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Game Change: A Sudden Shift in the Global Climate Debate
March 15, 2010
Last week, Saurabh Shome and I reported that India’s proposed massive investments in clean power will cost about $50 billion more than generating the same power with coal. As we note in our paper, Less Smoke, More Mirrors, India is considering such investments “despite the absence of any meaningful international pressure to cut emissions, no guarantees of compensatory financing, and a continuing American failure to adopt stringent emissions limits.” With this initiative, India joins China, South Africa, and other industrializing countries that have begun large clean technology programs at their own expense. In the process they have knocked the conventional climate-development debate into a cocked hat. Consider the following contrasts between Old Think and the New Reality.
Old Think: The pre-Copenhagen mantra of developing countries (including India):
The industrial countries caused this problem; the industrial countries should solve it. Developing countries should only adopt clean technology if the industrial countries will cover the extra cost.
New Reality: India and other rising industrial powers have decided to go ahead anyway. What explains this change? Theories abound. In the Indian case, my colleague Arvind Subramanian sees a big role for India’s great-power ambitions. Industrial policy may also play a part, since Indian and Chinese leaders know that renewable energy is a major new arena for global competition. Greater energy independence is probably a factor. Worry about the impact of climate change certainly plays a role. As my colleague Bill Cline has reported, major Indian regions are likely to suffer agricultural productivity losses greater than 40% if we stay on our current emissions-intensive track. And sea-level rise will displace millions of people in coastal China if we continue on the present course. Finally there is Tuvalu’s ethical challenge in Copenhagen, leveled at India and China as well as the industrial nations: How can you claim the right to emit so much carbon that you will surely submerge us?
Old Think: From US critics of carbon emissions regulation:
We can’t afford to impose more costs on our industries, when competitor countries like India and China are refusing to do anything. They’ll simply steal market share from us and emit more carbon at the same time, so nothing will be gained.
New Reality: India has undermined this claim with stunning force, because its $50 billion initiative imposes an annual cost on the average Indian that is equivalent to $200 per year for the average American (who is 45 times richer). This $200 individual tab is far higher than the Congressional Budget Office’s estimate of $175 per householdfor the Waxman-Markey cap-and-trade bill that has been blocked by Senate opponents because “we can’t afford it.”
India’s message to the US couldn’t be clearer: Stop complaining and join us on the front lines.
Old Think: From critics of proposed global emissions limits:
Climate change is uncertain, carbon mitigation is costly, and poverty remains a serious problem. Under these conditions, the industrial countries should not pressure developing countries to divert scarce resources to mitigation.
New Reality: This critique has become farcical, because developing countries have decided to pressure themselves. In fact, the argument is now reversed. Because developing countries are devoting major scarce resources to mitigation, the industrial countries must immediately respond in kind. Europe has already anted significantly, so the spotlight now shifts to the US, Japan, Australia and Canada.
Old Think: A corollary refrain about loans from the World Bank:
Climate conditionality must be rejected, because it is tantamount to ramming costly mitigation down the throats of poor clients who would never pay for it otherwise.
New Reality: Far from ramming mitigation down any throats, the World Bank will now have to scurry to catch up. Bank management beware: Your institution’s status as a leading 21st-century player is clearly in jeopardy. Your major clients are now investing in clean energy at levels that dwarf your own resources, while you continue to subsidize coal-fired power projects like Tata Ultra Mega and Medupi. You risk consignment to history’s dustbin, financing yesterday’s dirty technology with an obsolescing staff that cannot attract bright young technical graduates who see the future more clearly. You have made a good start with the Clean Technology Fund’s decision to invest massively in North African solar power. Embrace that path, for the sake of your own future.
So, thanks to leadership from India, China, South Africa and others, we have just had an abrupt game change. Its implications for Old Think are easy to summarize: Gone, baby, gone.
Now the global dialogue begins anew, with novel implications for all the players.
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2 Responses to “Game Change: A Sudden Shift in the Global Climate Debate”
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March 16th, 2010 at 12:38 am
I will send you a dollar if India actually goes through with this idiotic, almost criminal waste of money – rather than go through the motions of exciting folks like you in order to accomplish two things:
1. Level the playing field with its first-world competitors by encouraging them to adopt idiotic carbon emissions standards (idiotic if you believe that they will slow warming, but effective in handicapping the US as economic competitors)
2. Encourage governments and donors to make huge grants to India to mitigate non-existent suffering from warming, glacier meltdowns, rising sea level, etc., grants which can be spent by governments and individual philanthro-entrepreneurs as they please.
Let me know when you can replace the word “considering” with the word “spent” and you will get your dollar.
April 29th, 2010 at 10:21 am
Hi David,
Really interesting conclusions, and potentially quite exciting to see governments in middle income countries actually going above and beyond what is expected of them on the climate change front, we can only hope that this leads to more serious efforts by the US and other developed countries. I have one point and one question.
I would suggest you rethink your contention that the CDM should offer finance for projects that are not additional, (i.e. would have happened anyway) on the basis that it would reduce the cost for India to pay for renewables. Surely you are aware that this would essentially mean that India´s advances in renewables would be used to allow developed countries and governments to pay and keep polluting, without bringing about any additional emissions reductions? I am in total agreement about developed countries´responsibilities to reduce the costs of renewables for developing countries, but this should not mean relaxing the CDM rules, as that would surely mean the creation of loads of ‘hot air’ credits.
My other question is out of pure curiosity: If, as you saw, India and other developing countries are getting serious about promoting renewables in a big way, why then did they defend the Medupi coal plant loan, and specifically voice their disagreement with the US Government´s plans to redirect the World Bank towards renewables? I´d be interested to see if you have an explanation, because it seems to me like a contradiction. Thanks a lot,
Rachel Godfrey Wood
http://www.iied.org/sustainable-markets/blog/due-south