Column: Resisting wests

carbon imperialism
The rich worlds move against fossil fuels is a disaster for India, and
other poorer countries.
By: Arvind Subramanian | November 30, 2015 12:50 AM
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Technologies that are already available, such as carbon capture and storage, have proved prohibitively
expensive.

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A decade or two from now, the world should be able to look back at the UN climate
conference in Paris and say with the wistfulness of the ex-lovers in Casablanca: Well
always have Paris.
But will we? There is real anxiety in India, and other poorer countries that rely heavily on
coal, that the stance of advanced nations might in one vital respect stand in the way of
successfully fighting climate change.
In the run-up to the conference, there is a growing callfirst articulated clearly at this years
summit of the Group of Seven leading industrialised nationsto phase out fossil fuels. The
US and others have also vowed to vote against fossil fuel energy projects in developing
countries when multilateral development banks are voting on them. Meanwhile, the US
produces at least 35 per cent more coal than India.
For Indiaa country struggling to provide basic electricity to about 25 per cent of the
population, according to conservative estimatesthis smacks of a carbon imperialism. And
such imperialism on the part of advanced nations could spell disaster for India and other
developing countries.
In fact, rather than replacing coal, the only way India and other poorer nations can both meet
their needs and minimise damage to the environment may be to find effective techniques to
clean and green coal.
Under any plausible scenario, coal will provide about 40-60 per cent of Indias energy until
2030. It will, and should, remain the countrys primary energy source because it is the
cheapest fuel available.
But India is neither unaware of the social costs of coal nor is it lax in promoting renewables.
It has already started taxing carbon, both explicitly and implicitly. The coal tax has
quadrupled to R200 ($3) a tonne since 2014. This has resulted in an implicit carbon tax of $2
a tonne of carbon dioxide on domestic coal. This may, of course, still not be enough to cover
all the social costs of carbon use.
There has also been a substantial indirect tax on carbon. In response to the fall in the oil price,
the government has eliminated subsidies on petrol and diesel and increased taxes. India has
therefore moved from a negative pricethat is, a subsidyto a positive price on carbon

emissions. In contrast, the governments of most advanced countries have simply passed on
the benefits to consumers, setting back the cause of curbing climate change.
It is encouraging, too, that the problem of pollution is becoming part of domestic political
discourse. New Delhi is requiring monitoring mechanisms for pollution in a number of cities.
The pressure on local governments elsewhere in the country to take account of the domestic
social costs of increased carbon-related pollutionhealth, accidents and congestionwill
almost certainly grow.
India is committed to an ambitious renewables programme, ramping up renewables capacity
from 35 gigawatts today to 175 gigawatts by 2022. But as Bill Gates, Microsoft co-founder
and philanthropist, has pointed out, the prices of properly costed renewables are not
competitive with coal today, and they are not likely to be any time soon. It is wishful thinking
to imagine that renewables can replace coal in the foreseeable future.
So, although Delhi is committed to curbing climate change and to promoting renewables,
making coal clean is vital to the countrys development. However, this cannot be done by
India, or anyone else, alone.
Technologies that are already available, such as carbon capture and storage, have proved
prohibitively expensive. To discover truly effective techniques, the world collectively needs
to embark on a programme akin to the Manhattan project that produced the first nuclear
bomb.
This would require investment from both public and private sectors, in advanced and
developing nations, as well as a range of policy instruments. But the rich worlds
preoccupation with phasing out fossil fuels creates a risk that the private sectoralready
lukewarm about investing in cleaning coalwill read the signals and abandon this project
altogether.
In the past few months I have met senior leaders from the US, the UK, France, Germany,
Australia and Japan. All appreciated that the need to clean coal is a significant part of efforts
to fight climate change. The time is ripe to create a global green and clean coal coalition.
That, rather than unconscionable calls to phase out Indias cheapest form of energy, would
best serve the cause of fighting climate change.
The writer is the Indian governments chief economic adviser
(This article first appeared in The Financial Times on November 26)