India to Benefit from Global Carbon Incentive

Chennai: India will be one of the major recipients of the ‘Global Carbon Incentive’, a fund proposed by the World Bank that will make countries pay for their emissions above the global per capita average and receive money for emitting below the average. As of the current levels, India may receive $37.16 billion annually while the largest emitter, the US will have to pay $37.92 billion.

The working paper by a group of experts including former RBI governor Raghuram Rajan proposes an objective way of estimating and allocating “differentiated” responsibilities for carbon emissions across countries. Under the Global Carbon Reduction Incentive, every country that emits more than the per capita global average pays into a global incentive fund. This annual payment will be calculated based on the “excess” emissions per capita, the country’s population, and a dollar amount called the Global Carbon Incentive. Countries below the global per capita average would receive a payout commensurate with their “under-emission.”

The United States and China are the two biggest emitters and, assuming a Global Carbon Incentive of $10, they jointly would contribute more than $70 billion to the fund. Estimating 4.61 tonne per person as the global average, the US has to pay $37.92 billion and China has to pay $34.96 billion. Though India is the third largest emitter, its per capita emission is lower by 2.78 tonne than the global average and so is eligible for receipt of $37.16 billion annually.

Countries such as India, Nigeria, Pakistan, Bangladesh, and Indonesia would be the major recipients. An important adjustment to the Global Carbon Reduction Incentive is to focus on consumption rather than production—a country should not avoid responsibility for the carbon it consumes by outsourcing production to another country. The proposal also considers methane emissions as well as crediting countries for their efforts toward preventing deforestation.

Further, every country would face a loss of $10 per capita for every ton by which they increase per capita emissions, whether they are at a high, low, or average level today. Low emitters, which are often the poorest countries and most endangered by climatic changes they did not cause, get a payment, which they can use to help their people adapt.