Low Carbon Strategies for Inclusive Growth

So, after huge success and failure (!!!!) of Conference of Parties at Kyoto, Bali, Copenhagen, Cancun the world is back to square one. Basically trying to understand how to address the challenges of future where non-carbon growth will dominate the agenda and policy making. India cannot remain behind in this race at least in terms of scenario building. How we are capable to really live upto those scenario reports is different matter of study. So, lets get started.

Everyone knows global warming happens due to anthropogenic greenhouse gas concentrations. By 2030 unless mitigation actions are taken, world primary energy demand expected to be 40% higher than in 2007. By 2020, in some African countries, yields from rain-fed agriculture could be reduced up to 50%. Approximately 20-30% of plant and animal species are at increased risk of extinction if increase in global average temperature exceed the range 1.5-2.5 degree C. (with respect to IPCC 2007)

In terms of per capital emissions India is still far away behind compared to USA, EU, JAPAN, CHINA. But kind of growth strategy we are pursuing, we will certainly end up paying the price of that in terms of invading the nature and developing polluting lifestyle.India`s emission is 1.18 tonnes of Co2 equivalent per capita in 2008 to that of 4.38 tonnes of global average. Though India has not created it, it stands committed to reduce the emissions intensity by 20-25 percent over 2005 levels by year 2020. The Copenhagen conference which lead to the Copenhagen Accord reflects a broad political consensus on some of the issues which are relevant to the negotiations:
" There is an agreement on the broad scientific view that the world must not exceed a 2 degree centigrade increase in warming on the basis of equity, and in the context of sustainable development. "  All participating countries have agreed to communicate their mitigation commitments and actions. Developed countries (Annex I parties) have agreed to report measured, reported and verified (MRV) mitigation actions as per COP guidelines. With Integrated Energy Policy projecting energy needs of country in 2030 like this: need of oil to be around 3-5 times more than current consumption, need of natural gas six-9 times than current consumption, need of coal to be around 5-6 times more than current consumption; in these scenarios what will be the best strategy for low carbon economy.

What do inclusive energy policy means? At the minimum, inclusive growth means all households are electrified and that all have access to clean cooking fuels such as natural gas or LPG. Currently 85% of the rural and 10% of the urban households use biomass for cooking. We need secular shift from traditional biomass to modern commercial energy, in addition to improving the efficiency of use of traditional biomass. Towards this end, the integrated energy policy scenarios project 100 percent electrification of all households by 2020.

Government of India is witnessing different shades of policy approaches in front of them while dealing with these issues. One is determined effort which is highly probable and business as usual scenario. Here effective implementation of policies already in place makes sense to apply. Private sector sustains current efficiency efforts. There is continuous up-gradation of technology and finance from both private and public resources. Another policy approach is Aggressive effort which is highly desirable and demands visionary interventions from every quarter of government. New policies, in addition to effective implementation of existing policies; private sector efficiency efforts at higher scale and finally new technology as well as additional finance, both from domestic and international sources are key features of this approach.

In order to explore strategic options for reducing emission intensity of the economy, an analysis of the quantities and trends of GHG emissions from different sectors is essential. This helps to priorities the sectors, industries and gases where efforts can be made for an effective action. Emissions take place both during, production and consumption processes. The emission intensity of the economy can be lowered by reducing the need for production and consumption, as well as by making consumption and production processes more emission efficient. Today agriculture accounts for 18%, wastes for 3%, electricity for 38%, transport for 7%, other energy industries for 12%, cement for 7%, iron and steel for 6% of the total GHG emissions of India in 2007.

There are several technology options to improve the combustion efficiency and lower CO2 emissions. Super critical plants operate at higher temperatures leading to net heat rate of 2235 kCAl per kWh and specific emission of 0.83 kg per net kWh11. The technology is available globally and the cost is almost the same as sub-critical plants. As per recent guidelines and projections, super-critical power plants would account for 60 percent of the thermal capacity to be built in 12th plan and 100 percent in 13th plan. Super critical units thus could contribute up to 50 GW by 2020. Integrated Coal Gasification Combined Cycle (IGCC) is another promising technology, which can attain higher efficiencies and lower CO2 emissions and also produce synthetic chemical fuels such as diesel and hydrogen. However initial estimates under Indian conditions of high ash coal show very high auxiliary power consumption and hence the overall efficiency is comparable with sub-critical units at almost double the cost. While India will continue to do its research in IGCC, commercial deployment of IGCC is unlikely before 2020. In other important energy segments India hopes to achieve target of 50, 000-65, 000 MW by hydro power by 2020. In solar energy this scenario is around 10, 000 MW and by biomass 4, 000 MW. With current installed capacity of 4780 MW, Government has made aggressive projection for Nuclear Energy 9, 800 MW by 2020 despite Japan`s Fukushima event and protests at Jaitapur Nuclear Power Plant site.

India imports 80% of its crude oil requirements. This becomes more critical when we know that now transport sector has become second sector to contribute to the GHGs mostly. Ways to tackle this crisis is increasing the share of public transport to 60 percent and share of rail in passenger transport to 35 percent, increasing the share of rail in freight movement to 50 percent, increasing efficiency of vehicles, introducing cleaner fuels, increasing electrification of railway tracks. There are other steel, cement, construction and other major industries contributing to carbon growth need to be taken into account but details are not being presented in this post.So electricity generation required in 2020 projected at existing terms is gross generation (Billion kWh) 2, 104-2359 and net generation estimated in 1970-2208 Billion kWh. I will deal about mitigation and adaptation strategies, concept of national accounting and green DGP in next post, till then have a nice energy efficient day.

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What is at stake in 12th Plan: Rebalancing the sequence of words " Faster, More Inclusive, and Sustainable Growth"

Issues for Approach to the 12th Five Year Plan 
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These are the interesting times for Planning Commission. This must be one of the most eagerly awaited moments in the Indian contemporary history as we witness the reports of Full Planning Commission Meeting on 21 April 2011. The Process of Formulating the 12th Plan have been accomodative, reflective on the wishes of the civil society. Even though there are issues about in what sense the term Civil Society has been interpreted. This initiative is significant in terms of very authentic questioning the existence of Planning Commission as extra-constitutional body is gaining ground by each passing day. Bibek Debroy in recent article in India Today says:

        "India's bedrock is the Constitution. Anything not in the Constitution
         should be abolished. The Planning Commission (PC) is an extra-
         Constitutional body. It was set up through executive order in 1950. It has
         no business to exist.

          Second, under the Constitution, public expenditure is scrutinized and
          approved by Parliament. As an extra-Constitutional body, PC is not
          answerable to Parliament. 

          Third, fund-flows to states take place through Finance Commission, PC
          and Central sector and Centrally-sponsored schemes CSS). We have
          diluted Finance Commission mandates since late-1960s and early-
          1970s. Union Finance Commission is the mandated Constitutional body
          for Centre-state transfers and state Finance Commissions for
          intra-state transfers. If Finance Commission's original mandate is
          restored, we won't need fund-flows to states through PC. Discretionary
          transfers to states haven't incentivised reforms in states. Annual Plan
          discussions are a nuisance. In an era of reforms, we need more
          transparency and less discretion. See how backward regions' grant-fund
          has been mis-utilised and special category status for states abused.
          This is an era of decentralization. No one knows the number of Central
          sector schemes and css. They have proliferated since late-1960s. At one
          point, the number was 455. It was pruned to 150, but have proliferated
          again. We were perfectly happy when they didn't exist, before 1960s.
          They impose Centralized templates from above, regardless of local
          conditions. This year's Budget also recognizes the Plan/non-Plan
          distinction as artificial. Even if this distinction goes, as it should, and we
          eliminate CSS, there is no need for PC. 

           Fourth, PC has been unable to push decentralized planning. In terms of
           mindsets, it makes things worse by its unwillingness to do so, as if all
           wisdom is vested from above. Witness the confusion it has created over
           poverty numbers. BPL should be determined through decentralized and
           participatory identification by gram sabhas and urban local bodies. Why
           should pc muddy waters?          

            Fifth, there are plenty of research bodies outside the Government that
           can do research now and produce data. PCs utility inthese is
           questionable. 

            Sixth, it has no imagination. It continues to produce Plan documents
            and  approach papers that are rehashes of First Five YearPlan. There
            was a time when there used to be models for growth emanating from
            PC. That was because PC had the task of directing resource flows. In
            this era of reforms, no one can direct resource allocation. It is
            determined by markets, with a role for the private sector. Several
            regulators and ministries outside PC have been empowered. What role
            can PC have now? Its projections go wrong. Had this occurred outside
            the government, PC would have been wound up long ago. PC was
            supposed to subject itself to a zero-based budgeting (ZBB) exercise,
            reinventing itself and justifying its existence. But nothing has moved.
            All that happens is PC triggers squabbles with other ministries,
            departments and states, often in public.

         
            Seventh, it is a parking spot for retired bureaucrats and failed
           politicians. The intention is not to tap their expertise. They are parked
           there because they will create the least nuisance there. In addition,
           positive affirmation and reservation quotas characterize membership.
           This is true of other commissions too. But what's true of other
           commissions is also true of this. It should be distinguished through an
           act of omission."  

Keeping in mind all the questions raised above, let us take a look at the outcomes of recent Planning Commission meeting chaired by Hon. Prime Minister.

" Eleventh Plan Experience
• GDP growth likely to average 8.2% over 11th Plan: short of the 9%
  target, but remarkable given the global crisis and drought
• In the 10th Plan GDP growth averaged 7.7 %
• We have also seen progress on inclusiveness: Agricultural growth,
  Poverty Reduction, Education, Health, Upliftment of SCs/STs,
  Minorities etc.
• However progress on inclusiveness less than expected. We are likely
  to miss Millennium Development Goals (MDG), except perhaps on
  poverty
• Inflation has accelerated in the last two years
• Current international environment is very uncertain
      Global pressure on food, oil and other commodity prices
      Financial conditions & exchange rates are likely to be volatile due
      to sovereign debt related problems in Europe/US, and readjustment
      of extra-ordinary monetary/fiscal easing

About consultations 
" We have commenced a very wide consultative process on the
  challenges for the 12th Plan
• Over 900 CSOs across the country have participated, as well as many
  industry associations and ‘think tanks’
• Internet being used for first time to reach out to broader community
  including several hundred sectoral experts
• Planning Commission has launched a dedicated website
  http://12thplan.gov.in This site is also linked to Facebook. 32,000
  netizens have visited these two sites and have left many insightful
  comments
• A series of regional consultations with States are planned in May
• Dialogue with other stakeholders continues."

Key Messages from Consultations
• Strong demand from all sectors of society to improve Implementation,
  Accountability and Service Delivery
• Citizens Groups broadly support the stated objectives of existing
  government programmes. However, the design and institutional
  arrangements are weak. Greater devolution and empowerment needed
• Government programmes need a new architecture: greater
  localisation, break-down of silos, feedback from citizens, and
  mechanisms for learning and sharing of best practices
• A major contribution to economic growth now comes from the private
  sector. A policy environment that supports this dynamism is therefore
  important
• Create environment for nurturing enterprise, improving markets,
  supporting innovation, providing access to finance and inculcating
  respect for common pool resources
                                                                       
Twelfth Plan Objectives
• Basic objective : Faster, More Inclusive, and Sustainable Growth
• Is 10% growth feasible? Realistically, even 9% will need strong
  policy action. Could aim at 9.0 to 9.5 percent
• Energy, Water and Environment present major sectoral challenges. Can
  we address them without sacrificing growth?
• Can we find resources to create a world class infrastructure?
• For growth to be more inclusive we need:
        Better performance in agriculture
        Faster creation of jobs, especially in manufacturing
        Stronger efforts at health, education and skill development
        Improve effectiveness of programmes directly aimed at the poor
        Special programmes for socially vulnerable groups
        Special plans for disadvantaged/backward regions
     
Desirable changes                                                        
• Social Mobilisation: People should be active agents of change. Flagship
  programmes need to provide human and financial resources for social
  mobilisation, capacity building and information sharing
• Professionally managed delivery organisations are needed with clear
  mandates and accountability. We need much better mechanisms for
  convergence of government departments on systemic issues
• Devolution can be effective only if the autonomy of PRIs/ULBs is
  increased and their human resource capabilities improved. How can the
  Centre help?
• Mechanisms need to be created at all levels to understand the needs of
  vulnerable sections of the society and inform policy-makers
• Diagnostics of Failure and Mainstreaming of Success: horizontal linkages
  need to be created for exchange of information and best practices
• Institutional mechanisms for conflict resolution, particularly for land and
  water."


Planning Commission has identified 12 challenges for the 12th Plan.
These are:
                  Enhancing capacity for growth
                  Enhancing skills and faster generation of  Employment
                  Environmental and ecological sustainability
                  Decentralization, Empowerment, and Information
                  Technology and innovation
                  Securing the energy future for India
                  Accelerated development of transport infrastructure
                  Rural Transformation and Sustained Growth of Agriculture
                  Managing Urbanization
                  Improved access to Quality Education
                  Better preventive and curative healthcare
                  Economic Turbo Chargers


The list of challenges will not end here but these are broad challenges identified. The elements of challenges must be discussed. Before taking break from this piece let us ponder over what Mihir Sharma from Indian Express said when he wrote a well timed OpEd. He said:

               " Policy-making’s central problem: how the machinery of administration has obsolescence built-in, how it is creakingly failing to adapt to a new and more complex era. Our government is run by generalists. And there’s no chance of that changing any time soon. But now, each ministry and department, state or Central, is expected to try and frame policy with market-supporting, quick-reacting precision. Much blunter instruments — licences, restrictions, diktats of one sort or another — are out. The economy is an even denser tangle of 

connections than the one that planners in the ’50s tried to reduce to a large matrix of inputs and outputs. 

                      There’s a lot of talent in government. But everybody knows they can’t    handle this transition alone. Nor should they, many would argue. Policy possibilities that aren’t culled from a broad base of experiences will be too limited. And if you have just tenured employees analysing alternatives, you build in bias towards rigidity and conservatism. We don’t need a statutory body wasting its time predicting how much   steel we will need in five years. We do know what we need: an institution capable of providing genuinely independent, non-partisan ideas — yet ones that engage with the human and political aspects of the economy, rather than sterile accounting aspects of it. 

                  The biggest barriers to increasing and deepening growth, and freedom, today are political. Advice that pretends they don’t exist has little value. Where would this advice come from? Our political parties don’t debate and develop policy ideas. We don’t have a culture of think-tanks, nor does one look like developing. Universities have other reform priorities. Journalists can’t do everything. No, government itself will need to nurture and grow independent — and persuasive — sources for policy prescriptions and recommendations.Nehru’s Planning Commission was supposed to help the state be the vanguard of the economy, to provide disinterested instructions to an activist government. Now, instead, a retreating government needs the Commission, or something very like it, to be the vanguard." 

 I think, possibilities of confusion have now evaporated. 

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