Modi’s Green New Deal Might Actually Work

  • After making great strides in promoting renewable energy, India is once again being singled out as a global climate laggard. Its negotiators blocked agreement on tackling emissions at the G-20 meeting in Naples earlier this year, publishing an eye-catching dissent calling for the group to focus on bringing down high per-capita emissions in rich countries. India later skipped a ministerial meeting meant to prepare for the next global climate-change summit — the only one of 51 invitees to do so. Its leaders clearly resent pressure to set a date for reducing net carbon emissions to zero, as rival China has.

The West’s focus on India’s lack of a net-zero target, however, may be misplaced. It risks missing a potentially major shift underway in the country.

While Prime Minister Narendra Modi has always taken climate change seriously, he hasn’t typically highlighted it as part of his domestic policy agenda. His recent Independence Day speech was different. Modi uses the speech, delivered from the ramparts of Delhi’s Mughal-era Red Fort, to outline his government’s major upcoming policy initiatives. Previous speeches launched his “Make in India” manufacturing push and his program to improve India’s sanitation and hygiene.

This year, Modi focused on climate change. He tailored the appeal to suit his hyper-nationalist image, pitching the energy transition as a matter of “environmental security,” as crucial as defending against the likes of China and Pakistan. He appealed for greater self-reliance, warning of India’s dependence on petroleum imports.

Modi talked about a new “National Hydrogen Mission” to develop green hydrogen and fuel cells, and about the electrification of India’s massive rail system. He could also have mentioned the government’s new subsidy for electric vehicles, which might make electric two-wheelers, in particular, attractive to India’s vast scooter- and motorcycle-riding population.

I doubt India’s government has shifted so strongly to greener rhetoric because of pressure from foreign diplomats and climate activists. It’s more likely that Modi appreciates India’s need for a compelling new growth narrative.

India’s growth engines had cooled even before the Covid-19 pandemic hit. Modi’s big manufacturing push hadn’t really paid off; private investment was at historic lows. Early-2000s confidence that India would be the next China, the new factory of the world, has crumbled over two decades of disappointment.

In effect, there’s no growth story left in India’s economy that can enthuse both voters and investors. That’s what Modi hopes to recover with his new narrative about green growth.

Fortunately, a focus on greener growth might also work. In past decades, unsustainably low domestic prices for raw materials such as iron ore and coal helped drive high growth rates. That boom collapsed amid accusations of corruption and cronyism, as well as objections from many who lived in heavily polluted mining and industrial hotspots. Politically, Modi needs to find a less extractive growth model. -(