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Wednesday, March 2, 2016

India and renewables

I hadn't seen this before, but it is certainly significant.  Instead of a carbon tax, India taxes coal directly, both local production and imports.  And they've just doubled this tax. Again.

The coal tax is instead of giving subsidies to renewables, and is designed to reflect the negative externalities of coal.  Its net impact is to make renewables even more attractive.  Solar is already cheaper than imported coal.  Within 5 years it will be cheaper than domestic coal too.  India has already started a rapid shift into renewables   The rise in tax will accelerate this shift.

It's good news.  The world's four largest emitters, China, the US, India and Europe have all started to aggressively decarbonise their economies.  These 4 as a group produce just under 60% of total emissions.  And as the costs or renewables slide, this switch will accelerate.  This is a tipping point. Every year from now on, renewables will get between 10 and 15% cheaper.  Their costs advantage will just get better and better.   Industrial scale solar is now around 5 (US) cents per kWh, wind around 3.6, CSP as low as 10 cents.   These are lower than or close to coal (9.5 cents per kWh)  and gas (7.5 cents per kWh) (Source.  Note that the costs for renewable sources in the data table seem to be way out of date, or at least, differ substantially from recent signed contracts)

18 months ago, I argued for an absolute cut in developed country emissions of 4% a year, if we were to get to zero emissions by 2100.  I think we have to do better than that, given the recent acceleration in global temperature increases.  I'd like to see a 75% cut by 2050, which for the world as a whole is a cumulative 6% per annum.  For developed countries, my guess would be that to allow for some growth in developing countries, the decline would have to be more like 8% per annum.  That won't happen short term, because the percentage of renewables has to ramp up.  But for places like Germany, already at 40% renewables in their grid, a rise of 4% a year (the recent rate of inrease) in the percentage of electricity generated from renewables will mean zero emissions from electricity in 15 years.  If we can replace petrol and diesel transport with EVs then a 75% cut by 2050 in total emissions will be easily doable.

 I am now convinced that this will happen, because renewables costs are falling so rapidly, and because after the Paris Climate Agreement, the world has finally realised that something must be done.  India is showing us how.

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