The carbon invoice: the cost of climate change

The damage caused by climate change is notoriously challenging to quantify, even as its cumulative nature impacts almost all facets of social and economic well being. It’s hard to study such a global phenomenon in isolation. While climate change is earth’s collective cross to bear, the individual price for it is starkly unequal. A recent study published in Nature found that the economic cost of carbon emission is unfairly skewed for countries like India, China, and Saudi Arabia.

Using a mix of econometric approaches and emission profiles, the study found that one tonne of additional carbon dioxide emission will cost $86 (₹6,320) to India. To give some context, 400 litres of diesel will emit about a tonne of carbon dioxide. For every litre of diesel that we use, India needs to pay an extra ₹15 in climate change damages. This hidden cost is borne by India in the form of decreased crop yield, extreme weather patterns, ecological attrition, increased sea level, pollution-pioneered health ailments, water crisis and other perils of climate change. This quantification is an insight into the implicit carbon invoice that is often repaid by the most vulnerable citizens.

India alone will have to bear the burden of 21 per cent of global financial damages caused by climate change—amounting to about $210 billion every year. This share of damages is almost four times our carbon emission. This asymmetry in the cost of carbon becomes clearer when we start to look at it relatively. Here’s the cost per tonne of carbon dioxide for the top five countries: India ($86), the US ($48), Saudi Arabia ($47), Brazil ($24) and China ($24). The cost for Canada, Russia and Northern Europe is a negative value. This dissonance makes it harder for countries to agree to a common climate agreement. As the global discourse gravitates towards “country first” politics, the red spot on this map is a reminder for India that the redemption of carbon sins are not going to be fair.

World map of country-level social cost of carbon.

It is also important to understand that this study only revolves around carbon dioxide emission alone and not climate change as a whole. The estimate in this study is for every additional tonne of carbon dioxide that is released. Projecting the cost of something as complicated as carbon emission is often riddled with limited intellectual consensus and uncertainties. The stated study too is not free from these challenges.

The Intergovernmental Panel on Climate Change (IPCC) in its recent 1.5°C global warming report echoed the same narrative. The report stated that along with being battered by heat, drought and floods, low- and middle-income countries like India are likely to see the largest reduction in economic growth. It also emphasised how climate change will widen the inequity that already paralyses disadvantaged populations. The Kerala floods were an important example of the compounding effect of climate change. While these floods were an instance of direct impact, carbon invoice often hostages progress in ways we barely anticipate. A World Bank report estimates that 143 million will be displaced because of climate change. Bangladesh is one such hot spot of these potential climate refugees. Escaping the wrath of rising water, a large section of climate migrants are likely to come to India. India will need to buckle up to help them as well.

On September 17, Prime Minister Narendra Modi was awarded the UN Champions of Earth award. Although dismissive of climate change in past, PM Modi has done incredible work in pioneering the International Solar Alliance for which he received the award. Despite the leap forward in solar power, a recent auction for 3 gigawatts power plants by the government received zero bids and only one bid for the 5 gigawatts tender. Sources blamed this on the lack of government subsidies. A similar sign of poor implementation was seen in the letter that the Union power minister, RK Singh, wrote to Arun Jaitley, warning how states were not purchasing solar power even at the lowest rates. Ambitious plans standing on the shoulders of poor implementation has been a hallmark of India’s climate policies.

Despite setbacks, consultancy group Wood Mackenzie expects that 76 per cent of the target of 175 GW energy production by renewable means—like solar and wind—will be met by 2022. These numbers seem optimistic, as switching to more sustainable sources of energy is the most imperative strategy in global warming mitigation. Along with generation, fuel consumption plays an important part in domestic pollution. A survey by a Bengaluru-based non-profit found that 87 per cent of Indians are willing to buy an electric vehicle to reduce pollution. Yet Mercedes doesn’t find India a viable business case for launching an electric vehicle. This is because of a lack of government policies and incentives—which other manufacturers including Elon Musk’s Telsa agree with.

There has been a leadership vacuum after the US withdrew from the Paris climate accord. China is keen on filling this gap by championing climate change mitigation by decreasing its carbon emission and switching to cleaner energy sources. India too has shown its interest in leading the climate action as expressed by Sushma Swaraj at a recent UN event. This zeal to lead will be requisite for a country like India. India will need to make an active effort to make more climate-centric policies and incentivise the budding tech and startup industry to pave the part forward. A powerful country is no good if it is not liveable. For a sustainable future, it will be paramount to be prudent and equitable while we remunerate our shared carbon invoice.