India has an opportunity to change the climate of negotiations, a week before the opening of the United Nations Conference on Climate Change (UNFCCC) in Copenhagen. Economic reforms since the early 1990s, have been making the economy more energy efficient. Irrespective of whether the planet is warming, or whether CO2 is the cause, between 1992 and 2007, the carbon intensity of the economy has declined by 45%.

Surprisingly, Mr Jairam Ramesh, the Minister for Environment and Forest, decided to play for a draw, with his statement in Parliament on Thursday, 3 December 2009, during the special discussion on climate change. Despite his strong assertion that India will not accept any legally binding international commitment to reduce emission, he proposed a voluntary reduction in carbon intensity of the economy by a modest 20-25%.
 
Just when world of climate science was getting shaken by allegation of massaging of data to support claims of global warming, the minister acknowledged that Indians are among the most vulnerable to global warming, and then promised to announce domestic emission norms by 2011.

The minister noted the enormous progress India has made on the energy front in the past decade. Yet, he failed to drive home the point.

Between 1992 and 2005, India’s energy intensity, that is energy needed to produce an unit of GDP, improved by about 52%, from 1,281 kg of oil equivalent per $1,000 of GDP in 1992 to 618 kgoe per $1,000 by 2005. During this same period, carbon intensity declined by 45%, from a high of 3.15 metric tonne of CO2 per $1,000, to 1.73.

These figures are impressive, and comparable to the major economies of the world, this is only part of the story.

India's GDP in 2008, was estimated by the World Bank to be $ 1,217 billion (current dollar). At 2005 energy intensity level of 618.46 kgoe/$,000, this required total energy of 752,969 million kg of oil equivalent (mn kgoe).

But in 1971 energy intensity was a high 2,259 kgoe per $1,000. To achieve the GDP level of 2008, would have required 263% more energy than it actually did. Likewise, at 1981 energy intensity of 1,154, would have required 87% more energy. And at 1991 energy intensity of 1,409, would have required 127% more energy to attain the GDP level of 2008.

The improvement in energy intensity mirrored that in carbon intensity. At 2005 carbon intensity level of 1.73 MT per $1,000, the GDP of 2008, emitted 2,094,083,144 MT of carbon. But at carbon intensity levels of 3.08 (1971), 1.96 (1981) and 2.72 (1991) the GDP of 2008, would have emitted 79%, 14% and 58% more carbon, respectively, than it actually did.

This suggests that between 1992 and 2008, effective saving in total energy used was 127%, and effective decline in total carbon emission was 58%, for the 2008 GDP level.

Decrease in carbon intensity between 1992 and 2005 was a whopping 82%, from the 2005 base, and energy efficiency improved by 56%.

The minister’s defensive strategy became apparent, when invoking national interest he offered to do domestically, emission reduction and emission standard, while vehemently rejecting similar measures under any international legal mandate.

The dramatic improvements in energy use since 1992, were not a coincidence. Equally, there was little conscious effort aimed at such environmental goals. The real secret of this amazing transformation is the economic liberalization initiated during this period, which unleashed greater competition, ushered in a relatively free trade regime, and facilitated investment and technology adaptation. Between 1980 and 2007, the carbon intensity of the Indian economy declined by just 2.3%. But between 1992 and 2007, during the years when economic reforms gathered pace, the decline in carbon intensity has been over 21%.

China, for instance, heads the league of major economies with the highest decline in carbon intensity at 67%, between 1980 and 2007. Although, China’s carbon intensity is 40% more than India’s at present, China’s reforms process started much earlier, and has run deeper, consequently it has experienced this magnitude of improvement in carbon intensity.

Globally, however, decarbonisation of the economy has been going on since the past 400 years, as societies moved from fuel wood, to coal, oil and electricity, driven by economic needs, leaving a safer environment in its wake.

Given this track record, rather than seeking to balance economics and environment, we need to push ahead with economic reforms with much greater vigour. We need to recognize that cleaner and safer environment is like value added products which become accessible only with higher economic growth and prosperity.

We need to recognize that the poor are vulnerable to natural hazards, in the past, at present and in the future, because of their poverty, quite irrespective of any change in the planet’s climate. If we are really concerned about the plight of the poor, then it is the intellectual climate that we need to change.

Even at a nominal economic growth rate of 8% annually, India’s GDP will rise 150% from 2008 level, to over $3,000 billion by 2020. At our current carbon intensity level of 1.73 MT of CO2 per $1000, the total carbon emission could increase by 2.5 times. But if our carbon intensity falls to European or Japanese levels, 0.252, prevalent today, the total carbon emission would fall by a sixth from the projected total emission in 2020 at current carbon intensity of 1.73. This is possible at current levels of technological development! And this could happen irrespective of whether man-made carbon is the cause of climate change or not. It would happen because of the economic need to improve energy efficiency. This is the real “business as usual” model.

The minister will emerge as a true ‘deal maker’ in Copenhagen, if he succeeds in changing the intellectual climate at the negotiations. Economic freedom generates greater wealth and makes energy accessible, and that in turn enable the people to better insulate themselves from the vagaries of nature.

(Note: Data from the World Development Indicators of the World Bank have been used for the above calculations. Some data have been used from Energy Information Agency of the United States, as well.)