Climate Crisis and Union Budget 2024: A Critical Analysis
India ranks 7th out of 63 countries in the Climate Change Performance Index (CCPI), 2024, up one spot from the previous CCPI. In Greenhouse Gas Emissions (GHG) and Energy Use categories the country was rated “High”. Because India is the world’s most populous country, it has relatively low per capita emissions. But, in the Climate Policy and Renewable Energy categories it earned a “Medium” rating, as in the previous years. The CCPI evaluates 63 countries and the European Union (EU), which together generate over 90% of global GHG emissions. The climate mitigation performance is assessed in four categories: GHG Emissions, Renewable Energy, Energy Use and Climate Policy.
The climate crisis is an existential threat to the life on Earth. And, in last few summers we in India are feeling the heat. Not that last winter was comfortable because till mid-December we did not take out the woolens with the daytime temperature hovering around 27 degree Celcius. The CCPI tracks the implementation of the 2015 Paris Climate Accord -- to reduce the magnitude of climate crisis impacts we must limit global warming to 1.50C. How close are we to 1.5oC? World Economic Forum announced in January 2024 that temperatures in 2023 reached 1.480C above pre-industrial averages, with the 1.50C threshold that takes the Earth into an unsafe operating space likely to be breached in next 12 months!
The World Economic Forum’s Global Risks Report 2024 named three key climate issues as critical challenges facing humanity: (i) Extreme weather events, (ii) critical change to Earth systems; and (iii) biodiversity loss and ecosystem collapse. Urgent actions are needed to combat these three interconnected and mutually reinforcing climate challenges. Abrupt and irreversible changes to Earth systems lead to more extreme weather events and risk collapses in the eco-system not well adapted to new climates.
Extreme climate endanger our goal of sustainable food and resources, as well as sustainable employment. Scientists estimate that 99% of coral reefs will not survive in a 1.5°C world, and this threshold will be crossed in nearly all Intergovernmental Panel on Climate Change (IPCC) scenarios in the early 2030s. This will lead to a critical change in Earth systems as the coral reefs dies. Coral reefs offer an effective barrier from coastal storms, and so the extent of extreme weather damage will grow in their absence. 25% of all marine life is dependent on coral reefs at some point in their life cycle. Coral reefs collapse will have significant environmental impacts and cascading consequences on marine ecosystems, global food security and tourism.
The Union Budget 2024 proposes ways to tackle climate events with “productivity and resilience in agriculture” with funding for research and development in developing climate-resistant crops, managing floods in some states, and “energy security” by building small nuclear energy reactors. The government will release 109 climate-resilient varieties of crops for farmers to grow. Plus, ten thousand “need-based bio-resource centres” will also be established. To mitigate the effect of climate change, Bihar got Rs.11,500 crores for flood management, while Assam, Sikkim, Himachal Pradesh and Uttarakhand found mention in the Budget with assurance "we will provide assistance”.
The Finance Minister said that the government will develop “taxonomy for climate finance” to enhance the availability of capital for climate adaptation and mitigation, “which will support India’s climate commitments and green transition”. Climate finance taxonomy refers to a set of standardized regulations and guidelines to inform companies and investors on making impactful investments towards environmental conservation and combating the climate crisis. The International Finance Corporation (IFC) says: “diverse interpretations fragment markets and confuse investors. What seems ‘green’ in one country may appear ‘brown’ elsewhere, stalling environmental progress”.
Climate financing forms a core area of combating the climate crisis. According to the UN Framework Convention on Climate Change (UNFCCC) first “Needs Determination Report”, financing of around US$ 5.8 – 5.9 trillion is required to implement developing countries’ climate action plans by 2030, and this does not include adaption cost. Different geographic regions will have to adopt different paths to limit global warming to under 1.50C. Already, Singapore, Thailand, Sri Lanka, Malaysia, etc. has taken lead and issued green taxonomies to facilitate climate-sensitive investments. According to IFC, India would need estimated US$ 10.1 trillion to achieve Net-zero in 2070.
Instead of push for renewable energy, this Budget allocates Rs. 2,228 crores for setting up small nuclear reactors to diversify its energy sources. The environmental aspects and associated impacts of setting up these small nuclear power plants have to be studied along with the source of fuel, considering a life cycle perspective.
Will India able to achieve the 500 gigawatt (GW) renewable energy (RE) target by 2030 committed at the COP26? India managed in March 2022 only 56 GW of the 100 GW solar target because of low rooftop installations, which at 12 GW comprised only 20% of the total solar capacity. Till May, 2024 the RE installed capacity is 191 GW, with 85 GW of solar power. Wind and solar sector in India offer attractive investment opportunities for foreign investors. The government’s commitment to RE was not explicit in the Budget with tax exemption of capital goods used in the manufacture of solar cells and panels. India has solar module manufacturing capacity of 64.5 GW only.
India’s power transmission infrastructure has to keep pace with the increasing RE capacity. The Central Transmission Utility has decided to use High voltage Direct Current (HVDC) technology for new transmissions due to advantages of lower transmission losses and cost advantage over large distances. But, there is bottleneck as there are limited number of manufacturers of HVDC equipments and they are overbooked with orders from the US and Europe.
The residential rooftop solar plants scheme “PM Surya Ghar Muft Bijli Yojana” seek to install it in one crore households. With over 14 lakhs applications and 2.5 lakh installation done till June, 2024 there were teething issues of subsidy disbursement and equipment availability. The one crore household target is still far off. Along with raising awareness about benefits of solar energy, we must also learn from others. France legislated that every parking lot for 80 cars or more must be covered by solar panels. That is 11 GW of solar energy, same as 10 new nuclear reactors and zero new land needed, avoiding the time consuming land acquisition process.
Article 14 of the Paris Agreement requires periodic taking stock of all the signatory nations’ carbon emission. The first “global stocktake” was done in Dubai 2023 COP28. But, it didn’t go well, there were glaring gap in emission reductions, with commitment falling short by 20.3 to 23.9 gigatonnes of CO2 equivalent compared to level required to limit global warming to 1.50C by 2030. On 24th July Copernicus Climate Change Service reported June, 2024 was the 12th consecutive month to see average temperatures above 1.50C threshold.
Meanwhile our Economic Survey, 2023-24 called for a “more balanced approach” to climate change suggesting the policy makers focus on “nearer-term policy goals of improving human welfare”. Anyway, most of us and the policy makers won’t be present in this Blue planet to experience India’s achievement of Net Zero in the distant 2070.
Dipanjon Konwar can be reached at: dipanjonkonwar@gmail.com
