Global GDP Growth 2007-2010
7.2 Material capabilities
7.2.2 Material capabilities in India
Of the US$34,688 pledged to 25 multilateral funds by the end of June 2015, only US$ 16, 809 million had been deposited and only US$2,586 million had actually been disbursed (Overseas Development Institute & Heinrich Böll Stiftung, 2015). A breakdown of these funds is in appendix 0.
In addition to raising FSF, developed countries committed to “a goal of mobilizing jointly US$ 100 billion dollars a year by 2020 to address the needs of developing countries” (UNFCCC, 2010 decision 2/CP15, para. 8). FSF can be thought of as a litmus test of the developed countries’ commitment to sharing the burden by raising the long term finance needed by developing countries to respond to climate change. While the focus in the first part of this phase was necessarily on the FSF, since 2013 there has been increasing concern on the part of developing countries at the lack of progress in mobilising the longer-term finance. With the agreement of the second commitment period at Doha in 2012, the continuation of the CDM was assured until 2020. The CDM has been an important source of climate-related finance for India as it ranks second only to China in terms of Certified Emission Reductions (CERs) issued – 12.8% of total – and therefore revenue generated (Fenhann, 2015) through the mechanism. This revenue was especially important in light of the slowing of the Indian economy which is discussed next.
Chapter 7.India vying to occupy centre stage with the USA & China: the fourth phase (2011–2015)
The Planning Commission attributed some of the continued “sluggishness” in the Indian economy to the general slow-down of the world economy since the 2008 financial crisis and prevailing global economic uncertainty. In addition it pointed to domestic-level issues of “coalition politics, lack of consensus, and poor coordination” as contributing to the slower growth rates (Planning Commission, 2012b). Despite the GDP fluctuations, India’s performance on the Human Development Index continued to close the gap with the regional average – by 2013 India’s HDI score of 0.586 was almost equivalent to the low South Asia regional average of 0.588.
At a day-to-day level the material circumstances of Indians were improving, albeit at a slow but steady pace. While the 2011 census indicated an increase in the percentage of Indians with access to sanitation facilities, even so only 36% of Indians had access to a “water closet” and over half the population had no latrine access at all. In addition nearly half the population in 2011 still lived without any drainage facilities whatsoever (Ministry of Home Affairs, 2001). 2011 census data also indicated that although nearly 47% of Indians had access to water within their homes, the remaining 53% of people having access to water either near the premises or at some distance from it. This figure of 47% was an improvement on the 39% with on-premises access reported in the 2001 census, but was likely an indication of a decrease in the number of people with access near the premises rather than a decrease in the number of people having to travel some distance in order to get water. It should, however, be noted that given India’s vast population, small changes in percentages actually indicate improvements to the lives of millions of people; for instance, the 6.3%
increase between 2001 and 2011 meant that borewell access was provided to approximately 35 million people (Ministry of Home Affairs, 2001, 2011). Between 2001 and 2011 almost 12% more people gained access to electricity in their homes (from 55.8% 67.2%). Most of this increase was in the rural areas, in the form of electrification. Solar energy, for instance, increased nearly three-fold in the rural areas in the period, but even so accounted for only 0.4% of the total by 2011 (Ministry of Home Affairs, 2001, 2011) despite India’s good potential for wind and solar.
India has considerable coal resources which are found predominantly in the North-East of the country. Even so domestic demand has outstripped domestic supply since at least 2008 and shows no sign of declining. Domestic demand for coal during the 12th FYP (2012-2017) is projected to outweigh domestic supply by approximately 20% (Garg, Naswa & Shukla, 2014) - the difference is met by imports which puts India increasingly at odds with China on the international commodities markets. Notwithstanding India’s Solar Mission targets and potential for wind energy, coal remains a cheap, relatively abundant and accessible source of energy with which to power the growth that
would propel millions of Indians who are on the “cusp of prosperity” out of poverty (Saran & Jones, 2015).
In addition to international demands on coal resources as a possible source of tension, India has no oil or gas reserves and thus India’s reliance on external oil continued to grow (IEA, 2015; World Bank, 2015). By 2015 over 80% of India’s oil demand was being met by imports underlining India’s energy security concerns. Even future energy demand modelled using the constraints of deep decarbonisation measures showed continued increases in imports of oil and gas, thus India’s energy security concerns are unlikely to abate in the near or long term (Shukla et al., 2015: 32).
Fossil fuels continued to dominate the overall energy mix at over 70% whereas renewable and nuclear energy remained below 5% of the total. To unpack this last figure a little, the Finance Ministry’s 2014-2015 Economic Survey reported that as of 31 December 2014 India’s total installed capacity of renewable power had reached 33.8 GW. The majority of this capacity – 66% – was in wind power (despite the absence of a Wind Mission under the NAPCC of 2008) followed by biomass, small hydro power, and solar power, which in 2013-2014 had an estimated installed capacity of 2647 MW (Finance Ministry, 2015, para. 8.15). India is thus following a well worn fossil-fueled path from poverty, via industrialisation, to a rise in per capita incomes and better standard of living (Saran &
Jones, 2015).
Toward the end of the third phase (2010) the Indian government had created an institutional requirement by levying a cess on coal. In the 2014-2015 budget the cess was doubled from Rs50 to Rs100 per tonne and used to capitalise the National Clean Energy Fund (NCEF). In total (up to the 2014-15 budget preparation) the cess had collected a (budget estimated) amount of Rs17,084.45 crore used to provide funding for 46 clean energy projects worth Rs16,511.43 crore in the period from 2011 up to September 2014 (Finance Ministry, 2015, para. 8.15). The steady increase in the number of projects under the National Clean Energy Fund indicated the success of this particular combination of institutional arrangement and material resources. Despite India’s continued reliance on fossil fuels, the emissions intensity of India’s GDP continued to decrease (improve), showing that energy efficiency measures were paying dividends (World Resources Institute, 2015).
Under Modi, material resources for climate change and environmental projects have suffered mixed fortunes. In the first budget in 2014 the new BJP government set up a National Adaptation Fund (NAF) – ostensibly because, according to Finance Minister Arun Jaitley, “[c]limate change is a reality which all of us have to face together. Agriculture as an activity is most prone to the vagaries of climate change” (Yeo, 2014). The establishment of the NAF therefore acknowledges both the
Chapter 7.India vying to occupy centre stage with the USA & China: the fourth phase (2011–2015)
science of climate change impacts on India (as per AR4, AR5 and the INCCA’s 4x4 assessment among others) and the continued importance of agriculture to the Indian economy. This budget also announced funding to establish “ultra mega solar power projects” in Rajasthan, Gujarat, Tamil Nadu and Laddakh. However, the finance minister also announced measures to enhance coal production and exploit old petroleum and natural gas wells – unsurprising given the 12th FYP projections in relation to domestic energy demand (Planning Commission, 2012a; Yeo, 2014).
The 2015/6 budget struck slightly discordant notes. While environmentalists called it “destruction- oriented” after Jaitley reduced the MOEFCC’s budget allocation from Rs 2,043 crore (US$ 378 million) in 2014-15 to Rs 1,681 crore ($300m), the coal cess was doubled to Rs 200 per metric tonne in order to fund India’s ambitious green-energy plans, including plans to generate 100 GW of solar, 60,000 MW wind, 10,000 MW biomass and 5000 MW small hydro by 2022 (Pandey, 2015).