to reach the per capita income levels of developed countries with the use of renewable energy?

Tejal Kanitkar: Even the basic minimum, in terms of universal well-being, would require much higher levels of energy. Much of our infrastructure is yet to be built. We need roads, housing, hospitals, schools, industries, etc. Is this all possible with renewable energy? No, it is difficult. We need other sources of energy, which are equally fraught with other concerns. The developing world does not have the luxury of using fossil fuels in an unconstrained manner, which the developed world has had. Climate change is real; we are going to face the impact. So, we have to pursue more deliberate, purposeful and optimal utilisation of fossil fuels that will allow us to bootstrap ourselves to a low carbon future. This is not going to be easy, but it is necessary; the developing world is much more vulnerable to the impacts of climate change. We need to utilise our fair share of carbon to build resilience and create the means to transition to a non-fossil fuel future. It is important, however, that our efforts are not utilised by developed countries to free ride on us, and that the benefits of our efforts must accrue back to us.

Navroz K. Dubash: We don’t have the luxury of unconstrained fossil fuel use or high carbon energy trajectories. If we all chose a high carbon path to development, the impacts of climate change would make development itself much less tenable and would undermine the benefits we seek from development. Does this mean that we are obligated to a maximally low carbon path? No. This is where your belief regarding the renewable energy opportunities available becomes very relevant. If you think there aren’t many opportunities, you won’t deviate much from a high-carbon path. If you think there are opportunities, you might deviate quite a lot. The solution really lies in focusing on finding common ground between economic development and climate mitigation efforts.

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We need to search for opportunities in the renewable energy space and sustainable urbanisation. Let me give examples. We have to build our cities around public transport and to some extent around walking and biking, to achieve lower emissions. Studies have shown that if you internalise the health costs of coal-fired power plants, about half of coal-fired power plants today are not economically viable. There are lots of reasons aside from climate change to accelerate this transition.

Tejal Kanitkar: These are developmental objectives that we must meet and there are likely to be some overlaps. Public transportation is a given. But if we frame the entire economy-wide transition in this way, we might end up in a situation where we only look for developmental options that have mitigation co-benefits also. That would be dangerous because we have examples of serious trade-offs in agriculture, for example. Recommending restrictions on providing irrigation to farmers because it would mean more energy, more emissions, etc. is a problem because irrigation leads to increased productivity, which improves the resilience of farmers. So, we must be careful that the idea of mitigation does not overshadow development.

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Navroz K. Dubash: I don’t think anybody is claiming that mitigation should be the dominant objective of development policy. The question is, can you approach this as a multiple objective problem where you are looking at development as encompassing many things including growth, distribution, air pollution, local environment benefits and a low carbon future? Is it legitimate to include mitigation outcomes or a lower carbon objective as one among several things that you seek to manage your policy around? I argue that it is. I agree we need to look at both opportunities and trade-offs. Look at those opportunities in a clear and objective way, with mitigation being one among a slew of different objectives. It can be weighted less, but we should have our eye open to it.

Given the carbon footprint of many green technologies, can they actually help cut down greenhouse gas emissions? And are there solutions to the climate crisis that address the root of the climate issue, which is that it is a global commons problem?

Tejal Kanitkar: Analysis of the life cycle emissions of renewable energy sources has shown that they are less compared to fossil fuels. But there are other factors such as battery materials, raw materials mining, etc. whose impact we will know only later as the use of green energy increases. This is the nature of technology, and we will have to innovate to address these issues. There are arguments that favour restricting demand, going back to traditional ways of doing things, etc. I think while sustainable consumption must inform our choices, glorification of the traditional ways of doing things ignores the hardship this means for large sections, particularly women.

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Yes, the carbon space must be thought of as an example of the global commons. Its fair distribution must be the starting point of the way in which we think about the utilisation of these commons. Policies for imposing caps on emissions must be designed with this understanding. But no high-income or even upper middle-income countries have been able to achieve high levels of human development without overshooting their fair share of the carbon space. So, just being within our carbon space is going to be a challenge for India.

Navroz K. Dubash: Fossil fuel use should go to where it has the greatest welfare gains. A tonne of fossil fuel use gives you much greater welfare gains in poor countries where the use is lower. Poorer countries should also try to limit emissions not just for global reasons, but because they will have all these other associated development benefits. Let’s not forget that limiting emissions is likely to be convergent with the goal of India becoming a more competitive economy in the future. India in the past made the mistake of focusing on deployment, and not manufacturing, of renewable energy. We now think more in terms of becoming competitive producers in these new low carbon technology spaces, which is good. It is a good approach to claim a large carbon space if we need it, but try as hard as possible not to utilise that claim.

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Regarding the global commons, the climate crisis is a global collective action problem. As a political problem, it requires countries to agree to cap their emissions many decades into the future. Political systems work on three, five or seven-year cycles. So, we have a gap between the scientific and political understanding of the problem. At the end of the day, this is going to be dominated by the political understanding. I don’t think we will have a political agreement on the allocation of carbon budgets. What we will have is political agreement on the means of support to accelerate the transition to a low-carbon future. That’s what India needs to focus on.

Navroz K. Dubash is a professor at the Center for Policy Research, New Delhi; Tejal Kanitkar is an associate professor at the National Institute of Advanced Studies, Bangalore

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