The Next Big Climate Change Battle Starts in India

December 26, 2016 09:02 AM

From Bloomberg View columnist Noah Smith. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

Some climate activists worry that Donald Trump’s presidential election will be the death knell for the global environment. That’s almost certainly untrue. Whatever Trump’s attitude toward climate science and energy policy, two big outside factors will be much more important -- technological progress and policy in developing nations.

First, the good news. Renewable energy technology is already unstoppable. No longer does solar power depend on government subsidies for survival -- it’s increasingly beating fossil fuels on pure raw economics. A new report from Bloomberg New Energy Finance lays out the numbers. Solar is getting so cheap, so fast, that it will quickly come to represent the lion’s share of new electric-power generation:

Assuming battery technology continues to improve, BNEF predicts that a decade from now, solar will start to replace some fossil-fuel plants. In other words, in many places it will be cheaper to simply scrap coal plants and build new solar plants in their place.

All of this is great news for the climate. It means that we don’t have to halt economic growth or radically change the way that capitalism works in order to save the planet, as some more climate activists had assumed. Once again, human ingenuity will let us escape the trap of natural limitations.

But here’s the bad news: Technology will only get us part of the way there. BNEF predicts that even with solar racing ahead, carbon emissions will continue at or slightly above current levels for the next three decades. That’s new carbon that’s getting pumped into the air every year, to add to the giant stockpile that already exists. Since averting climate change requires dramatic reductions in emissions, this means more needs to be done. In the short term, technology’s amazing progress is getting canceled out by rapid emissions increases in developing countries.

China is the problem everyone knows about. The country already releases about twice as much carbon as the U.S. each year. Recently, however, China has made a dramatic effort to reduce emissions, and it seems to be working. Much more needs to be done, but the leadership in that country is taking the problem seriously -- possibly more seriously than the U.S.

More worrying is India. This country, almost as big as China in terms of population, is still desperately poor and is understandably determined to develop. The easiest way to get richer is to industrialize and dig up a bunch of coal and burn it -- and India is endowed with a very large coal deposits. According to the BNEF report, Indian emissions are set to soar:

So it’s increasingly in India, and to a lesser extent Southeast Asia, where the fight against global warming will be lost or won. In order to prevent dangerous climate change, India will need to industrialize differently from the way Europe, the U.S. and East Asia did. It will have to skip most of the coal stage and go right to solar. The falling cost of solar will help with that, obviously, but India’s unusually abundant, cheap coal resources mean it will be late to the renewable party unless the government takes action. Although the Narendra Modi administration has made big promises on cutting carbon emissions, many question the government’s ability and will to follow through, especially given the country’s traditional reluctance to address the issue.

That reluctance was understandable. Although India is among the countries most vulnerable to climate change -- it has lots of coastal areas susceptible to flooding, and lots of poor people who would suffer from food price swings -- it also needs to industrialize as quickly and as cheaply as possible. It’s manifestly unfair for India to hobble its growth when most other nations got rich by burning fossil fuels with abandon. That will create popular pressure for the government to do less than it should.

The simple solution would seem to be for rich countries to pay India and other fast-developing nations to skip coal and go straight to solar. However, with European economies in the dumps and the U.S. now headed by the Trump administration, such a grand bargain seems unlikely.

A more realistic idea is to trade investment, trade access, and technology for dramatic action on the climate issue. If India imposes  a high tax on carbon, and adopts other incentives to substitute solar for coal very quickly, developed countries should do two things. First, they should direct large amounts of investment India’s way, and drop trade barriers that keep out Indian goods. Second, they should set up technology transfer programs that give away clean energy know-how -- solar, wind and nuclear -- to India.

This kind of grand bargain would satisfy Indians’ desire for fairness, while also helping it industrialize quickly. It would strike a big blow against climate change. And it’s something that Europe, Japan and other rich countries can do, even if the U.S. opts out under Trump. Though solar has given humanity a possible window out of the climate-change trap, bold policy is needed to take advantage of that window.

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