Bangalore: In a country that has much else on its mind now, political uncertainty and a slowing economy in tow, Earth Day may not make its mark this year. But that won’t stall the march of climate change. If anything, this is the time, politically and economically, to appreciate that the solution to global warming lies not in slamming the brakes but in stepping on the gas.
Today, with some of the biggest cash injections in history, the global market can be steered towards a low-carbon economy; India is no exception. Its business and social interests are well served in increasing the energy efficiency and decreasing the carbon footprint of products and services originating from here. After all, the cost of inaction is much higher than that of timely action.
Former World Bank chief economist and author of a landmark 2006 report on the economics of climate change, Nicholas Stern calculated the cost of action to limit green house gas emissions to an accepted sustainable level to be about 1% of global gross domestic product (GDP) as against the cost of inaction, estimated to range from 5-20% of global GDP annually. He warned that climate change would eventually shrink the global economy by 20%. Stern has since revised his cost estimates (from 1% to 2%), as have others, in the wake of climate change projections getting severer.
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From the 1930s, when the signs of global warming started becoming evident, to the present day, climate debate has moved from the margins to the mainstream but businesses, particularly in India, are yet to comprehend that it’s no longer an either-or question. Economic growth and environment protection must go hand in hand. Why this understanding is important is because businesses in the past, owing to their power of scale and persuasiveness, have brought about ground-breaking changes in human behaviour (most recently India’s telecom revolution) and experts believe they can do so again, in averting a climate catastrophe.
However, a 2008 survey by the tax and audit advisory firm KPMG of Indian business leaders (at the CXO level) shows that while 83% believe they have a fair to good understanding of climate change, only 21% have measured their current carbon footprints. This may soon prove to be a bad business call as even though the Indian government has chosen an approach of “common but differentiated responsibility”, pressure is mounting on India (and China) to commit to binding emission targets.
Internationally, emission calculation has to do more with politics than mathematics; but locally, businesses need to do their math right—measure their environmental footprint, implement action plans and monitor them periodically for their own benefit. It is feared that after the Copenhagen conference in December, other countries may consider trade-based sanctions on Indian businesses if the country doesn’t commit to an emission target.
It appears, from the KPMG survey, that Indian companies want to be leaders in their response to climate change but they expect the government to lead by example, both in education and technology adoption. This isn’t surprising as even globally regulation is proving to be the primary driver of change.
In its National Action Plan on Climate Change, India has outlined “expanded action” in eight areas including solar energy, water, and sustainable agriculture, but, it turns out, the nation of mere guidelines that we are, nothing in these “missions” is legally binding, except, of course, the commitment that India’s per capita greenhouse gas emission will “at no point exceed that of developed countries”.
Issues of climate change are in a way transcendent, affecting national well-being as well as economic affairs. The global low-carbon technologies market, according to a European Commission estimate, will amount to $3 trillion (about Rs150 trillion today) by 2050. Of this, renewable energy, waste management and water treatment alone will account for $700 billion by 2010, almost measuring up to the aerospace industry in value.
But unfortunately, the cleantech sector in India has seen a decline in investment even before it could see any reasonable surge. Though the Indian clean-tech market ranks third after the US and Europe in venture capital investment, with China at rank four, these markets saw a drop of 41% since the last quarter of 2008 and a 48% decline compared with the same period last year, according to the market research and advisory firm Cleantech Group Llc.
But investment is only one part of the problem; the other, no less significant though, is figuring out how to quickly limit the emission of heat-trapping gases by changing some of the ways we work and live. It could well be moving towards smart power grids or better handling of waste— electronic, municipal or industrial; avoiding deforestation or promoting cleaner biomass burning; adopting renewable energy sources or low power consuming devices, operating an efficient carbon market, encouraging next generation of biofuels or turning to carbon capture and storage. No grand scheme would work; it has to be a mix of smaller, decentralized programmes since our urban and rural divide continues even in the deteriorating environment.
In fact, green activists moan that urban centres will face the gravest challenges. The Rockefeller Foundation is spearheading a major international initiative (Asian Cities Climate Change Resilience Network) to build resilience in cities to the challenging natural environment. Out of 17 cities in South Asia covered under the initiative, six are tier II cities from India. But India’s own response to urban vulnerability arising out of climate change, the massive Jawaharlal Nehru National Urban Renewal Mission, seems to be a knee-jerk reaction to a gigantic problem.
Indeed, global warming is a global issue—a tonne of greenhouse gas is a tonne of greenhouse gas, wherever emitted—but the measures to curb it have to be largely local. If the multi-business conglomerate ITC Ltd can vow to be the first organization of its size in the world to become a carbon positive, water positive and zero solid waste discharging entity, other businesses, too, can put a value on climate change.
We are fast heading towards a point of no return, but there’s still hope. Historically, clarion calls for socio-economic changes haven’t grown steadily, but sporadically and exponentially.
Indian companies, says KPMG, differ from their counterparts in other countries in not facing pressure from their stakeholders—investors, employees and customers—to reduce carbon impact. It’s time that pressure built up, so we at least begin to measure the toe-print, if not the footprint.