The Hindu Business Line : Carbon credits and emissions

Transactions in the financial world do not necessarily reflect real economy conditions — this is borne out not only in the case of commodities but also in the market for carbon credits. A recently released World Bank report, State and Trends of the Carbon Market 2008, points out that the value of carbon credits had doubled from $32 billion in 2006 to $64 billion in 2007. Amidst this burgeoning trade, the record on carbon emission cuts is rather dis mal. Emissions increased by 1.1 per cent annually in the 1990s, and 3 per cent annually between 2000 and 2004. This is despite the Kyoto Protocol mandating a 5 per cent cut in 1990 emission levels by 2008-2012.

Obviously, things have gone terribly wrong, despite the fact that the effects of global warming are already upon us. Agriculture has been impacted by weather extremes. The international community has failed to draw up a time-table to reduce carbon emissions along the lines spelt out by the Kyoto Protocol. This is because the developed world, and the US in particular, is opposed to taking the lead in emission cuts, even as it accounts for about 70 per cent of cumulative greenhouse gas emissions, while making up just a fifth of the world’s population. Developed countries want emerging economies such as China and India to make deeper commitments, pointing out that developing economies account for well over half the increase in emissions. The emissions of India and China have increased by 88 per and 67 per cent respectively, between 1990 and 2004, while that of the US, Japan and Europe by 19 per cent, 23 per cent and 6 per cent over this period. However, to ensure that high growing economies clean up their act, developed countries should ensure transfer of clean technology at reasonable prices, instead of denying the South the right to grow. Even as efforts continue at the international level to create a level-playing field, there is a lot that India can do to curtail emissions without hurting its growth objectives.

India has made little headway in renewable energy over nearly three decades, even as oil prices are now ruling at record highs. Renewable energy generation capacity, at 10,622 MW, is just about 7.7 percent of total power generation capacity. The Eleventh Plan (2007-2012) plans to add another 78,577 MW of installed capacity, of which the renewable energy component is an additional 14,000 MW. This is expected to increase renewable energy capacity to 11 per cent of total installed capacity. Wind energy capacity, at about 7,000 MW, accounts for bulk of the share of renewable energy, while other options such as solar and biogas have not been as successful. The government should focus more on this area, particularly when fossil fuel prices are surging ahead. An R&D focus on nanotechnology could help India economise on resource use. There is, sadly, little evidence that the government is serious about these options.

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