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Economic Survey 2014-15

1.12 CLIMATE CHANGE

India has taken a number of green actions,
including imposing significantly higher
taxation of petroleum products and reenergizing the renewable energy sector. It can
make a positive contribution to the
forthcoming Paris negotiations on climate
change.
Later this year, Heads of States from around the
world will meet in Paris to conclude negotiations
on a new agreement under the United Nations
Framework Convention on Climate Change
(UNFCCC) by December 2015. The expectation
is one of action by all countries on climate change
from 2020 onwards in accordance with the
principle of common but differentiated
responsibilities.
The Intergovernmental Panel on Climate Change
(IPCC) in its recent report the Fifth Assessment
Report (AR5), published in 2014 has observed
that, there has been an increasing trend in the
anthropogenic emissions of greenhouse gases
(GHG) since the advent of the industrial revolution,
with about half of the anthropogenic carbon dioxide
(CO2) emissions during this period occurring in
the last 40 years. The period 1983-2012 is likely
to have been the warmest 30 year period of the
last 1400 years. CO2 emissions from fossil fuel
combustion and industrial processes contributed

Source: World Bank estimates.

a major portion of total GHG emissions during the

period 1970 - 2010.
The change in the climate system is likely to have
adverse impacts on livelihoods, cropping pattern
and food security. Extreme heat events are likely
to be longer and more intense in addition to
changes in the precipitation patterns. Adverse
impacts are likely to be felt more acutely in tropical
zone countries such as India, and within India, the
poor will be more exposed.
India can make a significant contribution in
addressing climate change. Unlike some countries,
it has taken substantial actions to eliminate
petroleum subsidies and gone beyond to impose
substantial taxes on these products.
These actions have taken India from a carbon
subsidization regime to one of significant carbon
taxation regimefrom a negative price to an
implicit positive price on carbon emissions. And
the shift has been large. For example, the effect of
the recent actions since October 2014 has been a
de facto carbon tax equivalent to US$ 60 per ton
of CO2 in the case of (unbranded) petrol and
nearly US$ 42 per ton in the case of (unbranded)
diesel. In absolute terms, the implicit carbon tax
(US$ 140 for petrol and US$ 64 for diesel) is
substantially above what is now considered a
reasonable initial tax on CO2 emissions of US$
25 per ton (Figure 1.25). India now ranks quite