Reducing Emissions A Global Responsibility, India Must Prioritise Living Standards

The Reserve Bank of India reduced its policy rate, the repo, by 25 basis points to 6.25% on February 7. The rate cut is the first in nearly five years. The rupee did not swoon as a result, demonstrating that there are multiple factors at work in determining the exchange rate of the rupee against the dollar, the prime mover being the totally unpredictable policy pronouncements by US president Donald Trump.

Trump and his spokespersons have started moving on Ukraine, dismissing the possibility of that country joining NATO, and of the US offering security guarantees that would entail US soldiers engaging hostile elements. While insisting that the war must come to a swift conclusion, the Trump administration has also made it clear that Ukraine’s hopes of returning to the 2014 borders, when Crimea, with its Russian naval fleet based in Sevastopol, was part of its territory, are not realistic. Movement along these lines would end the war to Russia’s advantage, and that would increase the supply of oil and gas to volumes traded at present, and bring down energy prices.

Import Duty And Inflation

Trump’s move to levy an import duty of 25% on steel and aluminium has once again raised the prospect of reciprocal tariffs, increased US prices, and lower prospects of further rate cuts by the US Fed. The effect is inflationary and puts upward pressure on yields. That, in turn, tends to strengthen the dollar and depress currencies like the Rupee.

Consumer price inflation in India softened to 4.3% in January, thanks, essentially to more steady food prices, specifically, vegetable prices. This is welcome. But it remains strange that the world is not paying attention to the hostage crisis in India. Ever since the central bank adopted inflation targeting as its monetary policy strategy, with changes in the consumer price index being used to measure inflation, interest rates have been held hostage by three vegetables, tomatoes, onions, and potatoes, with wildly volatile prices, especially in the run-up to the harvest.

The only strategy to release the hostage is food processing, and marketing processed tomatoes (puree, paste and tinned chunks), onions (paste, powder, flakes) and potatoes (blanching, drying and frying are passe, try ultrasound processing, pulsed electric field processing, microwave and radiofrequency processing) to make these acceptable to the conservative Indian kitchen. The success of Maggi noodles suggests that Indian households might be far less traditionalist when it comes to food than is commonly assumed.

Technologies For Carbon Capturing

A major event in India this week has been the India Energy Week that concluded on February 12. While it covered the ground on different energy sources and the energy transition to a low-carbon future, the vital area of carbon capture for storage or utilisation did not receive the attention it deserves. There were two technical sessions on the subject, but it did not figure as the prime mover in climate strategies that it actually is.

The year 2024 saw an average global temperature 1.6 degrees Celsius warmer than pre-industrial times. Even after the El Nino weather formation, a factor that feeds warming, gave way to La Nina by the beginning of 2025, the warming effect did not recede. January 2025 has been the warmest January on record. The world is fast depleting the carbon budget of 500 gigatonnes of carbon dioxide equivalent that remained in 2019 for the average global temperature to rise 1.5 degrees C above pre-industrial times. However fast the world might reduce the pace of fresh emissions, there is no way to prevent the average temperature rising beyond that critical level. The only way to get that done is to create negative emissions, that is, to remove carbon dioxide from the atmosphere.

Carbon dioxide removal (CDR) is a huge and growing business opportunity. Right now, the biggest players are oil companies, who inject the captured CO2 into depleted oil wells to pump out yet more oil. However, technologies are being innovated to convert CO2 into extremely valuable products such as synthetic aviation fuel, graphene, carbon fibre, ammonia and hydrogen. The point is to fund such research and gain a competitive advantage in such technologies and new businesses that make use of these technologies.

The Joe Biden administration’s Inflation Reduction Act included funding for CDR technologies. With Trump promising to scupper all green initiatives, such funding is at risk. That is all the more reason for a country like India, with one of the world’s largest pools of engineering and research manpower, to prioritise CDR research.

Better Living Standards

Speaking at the India Energy Week, oil minister Hardip Singh Puri flaunted India’s success in providing even rural homes with cooking gas, to rescue rural women from the passive, low-level poisoning they suffer while cooking with biomass that is burnt inefficiently, producing a lot of smoke. He was offering the Indian model to African nations.

While replacing wood stoves with gas stoves might seem a great move, it is actually far from salutary. It makes sense for India to make electricity the primary cooking fuel in rural areas. At one point, this would have seemed like a daydream. Now, with near total electrification of rural areas, and power lines bringing electricity to the smallest hamlets, it only takes an efficient supply of electricity to replace all other fuels with this relatively cheap and absolutely smokeless fuel.

India imports half its requirement of natural gas and 80% of its requirement of crude oil. Cooking gas is produced from either of these two. Instead of training Indians to cook on this imported fuel, it makes far more sense to generate enough power to make electricity the preferred fuel for cooking. Power can be generated from locally abundant coal, besides from renewable wind and solar. India has the world’s fourth-largest reserves of coal. India would not run up a balance of payments problem for its cooking fuel if it uses electricity generated from coal.

What of the emissions this would create? India’s primary responsibility is to grow and improve the living standards of its people. The emissions this generates could be removed by anyone anywhere in the world. India’s per capita emissions are only 1.5 tonnes a year. Even if that doubles, it would still be less than one-fifth that of a North American, and one-third the emissions of a European. Let Indians prosper, while the world collectively develops technologies and businesses to remove emissions from the atmosphere.