Fall 08 Climates of Change: Sustainability Challenges for Enterprise Smith School Working Paper Series November 2013 23 October 2009 Working Paper 09-03 India and climate change mitigation Dr Vijay Joshi, St John’s College, University of Oxford Dr Urjit R. Patel, Reliance Industries Ltd, Mumbai and Brookings Institution Editor: Dr Mick Blowfield
[email protected] Author : Dr Vijay Joshi & Dr Urjit Patel Climates of Change: Sustainability Challenges for Enterprise Smith School Working Paper Series India and climate change mitigation Dr Vijay Joshi, Dr Urjit R. Patel From The Economics and Politics of Climate Change, edited by Dieter Helm and Cameron Hepburn, OUP, October 2009. I. Introduction While global warming can be argued to be a matter of urgency, it is also a long- horizon, protracted transformational challenge distinguished by a ‘cascade of uncertainty’, encompassing climate science, technology breakthroughs, and economic thresholds. The volatile (or fickle) economics can be appreciated within contemporary developments, for example, when the fluctuation in oil prices in 2008 is juxtaposed with the affordability of alternatives; petrol at US$4/gallon means that a hybrid petrol-electric car would pay for itself in 2–3 years, but at below US$2/gallon, the payback is 7–8 years. Since natural gas prices are tied to oil prices, the recent sharp decline in these prices has thrown into doubt the economics of forms of (cleaner/low-carbon-emitting) generation that compete with natural gas, including nuclear and renewables such as solar and wind.1 An even more important backdrop for the goal of climate stabilization, is the current bleak outlook for the global economy; it is unclear whether the (OECD) constituency for pricing carbon (either through a direct levy or a cap-and-trade) will have the stomach to accept, when 1 Price evolution of other commodities over the business cycle, on the other hand, has helped alternatives recently.