The PEx argument raises a number of challenges. First, it presents a dilemma to those (like us) sympathetic to the perspective of The Breakthrough Institute (TBI) who have been arguing since the mid-2000s that carbon pricing will never work as a strategy to tackle climate change, because climate change isn’t a classic polllution problem. Its causes are too systemic, and we do not have existing cheap enough low carbon alternatives, so carbon pricing will just raise costs and piss people off. Instead, we have to invest in clean energy technology development and get breakthroughs that will provide us with big cost reductions. The dilemma arises because if large scale deployment of renewables (when they are still expensive) is a crucial part of bringing costs down in the long run (TBI and Joe Romm of Climate Progress had a major exchange about this), these costs may also piss people off.

And it does seem as if a credible committment to deployment at some scale is needed to bring in the sort of investment that may eventually reduce costs. This can be seen clearly in the case of offshore wind in the UK, where the commitment of successive Secretaries of State have now brought in large players like Mitsubishi and Siemens with investments both in production of turbines and R&D facilities. This is a weakness in PEx’s argument about technology policy, since many studies show that demand-pull is as if not more important than supply-push in innovation, and that learning-by-doing and economies of scale are key for reducing costs in manufacture and installation. Deployment at scale is needed for that. PEx also have what looks like a deliberately naive proposal that we could meet the targets through on-shore wind, but they know as well as the rest of us that planning would make that impossible. Offshore wind is partly the price we pay for not wanting onshore wind.

However, it still leaves the political dilemma. The experience of countries like Germany and Spain is relevant. Germany has over 1 GW peak of solar PV (equivalent to about 100 MW of baseload generation), and this has helped bring down the costs globally of PV, and built up a domestic manufacturing industry (although this is now threatened by Chinese competition). But this hybrid technology/industrial policy will cost the German public somewhere in the region of €70 billion. Spain’s subsidies were so generous they sparked a huge surge in PV investment, but were ultimately politically unsustainable and were reversed. Is technological breakthrough just as politically difficult as carbon pricing?

But the PEx argument also contains a potential trap. It may be cheaper to reduce emissions in the UK to 2020 by relying on gas and nuclear instead of offshore wind (although gas prices may not fall from currently high levels, and the costs of new nuclear are opaque. But the argument from some (e.g. WWF) is that this won’t help us after 2020 when we will increasingly need renewables to meet much more stringent targets. The gas industry argues that gas with CCS will be a key post-2020 technology, but this is still untried, and to depend on it would be highly risky. This is an important argument. Gas and nuclear are powerful commercial lobbies, and much of the current critical noise about renewables looks very much like the gas industry in particular trying to compete for some kind of commitment from Government about gas in the future electricity mix.

There are two real dangers here. One is that delaying the development of renewables in the UK (especially those, like offshore wind, in which the UK is an important market) will kill them off (which is indeed a likely objective of gas and nuclear lobbies). The second is that if the UK builds a lot of gas-fired capacity now, and CCS for gas turns out not to work, it will nevertheless very hard politically  for a future government to turn that capacity off. Again, a policy like a future emissions performance standard has an underlying credibility problem.

Where does all this leave us? First, it’s not clear how serious any of this is, in terms of actual influence on policy. So far Huhne has been robustly defending offshore wind, and although Osborne made some comments at Tory Party Conference about competitiveness, he hasn’t blocked  Huhne on recent decisions (indeed he has just released £103 m to the Scottish Executive for clean energy projects. Across the broad population, renewable energy does remain popular.

But that doesn’t mean it shouldn’t be taken seriously. The gas lobby and the Mail and Express will doubtless continue to chip away at the issue. There is some evidence of limited willingness to pay for renewables. Policy could change very quickly if there were a change of Minister, or if the economy deteriorated (which it looks like it will). So what should be done?

The most fundamental point is to keep renewables options open. Most renewables technologies are still much younger than gas and nuclear, and if they are pushed out now, we will never know how far their costs can be reduced. Nuclear fusion in particular received vast subsidies, and there is a strong case for continuing and expanding support to renewables to level the playing field. Of course, innovation in renewables won’t happen just in the UK, and we are already benefitting from lower cost Chinese solar PV, but there is a case for the UK playing a role in developing the renewables technology in which the UK may be a major market.

Thus the biggest problem with the PEx argument is that it seems to assume away all political economy. There may still be a role for gas looking ahead, but only if credible ways way can be found to avoid future lock-in and the squeezing out of renewables options. I’m not sure if this can be done, but if it can, it’s a subject for another post.

However, it is also true that supporters of renewable energy policy need to stop simply saying we have to deploy renewables just because we have a European target, and start making a case for renewables policy on particular grounds. This could be  technology development, green growth or even building a new interest group for clean energy policy  (in Germany, the development of renewable industries also provided a new political constituency to support renewable and wider climate policies). It could also possibly as a global public goods policy: if Japan (solar PV), Denmark (wind), Germany and Spain (wind and solar) can all play their role in helping to bring technologies down the cost surve, a rich country like Britain should do as well (although this may not work so well in times of economic crisis). Some in the environmental movement do have a more sophisticated account of renewables policy, but some don’t and need to get one.  We have to be doing this for a reason, and PEx and others are right to say that doing it just to cut carbon now doesn’t actually stand up.

That policy should also be fit for purpose. If it is about creating more technological options and bringing down costs, then it should be defensible as well-designed, and not excessively expensive in itself.  What this means in practice is paying more attention to the principle that both demand pull (deployment) and supply push policies (R&D support, tax credits, infrastructure support etc.) should be designed within a single integrated framework, with all the elements working together (this is the approach proposed by The Breakthrough Institute in a recent set of proposals for the US). It also means having a full range of support mechanisms, especially through the valley of death. There has been an increasing amount of funding going to offshore wind RD&D, both via the ETI and NAREC. But we still don’t have a working publicly-funded test site for new offshore turbine designs. It looks like we may eventually get one next year, but it’s been a long time coming. Waves of deployment should be more closely associated with the phasing of development of new generations of turbines, and experience gained with construction of platforms, than a timetable determined by targets.

Lastly, options within renewables policy should be kept open – including meeting targets through heat as well as electricity. Offshore wind costs could come down sharply if there are unexpected breakthroughs in materials, in turbine design, or in construction techniques. But equally, there may be unexpected breakthroughs in other smaller-scale technologies. Solar PV has fallen more quickly in cost in the last five years than was expected. It is not easy, but the Government has to steer a path between credible deployment policies and a flexible approach that responds to technological change.

In the end, the backlash in itself may be self-limiting. If gas prices stay high, then concern about the additional costs of offshore wind may be easier to stoke up, but it is also les easy credible to present gas as a cheap alternative. If gas prices do fall sharply, then concerns about the costs of renewables is likely to drop away. But if it leads to clearer thinking and more robust arguments for supporting renewable energy, then it will have played a useful role.

For me, this is probably the major problem with the no-growth argument. But I think there are also two others.

The first of these is exactly how a steady state economy might work. The best way into this issue is to consider how our current economy works. Most of us (I’m including the Chinese here) live in capitalist economies. What is capitalism about? Jackson (following the economist William Baumol) chooses to define capitalism as being about private ownership or control of the means of production. Defined in this sense, a steady state economy could be capitalist or it might not, it doesn’t seem to matter much.

But this is surely an inadequate definition of capitalism. The keenest observers of capitalism, from Marx to Schumpeter to Solow, say that what matters is not ownership but accumulation. Capitalism is about investing capital to increase productivity, earn profits and then re-invest those profits in turn. Crucially, it is this process that underlies economic growth. Growth is inherent in capitalism, which means you can’t have capitalism without growth, and you can’t have a capitalist steady state economy.

For the Austrian economist Joseph Schumpeter, the key driver of this process was innovation, both in technology and in business organisation. As he put it, ‘Innovation is the outstanding fact in the economic history of capitalist society’

Technical change produces a trend of increasing productivity (for the US, for example, of an average of about 2% per year since the Second World War), and increases in labour productivity mean shedding labour (a very visible current example is the way that checkout workers in supermarkets and other shops are being replaced by self-service machines). In economies like the UK and US, this general trend means that unemployment increases when economic growth falls below around 2-2.5% a year.

Jackson does recognise this trend (although he underplays the role of innovation in increasing labour productivity). But it poses a dilemma for the no-growth argument, and especially for an explanation of how a “steady state” economy is supposed to work.

The argument seems to fluctuate between two possibilities. One is that a steady state economy is one in which there would be no innovation and increases in labour productivity, except for exports, in order to maintain competitiveness, and areas like renewable energy and ecological services, where major effort is needed to reduce emissions and counter the loss of biodiversity. In this case you could have, in theory, steady income and full employment. This would be a “Cuban cars” economy, in which all technology and labour processes were frozen at the point in time that it stopped growing.

The exceptions mentioned above do raise some tricky questions. You need innovation and investment in low and zero carbon energy, to make radical decoupling cheaper, quicker and easier, but this would include the supply chain for technologies too (e.g. steel for wind turbines, silicon for solar PV etc). It is not clear how far into the wider economy such productivity increases would go, and so how big the labour displacing impacts would be. It is not clear if you can have rising productivity in just a few parts of the economy in the absence of technical change elsewhere, and if you can in theory, how you might organise it institutionally.

These issues are not really broached in the book. The reason why they matter is that such an economy, as argued above, would not be a capitalist economy as we know it. This might not matter in theory, but it raises the huge question (on which more below) of how the transition to such an economy might be organised politically.

The other possibility for a steady state economy seems to be allowing innovation and increasing labour productivity in the economy, but resolving the tension with economic growth not through rising unemployment, but by sharing the work around through labour sharing or a shorter working week. Presumably to avoid a collapse in demand (this is a steady state economy remember) total pay would remain the same even though hours of work would reduce.

The issue with this version of the steady state economy is that innovation and increasing labour productivity are long-term trends, which implies that over time, the working week would have to get shorter and shorter if economic growth is to be avoided. At a 2% increase in labour productivity a year, the working week would become the working day after 40 years, and the “working hour” after 180 years! This seems a little unrealistic, and it’s not clear that an economy organised like this would actually maintain increasing labour productivity. In any case, there is again no discussion of a political route to such a world (companies are liable to object as the fixed costs of employing people would go up and up as a proportion of their total labour costs, for example).

This brings us neatly finally to the third problem with PWG: politics. Jackson does have some discussion of the need for our old favourite “political will” towards the end of the book, and there are some examples of concrete ideas (e.g. shorter working week, ban advertising aimed at children), but there is basically no political strategy. Indeed, the argument is framed in terms of the need for “social and economic change” and “governance”, but not politics at all.

The key question is how we are supposed to get from where we are to where he wants us to be. Jackson acknowledges that at the moment, many people want growth (or more precisely, economic stability) and so demand it of politicians, who then have a political incentive to deliver it. The quandary (not really acknowledged) is which strategy to adopt in this situation.

Do you first reshape the economy to deliver economic stability without growth (e.g. by a shorter working week), which then demonstrates to people socially and politically that growth isn’t necessary for a good life, or do you first have to bring about major social change, moving people away from consumerism, as a precondition for transforming the economy and making the end of growth politically feasible?

The discussion in chapter 11 of the book sort of implies that Jackson is thinking in terms of the latter route, but it actually has no strategy. He lays out (some quite conventional, even dare I say it, already proposed by economists) policies like carbon taxation and the aforementioned shorter working week but there is nothing on political narrative. The closest we get to a strategy for social transformation is banning advertising aimed at children (also a theme of Tom Crompton’s) and policies to drive greater durability of products.

A counterview might be that all these changes are needed, and it doesn’t matter so much what happens first, that they all reinforce each other etc etc. But I don’t think that’s enough. The political party in the UK that comes closest to offering the Jackson vision is the Green Party. They got 1% of the popular vote in the 2010 general election, and one MP. What stronger evidence can there be that the vision on its own is not enough?

A final point takes us back to equity (see previous post), but this time within rich countries. Certainly within the US and the UK, a large group of people in the low-to-middle part of the income distribution have seen their real incomes stagnate or fall over the last decade, as the rich have got richer. Telling this “squeezed middle” that economic growth is to end is not going to go down well unless there is a credible strategy for redistribution. That’s why a good initial step for a more sustainable economy might be a set of good old-fashioned social democratic policies on tax and spend.

Prosperity without Growth raises some very important questions, and Tim Jackson shows how tight a squeeze we are in. But the book leaves some even more crucial questions hanging. Of course ending economic growth in rich countries would make a solution to ecological limits a bit easier, but this would play only a small role. In the absence of radical technological change, only serious “de-growth”, what Kevin Anderson and Alice Bows call “planned economic recession” would be sufficient to bring about the cut in emissions needed. With rapid growth in poor countries this conclusion is even stronger.

So what we should be focusing on is achieving that technological change. Yes, it hasn’t materialised so far, but nor have the policies for low carbon innovation we need to produce it – like Gandhi’s Western civilisation, the low carbon revolution would be a good idea. And yes, getting those policies in place will require political effort. But that effort will be as nothing compared with the political challenge of replacing capitalism with a new steady state system either lacking innovation or with a disappearing working week.

Perhaps the most fundamental, indeed philosophical issue here is that, despite the fact that Jackson has made a good effort to make an argument about limits into an argument about quality of life, his underlying message is (pace Obama): “No, we can’t”. But beyond the environmentalist camp, this message will not work. In the face of the biggest collective challenge that humanity has faced, we need a narrative that has the human potential to solve problems, and overcome apparently unbeatable odds, at its heart.

Very very briefly, PWG says that economic growth cannot continue without doing serious damage to our ecology (especially through climate change), that we don’t need to be rich to be healthy and well-educated, and that, far from making us happy, spending money makes us unhappy and insecure. You won’t be that surprised to learn that he goes on to say that another world is possible – the world of a no-growth, steady state economy, which can exist within ecological limits and in which we can flourish.

There are one or two similarities between Prosperity without growth and Growth isn’t possible. They share many of the same themes and pretty much the same conclusion, for a start. PWG also shares the irritating (to me at least) tic of dismissing economics as “ecologically illiterate”, and then going on to selectively cite economists (in this case Dieter Helm, Sen, Nordhaus and Tobin) where they lend support to the argument, and to call for policies (e.g. a carbon tax) that economists have been banging on about for years. There’s no mention here of the huge literature on the economics of exhaustible resources going back at least to Hotelling, nor Kuznet’s warnings about the limits to GDP as a measure, nor Partha Dasgupta’s pioneering work on natural capital and the greening of national accounts. Not the best way to start a debate with a pretty powerful professional group…

But moving swiftly on, unlike the NEF offering, PWG is a serious book. Indeed, it is popular precisely because it is the most eloquent and well-developed version of the environmentalist view of the world around at the moment. There is no opaque modelling, and there is a serious attempt to understand the nature of growth rather than just attack it. Some of his numbers on growth and carbon emissions pose some really challenges in a very clear and direct way. At the same time, Jackson acknowledges that ending growth would not be easy, and would not solve all problems. He tries to think through how a no-growth economy might work. He even offers some ideas about policy.

There’s a lot in the book, and here I’m going to focus on what I think are the core arguments about ecological limits and the nature of economic growth. I also think there are weaknesses in the ‘happiness’ agenda and in Wilkinson and Pickett’s The Spirit Level, which Jackson also stirs into the pot, but for more on those issues I’d recommend reading critiques by Paul Ormerod and John Goldthorpe respectively.

Jackson raises some difficult questions for the view that continuing economic growth in the West is compatible with abiding dangerous climate change, but in three areas I think the book dodges some fundamental issues, each one following on from the next. They are, in turn, the debate on decoupling, the nature of capitalism vs. a steady state economy, and the politics of it all. This post will tackle the decoupling debate, while Part 4 will look at the other two areas.

The decoupling debate

At the core of the book is the argument that it is “delusional” to believe that capitalism’s potential to improve efficiency will be able to decouple economic growth from carbon emissions in time to avoid dangerous climate change (Jackson takes that to require stabilisation at 450 ppm by 2050). The argument goes like this. Growth (or decline) in emissions depend by definition on the product of three things: population growth (numbers of people), growth in income per person ($/person), and on the carbon intensity of economic activity (kgCO2/$). This last measure depends crucially on technology, and shows how far growth has been “decoupled” from carbon emissions. If population growth and economic growth are both positive, then carbon intensity must shrink at a faster rate than the other two if we are to slash emissions sufficiently.

Jackson calculates that to reach the 450 ppm stabilisation target, carbon emissions would have to fall from today’s levels at an average rate of 4.9% a year every year to 2050. So overall, carbon intensity has to fall enough to get emissions down by that amount, AND offset population and income growth. Between now and 2050 population is expected to grow at an average of 0.7% and Jackson first considers an extrapolation of the rate of global economic growth since 1990 – 1.4% a year – into the future. Thus, to reach the target, carbon intensity will have to fall at an average rate of 4.9+0.7+1.4 = 7% a year every year between now and 2050. This is about ten times the historic rate since 1990.

Pause at this stage, and take note that if there were no further economic growth, carbon intensity would still have to fall at a rate of 4.9+0.7 = 5.6%, or about 8 times the rate over the last 20 years. To his credit, Jackson acknowledges this – as he puts it, decoupling is vital, with or without growth. Decoupling will require both huge innovation and investment in energy efficiency and low carbon energy technologies. One question, to which we’ll return in part 4, is whether and how you can get this if there is no economic growth.

But also note that the difference between business as usual and no growth is the difference between an 8-fold and a 10-fold acceleration in the rate of decoupling. Economic growth plays much less of a role than the basic need to decarbonise. It’s possible to argue that if we can make the technological breakthroughs and huge investments needed to speed up decoupling by 8 times its current rate, we will be able to achieve a 10 times acceleration.

Can we make these breakthroughs?  That’s a good question, and Jackson makes a lot of it. A 7% per year increase in efficiency over 40 years sounds very daunting, but technology breakthroughs can actually produce improvements equivalent to this, although usually with very big jumps, followed by smaller incremental changes over a longer period. For example, the introduction of the basic oxygen furnace in steelmaking increased labour productivity by 1,000% over 80 years, equivalent to around 9% a year, and cut the time required to make a given volume of steel by over 90%.

But Jackson doesn’t stop there. He goes on to point out that taking historical economic growth as a basis for the future means you accept a very unequal world. If we are serious about fairness, and poor countries catching up with rich countries, then the challenge is much, much bigger. In a scenario where all countries enjoy an income comparable with the EU average by 2050 (taking into account 2% annual growth in that average between now and 2050 as well) then the numbers for the required rate of decoupling look like this: 4.9% a year cut in carbon emissions + 0.7% a year to offset population growth + 5.6% a year to offset economic growth = 11.2% per year, or about 15 times the historical rate.

[Methodological note: Since Jackson is talking about equity in living standards, he should be basing the discussion of catch up and growth on a purchasing power parity calculation of GDP. It’s a not clear from Jackson’s presentation whether he’s done this, but if he has made the calculations based on GDP on a nominal exchange rate basis, then this overstates the required catch-up growth by a factor of about 3.]

Interestingly, Nancy Birdsall and Arvind Subramanian over at the Centre for Global Development in Washington explored similar numbers as Jackson back in 2009, and came to the c0nclusion not that growth in OECD countries should stop, but rather that “very large, probably revolutionary, improvements” in carbon intensity are needed.

There is a reason why this picture may not be quite as daunting as it appears. In this exercise, the vast majority of growth will happen in developing countries. Places like India and especially China already have a big fossil fuel infrastructure. But in many countries, and even in India, the majority of people still do not have access to electricity. For these people, there are no big fossil fuel plants to close down, and there is a huge opportunity to build a low carbon energy system almost from scratch. Their growth wouldn’t need to be decoupled from carbon, it just has to be low carbon. Brazil until recently is a good reminder of this – not particularly for climate reasons, it has followed a low carbon path. Most of its electricity comes from hydropower) and it uses sugar-cane ethanol for transport fuel. Brazil’s GDP (ppp) per head is $11,300 (about one third of Britain’s) and its energy carbon intensity of GDP is 0.181 kgCO2/$, compared with the UK’s 0.258 kgCO2/$.

Again, the more innovation we get in low carbon energy technologies, the cheaper and easier such low carbon growth will be. Look at some numbers. Installed capacity per head in Africa (including North Africa) is 0.117 kW, compared with the UK’s 1.4kW. To make up the gap using, say, solar PV, so that every African enjoyed the same capacity as each Brit, and taking into account solar PV’s low capacity factor (say 0.15 in the tropics), this would require an investment of 8,550GW of solar PV. Since 2001, the retail price of solar PV modules has halved, from $5/watt to around $3/watt in 2011, because of cheaper silicon, technological improvements and economies of scale in manufacturing, making that investment some $17 trillion cheaper than it would have been 10 years ago (these astronomical figures also show how expensive solar PV remains, however).

A final but important point. When looking at this kind of poor world catch-up scenario, the influence of economic growth on the required rate of decoupling is much bigger than when we are looking at a growth-as-usual scenario. The case for slowing or stopping global growth is much stronger, in terms of the difference it makes to being able to reach the carbon targets, when we are talking not about just BAU growth in OECD countries, but much higher growth in developing countries.

But then it is not exactly clear what Jackson is proposing. At various points he seems to acknowledge the need and the historical right for developing countries to have economic growth. But at the same time he is saying that it’s incredible to believe that efficiency gains can accelerate decoupling 15 fold. If OECD countries stop growing, that would help, but as we’ve seen, not a lot. They’ll continue to emit carbon at near the current level, as shown in a steady state economy model of Canada that he introduces later in the book. To make a more serious difference, and keep global economic growth low or zero, OECD countries would have to try to find prosperity not only without growth, but with a 75% reduction in their economies, as Jackson hints at one point. Such a mixture of rapid economic growth in some places and rapid decline in others might make it more feasible to meet carbon targets, but it’s clearly not what he really has in mind when he is talking about his alternative “steady state economy”. But does that mean he thinks that poor countries shouldn’t reach EU levels of income, and perhaps only aspire to thresholds levels at which better health and life expectancy outcomes are typically reached (in the region of $6,000-15,000/head)? The basic issue is even if you stop growth in the OECD tomorrow, if you want to meet the ecological constraint, you still need some combination of unprecedented increase in the rate of technological change and low carbon investment, and/or an unfair global distribution of income. Jackson’s headlines are all about the first issue, but what about the other two, bigger, issues?

“Current levels of public expenditure for RD&D [research, development  and deployment] should be regarded as a minimum and cuts would be detrimental to the achievement of our climate goals and the new Government’s objective to build a green economy. UK energy RD&D funding is low by international standards, and international funding is low relative to benchmarks proposed by the Stern Review, the IEA and the EU (e.g. IEA analysis suggests that a two to fivefold increase is required).”

The CCC estimates that current spending on low carbon RD&D in the UK is around £550 million, including spending by higher education research councils. this is a tiny amount in the context of this year’s deficit of over £150 billion.  But more importantly it is the kind of investment in our future economy and environment that should be the last thing to go.

Sad then, that the CCC report came out three days after the cuts we outlined in Monday’s post.

A post from guest blogger Reg Platt

As regular readers will know Political Climate thinks the focus of climate policy should be on innovation to reduce the cost of low-carbon technology rather than on forcing up the cost of carbon intensive energy. But, innovation is not straightforward and more money does not necessarily mean the right results. This is lesson coming out of two recent events I attended, the first a Green Mondays event on ‘disruptive’ innovation and the second a speech by Sir Harold Evans at the RSA on The Spirit of Innovation.

Three points stand out.

First, what sort of innovation? Is incremental innovation enough? Not if you listen to Hugo Spowers of River Simple. Their aim is to eliminate the environmental impact of personal transport. According to Hugo incremental improvements to the efficiency of cars is not enough. What is needed is a whole new business model, beyond selling a car as a product, to selling mobility as a service. This is innovation as ‘whole system design’.

Second, who can achieve this kind of innovation? According to Ramon Arratia from InterfaceFLOR (it won’t be the existing players in a sector. He explained how his company developed a far more sustainable option for sticking down tiles than all of the existing adhesives on the market. Their innovation – to do away with the adhesive altogether and instead use a form of sticky tabs. Is it realistic to expect an adhesive company to uninvent the adhesive? Or for a car manufacturer to completely reconfigure there existing, highly profitable business model? For Ramon disruptive innovation will only emerge from companies moving into lateral markets – not from existing players.

But the overriding lesson from both events was the need to be comfortable with failure. Sir Harold explained how it took James Dyson 5000 experiments before he came up with a working model of his now ubiquitous dual cyclone bagless hoover. Innovation is a trip into the unknown, and when you don’t know where you are going it’s easy to go the wrong way. This is where it gets hard for government: as the swingeing cuts kick in Government is going to feel the need, more so than ever, to show a return for every penny being spent. So, as we make the case for investment in innovation we need to think: what sort of innovation do we need? Who are the right people to make it happen? And have we got the stomach for the inevitable failures we will encounter on the way?

There is no other country quite like India. As the World Bank’s country overview shows, while poverty rates have been reduced in the past two decades, more than one quarter of the rural and urban population remain poor in absolute terms.

The other big story at the macro level in India is inequality. In the same World Bank data set, it is noted that the country’s richest states have average incomes five times higher than its poorest states. Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh (known pejoratively as BIMARU) have human and economic development data more akin to least developed countries than to one of the world’s major economies.

As noted elsewhere on this blog, decarbonisation is primarily an energy challenge. In India, 400 million people regularly lose power in outages and less than half (44 per cent) of rural households have access to electricity. A very good Wikipedia page has all the relevant data and links. India’s political economy is thus much about energy; the challenge, which is of importance to the current government whose mandate comes particularly from rural voters, is to ensure that its rural poor have access to electricity (or at least that the job is in hand).

According to Dr. Ritu Mathur at The Energy and Resources Institute (TERI), who sits on the 26-member expert group advising India’s Planning Commission, India must expand electricity generation from its current installed capacity of less than 150GW to around 800GW by 2030. TERI’s recent submission to the Indian PM on energy security (apparently not available online) is well worth tracking down. This and other recent work on energy supply and security in India pose a mighty elephant of a question: Is it possible for India to find the energy it requires from conventional, fossil sources?

TERI’s answer to this question is an effective ‘no’. Its submission to the PM suggests that under a business as usual scenario, by 2031/32, India would be almost 80 per cent reliant on imports of fossil fuels. Alternatively, the report argues, under a highly ambitious renewable energy-based scenario (which would also reduce India’s per capita carbon emissions to 1.24 tonnes), India could constrain its fossil fuel import dependency to around 30 per cent. However, this scenario is around two-thirds reliant on solar power.

TERI has used the MARKAL model to crunch its scenarios. The credibility of this model notwithstanding, it would be fair to say we simply cannot fully know the impact that such a huge demand for fossil fuels (especially when multiplied several times due to equivalent demand growth elsewhere in Asia and perhaps also in Africa and Latin-America) would have on world prices. Equally at current costs, such an immense amount of solar in India’s energy mix would take domestic energy prices way beyond the reach of the very people the expansion of supply is intended to serve. The national and geo-politics of this are mind-boggling.

PM Singh recently launched India’s solar mission, which has a not-to-be-sniffed-at ambition to install 20GW of solar power by 2022; equivalent to more than one-quarter of the entire installed electricity generating capacity of the UK. For understandable energy security reasons and to reach the places the grid will not reach, India is already going for solar in a big way. However, India’s electricity production cost, also according to TERI (2007), is between 2 and 6 Rupees per unit and solar electricity’s unit costs are between 15 and 30 Rupees. The Government estimates the solar mission will cost $19 billion (India solar geeks should check this Wikipedia page).

Climate negotiations tend to focus on whether countries such as India (and to reiterate, apart from India, there is no country such as India) can be persuaded to take on some form of quasi-binding emissions limitation target. Political Climate’s view – especially after our few days in Delhi – is that it would be far better to engage in a technology-specific negotiation. With 300 clear sunny days per calendar year, solar is the obvious priority (although there would and should be others). So the key India question is; what can international cooperation achieve in dramatically reducing the unit cost of electricity from solar?

Until the climate negotiations or other global processes focus in on the aspects of the debate that really matter to the political economy of major emitters (and those with the potential to become so, which is how India would see itself) countries ‘such as India’ are unlikely to be moved. Why would they be?

It’s hard to reflect on the shortcomings of conventional environmental wisdom without sounding negative, but this blog’s main aim is to contribute towards a renewal in thinking about climate change. Indeed, it is our desire to see the negative language and imagery of climate change replaced by a resolutely optimistic debate.

The ‘About‘ link above will take you to a longer explanation of our aims. We are also developing a Political Climate manifesto and a set of proposals for work in areas in which thinking needs to be developed, such as innovation policy and finance. In the meantime, we’ve been working on the appearance of the site and we owe its new smoothness to Lawrence. If you like what you see, we urge you to sign up to receive notification of new posts using the box at the top of the column on the right-hand-side of the page.