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Letter to concerned ministers on fossil fuel subsidies


To

Sri. Piyush Goyal
Union Minister for Coal, Power and Renewable Energy
Govt. of India, New Delhi

Copy with complements:
Sri. Prakash Javadekar
Union Minister for Environment, Forests and Climate Change
Govt. of India, New Delhi

Sri. Arun Jaitely
Union Minister for Finance
Govt. of India, New Delhi

Sri Naredra Modi
Prime Minister
Govt. of India, New Delhi

Dated 22nd  May, 2015

Dear Sri. Goyal,

Greetings from Mysore, Karnataka.

This has reference to the large number of coal power projects being planned, along with the large number of coal mines being auctioned in the country.

Whereas the civil society organizations in the country have been expressing their serious concerns on social and environmental impacts of relying on coal power, even the economic issues of coal power has come to the fore in recent years.  A hugely authoritative report by IMF few days ago has focused on the unbelievably large subsidies being provided to fossil fuel companies. It says that the fossil fuel companies are benefitting from global subsidies of $5.3tn (£3.4tn) a year. A related article in The Guardian of UK is as in the link below.

Fossil fuels subsidised by $10m a minute, says IMF

<http://www.theguardian.com/environment/2015/may/18/fossil-fuel-companies-getting-10m-a-minute-in-subsidies-says-imf?CMP=share_btn_link>

The IMF calls the revelation “shocking” and says the figure is an “extremely robust” estimate of the true cost of fossil fuels. The $5.3tn subsidy estimated for 2015 is greater than the total health spending of all the world’s governments, and is about 6.3% of global GDP.

This vast sum is largely due to polluters not paying the costs imposed on governments by the burning of coal, oil and gas. These include the harm caused to local populations by air pollution as well as to people across the globe affected by the floods, droughts and storms being driven by climate change.

Sir Nicholas Stern, an eminent climate economist at the London School of Economics, has said: “This very important analysis shatters the myth that fossil fuels are cheap by showing just how huge their real costs are. There is no justification for these enormous subsidies for fossil fuels, which distort markets and damages economies, particularly in poorer countries.”

Sir Nicholas Stern had made similar observations many years ago in his seminal work “The Economics of Climate Change”way back in 2005. He had said “Emissions have been, and continue to be, driven by economic growth; yet stabilisation of greenhouse-gas concentrations in the atmosphere is feasible and consistent with continued growth.”

(www.wwf.se/source.php/…/Stern%20Report_Exec%20Summary.pdf )

It should be a matter of concern that India with estimated subsidy of $ 277 billions per year, is among the top four countries with such heavy subsidies. Ending such subsidies is expected to slash the number of premature deaths from outdoor air pollution by 50% – about 1.6 million lives a year at the global level. A study by Conservation Action Trust and Urban Emissions (Pvt. Ltd.) in 2014 has found significant impacts from the existing fleet of coal fired power plants in India, including between 80,000 and 115,000 deaths annually due to exposure linked their particulate emissions in 2011-12.

The latest analysis of the related issues by Sir Nicholas Stern in the context of IMF report is as in the link below.

Dirty air and disease: why we must end the subsidy of fossil fuels

http://www.theguardian.com/commentisfree/2015/may/20/dirty-air-disease-end-subsidy-fossil-fuels-imf

Among other things Sir Nicholas Stern says:”… So the costs of fossil fuels are paid through the death and illness of present and future generations. That is why it is so important to create a level playing field for alternative energy sources and help to propel our economies away from their dependence on dirty and expensive fossil fuels.  To achieve this, direct subsidies for the production and consumption of oil, coal and gas must end. But governments must also start to implement policies that properly price in the hidden costs of fossil fuels.  This is what a low-carbon transition means for the world, and it could unleash a period of innovation and creativity that would drive prosperity and growth in rich and poor countries alike. “

A welfare society cannot afford to ignore such economic and social issues, even if it does not care adequately for environmental issues.

A serious consequence of removing such vulgar subsidies would be that the need for subsidies for renewable energy – a relatively tiny $120bn a year – would also disappear, if fossil fuel prices reflected the full cost of their impacts.

It goes without saying that coal sector in India is a major beneficiary of such a level of unscientific and unsustainable subsidies.  It should also be a matter of great concern to a welfare society that much of such subsidies are reaching a tiny section of rich and upper middle class people, despite the fact that a large percentage of our population is said to be poor.

It is worth remembering that IPCC (AR5) has come to the conclusion that in order to limit the global warming to less than 2 degree C, more than 80% of all the fossil fuel reserves should be left in the ground.

It would also be relevant to what MNRE has recently stated. It has said that India has 900 GW (900,000 MW) of commercially exploitable sources of renewable energy if 3 percent of the country’s wasteland is made available. The solar power potential of the country remains largely untapped with only 3 GW of installed power compared with 750 GW of potential.

In contrast a study by the title “Thermal power Plants on the Anvil: implications and the need for rationalization” by Prayas Energy Group, Pune, has discussed in length the social and environmental impacts on our communities from a large number of coal power plants being planned /implemented in the country.  It estimates that the fresh water requirement of the additional coal power plants being planned will be equivalent to the drinking water needs of about 7% of our population and can provide irrigation to more than 900,000 hectares of land each year.

A recent study, “Heat on Power”, done under Centre for Science and Environment’s (CSE) Green Rating Project (GRP), finds the coal power sector’s performance to be way below global benchmarks.  It has listed a number of serious concerns from the perspective of overall environmental degradation.

The issues confronting the power sector in India in general, and w.r.t coal power in particular have been discussed in length in a book “Integrated Power Policy” released in year 2012.  This book has discussed major issues of concern to the society and has analysed how the reliance on projects based on fossil fuels, dams and nuclear power can be drastically reduced, replaced by renewable energy sources, and achieve minimum GHG emissions from the power sector.

In this context it would be unwise not to take cognizance of what is happening at the global state. There has been a worldwide movement going on against the socio-environmental impacts of coal power in the context of global warming.  According to the December 2014 release of Platts World Electric Power Plant database (WEPP), China retired 29,393 MW of existing coal plants from 2000 through 2014, and the United States retired 26,930 MW of existing coal plants in the same period. Between 2010 -14, 118,885 MW were cancelled and an additional 70,140 MW were shelved in China {Source: Global Coal Plant Tracker, EndCoal. Org.}.  In the United States, 20,503 MW of proposed projects were cancelled in the 2010-2014 period and an additional 3,150 were shelved. {Source: Global Coal Plant Tracker, EndCoal. Org.} For the period 2000-2010 in the United States, 110 proposed projects totaling 65,054 MW were cancelled in the United States. (Source: SourceWatch)

In the context of all these clinching evidences, it is impossible to notice any discernible intent of the successive governments in the country to be a responsible global player in reducing the GHG emissions. Whereas it may be necessary for our country to stake its claim to be a member of the UN Security Council, the global community would expect it also to demonstrate that it is a serious global player by taking pro-active role in reducing its total GHG emissions. The country would do well not to stake its position as the second or third largest emitter of GHG emissions; instead it should make all efforts earnestly to go down in the list of total GHG emitters, which is techno-economically feasible.

The IPCC report ‘Special Report Renewable Energy Sources (SRREN)’, has projected a very critical role for renewable energy sources, and hence deserves greater attention for enabling a paradigm shift in our energy policy to address the global warming threats. This report has projected that the renewable energy could account for almost 80% of the world’s energy supply within four decades.

In this context it needs no great emphasis to state that India’s vast potential in renewable energy sources must be appropriately harnessed for all-round benefits.  But even the harnessing of all these potential in renewable energy will not lead to sustainable development unless the gross inefficiency prevailing in the power sector is effectively addressed, and unless a responsible attitude towards harnessing our natural resources is deployed.

The country needs an urgent paradigm shift not only in power sector but in its developmental pathways also.  Such a paradigm shift is feasible only if the civil society groups along with domain experts are objectively consulted at all levels of the governance.

Regards
Shankar Sharma

Power Policy Analyst
# 1026, 5th Main Road, E&F Block, Ramakrishna Nagara
Mysore, Karnataka, India – 570022
Phone: 0821 2462333 & 94482 72503
[email protected]
[email protected]

“I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.” – Thomas Edison in conversation with Henry Ford, 1931

“Injustice anywhere is a threat to justice everywhere.”
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