Business Today

Too hot to handle

The government and industry aren't doing enough to tackle climate change.

By Shalini S. Dagar | Print Edition: July 15, 2007

Soaring mercury, melting ice, freak weather conditions and rising instances of natural catastrophes... these are all the result of global warming and the resultant climate change. Most guns may be trained at the us, which, for long, has refused to participate in cleaning up the environment, but India, as one of the fastest developing countries, is also feeling the pressure. The government has traditionally taken the stand that "the polluter pays"; the logic: the developed world, which industrialised earlier than India and other developing nations, was the worst offender, and so should take primary responsibility for cleaning up the mess. However, this argument is increasingly losing its relevance. Says Leena Srivastava, Executive Director, The Energy and Resources Institute (TERI): "Climate change does not understand politics. We are as vulnerable as any other country."

There are serious economic implications-the loss to the country's agricultural potential is estimated at 30 per cent. "So, it is in India's interest to make sure that global negotiations lead to a curbing of global warming," says William R. Cline, Senior Fellow, Peterson Institute for International Economics and the Center for Global Development in Washington, DC.

But, the country doesn't seem to have a cogent and coherent position on climate change. Srivastava believes that there should be "what if" scenario planning down to city levels. This should then inform the choices that we make in terms of the new infrastructure that we build. The government, as usual, is doing too little too late. It was only earlier this year that it proposed the setting up of an expert committee to work out the necessary measures to counter the threat. Given the slow response times in public policy decisions and the pace at which climate change is occurring, India is in for tough times.

The situation is grave for India Inc., too. The key risk to it will come from volatile energy prices. One of the easiest things Indian companies can do is to improve energy efficiencies. According to the Integrated Energy Policy, a 25 per cent improvement in efficiency is technologically and commercially possible. A small beginning has been made; and several companies are participating in the Clean Development Mechanism, which is an arrangement under Kyoto Protocol by which developing countries can gainfully participate in the efforts of the industrialised nations to reduce their greenhouse gas emissions.

"Indian businesses have been quick to see the opportunity that climate change brings, and many businesses have restructured their operations so as to be able to generate carbon credits for emissions trading in the international markets," says Deepak Asher, Director, Gujarat Fluorochemicals, one of the early participants in the CDM project.

But environmental experts say that Indian companies are focussing mainly on low-hanging fruit. "There has to be a mindset change-from worrying about current costs of production to looking at the long-term sustainability of that process," says Srivastava. "Indian companies have to change if they want to be global players," adds R.K. Pachauri, Director General, TERI.

That does not seem to be happening. assocham President Venugopal Dhoot points out that in the short-term, the ball is in the government's court since the regulatory scenario for climate change efforts will determine the corporate response. "The easiest measure to adopt is rationalisation of energy pricing," says Pachauri.

India's energy pricing, with all the attendant subsidies, is one of the most skewed in the world.

So while industry waits for the government machinery to get its act together, the social and economic costs of this procrastination keep mounting-inexorably and towards a crisis point.


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