|»5 Minute Wrap Up by Equitymaster|
On This Day - 7 DECEMBER 2009
This can push India into darkness...
In this issue:
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India has 10% of the world's coal reserves. India's reserves are the biggest after the US, Russia and China. However, it had to import about 70 m tonnes of high grade coal in FY09, mostly for making steel. The country plans to add 78.7 gigawatts of power generation capacity during the five years ending March 2012. Most of it will be from coal, which now accounts for about 60% of India's energy mix. Even if India remains on track with its renewable energy plans, coal will still account for about 55% of its power supply by 2030.
The emerging economies have often insisted that rich nations have caused global warming. The developed ones that are done with their industrial growth are happy to comply with emission norms. Renewable energy is steadily gaining ground in the West. However, looking at the high cost of solar and wind energy, the questions that arises is - can India afford them? India, the world's fourth largest greenhouse gas emitter is still very low on per-capita emission. The country's industrial electricity tariffs are amongst the highest in the world, a measure aimed at deterring wastage. Nevertheless, it is under pressure to cut pollution to battle climate change. This is at a time when the nation's demand for power is rising with more Indian middle class buying houses and electronic items.
India has committed to contributing towards reducing "carbon intensity". It has set a goal to rein the amount of carbon dioxide (CO2) emitted per unit of economic output by 20 - 25% until 2020. However, what is the price that the nation will have to pay? Does this mean that India's future will once again be pushed into 'darkness'?
China and India are today the toast of the emerging world due to their high GDP growth rates. However, they have also been at the core of green house gas emissions over the past two decades. As today's chart of the day shows, China and India have nearly doubled their carbon emissions since 1990. The World Wide Fund For Nature (WWF) estimates need for emission cuts based on per capita emission. Thankfully, India is very low on this count, even when compared to China. The WWF model projects that the average per capita emission in 2020 needs to be around 4.6 tonnes and between 0.6 and 0.7 tonnes by 2050. India's per capita emission is currently 1.3 tonnes as compared to 5.3 tonnes in China, 15 tonnes in the UK and 20 tonnes in the US.
However, he is of the view that the problems could be managed with a certain amount of coordination. But then he is worried as he says, "...the problem is thereafter, what is the normalcy to which you are going when you exit and that should be the new normalcy and that new normalcy should learn lessons from the past and avoid the same mistakes." We are in complete agreement to these words.
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