The year 2005 was recorded as the hottest year in over a century and experts predict that if current trends prevail the earth shall soon witness feral warming, cataclysmic floods, tyrannical cyclones and so on.
India being an agricultural economy will have to bear a major brunt of the climate change scourge. It is without doubt that an increase in greenhouse gas (GHG) emissions will lead to climate change that can radically affect all sectors of any economy. Large economic disasters like crop failure, local disruptions due to these disasters, and deteriorating service quality due to infrastructure logging are just the tip of the iceberg. In a globalised world where markets are intricately inter-related, one small breakdown can have severe repercussions across the world.s
Indians by and large do not acknowledge how important a role each one of us plays in the race to save our planet. It is unfortunate that some people do not know how to bring about a change, yet it is even more unfortunate that people refuse to acknowledge that there is a way in which they can bring about a change.
We’ve all read about global warming and climate change and some of usare busy discussing the nitty-gritties of the Kyoto Protocol while pointing fingers at others. Though even children’s textbooks and management programmes deal with issues of carbon markets and carbon credits, yet most people ask, “What has it got to do with us?” And the answer is, ‘It gives us the power to take change into our own hands’.
For those who boast about trying to make a difference themselves should try the Voluntary Carbon Markets. This is a mechanism, which allows companies, NGOs, local governments and individuals to compensate for the pollution they cause. Simply put, every time you switch on a light, or travel by car, bus or flight, you release GHGs that contribute to global warming. For example, while flying between Delhi and Mumbai, you will emit 0.13 tonnes of carbon dioxide and you can neutralise this emission with Rs 90. Similarly, if you travel 5,000 km annually in your petrol-driven vehicle, you will emit a little less than 1 tonne of carbon dioxide in the atmosphere, which you can offset with about Rs 800. It’s a small price for a year’s worth of pollution.
When you pay for offsetting your emissions, you fund a project that reduces GHG emissions, most likely in India or China. These projects generate credits that are verified and/or certified by a standards organisation, which guarantees that the emission reductions have actually taken place. These projects include energy efficiency schemes, reforestation or afforestation programmes, industrial gas capturing plants, and methane flaring plants among others. This creates an emission trading market where the commodity is reduced GHG emissions, and the quality is measured by verification standards used and the sustainable development that has occurred from the project.
While this is a voluntary mechanism, the Kyoto Protocol provides for emission reductions via other regulated markets. What is different is that private organisations can now build a ‘Green Image’ for corporate social responsibility (CSR) reasons or any other reason and offset a part or all of their GHG emissions. Individuals can also take responsibility for their own emissions.
The Ministry of Environment and Forests estimates that the total GHG emissions in India in 2020 will be close to 3,000 million tonnes of carbon dioxide equivalent (MtCO2e). The Institute of Economic Growth estimates that the population will be roughly 1.3 billion by the same time. Sp we are essentially looking at 2.3tCO2e per capita. While the US emits almost 15 times this amount.
Even city and state-level initiatives like Chicago Climate Exchange and New South Wales Greenhouse Gas Abatement Scheme have developed market systems to combat increasing greenhouse gas emissions.
Some Indian corporate leaders have begun to take matters seriously. A telecom company like Bharti Airtel saves 96 trees a year by providing e-billing, uses video-conferencing to avoid travel, and has created energy efficient green shelters at around 7,000 sites.
Companies like ONGC, ITC, Nestle, Essar Oil, Tata Steel, Wipro, JSW Steel, IDBI, ICICI, and Rabo Bank have also announced plans for emission trading. It is comforting to know that several high-impact sector firms (electricity generation, electrical equipment and construction) have taken the initiative to collect emissions data and allot senior management staff to climate change issues. However, most firms need to overcome their tendency of short-term thinking and focus more on deep-rooted institutional changes.
Indian firms will face increasing pressure to comply with international environmental standards from their global partners. Tesco, an international grocery and general merchandising retail chain, recently said it will provide details of emissions through out the life cycle of each product it sells on the packaging.
So, not only will the smallest of Indian suppliers to Tesco have to disclose emissions data, but they may also need to reduce emissions to sustain their business. Sooner than later, other global competitors would be keen to adopt Tesco’s approach.
—The writer is chairman, Centre for Food and Agribusiness, IIM Lucknow. He was assisted by Deepanshi Chaudhary
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