carbon emissions

EURO ZONE SUMMIT

Euro Zone summit

1.       Euro zone summit took place in Brussels.

2.       The Euro zone leaders intend to revise the EU Treaty in regarding the Euro Zone financial crisis.

3.       The proposal would obligate all countries in single currency to write a GOLDEN RULE to balance their budgets in their constitutions. The new rule will introduce automatic sanction for country which breaches a deficit limit of 3% of GDP.

4.       It would bring out ESM bailout fund by the year to 2012, allow taking decision by qualified majority and modified status to make clear that a debt write down for Greece was a one-off.

Stands of different countries:-

Germany Stand:-

·         Germany has been in favor of fully automatic sanctions (in case any country breached the new fiscal rules) with national budget submitted or balanced for review by a supranational technocrat as a means of restoring confidence in the currency block. Berlin dropped its demand for European court of justice to have the power to prosecute the rule breakers.

France Stand:-

·         France has favored more flexible and governed approach. It wants to retain the inter governmental approach; never minded such an approach has been founded wanting.

Brittan Stand:-

·         Brittan is not in favor of revision of European treaty that will allow Brussels to exercise greater budgetary and fiscal control, because according old European treaty one country cannot bail out other country debt, which may lead to loss of financial sovereignty of that nation. Brittan had its apprehensions regarding this.

Outcomes of the Summit:-

1.       Euro zone state budget should be balanced or in surplus.

2.       The annual structure deficit should not normally exceed 0.5% of GDP.

3.       If any euro zone member is in breach of 3% debt ceiling there will be automatic sanction including possible sanctions.

Who is going to play big role?

1.       The private player i.e. Read banks especially European central bank (ECB) has a major role to play. ECB welcomed the deal but gave no hint that it was prepared.

2.       The only question that the market is currently asking is whether the political deal open the way for more forceful intervention by the ECB in sovereign debt market. It was not clear what ECB would do.

3.       What was clear was the Euro zone governments are counting on the ECB to sail to the rescue.

THE POWER PICTURE

Need for positive, clear-headed reform measures

Andhra Pradesh, Kerala, Tamil Nadu, West Bengal, Delhi, Haryana, Uttar Pradesh, Madhya Pradesh, Maharashtra… no, this is not a listing of States with high growth. These are States that imposed rolling power cuts as late as in October, well after autumn had set in.

In fact, Tamil Nadu still has power cuts for periods ranging from 1-3 hours across the state. So, what's new, you might ask. Aren't power outages a fact of life in India?

Well, the difference this time is that it is happening not during the height of summer but during winter, a period of relatively low demand. Second, the duration of the power cuts is longer than what was faced during the summer.

The frightening fact though is that this could just be a taste of things to come unless the government takes corrective policy measures to clean up the mess in the power sector. What ails the industry?

There are two mainly. First, a conundrum over fuel, which, even a couple of years ago was non-existent. And second, a mess created by the inability of state electricity boards and distribution utilities to charge consumers the right price for the electricity they consume leading to losses.

Fuel trouble

As a country we may be tapping every available source of power generation but sadly all those sources are mired in problems either due to faulty policies or resource constraints or simply inept implementation. Thermal power is the most critical for India , yet that is where we seem to have messed up the most.

Thanks to protective policies on coal mining in the country, coal output is unable to keep pace with the growth requirements in power. In the first four years of the current Plan period ending 2012, coal demand, mainly for power generation, grew by 7.3 per cent but coal output grew by just 5.4 per cent.

In the coming XII Plan period (2012-17), the projected coal deficit is 200 million tonnes and the sector to suffer the most will be power generation. Though 194 blocks have been allotted for coal production to public and private companies, only 28 have commenced production. This is mainly due to problems of environmental clearances and “no-go” policies for mining.

Imports were an option till recently, but not anymore. Countries such as Indonesia that have large coal reserves are clamping down on exports and making it more expensive and difficult for buyers. Indian companies such as Tata Power, Reliance Power, the Adanis and others who have a toehold there are now finding their toes crushed by the weight of the Indonesian government's policy to tax exports.

The options are just two: push domestic coal output in a big way through positive policies and second, brace ourselves for high cost coal imports, wherever they are available. With more than half of thegenerating capacity being coal-fired, the country just cannot afford to go wrong here.

Gassed out

The technical problems that Reliance Industries is reported to be facing in the KG Basin have affected gas-based generation. Gas output from the KG Basin now is less than half of what was projected as possible by Reliance and even this is being supplied to fertiliser companies on priority basis. Imported gas is an option but it is expensive.

The hope is that Reliance will be able to surmount the problems in the near term and gas output will rise again. But even if it does, the gas-based generation capacity available now may not be enough to substitute for the shortfall from coal-based generation.

Hydro dam(ned)

Hydel power, supposed to be environmentally-friendly, has ironically run into trouble with the green lobby. NTPC was forced to halt work on two of its projects in Uttarakhand after pressure from environmentalists. Even last week there were protests in Assam against a large hydro project, Subansiri, being executed by NHPC in Arunachal Pradesh. Hydel projects have always been sensitive anyway due to submergence of land.

If we thought that nuclear power will be our long-term saviour that hope is also now fading away. The imbroglio over supplier liability clauses means that American companies are unable to commence business for reactor supplies. With the performance of the French EPR reactor being questioned after the experience in Finland where it ran into time and cost overruns, it appears unlikely that the first of the planned ones at Jaitapur will ever take off.

The public protests against nuclear power at Jaitapur and lately, in Kudankulam, also mean that progress will be slow and painful in future. Public opinion is veering around against nuclear power post-Fukushima and the example of Germany, which will be totally off nuclear power by 2021, is being widely quoted as an example for us to move away too.

Financial mess

Part reason for the fuel trouble may lie outside our control but the same cannot be said for the financial mess that the sector is in today which is entirely due to our governments, Central and State. State electricity boards are estimated to have accumulated losses of a massive Rs.70,000 crore. Ratings agency Crisil estimates that distribution utilities alone had a cumulative loss of between Rs.35,000 crore and Rs.40,000 crore as of 2010-11.

Riding on government backing, the state electricity boards have been borrowing merrily from banks to sew up the gaping holes in their finances due to these massive losses. And the hole is only growing bigger. Banks, after initially accommodating the state electricity boards have now grown wiser and are refusing to lend.

According to a Crisil report, the total debt of state electricity boards and distribution utilities touched a huge Rs.3-lakh crore or Rs.3 trillion as of March 31, 2011. The same report estimates that as much as a third of the 56,000 MW of thermal generation capacity is in trouble due to the combined impact of fuel and financial problems.

So where does all this leave us? Hopefully not in darkness. We need positive, clear-headed reform measures to be undertaken, including passing on full prices to consumers who can bear them and subsidising the genuinely poor. Some States have reluctantly allowed their boards to revise power prices in the last few weeks.

We need to cut down on transmission and distribution losses and untangle the environmental problems that coal mining has run into. Policymakers have to balance the needs of development with environmental considerations. But for some urgent steps from the government the country may well return to the Dark Ages, literally.

PLIGHT OF SMALL FARMER AND CLIMATE CHANGE

When world leaders sit down again to discuss climate change, we hope that the people who live and work on the world's 500 million small farms will be with them, at least in spirit. Their voice — and the issue of agriculture as a whole — has, for too long, been missing from the conversation. But without increased support to smallholder farmers now, the number of hungry people will grow, and future food security will be placed in jeopardy.

The upcoming 17th Conference of the Parties (COP17) to the United Nations Framework Convention on Climate Change (UNFCCC), and the United Nations Conference on Sustainable Development (UNCSD) in Rio de Janeiro in June 2012 — marking the twentieth anniversary of the landmark Earth Summit that produced Agenda 21, “a roadmap” for sustainable development — will both need to ensure that agriculture and the world's smallholder farmers are high on the agenda if we are to overcome the many challenges we face in achieving the Millennium Development Goal 1.

The front line

In the last 20 years the global population has risen from about 5.3 billion to seven billion; the reality of climate change has been accepted beyond doubt; and the number of hungry people in the world has remained stubbornly around the one billion mark. Meanwhile, aid to agriculture has only just recently begun to pick up after decades of stagnation. More needs to be done — a lot more — and supporting smallholder farmers must be at the heart of any agenda.

The rural poor across the world, including India, have contributed little to human-induced climate change, yet they are on the front line in coping with its effects. Farmers can no longer rely on historical averages for rainfall and temperature, and the more frequent and extreme weather events, such as droughts and floods, can spell disaster. And there are new threats, such as sea level rise and the impact of melting glaciers on water supply.

How significant are small farms? As many as two billion people worldwide depend on them for their food and livelihood. Smallholder farmers in India produce 41 per cent of the country's food grains, and other food items that contribute to local and national food security. Small farmers cannot be ignored, and special attention must be given to the most vulnerable groups — particularly women, who make up a large percentage of farmers in the developing world.

Small farms also add up to big business: In the world's 50 least developed countries, agriculture is the backbone of the economy, accounting for 30 to 60 per cent of Gross Domestic Product and employing as much as 70 per cent or more of the workforce. Addressing the plight of smallholders isn't just a matter of equity, it's a necessity if we are going to be able to feed ourselves in the future. Smallholders farm 80 per cent of the total farmland in sub-Saharan Africa and parts of Asia. If we don't help them to adapt to climate change, their achievements — feeding a large portion of humanity — will be endangered.

With appropriate support, smallholders can play a key role in protecting our environment, for example through actions that contribute to carbon sequestration and limit carbon emissions (planting and maintaining forests, engaging in agro-forestry activities, managing rangelands and rice lands, and watershed protection that limits deforestation and soil erosion).

To continue farming in a sustainable way in the face of climate change, rural women and men need to be given the resources to cope with the challenges. Smallholder farmers need support such as resilience-building technologies (including drought- and salt-tolerant seed varieties and new methods of rainwater harvesting), and training in sustainable practices of conservation agriculture, such as minimum-till farming to reduce erosion and moisture loss. Investing in adaptation measures now will be far less costly than in the future.

The International Fund for Agricultural Development (IFAD) and the M.S. Swaminathan Foundation, together with the government of India and other partners, have undertaken a range of projects to do just that.

For example, in Tamil Nadu, we have been supporting rural communities to produce and market nutri-cereals like millet, which can easily grow in dry and arid environments. We worked with smallholder farmers to use simple techniques to increase their yields, while also helping rural women create and market modern recipes — for example, a millet malt drink now being sold in major health food stores in India. The result has been not only increased food for the community, but also increased income and non-farm employment opportunities.

To help farmers adapt to increasingly dry conditions, a programme in Chhattisgarh has expanded cultivation of traditionally produced Niger seed oil, which grows well in areas that receive little rain. Land and forest regeneration were promoted to improve soil structure and moisture levels, and solar energy technology and biogas digesters have been introduced, which reduce greenhouse gas emissions as well as the need for fuelwood. Another project in the northeast has helped restore degraded jhum land and has benefited almost 40,000 households in 860 villages.

Climate-resilient sustainable agriculture requires knowledge. Successful projects such as these can provide a model for others to follow. Knowledge transfer that brings the benefits of research from the laboratory to the farm is essential.

Programmes targeted at vulnerable groups such as women and tribal communities are particularly important. IFAD-supported programmes and projects in India promote tribal development by building and strengthening grassroots institutions that enable vulnerable people to plan and manage their own development, negotiate improved entitlements, and broaden their livelihood opportunities. Conferences and talks among world leaders can do many things but they don't feed people. We hope that leaders will keep in mind those who do: the smallholder farmers. Price volatility and the persistence of widespread, endemic and hidden hunger underline the need for urgent attention to enhancing the productivity and profitability of smallholder agriculture in an environmentally sustainable manner. This is the pathway to increasing agriculture's contribution to climate change mitigation as well as to sustainable food security.

Price volatility and the persistence of widespread and hidden hunger underline the need for enhancing the productivity and profitability of smallholder agriculture in an environmentally sustainable manner.