Market fall and climate change

Every passing day is bringing more bad news on the financial markets and the real as well as psychological impact of this meltdown is deepening. The reaction in the US to the government's bail out plan reflects the real concerns of the common man – what would such a large diversion of tax payers' funds mean to development and investments in necessary infrastructure? It has been rightly argued that allowing a free fall in financial markets would not insulate the not-so-rich or the poor as they too, in one way or the other, would suffer from the collateral damage of such an eventuality. Undoubtedly, the immediate need to address the current real and sentimental problem is urgent. Unfortunately, as with every~ thing regarding the corporate sector where the short term view takes precedence over the long term, it is quite conceivable that in the effort to bailout this sector, governments feel compelled to postpone acting on what is perceived as a long-term priority i.e climate change. This threat is more plausible as the net impact on the less privileged - measured over the geographical spread and time scales - is not all that clear. The vulnerability levels of income impacts at the margin for the poor being as high as they are, they are willy-nilly going to be more deeply affected by the current crisis despite all interventions. In the long run, II the emerging views of experts come true and greenhouse gas mitigation measures in the developed world are indeed on the backburner, we would be committing ourselves to a much higher level of climate change. In such a scenario too, the lives' of the poorer segments in societies across the world will be put on stake – as they are the ones who are the most dependent on and most exposed to the elements of nature. The more optimistic scenario would be to hope that we would learn from recent experiences - the price volatility in international oil prices and this financial crisis – on how to cope with the cost of unpopular (or less-understood?) measures and emerge more capable in dealing with climate mitigation. After all, when oil prices went beyond $140 a barrel, it was tantamount to a carbon tax of at least $80 per tonne!! While oil prices are easing now, the squeeze on credit markets and the economic fallout are having an impact on consumption levels. As we struggle to find our way out of the current mess, can we re-design our future development pattern? Can we put in place a fiscal system that would drive consumption and service provision along a more sustainable path? The important pre-requisite here is that governments in the developed world would not wait for ‘normalcy’, as we know it, to return before turning their attention to addressing the climate problem. One key sector that needs focused attention is the energy sector. The lack of appetite for the consequences of price volatility was obvious in the increased, if misplaced, emphasis on energy security in the US. This may now be compounded by a reduced ability to bear the burden of high prices. Both these factors should increase interest in renewable energy technologies such as solar photovoltaic and solar thermal, wind and biomass, and lend urgency to the mutually reinforcing goals of efficiency improvements and cost reduction. However, OPEC is astutely allowing oil prices to fall in recognition of the real fears of recession. And, the developed world runs the risk once again, as in the mid 1980s, of moving away from investments in renewable energy R&D and its commercialization. Governments in the developing world, including India, also need to start thinking about their own strategies for ensuring that the climate commitments of developed countries do not get sidelined or indeed derailed. One of the biggest challenges that governments in Europe are facing in getting their industry to reduce greenhouse gas emissions is the real fear of becoming uncompetitive in this globalised environment and the migration of industry to the developing world! Unfortunately, there is little succor that .the developing countries cart provide on this -they have lived with the challenge of migration of skilled human resources to the developed world for decades now and, after all, the polluter pays principle recognizes that such adjustments would entail some costs! The Fourth Assessment Report of the IPCC had identified a very narrow window of opportunity for stemming dangerous human interference with the climate system. If we all do not collectively grab this opportunity to correct our development pathways, we may face serious humanitarian crises that could well dwarf the energy and financial crises - the ripple effects of which we may find difficult to recover from!