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Climate change: New dawn or same old song?

By Bishal Thapa and Mahua Acharya
March 06, 2009 12:26 IST
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As they do every December, world officials gathered in Poznan this time for the United Nations conference on climate change. They had come to advance the negotiations for a post-2012 international agreement on climate change. Some 11,000 participants attended. It was quite an event.

Nothing happened. Nothing much was expected to happen.

With the US administration in transition at that time, significant progress on the negotiations was always unlikely. After an agreement on modalities for the adaptation fund, an instrument created to finance adaptation projects and programmes in developing countries, participants shook hands, promised to keep talking and headed home for the holidays.

The first real challenge for a post-2012 climate deal will come in the summer of 2009. The draft text on the agreement is supposed to be ready by then. The final challenge will come in Copenhagen in December 2009 where the agreement is scheduled to be finalised.

That meeting is supposed to be a milestone in the global response to climate change. In case the sense of history or suspense might elude you, the website of the United Nations Framework Convention on Climate Change -- the agency coordinating the global response -- carries a foreboding clock in black with orange letters and numbers continuously counting down to the Copenhagen meeting. Countdown to Copenhagen, countdown to the fate of humanity.

The fault lines that have far so pervaded the post-2012 climate discussions are not just political rhetoric. They are real and, from India's perspective, have a meaningful long-term impact on its objectives for growth, development and poverty reduction.

As the fourth-largest greenhouse gas emitter in the world, India has an important role to play in the global response to climate change. Consider this: If India were to meet existing electricity shortages with its current portfolio of power plants, the resulting emissions over a five-year period could erase the reductions that Japan is required to achieve in the five-year first commitment period under the Kyoto Protocol.

It is not just India that is involved. All larger developing countries will be important to the climate agreement. Several forecasts suggest that GHG emissions from developing countries will exceed that of developed countries by the middle of the next decade. An international framework that does not actively engage developing countries in the mitigation effort will be irrelevant. That's exactly where the trouble begins.

The fear in India, as with other developing countries, is that reduction requirements on them will constrain economic growth. In a country where the bulb -- even in the capital city -- doesn't turn on half the time because there is no electricity, the need for reductions will always seem misplaced.

The EU's Road to Copenhagen communication released in late January envisions that developing countries should commit to implementing national low-carbon development strategies in all key sectors by 2011. The EU further urges developing countries to commit to overall reductions of 15-30 per cent from business as usual levels by 2020.

The emphasis on reduction commitments for developing countries detracts from a discussion on the challenges they face in meeting the dual objectives of growth and sustainability.

A low-carbon strategy involves the use of technology and financing. But that's not enough. Translating the incentives of carbon markets into technology and financing requires a clear -- and stable -- policy framework. Some developed countries already have fiscal systems where incentives can reasonably be expected to yield desired outcomes. India doesn't. Nor do most developing countries.

Consider India's electricity industry as an illustration. The sector has struggled with three broad objectives: Access for all, reliable supply and growth to meet rising demand. These objectives, however, have remained elusive. The failures stemmed mainly from endemic system inefficiencies of state monopolies -- failed state electricity boards, high commercial losses, structural and regulatory bottlenecks and payment uncertainty.

Two decades of sector reform efforts finally coalesced into the Electricity Act 2003 -- a comprehensive set of regulatory and structural measures to liberalise and modernise the sector. The implementation has been patchy across the states but there are visible signs of success. Private participation has increased significantly. A stronger regulatory framework has evolved. Many state electricity boards have restructured. Most important, there are greater opportunities and increased certainty of returns. Everybody agrees that a robust electricity sector stands the only chance of delivering on the objectives of access, reliability and growth. The challenges in getting there are still far from over – the Electricity Act 2003 is the only the beginning.

Ecological sustainability has always been a component of the Electricity Act. For the power sector, low-carbon initiatives include better use of renewable generation, promotion of hydro, end-use energy efficiency, adoption of new technologies and improvements in existing performance.

The Act included several of these objectives: A goal for generation from renewable energy; support to the Bureau of Energy Efficiency; renovation and modernisation initiatives for existing plants; better use of hydro resources; and incentives to reduce commercial and technical system losses. But incentives to achieve these are either patchy or weak.

If implemented successfully, these initiatives would significantly slow emission growth. Yet they languish in potential and promises. That's because sector reforms are far from complete. The essential elements of the electricity supply chain -- fuel supply on the one side and distribution on the other -- are yet to attain a critical mass of reforms.

In such a sector environment, how do you transform, for instance, the incentives for carbon abatement into achieving more renewable power? A meaningful response on climate change must, therefore, be framed differently. It should propose systematic incentives for increased energy diversification, more renewable energy on grids, or incentives for better performance -- measures that promote emissions reductions while also supporting the broader sector reform agenda.

The EU's Road to Copenhagen communication recognises the need for domestic sector environments that can support mitigation efforts in developing countries. The challenge for this community is how to make developing countries accountable. And they should be held accountable. But the answer cannot be in simple reduction commitments. Rather, developing countries should be held accountable for achieving energy and industrial carbon efficiencies, energy diversification or delivering on more renewable power in their grids -- an overall target that is sure to expedite reform efforts in the power sector.

The challenge for governments in developing countries is to propose a climate framework that works both for economic growth and addresses climate change.

Promoting renewable energy generation is not a good thing just for climate change. It serves to increase access, ensure reliable supply and meet demand growth. These are our broader national objectives. Promoting energy efficiency lowers energy costs for business, frees up extra power, promotes innovation and eventually leads to the use of cleaner technologies.

Getting a country like India a good deal in the post-2012 framework may not be about just getting a waiver on reduction commitments. It will be about putting in place an international framework that better supports the country's national objectives of growth and poverty reduction; about strong and clear incentives, access to cleaner technologies, financing opportunities and new markets. 

Understanding this reality can make the Copenhagen meeting the beginning of a new dawn rather than just another version of the old song and dance.

Bishal Thapa is managing director, ICF International, and Mahua Acharya was formerly with ArcelorMittal. The views are personal.

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