Zero Carbon For India First

Context: To break this logjam of global warming and climate change and target zero carbon by 2050, the biggest emitters including India, should lead a two-pronged global initiative: one, carbon pricing that all nations can adopt; two, a vast increase in green investment.

Message from IPCC’s Sixth Assessment Report (AR-6)

• There are no ‘pathways’ to contain global temperature rise to less than 1.5° C in the next few decades without crossing that threshold later.
• A reduction in temperature is likely after crossing that mark by the end of the century.
• Thus, to target zero carbon by 2050, the biggest emitters — including India — should lead a two-pronged global initiative: one, carbon pricing that all nations can adopt; two, a vast increase in green investment.

Carbon Pricing as the solution: Recently, IMF proposed setting a global minimum price for carbon emissions.

• Already in practice: More than 40 countries are already using a carbon price, covering one-fifth of global GHG emissions.
• Different approaches:
  • Levying a tax on carbon discharges, as Singapore is doing for major emitters like power stations. 
  • Carbon trading: Setting limits on carbon effluents and allowing companies to trade their surpluses and deficits. China took this path with online trading, initially for coal and natural gas.
• Challenges:
  • Low average world price of carbon: At only $3 per gigatonne of equivalent CO2 (GtCO2e), far below the IMF estimated $75 needed to achieve limiting global warming to 2° C.
  • Low acceptance: Of 38 OECD countries and G20 countries combined, covering 80% of world emissions, only 10 are pricing carbon at half the mid-range of the estimated cost of CO2 emissions.
• Policies needed for leveraging carbon pricing: 
  • IMF suggests price floors of $75, $50 and $25 per tonne of carbon for the US, China and India. 
  • This could help achieve a 23% reduction in global emissions by 2030 to keep global warming below 2° C.

Raising green investments: 

• Investment requirement: Global capital investments to replace fossil fuels with renewables to keep global warming below the 1.5° C mark is $2.4 trillion a year through to 2035.
• Challenges:
  • Investment gap: Green public spending only makes up 12% of Covid-19 stimulus spending globally.
  • Green investments still present business risks; they need mechanisms for risk-sharing, such as government guarantees for the sale prices of energy.
• Policies needed:
  • Mechanisms for risk-sharing: Such as government guarantees for the sale prices of energy. 
  • Providing carbon credits can promote green investments and can be boosted if they can be traded in global markets, such as the emission trading systems in China, the EU and South Korea. 
  • Making carbon credits eligible for offsetting carbon taxes would reinforce the price-invest approach.