Even as the contours of the recently concluded Durban climate treaty unravel, developing countries like India are concerned they may be letting themselves in for an emission-reduction deal that’s not equitable. The agreement calls for a treaty on emission cuts by 2015 that comes into force in 2020.
India’s negotiating skills will be tested in the run-up to 2015. It should not be crowded into signing up for absolute emission cuts and must instead stick to the “energy intensity” metric. This merely moderates the rising absolute-emission curve. Beyond this, it will need to extract concessions from developed countries, especially in relation to the largest polluting element—electricity. This includes concessional funding and access to cutting-edge technology, measures that will enable consumers to enjoy competitively priced electricity and breathe clean air.
To expect renewable resources to satisfy the hunger of a developing country like India would be naive. In the Indian context, only an extreme polluter fits the bill—coal. The government will have to extract generous concessions to ensure that clean coal technology doesn’t send tariffs soaring.
The sense of inequity in having to commit to reducing emissions is strengthened by developed countries dominating the rankings in per-capita pollution.
What could improve the balance is furiously adding coal-based capacity before the baseline kicks off in 2020. That won’t be easy. Though there is huge demand, state-owned distribution utilities are in financial distress, with lenders reluctant to engage further with the sector.
A solution could lie in getting state-owned companies such as NTPC to speed up capacity addition. In turn, payments could be secured through preferential access to the relevant state government’s account with the Reserve Bank of India. Such an arrangement will catalyse reforms in the power sector, with the political class being nudged to allow tariff increases and reduce supply losses.
No doubt this would be an extreme step—in the event of a default, Centre-state tensions could rise. But curiously enough, its potency lies in the power of deterrence. The prescription was tried at the turn of the century when utilities owed large sums of money to power companies. And, it worked.
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