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The climate policy space in Indian governance has been earnestly submerged. The government interventions in the market keeping in mind the SDG goals have been to engendering the necessary conditions and scope for financial benefits to run the long-way towards the low-carbon pathway whether its through promoting sustainable livelihoods and resilience through forest management or bringing its Long-Term Low Emission Development Strategy (LT-LEDS) or promoting solar-based use of consumption of power through schemes such as PM KUSUM, Rooftop Solar scheme etc.
Eventually homogenizing the two different boats
Balancing economic development and climate goals have gotten into a fast-track motion by the Indian government’s collaborative whole-of-society approach. Example is the recently long haul of the EFTA agreement, a broad-based trade and investment agreement which also includes non-trade issues between the group of four European Nations viz., Switzerland, Norway, Iceland and Liechtenstein, committing to receive $100 billion in investments over 15 years. The lessening of the global ascendancy and emerging of the Indo-pacific holds significant importance in global trade where India could take the leadership.
While a pact like TEPA (Trade and Economic Partnership Agreement), definitely would open copious opportunities for both the parties. Things take a different turn when we talk about the CBAM (Carbon Border Adjustment Mechanism), a carbon-tax that EU will charge from countries rest of the world from 1st January 2026 which will adversely impact India’s export of steel, aluminium, and iron, fertilizers etc., as CBAM seeks to levy a carbon tax on these above-mentioned items basically to protect their local manufacturers who pay a carbon-tax for the emission they generate. India’s steel exporters in the EU accounted for 30-40% totalling 3.5-5 million tonnes in FY-23, ICRA data shows. Though the non-EU nations (The EFTA nations) have minimal steel imports from India. As the ICRA report shows, the Indian steel mills have to bring down the carbon-footprint at par with the global level to minimize the potential loss of market share in Europe.
What does the HDI 2023-2024 report show?
The Human Development Index for the year 2022 has recently been published some days back. This report also releases other sub-indices such as the IHDI, GII, GDI and the PDHI. “The PHDI is the level of human development adjusted by carbon emissions per person (production based) and material footprint to account for the excessive human pressure on the planet” as defined by the UNDP. Now, this year India’s HDI value has increased to 0.644 from 0.633 which is creditable comparing it to the PHDI value which is 0.625, the closer it is to the HDI, the better. Now the Very High HDI group is Switzerland (HDI- 0.967, PHDI value of 0.826), Norway (HDI- 0.966 PHDI- 0.808), Iceland (HDI- 0.959, PHDI-0.806) etc. The more pressure increases, the more the value of PHDI falls below the HDI. So, it clearly indicates that these Very High HDI groups also impose much higher pressure than the developing nations. As also pointed out in the HDI report, “The 2022 HDI value of medium HDI countries is similar to the HDI value of high HDI countries in 2002 but with lower planetary pressures. The spill over of the actions of the developed nations often the developing nations have to rectify which can be arduous in the sphere of the transition from the brown growth to green growth. As developing nations like India need to fully harness its demographic dividend, policies like CBAM can act as a handicap on growth.
References:
- https://www.business-standard.com/economy/news/india-efta-sign-100-bn-15-year-free-trade-agreement-piyush-goyal-124031000149_1.html
- https://www.livemint.com/industry/on-carbon-tax-not-all-steelmakers-are-on-the-same-page-11710241737162.html
- https://m.economictimes.com/small-biz/sustainability/india-steel-mills-most-at-risk-from-eu-carbon-plan-goldman-says/articleshow/107740243.cms
- https://www.livemint.com/industry/upcoming-india-efta-free-trade-pact-to-miss-carbon-tax-discussions-11709901669497.html
- GTRI report, March 2023
- Human Development Report 2023-2024
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