India Overestimates Losses in Renewable Growth Projections

India should not fear steep GDP growth drop-offs as it shifts to renewable energy, says Shri Jairam Ramesh, an economist and Member of Parliament for Andhra Pradesh, and guest speaker at the Chazen Institute’s India Business Initiative conference in Mumbai on January 15, 2018.
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The big concern in this country is that any deviation from business as usual will depress GDP growth.

Because we are used to a certain trajectory of GDP growth, we are used to an energy-intensive model of GDP growth, which the US, the Europeans, and the Chinese have followed. And the big concern in India was that if we somehow get away from this trajectory, our GDP growth would be sacrificed.

We did some calculations before Copenhagen, and we estimated that a low-carbon growth trajectory for India for the next 25 to 30 years would depress GDP growth by at most 1 to 1.5 percentage points.

If you’re expected to grow at 8 percent, you will end up growing at about, maybe, 6.5 to 7 percent if we were to get away from the current model of economic growth. Of course this does not take into account revolutions in energy storage; it does not take into account the dramatic decline that has taken place in the kilowatt hour costs of solar. So these were conservative assumptions that we made.

But I think this is an important point to keep in mind that we, in our calculations, we tend to overestimate the GDP sacrifice which comes from a renewable growth trajectory as opposed to a conventional fossil fuel growth trajectory.

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