The Challenge of Phasing Out Fossil Fuel Subsidies

GS 3: Economy: Regulating fossil fuel subsidies

Why is it in the news?

• Fossil fuels are a major contributor to climate change, yet they continue to receive significant government subsidies Despite promises by many nations to reduce these subsidies as part of their climate commitments, achieving this goal has been challenging.
• Consequently, fossil fuels remain affordable, fuelling their continued use and increasing greenhouse gas emissions.

An Analysis

Understanding Subsidies

• Subsidies are financial benefits provided by governments to industries or entities. While some subsidies are explicit, like crop insurance or research grants, others are indirect, such as tariffs or unaccounted environmental damage caused by certain industries.
• These financial supports often serve political or practical purposes, such as fostering emerging industries, stabilizing mature sectors, or gaining political leverage.
• However, they can outlive their original objectives, as seen with petroleum subsidies dating back to the Great Depression.

Forms of Fossil Fuel Subsidies

• Globally, fossil fuel subsidies vary in form. For instance, Saudi Arabia caps fuel prices, with domestic consumption costs offset by oil exports. Similarly, Indonesia compensates state-owned energy firms for price caps, while the U.S. offers tax deductions for drilling costs.
• Other indirect subsidies include under-pricing permits for fossil fuel extraction or lax tax collection from producers. Estimates of these subsidies range significantly, with the OECD reporting $1.5 trillion annually in 2022 and the IMF estimating over $7 trillion by factoring in environmental damages.

Discrepancies in Subsidy Estimates

• Disparities in subsidy estimates arise from differing methodologies. The IMF includes the environmental and societal costs of fossil fuels, such as pollution, climate change, and road damages, treating them as implicit subsidies. In contrast, the OECD focuses solely on direct financial supports.
• Despite these definitional differences, the impact on consumer prices is profound. For example, gasoline prices range from heavily subsidized rates of 10 cents per gallon in Iran to over $7 in countries like Hong Kong, where fuel taxes counter subsidies.

Global Efforts to Curb Subsidies

• Acknowledging the detrimental impact of fossil fuel subsidies on climate goals, global leaders pledged to phase them out. The G20 in 2009 and APEC in the same year vowed to eliminate inefficient subsidies.
• By 2010, additional countries formed the Friends of Fossil Fuel Subsidy Reform to advocate for policy changes. However, these commitments have largely failed.
• Between 2003 and 2015, little progress was made, with subsidies nearly doubling in 2021 and 2022 due to energy crises following events like Russia’s invasion of Ukraine.

Barriers to Reform

• Fossil fuel subsidies persist due to their pervasive economic implications. Reducing subsidies raises production costs, inflates consumer prices, and triggers inflation. This is especially burdensome for low-income households, making reforms politically sensitive and often unpopular.
• For example, Europe prioritized affordable energy over climate goals during the 2021-22 energy price surge. These challenges highlight the trade-off between short-term economic relief and long-term environmental objectives.

Opportunities Amid Crises

• Despite these difficulties, economists argue that higher fossil fuel prices can reduce demand and emissions, benefiting the environment and public health.
• Price surges, such as those experienced during crises, present an opportunity to reform subsidies without significantly exceeding recently experienced price levels.
• As the IMF suggests, locking in carbon pricing during such periods could drive meaningful progress toward reducing reliance on fossil fuels.

The Dangers of High-Altitude Sickness

GS 2: Society: Health

Why is it in the news?

• In September, a trekker from Kerala lost his life in Uttarakhand while attempting to scale Garur Peak due to respiratory failure.
• Such incidents are frequent in the inner Himalayas, where extreme altitudes expose tourists to high-altitude sickness, a potentially fatal condition caused by reduced oxygen levels and thinner air.

About High-Altitude Sickness

• High-altitude sickness, or Acute Mountain Sickness (AMS), arises when the body struggles to acclimatise to elevations above 8,000 feet (2,400 metres). Reduced air pressure and oxygen levels lead to hypoxia, causing symptoms like headaches, nausea, fatigue, and breathlessness.
• If untreated, AMS can escalate into severe conditions like high-altitude pulmonary edema (HAPE), where fluid builds up in the lungs, or high-altitude cerebral edema (HACE), characterised by fluid accumulation in the brain. Both conditions require urgent medical attention, with descent being the most effective remedy.
• At higher altitudes, the body tries to adjust by increasing breathing and red blood cell production. However, these adaptations strain the heart, potentially worsening conditions like HAPE and HACE, which can manifest as confusion, hallucinations, or coma.

Infrastructural Challenges

• Healthcare facilities in most Himalayan regions are insufficient to manage high-altitude sickness cases. While places like Leh in Ladakh have specialised medical infrastructure for such ailments, other regions lag.
• Preventive health screenings at entry points to high-altitude zones, similar to the “Inner Line Permit” system previously used in areas like Kinnaur and Lahaul-Spiti, could address this gap and save lives.

The Need for a Registration System

• A mandatory registration system for tourists entering remote mountain regions could significantly improve safety. Registrations maintained in State databases would enable authorities to monitor tourist movements and respond quickly in emergencies.
• Moreover, this data could support research on high-altitude illnesses, helping scientists understand how altitude affects different populations and develop better preventive measures.

Importance of Early Intervention

• Rapid ascent without adequate acclimatisation is the leading cause of high-altitude sickness. Gradual ascent, allowing the body to adapt, is the best preventive measure.
• Experts recommend resting every 3-4 days when ascending above 3,000 metres and limiting daily elevation increases to 500 metres.
• Medications like Acetazolamide, which promotes better oxygenation, and Dexamethasone, an anti-inflammatory steroid, are often prescribed for moderate to high AMS risk. Nifedipine can be used as a preventive for those with a history of HAPE.
• However, no medication guarantees full immunity, and individuals with pre-existing health issues should consult doctors experienced in altitude-related risks before traveling.

Treatment Strategies

• Descending to lower altitudes remains the most effective treatment for high-altitude sickness. A descent of 300-1,000 metres often alleviates symptoms significantly.
• Supplemental oxygen and portable hyperbaric chambers can provide immediate relief in emergencies, while medications like acetazolamide and dexamethasone offer short-term support. However, descent is essential for long-term recovery.

Policy Recommendations

To mitigate high-altitude sickness, the following steps are proposed:

• Establish advanced medical facilities in high-altitude regions.
• Develop research centres to study altitude-related illnesses.
• Equip Himalayan States with air-ambulance services for rapid medical evacuation.
• Provide comprehensive health and safety guidelines at government websites and tourist checkpoints.

India and Italy to Strengthen Defence and Maritime Cooperation

GS 2: International Relations: India-Italy Relations

Why is it in the news?

• India and Italy have agreed to negotiate a defence industrial road map and formalise agreements on the mutual protection and exchange of classified information. They also aim to establish cooperation in the maritime and port sectors.
• These priorities are detailed in the Joint Strategic Action Plan 2025-29, outlining the vision for bilateral relations over the next five years.

More about the news

• The plan includes negotiating a defence industrial road map between the Ministries of Defence of both nations. It also emphasizes promoting a Memorandum of Understanding (MoU) between the Society of Indian Defence Manufacturers and the Italian Industries Federation for Aerospace, Defence, and Security.
• Additionally, the plan highlights Italy’s growing interest in the Indo-Pacific region, aiming to enhance interoperability and cooperation between the armed forces, supported by negotiations for relevant arrangements.
• The action plan was announced following a meeting between Prime Minister Narendra Modi and Italian Prime Minister Giorgia Meloni on the sidelines of the G-20 summit in Brazil.
• Both leaders also agreed to explore enhanced partnerships among public and private stakeholders, focusing on technology collaboration, co-production, and co-development of defence platforms and equipment.
• India and Italy have witnessed increased military-to-military engagements in recent years. A significant milestone was achieved when the navies of both countries conducted their maiden Carrier Strike Group (CSG) maritime exercise off the coast of Goa. The exercise featured INS Vikramaditya and ITS Cavour, along with INS Visakhapatnam and ITS Alpino, marking a historic maritime collaboration.

Chancay Port Project in Peru

GS 2: International Relations: Tackling China’s growing influence  

Why is it in the news?

• On November 14, Chinese President Xi Jinping inaugurated Peru’s Chancay Port, calling it the beginning of a “new land-sea corridor” connecting China and Latin America.
• The $3.6 billion port, funded under China’s Belt and Road Initiative (BRI), has sparked concerns in the U.S. about China’s growing influence in the region.

About the Project

• The deep-sea port is touted as a game-changer for South America, with the ability to accommodate vessels up to 18,000 TEUs—the largest shipping vessels in the world. This capacity makes Chancay a key strategic port for global trade.
• Located 78 km from Lima, the port, which began construction in 2019, will significantly enhance trade between China and Latin America. With the capacity to handle the world’s largest ships, it will reduce transportation time for goods from Latin America to Asia from 35 to 25 days.
• Expected to generate $4.5 billion annually for Peru, the port will handle key exports like copper, blueberries, soybeans, and lithium from the region.

U.S. Concerns Over Chinese Influence

• The U.S. has expressed concerns over China’s growing influence in Latin America, especially with the Chancay Port. U.S. officials warn that it could facilitate China’s resource extraction from the region. Brazil’s plans to link to Chancay further fuel these concerns.
• Critics argue that the U.S.’s shifting foreign policy focus has allowed China to step in, with Peru’s foreign minister suggesting the U.S. should invest more in the region to counterbalance China’s growing presence.

Trade Relations and Economic Impact

• China is now Peru’s largest trade partner, contributing to its growing influence in Latin America. Peru is also China’s fourth-largest trade partner in the region.
• While the U.S. remains concerned about China’s activities, officials like Peru’s Foreign Minister have emphasized that the U.S. should increase its investments in Latin America, given its limited engagement in the region.

BRI and Sustainability Concerns

• The Chancay port is part of China’s larger BRI initiative, but critics question the sustainability of such projects. Previous BRI ventures, like Sri Lanka’s Hambantota port, have led to accusations of “debt-trap diplomacy” as countries struggle to repay Chinese loans.
• As China’s economy slows, doubts about the long-term viability of these projects continue to grow. Despite this, China’s influence in Latin America is reshaping the region’s trade and geopolitical landscape.

Maharashtra Sugar Mills Turn to Mechanization Amid Labour Shortages

GS 3: Economy: Issues related to sugar mills

Why is it in the news?

• As labour shortages worsen, sugar mills in Maharashtra are increasingly turning to mechanical harvesters to replace manual labour for sugarcane harvesting. The Manjara Farmers’ Cooperative Sugar Factory in Latur is set to become the first in India to fully mechanize its entire sugarcane harvest.
• The shift to machinery is driven by the growing difficulty in finding agricultural workers, with many seeking employment in construction, manufacturing, and other sectors.

Current Harvesting System and Challenges

• In Maharashtra, sugar mills manage the entire harvesting process, unlike other states like Uttar Pradesh, where farmers handle it themselves. Mills contract middlemen, or muqaddams, who organize labour gangs for the task.
• These gangs are paid based on the tonnage harvested, but the system is plagued by issues like non-arrival of workers and an aging workforce.
• Labour shortages, especially during peak seasons, often delay crushing operations, with many workers opting for better-paying, less physically demanding jobs in other industries.

Rise of Mechanical Harvesters

• In response to these challenges, the Manjara cooperative began using mechanical harvesters in 2020-21, initially deploying 10 machines. By 2023-24, around 93% of the sugarcane at the factory was mechanically harvested, and this season, it aims to achieve 100% mechanization.
• These machines offer several advantages, such as more efficient harvesting, lower labour costs, and higher sugar recovery, as they cut the entire cane, unlike manual harvesters which leave a portion of the cane behind.

Economic Benefits and Implementation

• The shift to mechanical harvesting has been financially beneficial for both the mills and farmers. The Manjara cooperative pays higher rates to machine operators than manual labourers, which incentivizes entrepreneurs to invest in harvesters.
• Private entrepreneurs own most of the machines, which are financed through loans from the Latur District Central Cooperative Bank. These machines help reduce the dependency on seasonal labour and provide a more reliable, efficient harvesting method.

Challenges and Drawbacks

• Despite its benefits, mechanical harvesting has some drawbacks. One major concern is that the machines cut not only the cane but also the green tops, which are traditionally used as fodder for livestock.
• This issue is less significant in Maharashtra compared to other states like Uttar Pradesh, where the cane tops are a key source of winter and spring fodder. However, some farmers argue that leaving the tops in the field helps improve soil health by increasing organic matter and acting as mulch.

Future Prospects

• While mechanical harvesting is growing in Maharashtra, it remains a gradual process. The Natural Sugar & Allied Industries Ltd in Dharashiv plans to increase mechanized harvesting from 20% to 50% over the next five years.
• The overall shift to mechanization is seen as inevitable due to ongoing labour shortages, though it will take time to fully replace traditional methods across the state.