India’s Economy Is Growing Green

Tuesday, December 15, 2009

By Barun Mitra

Barun MitraIndia needs to push ahead with economic reforms with much greater vigour–regardless of United States or European Union pressure.  And the world can rest assured that a richer India will emit far less carbon – without binding targets.

At the climate conference in Copenhagen, India has an opportunity to change the climate of negotiations, by standing up as the champion of economic growth. India recently announced that it would not accept any legally binding international commitment yet it did offer a voluntary reduction in its carbon intensity by 20 to 25% by the year 2020. Far from requiring targets, it will be India’s extraordinary economic growth that will cut carbon emissions.

Copenhagen is already in trouble: President Obama has been reluctant to commit himself to targets, using China and India’s reticence to do the same as justification. In truth, this excuse has come in handy for many countries such as Canada and Australia that are struggling to meet their targets. A further blow was dealt with “climategate”, when it was revealed that scientists at the University of East Anglia Climatic Research Unit were massaging data to support claims of global warming catastrophe.

Between 1992 and 2005, India’s energy intensity (the amount to produce a unit of Gross Domestic Product) improved by about 52% and its carbon intensity by 45%: India’s energy intensity now stands in the same league as other major economies such as Australia.

India’s GDP has reached $1.217bn:  if that GDP had been achieved at 1971 energy intensity levels, India would now be using two-and-a-half times the energy it actually does and emitting 79% more carbon. Environmental groups may be horrified to hear that India’s annual emissions run over two billion metric tons of carbon but without economic growth and accompanying innovation, the total would have been much worse.

These dramatic improvements in energy use did not happen by chance but they were not the result of conscious environmental efforts. The real secret of India’s increasingly clean development is economic liberalization:  with greater competition, companies and entrepreneurs had an incentive to invest and to develop better technology.

Consider the example of lighting: the energy efficiency of lighting devices has improved by a factor of 10 over the past 100 years, from the incandescent bulb to LED light sources. If all of the households of Delhi could afford to switch to energy-saving compact fluorescent lights, the 10% average daily shortfall that Delhi typically experiences could be offset, without any additional power generation.

Unfortunately too many poor people around the world rely on solid fuels such as wood, dung or coal for cooking and heating. As a result, over 400,000 people die in India – and over 1.6 million people worldwide – because of indoor air pollution every year.

Given this track record, India needs to push ahead with economic reforms with much greater vigour–regardless of United States or European Union pressure.  And the world can rest assured that a richer India will emit far less carbon – without binding targets.

Even at the realistic economic growth rate of 8% annually, India’s GDP will rise 150% to over $3,000 billion by 2020. At current intensities, this would mean 2.5 times more carbon emissions. But, by keeping its economy open to technological innovation, India’s carbon intensity could near European and Japanese levels – reducing total carbon emissions by up to a sixth.

It isn’t just about energy and carbon efficiency–it is about continuous improvements in living standards, nutrition and health for Indians. The number of people living under a dollar a day has fallen from 42% in 1981 to 24% in 2005.

But there is still much more progress to be made and it will not be achieved at Copenhagen. The poor are vulnerable right now to natural hazards like storms or drought because of their poverty, irrespective of any change in the climate. If we are really concerned about their plight, then it is the intellectual climate that we need to change.

India’s government will emerge as a true deal maker in Copenhagen if it is able to change the dominant mindset that growth is bad for the environment.  Rich countries have been able to reap the benefits of economic freedom, with better living standards and a cleaner environment. India and other developing nations must aim for similar goals, undeterred by Western hypocrisy.

Barun Mitra  is Director of the Liberty Institute in India and a friend of