Topic 1 : Bad weather report
Introduction: For the better part of 2023, it was all but certain that the year would be the warmest on record.
The rise in global temperature in 2023
- Beginning June, the average global temperature registered a record high every month.
- Now the EU’s Copernicus Climate Change Service (CCS) has confirmed that in 2023, the planet was 1.48 degrees hotter than the period when the large-scale burning of fossil fuels commenced.
- Scientists at the CCS have warned that the 12-month period ending in January or February 2024 could be 1.5 degrees above the 1850s.
- This does not mean that the threshold set by the Paris Pact is likely to be breached soon — the landmark agreement pertains to averages over a much longer time.
- But the weather pattern this year sets a worrying precedent, especially because the average temperature in 2023 was 0.17 degrees higher than in 2016, the previous record year — in global warming terms, a very large increase.
The efficacy of decarbonization methods
- By all accounts, renewable energy installations have increased appreciably in the past five years.
- However, this does not seem to have had a meaningful impact on the decarbonization of the planet.
- CCS data show that GHG concentrations in the atmosphere reached a record level in 2023 — this along with El Nino has driven most of the warming.
- The rate of increase in methane emissions was lower than in the past three years.
- But carbon dioxide in the atmosphere increased at a rate similar to that observed in recent years, indicating that RE deployment is being offset by the use of unclean energy.
- Blaming the Third World and emerging economies for this increase in the emissions burden would be simplistic, and unfair.
- According to a study published in the journal Nature last year, historically, the combined share of emissions (1850-2021) of the US and the EU is more than 32 per cent.
- India’s share, in contrast, is less than 3.5 per cent.
How India can contribute to decarbonization?
- India’s remarkable growth in total RE capacity in the last nine years –from 35 GW in 2014 to close to 180 GW — means that it is well placed to attain its goal of 500 GW RE capacity by 2030.
- However, like most parts of the world, India is yet to develop technology that enables storing of excess energy when the sun isn’t shining or the wind isn’t blowing.
The fallout of US-China rivalry on decarbonization
- In recent times, the US-China rivalry has hobbled RE supply chains.
- Last year, China wielded its national security rules to impose export bans on rare earth minerals — it dominates the world market in these commodities that are critical to the green energy transition.
- In a somewhat similar vein, the Biden administration has blocked US subsidies to Chinese battery manufacturers.
- In the last two months, the two countries have indicated their willingness to overcome tensions on the climate front.
- The weather record of the last year indicates that climate diplomats, especially in the big powers, need to be much nimbler.
What more can be done?
Individuals:
- Reduce personal carbon footprint
- Support decarbonization initiatives
- Spread awareness
Businesses:
- Invest in renewable energy and energy efficiency
- Develop and offer sustainable products and services
- Transparently report on sustainability progress
Governments:
- Implement strong carbon pricing policies
- Invest in renewable energy infrastructure and research
- Set ambitious emissions reduction targets and enforce regulations
- Foster international cooperation
Financial institutions:
- Shift investments towards sustainable businesses and projects
- Develop and offer green financial products and services
- Advocate for responsible environmental policies
Academia and research institutions:
- Conduct research on decarbonization technologies and solutions
- Educate the next generation about climate change and sustainability
- Collaborate with industry and policymakers
Conclusion: This confirmation that 2023 was the hottest year should lend urgency to decarbonization, and efforts to plug gaps in renewable energy.
Topic 2 : A plan to measure
Introduction: The logistic cost in India has been more than its peers. Lately, a more data-driven calculation of logistic cost has been started in India, which will give the exact estimate of the cost of logistics as a percentage of GDP.
The existing logistic performance indicators and India’s performance
- The World Bank has a Logistics Performance Index (LPI) with a focus on trade logistics.
- This is based on six heads of customs, infrastructure, international shipments, logistics competence, tracking and tracing, and timeliness.
- In the 2023 LPI, India is ranked 38 out of 139 countries.
- In 2014, India was ranked 54.
India’s vision to improve logistic performance
- Targets for achieving the vision of the National Logistics Policy are to -
- Reduce cost of logistics in India to be comparable to global benchmarks by 2030;
- improve the Logistics Performance Index ranking — endeavour is to be among top 25 countries by 2030; and
- create data-driven decision support mechanism for an efficient logistics ecosystem.
- In addition, there is PM Gati Shakti, which was launched in 2021.
- Because of understandable time lags, the impact of this doesn’t show in LPI 2023, but will, eventually.
Estimates of logistic cost in India and their limitations
- A cross-country ranking of logistics performance is one thing, estimating logistics cost is another.
- As per Economic Survey 2022-23, India’s logistic costs have been in the range of 14-18 per cent of GDP against the global benchmark of 8 per cent.
- In 2018, there was a port logistics report by Dun and Bradstreet (D&B), which found that the cost of doing business at sea ports was around 15-16 per cent of the consignment value — there was wide variation across ports.
- In 2020, there was a CII-Arthur D Little report on India’s supply chain which quoted logistics costs in the Indian supply chain amounting to almost USD 400 billion, or 14 per cent of GDP.
- A comparison with global peers shows that logistics costs amount to 8-10 per cent of GDP in the US and Europe, and 9 per cent in China.
- The global average is close to 8 per cent of GDP, which reveals a competitiveness gap of USD 180 billion for India.
- Other South-Asian countries, such as Thailand and Vietnam, also have high logistics costs.
- These countries’ costs reach 14 and 16-17 per cent of GDP, respectively.
- The D&B methodology was clear. In any event, it computed the cost of doing business as a percentage of the consignment value.
- But when it comes to logistics costs such as the percentage of GDP, since methodology isn’t clearly explained, numbers seem to be plucked out of thin air.
Recent efforts in calculating the logistic costs: NCAER report
- A recent (December 2023) report by NCAER on logistics cost in India is precise in its methodology and estimation.
- In 2021-22, logistics costs had an estimated range of between 7.8 per cent and 8.9 per cent.
- In 2014-15, they had an estimated range of between 8.3 per cent and 9.4 per cent.
- There has been a decline over time (with a transient increase in 2017-18 and 2018-19).
- It cannot be anyone’s case that this new NCAER report is the last word on the subject.
- But it is a beginning, with a clear methodology.
- And two points emerge: First, logistics costs aren’t as bad as they are often made out to be, and second, they have declined over time (also evident from LPI).
Logistic performance of Indian states
- Logistics, good or bad, are driven by states and the commerce ministry has a LEADS (Logistics Ease Across Different States) report based on perceptions.
- The 2023 version was released in December.
- Since states are heterogenous in the reporting, they are divided into four groups — coastal, landlocked, north-east and UTs.
- States that do well are called achievers.
- States that are middling aren’t called average. They are called fast movers.
- States that are sub-par are called aspirers.
- Among coastal states (75 per cent of export cargo is estimated to originate from them), the ones that do well are Andhra Pradesh, Gujarat, Karnataka and Tamil Nadu.
- The ones that lag are Goa, Odisha and West Bengal.
- While India’s logistics performance may have improved over time, that’s not true of every state.
- Some have slipped. Most states have a state-level logistics policy, including Goa and Odisha.
- West Bengal, bottom of the pecking order in the coastal category, doesn’t have one.
Conclusion: Logistics has been talked about for a long time and India has also focused on improving performance. We are now getting some precise data on measurement and quantification. That helps.