Change for the better: Indian industry should take a deep interest in the subject of climate change and its threats

Scientists have investigated climate change and its threat for over a hundred years now. Perhaps the earliest alarm regarding future climate change in the world was voiced by the well known Swedish scientist Svante Arrhenius in 1896, when he articulated his assessment that carbon dioxide (CO2) concentration in the atmosphere would continue to increase as the world consumption of fossil fuels, particularly coal, increased rapidly in the future. He predicted that if atmospheric CO2 doubled, the earth would become several degrees warmer. Unfortunately, hardly any attention was paid to these predictions, which we find now had great scientific validity. A plot of temperature since the beginning of the industrial revolution against the average global temperature for the period 1961 to 1990 is shown in Figure 1, clearly indicating an upward trend which is almost 0.4o higher than the average for the 30-year period, forming the baseline. Figure 1 Concerns regarding climate change surfaced prominently in 1988, when several parts of the world, particularly North America, suffered very high temperatures and severe droughts. The global community reacted effectively through the establishment of the Intergovernmental Panel on Climate Change (IPCC), which was set up by the World Meteorological Organization and the United Nations Environment Programme as a scientific body to investigate the complexities associated with climate change. The IPCC, the membership of which includes 192 governments, has since its inception produced three major assessment reports to investigate all aspects of climate change. The First Assessment Report (FAR) of the IPCC provided a useful basis for the Framework Convention on Climate Change, which came into existence in 1992. By 2001, the Third Assessment Report (TAR) was released, which concluded ?there is new and stronger evidence that most of the warming observed over the last 50 years is attributable to human activities?. The TAR also projected that by the end of the 21st century the average global temperature of this planet would increase to somewhere between 1.4o C to 5.8o C. This may appear like a negligible increase in average surface temperature, but in a historical context this increase is substantial in magnitude. Furthermore, the changes such increased temperatures would bring about would not be linear or continuous in nature. Interference with world?s climate change system results in several discontinuities and occurrences such as extreme events. All of these have serious economic consequences, which require business and industry to be fully informed about them. The impacts of climate change can be divergent in nature and widespread in their geographical coverage. The TAR concluded that globally the 1990s were likely to have been the warmest decade in instrumental record. During the 21st century, global average surface temperature is likely to rise to levels very likely without precedent during the last 10,000 years. The impacts of climate change can be detrimental to all forms of human activity. The figure 2 shows in summary from the effects of climate change on human health, agriculture, and the availability of water resources, as well as on coastal areas, and various species that constitute the diversity of plant and animal life. We already have substantial evidence of the receding Himalayan glaciers, which are the most important source of water in the rivers flowing through the northern parts of this subcontinent. Water resources would affect agriculture as well as industry quite apart from creating scarcity and water stress with respect to household uses. Figure 2 The United Nations Framework Convention on Climate Change, on which the Kyoto Protocol is based, has in fact not received the political will at the global level to produce perceptible results, because the Protocol itself has not yet entered into force. The one country that is now required to ratify the Protocol is Russia, but as yet there is no clear indication whether this would actually happen. The Kyoto Protocol lays down targets for the developed countries for overall reduction in emissions of so-called greenhouse gases (GHGs) of which CO2 is the most prominent. Given the increased concentration of these gases in the earth's atmosphere, it is essential that reduction in emissions be implemented with great determination, rapidly and in large magnitude. The Kyoto Protocol was a small step in attempting to achieve this goal, and it also included several mechanisms that were based on market forces, such as the Clean Development Mechanism (CDM). Essentially the CDM is included in the Kyoto Protocol to assist developing countries in achieving sustainable development through implementation of projects that would reduce the emissions of GHGs, with financing of such projects being provided by the developed countries, who in turn would get credit in their overall specified targets for the emissions reduction achieved in such projects implemented in the developing countries. Why should business be interested in the subject of climate change? Firstly, the sheer magnitude and seriousness of the impacts of climate change require every stakeholder in every part of the world to be concerned about these impacts on human existence and economic activities. The need for reducing the emissions of GHGs as rapidly as possible is paramount, but given the inertia in the system, climate change will continue for perhaps several centuries even with the most ambitious efforts to stabilize the concentration of GHGs in the earth?s atmosphere. Sea level rise, in fact will continue even longer, with serious implications for all industrial activities located in coastal areas or low lying islands. Even for those located further onshore, the intrusion of salinity in groundwater and other water bodies poses critical threats for many activities. The sum and substance of these prospects is that human activities and infrastructure will have to adapt to the impacts of climate change, even in the most optimistic scenarios of the future. This would require that business, for instance, consider several actions to reduce the consumption of water, and in the case of industries dependent on agricultural raw material, perhaps planning for a mix of agricultural feedstocks that would be very different from what is in use currently. The biotechnology profession would have to mount programmes for developing drought resistant or salt resistant species of several agricultural crops in various parts of the world. The spectre of precipitation changes in the future indicates that the frequency and severity of both droughts and floods would increase substantially, particularly in the sub-tropical and tropical regions. Consequently, infrastructure to manage floods would need to be put in place to adapt to such conditions in the future. This would be costly for those who lack the means to invest in flood control structures, because it is the developing countries, incidentally, who are the most vulnerable to the impacts of climate change. Both for adaptation and mitigation measures, an unprecedented level of cooperation would be required between governments and business round the world. A third, and perhaps most important leg of private-public partnerships would be research organizations that can not only assess the implications and impacts of climate change but also take in hand measures that can bring about proper adaptive solutions. Similarly, in the case of mitigation, an opening has already come into existence with the provision of the CDM. Governments can play an important role in promoting CDM projects in countries like India not only through creating awareness but also by providing institutional arrangements that facilitate the involvement of business, which is essential for the implementation of CDM projects. The nature of possible CDM projects opens up avenues for a large range of business enterprises. Figure 3 shows the technology wise distribution of the CDM project portfolio nominated for approval by the UNFCCC (as of March 2003). However, considerable homework and due diligence is required to be undertaken by industries to assess the most attractive CDM projects that could be taken in hand in a country like India. In the case of energy efficiency projects for instance, opportunities exist in every sector of the economy. So also is the case with fuel switching options, such as moving from the use of coal to oil, natural gas or renewable forms of energy. Another reason for industry to develop interest in this area emanates from assessments of the future market in the world for technologies that have low CO2 intensity and a GHGs reduction potential. If Indian industry has to export refrigeration or power generating equipment, for instance, the global market of the future would demand these products with an associated reduction in the emissions of GHGs. CDM projects might provide us with an opportunity to get into this game early with no cost to us. Figure 3 The initial estimate of the overall CDM activity foreseen globally was extremely high, when the Kyoto Protocol was agreed on in 1997. Subsequently, with the withdrawal of the US and its decision not to ratify the Protocol have resulted in a sharp reduction in the size of the CDM market. The early expectations were for a global market ranging from $5 billion to $21 billion. Also, the cost of GHG abatement at that stage was estimated at anything between $50-$100 per tonne of CO2. It was also expected that CDM revenues would dominate project decisions, such that even those projects which were financially unviable but desirable for environmental or social reasons would become attractive. Further, developing countries expected easy transfer of advanced technologies at low cost. Unfortunately, the picture currently is much less optimistic, and the benefits of emissions reduction will not tilt the balance for a project that is inherently not viable. The Conference of the Parties under the Framework Convention on Climate Change is the apex body for determining actions and pursuing negotiations involving countries and governments in the field of climate change. The 8th Conference of the Parties was held in New Delhi during October-November last year, and in keeping with existing practice, T R Baalu, minister of environment and forests, Government of India was the President of that conference in his capacity as the minister responsible for this subject in the host country. The period of presidency lasts till the next Conference of the Parties, which is scheduled to be held in Milan in December 2003. As part of India?s presidency of this process, the Ministry of Environment and Forests in association with the Confederation of Indian Industries (CII) and The Energy and Resources Institute (TERI) is organizing a Technology Bazaar during the week beginning 10 November 2003 to explore CDM opportunities and showcase Indian capabilities in the areas of mitigation and adaptation related to climate change. This is, therefore, an appropriate moment for Indian industry to take a deep interest in the subject of climate change, the threat it poses for economic activities in the future as well as the opportunities that would arise globally not only in adapting to climate change but also in developing solutions, including through CDM projects that would reduce the emissions of GHGs and help protect all forms of life and ecosystems on this planet, for the well-being of our children and grandchildren.