Climate change is one of the major challenges of our time and adds considerable stress to our societies and to the environment. From shifting weather patterns that threaten food production, to rising sea levels that increase the risk of catastrophic flooding, the impacts of climate change are global in scope and unprecedented in scale. Without drastic action today, adapting to these impacts in the future will be more difficult and costly.
The Human Fingerprint on Greenhouse Gases
Greenhouse gases occur naturally and are essential to the survival of humans and millions of other living things, by keeping some of the sun’s warmth from reflecting back into space and making Earth livable. A century and a half of industrialization, including clear-felling forests and certain farming methods, has driven up quantities of greenhouse gases in the atmosphere. As populations, economies and standards of living grow, so does the cumulative level of greenhouse gases (GHGs) emissions.
There are some basic well-established scientific links:
- The concentration of GHGs in the earth’s atmosphere is directly linked to the average global temperature on Earth;
- The concentration has been rising steadily, and mean global temperatures along with it, since the time of the Industrial Revolution;
- The most abundant GHG, carbon dioxide (CO2), is the product of burning fossil fuels.
The UN Intergovernmental Panel on Climate Change (IPCC)
The Intergovernmental Panel on Climate Change (IPCC) was set up by the World Meteorological Organization (WMO) and the United Nations Environment Programme (UNEP) to provide an objective source of scientific information. The year 2013 provided more clarity about human-generated climate change than ever before. The UN Intergovernmental Panel on Climate Change (IPCC) released its Fifth Assessment Report which looked at the science of climate change. It is categorical in its conclusion: climate change is real and human activities are the main cause.
Fifth Assessment Report
The report provides a comprehensive assessment of sea level rise, and its causes, over the past few decades. It also estimates cumulative CO2 emissions since pre-industrial times and provides a CO2 budget for future emissions to limit warming to less than 2 °C. About half of this maximum amount was already emitted by 2011. Thanks to the IPCC, this is what we know:
- From 1880 to 2012, the average global temperature increased by 0.85 °C.
- Oceans have warmed, the amounts of snow and ice have diminished and the sea level has risen. From 1901 to 2010, the global average sea level rose by 19 cm as oceans expanded due to warming and ice melted. The sea ice extent in the Arctic has shrunk in every successive decade since 1979, with 1.07 × 106 km² of ice loss per decade.
- Given current concentrations and ongoing emissions of greenhouse gases, it is likely that the end of this century will see a 1–2° C increase in global mean temperature above the 1990 level (about 1.5–2.5° C above the pre-industrial level).
- The world’s oceans will warm and ice melt will continue. Average sea level rise is predicted to be 24–30 cm by 2065 and 40–63 cm by 2100 relative to the reference period of 1986–2005. Most aspects of climate change will persist for many centuries, even if emissions are stopped.
There is alarming evidence that important tipping points, leading to irreversible changes in major ecosystems and the planetary climate system, may already have been reached or passed. Ecosystems as diverse as the Amazon rainforest and the Arctic tundra, may be approaching thresholds of dramatic change through warming and drying. Mountain glaciers are in alarming retreat and the downstream effects of reduced water supply in the driest months will have repercussions that transcend generations.
United Nations legal instruments
United Nations Framework Convention on Climate Change
The UN family is in the forefront of the effort to save our planet. In 1992, its “Earth Summit” produced the United Nations Framework Convention on Climate Change (UNFCCC) as a first step in addressing the climate change problem. Today, it has near-universal membership. The 197 countries that have ratified the Convention are Parties to the Convention. The ultimate aim of the Convention is to prevent “dangerous” human interference with the climate system.
Kyoto Protocol
By 1995, countries launched negotiations to strengthen the global response to climate change, and, two years later, adopted the Kyoto Protocol. The Kyoto Protocol legally binds developed country Parties to emission reduction targets. The Protocol’s first commitment period started in 2008 and ended in 2012. The second commitment period began on 1 January 2013 and will end in 2020. There are now 197 Parties to the Convention and 192 Parties to the Kyoto Protocol.
Paris Agreement
At the 21st Conference of the Parties in Paris, Parties to the UNFCCC reached a landmark agreement to combat climate change and to accelerate and intensify the actions and investments needed for a sustainable low carbon future. The Paris Agreement builds upon the Convention and – for the first time – brings all nations into a common cause to undertake take ambitious efforts to combat climate change and adapt to its effects, with enhanced support to assist developing countries to do so. As such, it charts a new course in the global climate effort.
The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping the global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.
On Earth Day, 22 April 2016, 175 world leaders signed the Paris Agreement at United Nations Headquarters in New York. This was by far the largest number of countries ever to sign an international agreement on a single day.
Nobel Peace Prize
In 2007, the Nobel Peace Prize was awarded jointly to former United States Vice-President Al Gore and the IPCC “for their efforts to build up and disseminate greater knowledge about man-made climate change, and to lay the foundations for the measures that are needed to counteract such change.”
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.