India's Smart Climate Strategy

Still scrambling for electricity.

Photographer: Simon de Trey-White for the Washington Post

To many eyes, India looks like a roadblock to an effective world climate deal. Prime Minister Narendra Modi's demand for “climate justice” -- meaning that rich nations should reduce their carbon emissions even as India and others continue to pollute -- reprises the polarizing rhetoric that has sunk previous international attempts to battle global warming. Yet there’s merit to Modi’s argument, and success in Paris requires that all countries recognize it. 

The first thing to appreciate is that, whatever commitments Modi's government ends up making at the climate talks, India’s fuel mix is growing steadily greener. While coal is still the cheapest and most abundant domestic fuel source, it's getting more expensive and harder to dig from the ground. Many banks already see more potential in funding solar projects than new coal-fired power plants. In fact, the most apt criticism of India’s pledges to reduce carbon intensity and the use of fossil fuels -- rather than cap emissions -- is that the country could probably meet them without really trying. It can and should aim higher. 

That said, Modi’s central argument is sound: India can't accept a hard limit on emissions when it’s still trying to lift hundreds of millions of Indians -- more than 20 percent of whom lack electricity -- out of poverty. Western nations are most responsible for the greenhouse gases now in the atmosphere; the average American accounts for 10 times the annual emissions of the average Indian. Judged by whether countries are doing their “fair share,” based on how much they’ve contributed to the problem and how able they are to pay, the U.S. and European Union’s climate pledges look far weaker than India’s. Among major nations, only China appears to have committed to doing more than its fair share. 

Politically, however, the chances that the U.S. or other Western nations will commit to lower their own emissions fast enough to prevent dangerous climate change are slim. So it's essential that they also help fund emissions cuts in the developing world. And, dollar for dollar, money devoted to mitigation in poorer countries is well spent. In India, solar power costs $96 per megawatt hour, compared with $107 in the U.S., according to data from Bloomberg New Energy Finance. Building a new solar plant costs 70 percent more in the U.S. despite much lower financing costs. Because most of India’s infrastructure is only now being built, smart investments can set the country on a sustainable and energy-efficient course. 

Modi has pressed developed nations to fulfill their promise to provide $100 billion a year to help India and others develop clean energy. However, that number is arbitrary, unlikely ever to be reached, and far short of the $2.5 trillion India says it will require by 2030 to meet its goals. What the country needs more is access to cheaper capital. And it’s taken welcome steps in this direction by authorizing tax-free investment bonds and by setting up programs to encourage private investment in renewables. Western nations could help by mobilizing both public and private sources of funding, including soft loans from institutions such as the U.S. Export-Import Bank. 

As much as money, India and other developing countries need assistance with clean technology. Better grid technology could allow India to tap its potential for rooftop solar projects, for example. And access to next-generation solar cells could lower costs further. 

This is not to say that India itself doesn’t have work to do. If it can’t raise its climate targets immediately, it should at least not block efforts to scrutinize the progress that all countries are making. Gas and electricity pricing and, in the nuclear-power sector, liability concerns need to be addressed to better encourage investment. And India could cooperate with Western companies by offering itself as a test bed for new technologies -- to draw energy from ocean waves and tides, for instance. 

In the short term, India’s carbon emissions are virtually certain to rise. But that doesn’t mean the country can’t help move the world toward a clean-energy future.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.