Global Contributions to CO2 Reduction - Research Paper Example

Global Contributions to CO2 Reduction BY YOU YOUR SCHOOL INFO HERE HERE Global Contributions to CO2 Reduction Introduction Developed and developing countries around the world are taking dramatic action to reduce their contributions to carbon dioxide (CO2) emissions. In the European Union, the country has developed its EU Emissions Trading Scheme, a cap and trade policy instrument that serves as legislation to assist in business activity-related greenhouse gas emissions (Burney, 2010). This policy coerces 11,000 different European businesses to purchase permits at equilibrium in relationship to the amount of CO2 released in their business operations. These permits are then traded much like securities on the market, which incentivizes compliance. This is a radical methodology for ensuring EU businesses remain focused on the target of CO2 emission reduction, where those companies that release higher volumes of greenhouse gas must purchase a higher volume of permits (UK DECC, 2009). Radical efforts that are aligned with corporate ideology and also market stability are necessary, however, in a global environment which is attuned to a more capitalistic ideology or guaranteeing compliance to environmental regulation could be challenged. The United States, additionally, is developing a similar cap and trade system in which companies must purchase similar credits that are then auctioned off, incentivizing compliance to emissions reduction strategies and is expected to provide the government with $83 billion in revenues by the year 2019. Other countries are working on a strategy called carbon pricing which applies a price to every tonne of carbon dioxide that an industry player will release into the atmosphere (Weitzman, 2013). Developed and developing countries are beginning to make carbon commitments from an economic perspective in which governments set a relevant carbon price and companies must pay this price to continue releasing CO2 in their business activities. The problem with current global steps to reduce carbon dioxide emissions, however, is that it is economics-based and businesses in developed nations have more resources to participate in permit and credit purchasing. In developing nations, such as India, being able to afford new technologies that provide more efficient and innovative CO2 emission reduction continues to be a significant challenge (Lankao, Nychka & Tribbia, 2015). It is estimated that developing nations contribute to 47 percent of the world’s entire greenhouse gas problem as consumers in these countries demand more cars, better housing and a variety of new products and services available to growing consumer incomes (Lankao, et al., 2015). Hence, the issue is that countries such as India will continue to improve their industrial capacity and production capabilities which contribute to higher CO2 emissions. Concurrently, without the significant wealth similar to that of the United States and businesses/government in the European Union, it promotes a rather bleak outlook for incentivizing CO2 emission reduction in the developing country. This essay focuses around India, conducting a case study research methodology regarding the economic reality of this developing country that could potentially conflict being a significant contributor to curbing greenhouse gas emissions. The essay explores India’s country-specific challenges related to participating in a system based on economics (this being carbon pricing and the cap and trade ideology), to assist in understanding whether this nation’s ability to contribute is feasible. Based on all available research, despite India being ready to become CO2 conscious and make reduction commitments, it would seem that the economic system of carbon pricing is not, currently, realistic for this developing nation. Country-Specific Issues in India There is a concept introduced by the Kyoto Protocol referred to as Common but Differentiated Responsibilities (CBDR). This ideology suggests that every country maintains the obligation for securing the heritage and well-being of all mankind, recognizing the obligation to control global environmental issues. The principle takes into consideration a nation’s technological and economic capacity to handle such challenges, where differences are prevalent in terms of developed or developing national status. The common goal is preserving human and ecological well-being, yet are differentiated in terms of these disparities related to country-specific resources and challenges. The Kyoto Protocol and the Framework Convention on Climate Change do illustrate that all global entities should do what is in their capacity to protect the climate and the environment and should essentially be held accountable based on these resource availabilities and restrictions as compared to other nations with other country-specific issues. India seems to recognize CBDR as the country is becoming more vocal about making commitments to curbing its greenhouse gas emissions in multiple industries, but also hopes that the country will not be held as equally-accountable based on its developing nation status (The Economic Times, 2015). This section describes factors that are country-specific for India and why equitable accountability is not realistic, despite the country’s recognition that it does maintain a common goal for environmental improvement and avoiding atmospheric degradation as a result of its business activities. It is recognized that India is the third-largest contributor to CO2 emissions release as compared to the rest of the world (Rogers & Evans, 2011). Between 2008 and 2009, the amount of CO2 emissions provided by Indian industry players jumped by 8.7 percent, at a rate, per capita, of 1.38 tonnes of emissions (Rogers & Evans, 2011). Per capita, however, this is one of the lowest tonnage rates. What does this mean? In 2014, the country’s per capita income was $1,631 USD, representing a low-income country (Business Standard, 2015). To illustrate, a country must cross the threshold of $4,125 USD per capita, each year, to be considered only a middle-income nation (Business Standard, 2015). Such a low per capita income level represents a nation that is marked by poor quality of living as it is calculated by taking into consideration the nation’s entire GDP as compared to actual population. A country with a low per capita income is a measure of the country’s overall wealth compared to other nations in developed countries. India is working on improving its per capita incomes and GDP, however this is highly dependent on development of industry that improves the nation’s capability to conduct global trade and increase employment rates. This is reflected by a slowly-diminishing unemployment rate in the country which was 10 percent in 2010, yet 8.6 percent in 2014 (Statista, 2015). The Indian government has recognized the importance of textile exports to its gross domestic product and has therefore created policies that entice a great deal of foreign direct investment in this sector as, to developing nations, labor costs are significantly lower for doing business in this country than other nations. The textiles industry is a major contributor to CO2 emissions as compared to many other industries around the world. Foreign direct investment is, again, improving the unemployment rate in this country, which is giving consumers new opportunities for better quality of life. The residential and industry sectors have contributed to 67 percent of new demand for electricity in the power industry, another industry that contributes substantially to CO2 emissions. In fact, in India, much of the nation’s power is facilitated by coal plants and these plants have received a poor ranking for efficiency in terms of their CO2 emissions. While the country maintains opportunities for alternative energy, such as wind, solar or nuclear energy, these are expensive technologies and require significant labor expenditures to facilitate their development in a nation with low per capita income and a much smaller GDP than other developed nations. It would seem that a slower progression to a developed nation would provide opportunities for India to be more efficient in various industries related to their CO2 emissions. However, in order to meet the demands of consumers for a better quality of lifestyle, this is not necessarily achievable. A study conducted by Linssen, Van Kempen & Kraaykamp (2011) which recruited 697 different Indian citizens, found that conspicuous consumption is a growing trend in India. Conspicuous consumption is a method of, proverbially, keeping up with the Joneses, by purchasing products which can visually illustrate a better social position and perception of wealth. India is a highly-collectivist country in which saving face and maintaining a high-opinion social standing are very important expectations for citizens. Spending on transportation, jewelry, higher housing rent prices, clothing and footwear underpin how Indian consumers are attempting to improve their social status by purchasing highly-visible products and services. This is supported by Van Wessel (2004) who illustrates how Indian lower-class consumers attempt to dissociate themselves from the stigma of poverty through the process of visible consumption. Therefore, there is no indication that industry development to provide domestic products and services (as well as export trade opportunities) is going to slow. Deeply-engrained social attitudes about maintaining higher social status as a result of consumption illustrate a country that is transitioning to a more Western model of business; a capitalistic ideology. With high demand from consumers for access to better products and services, it makes economic sense for the country to continue to entice foreign direct investment and incentivize industrial development throughout the country. It is estimated that India will become one of the largest automobile markets by 2020 as a result of increased consumer demand. In fact, there is such a significant demand for two-wheeled vehicles (as a result of infrastructure challenges) and these vehicles maintain limited regulation in terms of emissions regulations despite making up 80 percent of all Indian roadway traffic (Transport Policy, 2014). Concurrently, the automobile industry is seeing India as a viable investment opportunity with opportunities for growth by 2020, which is not only increasing the volume of vehicle on Indian roadways, but also establishment of auto production facilities which contribute substantially to CO2 emissions. India has become a major exporter of automobiles to other foreign markets, however they are produced domestically in an environment where emissions regulations are still insufficient for incentivizing businesses to utilize more environmentally-conscious production systems and technologies. Because these less-regulated, two-wheeled vehicles are more affordable and practical amongst a limited investment in infrastructure, it is doubtful demand for these high-emitting vehicles will diminish in the coming years. Acharyya (2009) suggests that industry players and government in India are not focused on conducting empirical study related to CO2 emissions throughout the country which serves as an under-estimation of the actual ecological damage being caused by significant foreign direct investment inflows in manufacturing, chemicals and fuel organizations. This is due to the fact that FDI is a substantial contributor to the nation’s GDP and, since the early 1990s, the country has worked to incentivize foreign companies to enter this market by liberalizing policies related to environmentalism. Therefore, there is less government emphasis on controlling environmental degradation in this country as this de-incentivizes companies from remaining in the country due to the significantly-high costs of controlling CO2 emissions. In the energy sector, another major CO2 contributor, the government has provided lucrative subsidies to develop this sector in which there is limited command-and-control activity related to energy efficiency. In fact, Stern, et al. (2006) suggest that command-and-control policies are extremely expensive and with the energy sector reliant on government for sustaining operations, it is unlikely that the government maintains the resources capable of imposing stricter CO2 emission controls. Hence, in the medium-term, the energy sector (as just one example) will continue to be a major contributor to the carbon dioxide emissions which are significant in this country. In the case of India, there are multi-faceted complexities that continue to make this country a major facilitator of greenhouse gas emissions as compared to other nations. Policy which emphasizes improving the quality of living, combined with social demand for new products and services, and risk of jeopardizing relationships with foreign companies investing in the country contribute to poor regulation of CO2 and coercing industry players to adopt more stringent control methodologies. Unlike developed nations that have more capital resources for investment in such activities as infrastructure, the Indian government maintains economics-based challenges for regulating CO2 emissions which conflicts achieving a more sustainable industry model for environmental degradation control. India’s Negotiation Strategy related to CBDR Dhasmana (2012) illustrates that Indian government is disappointed with weak political commitment to build an accord for environmental policy that provides disparate accountability for developing nations as compared to wealthier, developed countries. The country illustrates to the rest of the world that its main political goal is eradicating poverty in this country, which requires significant investment in more areas (i.e. industry, education, etc.) that forbids monumental investment in greenhouse gas emission controls. India seems readily willing to negotiate on how to facilitate this effectively in the country, but is concerned that developed nations are less committed toward providing technology transfer and financial support to aid India in this process (Dhasmana, 2012). Indian government representatives made it significantly-clear to developed nation governments that it would be absolutely impossible to adopt greener technologies without realistic funding from more wealthy nations (Dhasmana, 2012). India believes that wealthier nations negotiate regarding India’s accountability in CO2 emission controls under the concept of pseudo-green economies, a rather white-washed discourse where foreign, developed nations discuss trade protection as a costume for legitimate green developments. Heads of state from Germany and the United States were moderately chastised by Indian government representatives for failing to attend a 2012 Earth Summit to negotiate how to build mechanisms for green technology transfer and financial support within India (Dhasmana 2012). India’s negotiation strategy is rather firm: the country is willing to make extensive commitments to curb its CO2 emissions by 33 to 35 percent by the year 2030 in accordance with United Nations’ expectations (Friedman, 2015). This illustrates a radical commitment to make sweeping changes to the coal industry and seek renewable energy solutions as a means to facilitate these new commitments. However, India stipulates under no uncertain terms that its capacity and capability to achieve this 33-35 percent reduction will be wholly-dependent on financial commitments and allowances by more wealthy nations (Friedman, 2015). India estimates that it will cost the nation $2.5 trillion USD by 2030 to achieve this commitment, something the nation is not capable of allocating without international assistance. India expects that its economy will grow by 700 percent through 2030, which will triple its emissions output in this scenario (Friedman, 2015). In this scenario, technology transfer and financing by wealthier nations will be necessary to ensure that industries have greener technologies implemented when the country’s main goal is industrialization and poverty reduction. Without this assistance, India asserts, its obligations to meet current goals for emissions controls is unrealistic and not achievable. Hence, India has been forthright in recognizing its common but differentiated responsibilities, but states blatantly that it cannot be held accountable in equal capacity to other developed nations without their direct assistance and through global partnership development. This negotiation strategy is significant, as Gallucci (2014) reported that India’s Environmental Minister stated blatantly in 2014 that India’s first priority was poverty reduction and that it would not submit an emissions reduction strategy to supersede this social goal. The Minister believes, and publicly states, that developed nations with wealthier economies have a moral obligation to assist smaller economies in emissions control schemes (Gallucci, 2014). India recognizes that it has an obligation in this matter as a major contributor to global CO2 emissions, yet will not be a party to committing to a lasting environmental agreement ratified by all nations until it has received partnered assistance nor accept accountability without this global assistance. The December 2015 UN Treaty and India’s Involvement Strategy In December 2015, Paris will host the UN Climate Change Conference in which the main goal of this 11 day conference is to enact a legally-binding accord on climate change that is enforceable in all UNFCCC member nations throughout the world. Negotiations are focused on developed nations, such as those in the EU, which have large industrialized sectors that contribute substantially to climate change and should focus on implementation of alternative energy solutions as hubs of industrial innovation (Hidalgo & Marino, 2015). Hence, the EU recognizes its moral obligations to sustaining the well-being of human kind against CBDR and also its higher level of accountability to be a leader in environmentally-related innovations. The conference will touch on issues such as greenhouse gas emissions controls, cap and trade systems, scientific and technological innovation, hydraulic fracturing, fossil fuel dependencies, and establishing a mandate for global climate justice. India, specifically, is working on a partnership with France to exploit solar technologies and coerce changes in the petroleum industry. This partnership would create a type of alliance similar to that of OPEC which will seek reduction of reliance on traditional fossil fuels and facilitate a clean energy alternative (solar) that reduces coal consumption worldwide and provides a model for more affordable energy solutions for developing nations (Charanka, 2012). The terms of this agreement were considered in 2012, but will be outlined in more detail through collaboration between France, India and other interested nations at the conference in December 2015). The world recognizes its dependency on foreign petroleum, primarily from the Middle East, and seeks opportunities to reduce this dependence to ensure that the current imbalance of power is removed. Achieving a global agreement in the face of common but differentiated responsibilities is not a simplistic task and historical efforts by the UN to formulate this type of enforceable accord has met with resistance and ultimate failures. In this new conference slotted for this year, the notion of CBDR is being met with consideration which will not impose inequitable expectations on developing nations in accordance to their current resource and technological limitations. It would seem that this conference maintains the ability to finally enact an agreement that is more balanced in a global environment where countries such as India have been chastised for not doing enough to curb CO2 emissions with an unrealistic judgment system against the country’s main poverty-reduction goal and limited capacity toward this end. India’s involvement in this conference and its current strategy is to build first-time strategic relationships with developed and other developing nations that sustain a like-minded approach to committing to reducing these emissions. The government intends to lobby nations for this financing and support and essentially reposition the country as a committed and responsible nation recognizing its commitment to mankind and environmental sustainability (Yeo, 2014). France committed, in 2014, to providing India with €1 billion which represents an initial foundation for global cooperation and partnership (Yeo, 2014). The Kyoto Protocol was not an enforceable action in India and the country, under this agreement, was not prompted or coerced to undertake radical climate change-related activities. Hence, India’s renewed commitment to collaboration in this capacity represents a marked change from its historical stance so long as the other nations contribute economically and scientifically toward achieving this CO2 emission control scheme. India continues to assert that its primary goals of economic growth and poverty reduction cannot be superseded by greenhouse gas emissions and they must work in conjunction with one another to be competitive in the global marketplace. It seems that more ambitious and realistic outcomes might be developed through this UN conference in December 2015, taking into consideration that the country maintains unique challenges which are not as prevalent in wealthier foreign economies. Conclusion It is estimated that the short-term costs for implementing low CO2 emissions strategies for India are $834 billion. In a country with a low per capita income level, substantial economic commitment on behalf of the Indian government for poverty reduction and industrial growth, and a GDP which is significantly lower than other developed nations, achieving its obligations for CO2 emission controls is not feasible without economic assistance and technology transfer from developed partner nations. Concurrently, India maintains a social environment where consumers are demanding more products and services to enhance their lifestyle and the government maintains an absolutely obligation to ensure its citizens are removed from historical poverty cycles as a moral and ethical responsibility to its own people. Therefore, reducing industry capacity is not feasible or realistic and would impose a burden on the Indian people. Therefore, with India’s limited resources and capacity to achieve CO2 reduction in accordance to UN expectations, the country is showing a willingness to be more interactive and contributory toward this goal so long as strategic foreign relationships underpin a renewed focus related to climate change initiatives. This case study found that India is faced with a less-regulated government environment related to two-wheeled vehicles which, from a consumer level, contribute greatly to CO2-related atmospheric pollution. Combined with foreign businesses entering this market for the lower costs of doing business and sustaining more stringent environmental policies, the government might be harming itself economically by imposing new and more costly emissions control regulations that might incentivize a market departure to save corporate costs. This would have detrimental impact on consumer lifestyle, government revenue collection, and ability to compete in the global trade markets. This study reinforced why global commitment to providing India with economic resources and technology is an absolute necessity to gain prominence as a responsible developing nation. India cannot accomplish this alone without the opportunity cost of sacrificing its growth and poverty-reduction efforts. This conference in December 2015 is the first realistic and opportunistic chance for India to achieve its common but differentiated responsibilities related to controlling climate change and illustrating to the world that the country takes this obligation seriously and is willing to commit labor, science and finance toward building an accord that is equitable and realistic. The country-specific challenges in India are unique to developed nations and the country government maintains limited capacity to contribute, especially when the government is subsidizing many different industries that are contributors to its primary goals of growth and poverty reduction. Now that other nations recognize this and are less adamant about holding India equally-accountable for its environmental focus, the country can now move forward in being an integral part of a global effort at controlling CO2 emissions in a capacity unparalleled in its recent history. India is now being praised for being more focused on its common obligations for sustaining mankind and the environment which seems to be incentivizing more commitment and cooperation for foreign developed nations. With partnership and collaboration, India now seems to be on-track for making valuable and sustainable changes to its current environmental policies which will have lasting impact on global climate change problems and still allow the country to maintain priority toward its most challenging issues both social and economic. References Acharyya, J. (2009). FDI, Growth and the Environment: Evidence from India on CO2 Emission during the last Two Decades. Journal of Economic Development. 34(1). Burney, N.E. (2010). Carbon Tax and Cap and Trade Tools: Market-Based Approaches for Controlling Greenhouse Gases. New York: Nova Science Publishing. Business Standard. (2015). India’s per capita income up 10%. 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Retrieved November 19, 2015 from http://www.climatechangenews.com/2014/07/01/india-plans-to-overhaul-approach-to-un- climate-talks/ Read More