Category: Op-ed

The 28th conference is a milestone event where the international community must confront the harsh truths about our collective (and differentiated) efforts to combat climate emergency.

There is always a hype built around the annual United Nations Climate Change Conference. Every Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) is projected as a do-or-die meeting. Success is typically measured by the grandeur of new pledges, with the host country basking in the glow of any significant commitments. However, the 28^th COP, which begins on 30 November in Dubai, is unique because it is not so much about new promises (though there will undoubtedly be some) but what happened to the old ones. The question to be answered in Dubai this December is: Have the countries kept their promise, and if not, what’s next. Dubai COP, therefore, is the first ‘official’ reality check of the climate crisis. It is also a reality check for the oil and gas industry and for the commitment of the rich world to support poor countries in dealing with climate disasters.

Climate balance sheet

The Paris Climate Accord, adopted in 2015 and signed by 195 countries, is a unique treaty. While it has set an international goal to keep temperature increases within 1.5-2.0°C, it cannot force countries to cut emissions. Countries pledge voluntary commitments to reduce emissions, called Nationally Determined Contributions (NDCs), but these are not legally binding and there is no penalty for non-compliance. What the Paris Agreement has is a process to review pledges every five years, called ‘global stocktake’, to check where the world stands on climate action. The assumption is that disclosing information will put moral pressure on countries to enhance their commitments. The Dubai COP, therefore, is crucial because the results from the first-ever global stocktake will be discussed here. It will also be a test of the “moral pressure” hypotheses.

This year the Intergovernmental Panel on Climate Change (IPCC) released its Sixth Assessment Report. It confirms that between 2011 and 2020 global surface temperatures were on average 1.09°C higher than they were from 1850 to 1900, with 1.07°C of this change being caused by human activity

The findings of the UNEP’s Emissions Gap Report 2023: A Broken Record is even graver. It notes an average temperature 1.8°C warmer than pre-industrial levels in September 2023. It further asserts that proceeding along the current path as determined by NDCs would have us on track for 3°C of climate change by the century’s end.

The preliminary findings of the global stocktake, published in the Synthesis Report of the Technical Dialogue of the Global Stocktake, clearly states the following:

“Global emissions are not in line with modelled global mitigation pathways consistent with the temperature goal of the Paris Agreement, and there is a rapidly narrowing window to raise ambition and implement existing commitments in order to limit warming to 1.5°C above pre-industrial levels.”

While all assessments clearly show that the world is far off from the 1.5°C emissions trajectory, the big question is what kind of message from the global stocktake will be delivered in Dubai? Would it be greenwashing, or would it call out countries for vapid and unmet commitments? This is important because the outcome of the global stocktake will inform the next round of NDCs that countries need to declare by 2025. These commitments will be implemented through 2035 and thus would decide climate action for the next 10 years. So, the right messaging from COP28 is crucial to unequivocally indicate what countries, developed and developing, are required to do to put the world on track to meet the Paris Agreement goals in the next decade, a decade which will decide whether we will win or lose the climate battle.

Moment of truth for oil and gas

There is the elephant in the room and it is oil and gas (O&G). Often touted as a cleaner fuel than coal, oil and natural gas in 2022 accounted for 54 per cent of global greenhouse gas emissions; coal accounted for 40 per cent. O&G is the developed world’s fuel of choice. In the European Union (EU), for instance, they contribute about 60 per cent of the total energy; coal’s contribution is 10 per cent. The reliance on O&G is even greater at 70 per cent in the US. In contrast, the dependence on coal is higher in emerging economies like India, China, South Africa and Indonesia.

Two years ago, at COP26 in Glasgow, an agreement was reached to phase down coal use. This concession was wrung from countries like India that depend heavily on coal to meet their energy demands. Despite repeated attempts, and support from the EU, no such commitments have been made for O&G, although it is abundantly clear that prolonged reliance upon such fuels is entirely incompatible with the 1.5°C goal. Dubai, however, is the perfect venue to make such a commitment.

The UAE is the world’s eighth largest petroleum producer and very much a petrostate. A recent Guardian exposé found that the Abu Dhabi National Oil Company (ADNOC) has the most investment in new petroleum production projects. The CEO of ADNOC is Sultan Al Jabar, the man that the UAE has selected to preside over COP28. So, the stage is set for what the executive director of the International Energy Agency has called a “moment of truth for the [global] oil and gas industry’s efforts on climate”. Would the developed world and the petrostates agree to the O&G phase-down, or would this be another lost opportunity?

A compassionate world

Perhaps the most critical issue for developing countries at COP28 is action on the Loss and Damage Fund, whose creation was agreed to last year at COP27 in Egypt. Recent years have seen a rapid acceleration of climate-related disasters. In 2022, there were 81 weather, climate and water-related disasters in Asia, of which over 83 per cent were flood and storm events. More than 5,000 people lost their lives, more than 50 million people were directly affected and there were more than US$ 36 billion in economic damages.[iv] So far in 2023, the world has witnessed extreme floods in China, forest fire in Canada, flash flood in Somalia, heatwaves in East Asia and extreme rainfall in India. These impacts are being borne disproportionately by smaller, poorer, and inevitably less developed countries, which are least responsible for the climate crisis. The Loss and Damage Fund was envisioned to channel funds from rich economies into those most vulnerable to climate disasters.

While the agreement to create the Loss and Damage Fund last year was undoubtedly momentous, we will see whether this vehicle will be given any teeth in Dubai. If it is left toothless and penniless, the Global South should accept that the North has no intention of taking any responsibility for its historic emissions and has no serious plans to help those in need.

The commitments made in Dubai on the Loss and Damage Fund and action on Oil&Gas will determine whether the goals of the UNFCCC can be met. Will developing countries be made to bear alone the costs of adapting to a rapidly warming planet while the rich burn gasoline and natural gas and utter empty platitudes? Or will the developed world finally take responsibility for its historical emissions?

In essence, COP28 isn’t just another gathering; it’s a milestone event where the international community must confront the harsh truths about our collective (and differentiated) efforts to combat climate emergency.

Article The transformative potential of decarbonisation is that it can meet socio-economic goals better than current development pathways.

The Paris Agreement that India signed alongside 195 other countries in 2015 came into effect on 4 November 2016. Article 4.1 of the Paris Agreement refers to the goal of achieving ‘Net Zero’ through a “balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century, on the basis of equity, and in the context of sustainable development and efforts to eradicate poverty”.

To fulfil the obligations under the Paris Agreement, in November 2021, at the 26^th Conference of Parties (COP26) in Glasgow, Prime Minister Narendra Modi pledged that India would reach net zero emissions by 2070 and meet 50 per cent of its electricity requirements from renewable sources by the year 2030. In the words of Dr Fatih Birol, Executive Director of the International Energy Agency, “India is pioneering a new model of economic development that could avoid the carbon-intensive approaches that many countries have pursued in the past – and provide a blueprint for other developing economies”. Clearly, in the eyes of the world, India is in a position where it can act as a leader in climate action and pave the way for that development that follows an alternative model to that of the industrialised western countries and China. We can demonstrate that the process of economic growth need not come at the cost of our environment or indeed the health of our citizens.

To safeguard the well-being of humanity, Article 2 of the Paris Agreement refers to two temperature thresholds. While the globe cannot, under any circumstances, cross 2 degrees Celsius (C) of warming, the Agreement binds countries to attempt as far as possible to stay within 1.5C. The Intergovernmental Panel on Climate Change (IPCC) has made it clear what staying within 1.5C would entail. Global carbon emissions have to drop drastically – from their current level of 36 gigatons each year, to zero or near-zero by the middle of this century (i.e. around the year 2050). The IPCC makes it clear that this target is achievable through a combination of reducing fossil fuel use and increasing the speed of carbon removal from the atmosphere. More importantly, it also makes clear that the consequences of crossing 1.5C will result in unbearable impacts on humans and nature.

The cost of not achieving Net Zero

These impacts are not things that will only occur far in the future as conditions that our grandchildren and their children will experience; they are already manifesting. India has warmed by around 0.7C since 1900. This is not evenly distributed – some cities like Kolkata have seen 4.5C of average temperature rise due to a combination of urban heat island effects and changes in the amount of vegetation in and around the city. The Himalayas, which are a highly vulnerable landscape that provides incalculable ecosystem services such as delivering melt water to perennial rivers and ensuring that rain-bearing winds from the Arabian Sea and Indian Ocean reach a condensation point before crossing over to China, underwent maximum warming of 2.5C from 1950 to 1999 and could experience a maximum temperature rise of 9C by 2100. This would be accompanied by decades of catastrophic flooding in the Gangetic region and eventually water scarcity in the entire northern half of India. Indian Ocean cyclones are increasing in volume and intensity, while the historically calm Arabian Sea has started producing cyclones more frequently than before, as citizens in Mumbai and the rest of the Western Coast of India can attest to.

The impact of the warming on the economy and livelihoods is equally alarming. By one estimate, if global warming crosses 2C, India’s GDP will be 3 per cent lower in 2100 than it would have been otherwise. If it crosses 4C, India will lose around 13 per cent of GDP. However, these estimates are limited to the loss in labour productivity. Global warming also causes and exacerbates extreme weather events such as cyclones and heatwaves. Between 1998 and 2007, India lost $20 billion to climate change impacts. Those losses more than doubled over the next decade – we lost $45 billion between 2007-2017, with the agriculture sector being the worst hit.

If the cost of these weather extremes is included, India’s GDP is already 25 per cent lower than it could have been, and it could lose up to 90 per cent by the end of the century. By 2050, climate-caused economic loss to India could total $6 trillion, according to a Deloitte report in 2021. A separate estimate for ‘slow-onset’ losses such as coastal erosion and flooding indicates that India could lose $4 trillion to flooding through the rest of this century, with an additional 28.6 million people exposed to flood risk across six Indian port cities – Chennai, Kochi, Kolkata, Mumbai, Surat and Visakhapatnam. Finally, climate will also impact jobs. It is estimated that India could account for about 34 million of the projected 80 million global job losses from heat stress by 2030. The Reserve Bank of India’s latest report suggests that up to 4.5 per cent of India’s GDP could be at risk by 2030 owing to lost labour hours from extreme heat and humidity. These trends suggest terrifying implications if they are allowed to continue.

If the cost of these weather extremes is included, India’s GDP is already 25 per cent lower than it could have been, and it could lose up to 90 per cent by the end of the century. By 2050, climate-caused economic loss to India could total $6 trillion, according to a Deloitte report in 2021. A separate estimate for ‘slow-onset’ losses such as coastal erosion and flooding indicates that India could lose $4 trillion to flooding through the rest of this century, with an additional 28.6 million people exposed to flood risk across six Indian port cities – Chennai, Kochi, Kolkata, Mumbai, Surat and Visakhapatnam. Finally, climate will also impact jobs. It is estimated that India could account for about 34 million of the projected 80 million global job losses from heat stress by 2030. The Reserve Bank of India’s latest report suggests that up to 4.5 per cent of India’s GDP could be at risk by 2030 owing to lost labour hours from extreme heat and humidity. These trends suggest terrifying implications if they are allowed to continue.

Technology is available and growth will be exponential

Despite this urgency, the misconception persists that Net Zero is unrealistic. Some energy historians point out that neither coal, oil nor natural gas managed to cross more than 50 per cent of energy market share in their first 60 years, and conclude that renewable energy cannot dominate the market within 30 years. These historians ignore the historical and present nature of energy markets, the speed of technological development and the already-emerging future trajectory of energy markets that promise to be cleaner.

The past two decades have seen a revolution in renewable energy technologies – solar costs have fallen 90 per cent over the past decade. Building new solar power in India is now cheaper than building a new coal plant, and is quickly becoming cheaper than running existing coal plants. While renewable energy needs electricity storage to be as reliable as coal power, Moody’s projects that wind and solar, including storage cost, will be competitive with coal in India in 2025.

This itself is driven by the battery/ storage revolution coming to India, which could drop costs by 60 per cent in the next decade. This is a continuation of the global trend, which has seen Li-ion batteries become 97 per cent cheaper since 1991, with further room to drop. In addition to making electricity generation cheaper, the battery revolution would drop the cost of electric transportation in India – in about five years, electric vehicles (EVs) are estimated to account for 15 per cent of India’s scooter market, with the share doubling in about 10 years. The savings on fuel imports for transportation will be immense – USD 2.5 trillion by 2047 if the government’s (admittedly ambitious) targets are met. Investment in the battery producing capacity of the Indian industry can further generate huge income for the country.

Likewise, green hydrogen, the key to decarbonising heavy industries, is at a tipping point. Like EVs, electrolysis of water to produce hydrogen in areas without access to cheap electricity has been in practice since the 1950s. In fact, one of India’s first urea plants – the Fertiliser Corporation of India’s Nangal plant – employed electrolysis to produce hydrogen until it switched to hydrocarbons in the 1970s due to shortages of power in the Bhakra grid. But with cheaper renewable energy, green hydrogen is now a reality.

Crucial to remember is that even if India lacks certain technologies, for instance that used in creating commercially viable sodium ion batteries (SIBs), the Paris Agreement can be leveraged for technology transfer, and countries have started to cooperate on technology development.

Transition is possible and desirable in India

If we already have the technology, why are we not decarbonising yet? In a broad sense, we are. Current renewables capacity addition globally is way above the International Energy Agency’s predictions from even five years ago, a trend clearly visible in India. For instance, renewables accounted for 4 per cent of new capacity addition in India in 2001; between 1 April 2020 and 31 March 2023, they accounted for over 82 per cent.

Likewise, India has embarked on ambitious missions to competitively produce EVs, batteries, photovoltaic cells and hydrogen fuel. We are at the beginning of a revolution comparable to computers and the internet in the 1970s and 1980s, or smartphone ownership in the 2000s. The good news is that this transition is a win-win for India in terms of growth and jobs.

The other side of the question with respect to decarbonisation is what to do with existing energy generators that are major sources of carbon emissions, i.e., coal power plants. A coal plant’s operational life is 30-35 years. The Central Electricity Authority’s Tariff Regulations actually specify the ‘useful life’ of a coal plant is 25 years. If we adhere to this specification, a coal power plant built in India today should – on a purely technical/ technological basis – be retired by 2050 at the latest. But in practice, the lives of these plants are extended and regulators approve tariffs for older plants at their discretion – a discretion that has expanded to become a standard practice. To keep a plant going beyond 30 years, it needs significant repairs and upgrades, which are effectively a new capital investment at ratepayer cost. Beyond the useful life, coal power plants’ cost of operation exceeds the value they generate. Considering that the cost effectiveness of installing around-the-clock renewables is already competing with that of new coal plants, investments in new coal plants could rapidly become ‘non-performing assets’ (NPAs). A recent study has estimated that even in the existing coal fleet, the non-performing (‘stranded’) assets could be up to $40 billion.

No wonder the government recently put future coal expansion on an indefinite pause. It has already covered half the distance towards the inevitable – a deadline to shut down all coal power in India. But the challenge is a just transition – a transition that will compensate and strengthen workers and communities whose livelihoods depend on coal, oil and gas.

In sum, there are technologies that are ready to deploy right now, for which the barrier is neither technical nor cost, but policy priorities. But these policy challenges are a cause for action, not panic. No one expects us to reach Net Zero tomorrow. But the right policies need to be implemented now so that they can take full effect over 30 years.

Co-benefits are high

If we see decarbonisation as a technology-and-policy question, it requires decisions about the allocation of costs and benefits. The fossil fuel economy has delivered many benefits, including national development. Decarbonisation will bring some costs, especially for those who are dependent on fossil fuels for jobs and growth and those currently able to access cheap energy. But there has been evidence for a while that this development is not well distributed and directed.

For instance, the externalities of fossil fuel energy are disproportionately borne by the most vulnerable. Communities around coal mines and power plants are exposed to horrifying levels of air pollution, which in turn cause lung and heart disease. Cement and steel manufacturing similarly combine broad development benefits with high health impacts on workers and nearby communities. More Indians own cars today than 50 years ago, but our city air has become unbreathable. A recent Lancet-published study puts a shocking number on “premature deaths and morbidity attributable to air pollution” – US$ 36.8 billion in economic losses to India (or 1.4 per cent of GDP) in 2019 alone.

When people emphasise the cost of transition, they are missing the benefits – to health, energy access, employment, and domestic industry. This is true of those who believe development is fine as it is, as well as those who argue that development is a bad word. The transformative potential of decarbonisation is that it can meet socio-economic goals better than current development pathways. Similar to fossil fuel growth, the investment has to be made upfront, but unlike with fuel-based energy, with renewables, it is the benefits that will accumulate over decades rather than costs and detriments.

Conclusion

If we act on these realities, India can move beyond asking for a few million in climate finance and unlock trillions of dollars in investments. The IMF indicates $3 trillion in climate investment opportunities in India through 2030. Deloitte considers that the right policies can turn India’s projected $6 trillion loss from climate change into a $11 trillion return on climate investments, including by exporting decarbonisation to the developing world. Benefits from investment into climate-allied industries, such as those that produce EVs, batteries, solar panels and hydrogen, could push returns on investment even beyond Deloitte’s predictions.

Implicit in these estimates is that India moves decisively on climate change in every sector of the economy. In the following articles in this series, we shall outline sector-specific roadmaps to achieve carbon neutrality or net zero emissions.