Where Are All the Skyscrapers in India?

Lebenskunst

I was part of a small but fascinating discussion at The Fat Labrador Cafe yesterday (about which more in tomorrow’s post). The idea was to speak about under-rated/counter-intuitive ideas in economics, and a session that was supposed to last for an hour ended up starting at a little after nine pm, and going on well past eleven pm!

One of the ideas that I thought would be under-rated and counter-intuitive was that cities are magical places. Not only, it turns out, was this not under-rated and counter-intuitive where the audience was concerned, but it was almost quotidian. Huh, but also yay!

I’ve said it before, and I’ll say it again: cities are awesome, fantastic and brilliant, and we need many more of ’em on our planet.


Lebenskunst, The Economist magazine tells us, is the art of living well. Wiktionary has an even better translation, calling it the art of life. But whatever the definition, The Economist’s ranking of the world’s most liveable cities places Vienna at the top.

https://www.economist.com/graphic-detail/2022/06/22/the-worlds-most-liveable-cities

It is, after all, an index, and that means that you can choose to argue endlessly about which metrics are included and which aren’t, what weights have been given and what should have been the weighting instead, about how liveability isn’t all that measurable and especially comparable, and on and on and on.

The index rates cities along thirty different factors, bucketed into five different categories: stability, health care, culture and environment, education and infrastructure. Note that the article we’re talking about is from June, but that doesn’t really matter for us today. The good news, for the most part, is that “global activity is only around one-sixth lower than before the virus emerged. This is reflected in the global average liveability score, which has bounced back to something approaching normality.”

Of course, parts of the world have done worse compared to the pre-pandemic era. Almost all Chinese cities are worse off, although that is not at all surprising. Re: India, the bad news is that not a single Indian city comes in the top ten, and the good news is that not a single Indian city comes in the bottom ten! A summary of the report is available to read here, once you share your email address with the EIU. No Indian city makes the list of the cities that moved up the most in the rankings, nor does any Indian city make the list of cities that dropped down the most.

The full report costs an insane amount of money, and there’s no way I am paying for it, but you might want to just take a look at a Wikipedia article, as I did, for more information. I wasn’t aware of Numbeo, and obvious concerns about quality of data aside, it is a very interesting project.

Take a look at India’s data, it is fascinating. Pune comes in at number 2, which fills me with pride, and also with worry about what is up with the rest of India’s cities. If we’re at number 2…

Barcelona’s Superblocks

And if you’re curious about how it all turned out, considering this video is six years old

A Walk Down Abhimanashri Lane

Or Abhimanashree, whichever version you prefer.

But however you choose to spell it, join me, won’t you, as I saunter down this leafy little lane on a wintry Sunday morning?

Abhimanashri Lane is today a bit of a misnomer. But as a true-blue Puneri, I remember a time when it really and truly was a lane, and a very quiet one. Today, it forms the base of a very useful triangle, connecting Baner Road and Pashan Road, with the apex of the triangle being Pune University signal. Why this is a very useful triangle is a long story that will bring much angst to every Punekar reading this, so we will move on for the moment.

Accompanying us on this jaunt is my nine-year old daughter, whose ability to ask endless questions is matched only by her ability to ask questions about what we’re going to eat next. As a gourmand who pretends to teach economics for a living, I thoroughly approve of both of these qualities.

And so down Abhimanashri Lane we go, appreciating the quietness of the Sunday morning, pausing every now and then to meet a new canine friend, and breathing in the soft yet crisp wintry air that Pune still affords us in the absence of traffic.

Until we reach a nice little bakery on the left hand side, with a cute sitting-out area, and what looks from without to be a promising array of baked treats lying in wait inside. The daughter deploys the most beseeching look she can muster, but she needn’t have. I am chomping at the bit myself, so in we go to take a look. There’s croissants, there’s breads, there’s pastries and there’s coffee. Heaven, to be precise. Having suitably nourished ourselves, we resume our walk.


But then the economist in me starts to wonder.

We had gone there at around nine in the morning, and we were the only cutomers in the cafe. There was one delivery order that was picked up, but that apart, there was no one else who walked in. The food was very good without being truly outstanding, but that is not (at all) a knock against the place. In fact, if anything, I would have expected more customers.

So why, the economist in me wondered, was it empty?

  1. Abhimanashri is a truly lovely place to walk around in, but it is a low density neighborhood. Most people might wonder if I could have phrased that sentence better – wouldn’t it be the case that it is a lovely place to walk around in precisely because it is a low density neighborhood? Well, yes, but also no. Read on.
  2. It is not just a low density neighborhood, but it is also almost entirely residential. There’s a misal join towards the end of the lane, and a couple of shops and offices, and one upmarket salon. But it is safe to say that it is overwhemingly residential in terms of character.
  3. It is also a no-parking zone, for reasons that we refused to go into earlier, but now we must. Read this article to get a sense of why it is a no parking zone.
  4. So, low density neighborhood, not enough offices, plus a no parking zone along its entire length. Not enough folks in the vicinity, whether residents or otherwise, and the inability to park along its entire length. Nor, if memory serves me right, is there a bus-stop along the entire length of the lane.
  5. So walk-in customers are unlikely. Plus, the inconvenience of having to park a ways away and then walking down might disincentivize other customers.
  6. I’d much rather sit at home and order from there using Zomato or Swiggy or some such, rather than actually try and reach the place.
  7. And so while I thoroughly enjoyed my visit there and wouldn’t mind going there again, the inconvenience of it all makes it rather unlikely that I will.
  8. Which is why you should read up about mixed-use neighborhoods, and urban planning more generally. I have a couple of videos on the subject, or you might want to read more about it by searching on Google, or you might want to read this lovely thread on Twitter.
  9. But the next time you take a walk down one of your favorites streets in your favorite city, you might want to ask what makes that street your favorite, and what were the opportunity costs of that street being the way it is. Ask yourself in what ways that street could become better, and how your city might go about planning for it to be so. Get into the habit of doing this all the time, because why wouldn’t you want to think about how your city could be better.
  10. And then, suitably incentivized, learn more about urban planning, because it is a fascinating subject that every budding economist should know more about.
  11. Past EFE posts on urbanization, if you’re interested, are here.

When Cars Were The Intruders

The MIT Press Reader has a fascinating extract from a book called “Fighting Traffic: The Dawn of the Motor Age in the American City.”, by Peter Norton. The piece is about the early 1920’s in America, and focuses on how Americans struggled to get used to the idea that cars were going to be around in ever increasing numbers:

City people saw the car not just as a menace to life and limb, but also as an aggressor upon their time-honored rights to city streets. “The pedestrian,” explained a Brooklyn man, “as an American citizen, naturally resents any intrusion upon his prior constitutional rights.”  Custom and the Anglo-American legal tradition confirmed pedestrians’ inalienable right to the street. In Chicago in 1926, as in most cities, “nothing” in the law “prohibits a pedestrian from using any part of the roadway of any street or highway, at any time or at any place as he may desire.” So noted the author of a traffic survey commissioned by the Chicago Association of Commerce.  According to Connecticut’s first Motor Vehicle Commissioner, Robbins Stoeckel, the most restrictive interpretation of pedestrians’ rights was that “All travelers have equal rights on the highway.” 

https://thereader.mitpress.mit.edu/when-cities-treated-cars-as-dangerous-intruders/

Even more amazingly, at least to my twenty-first century ears:

In New York City’s traffic court in 1923, a judge explained that “Nobody has any inherent right to run an automobile at all.” Rather, “the courts have held that the right to operate a motor vehicle is a privilege given by the state, not a right, and that privilege may be hedged about with whatever limitations the state feels to be necessary, or it may be withdrawn entirely.”  The law would not deprive pedestrians of their customary rights so that motorists could roam at will in cities.

https://thereader.mitpress.mit.edu/when-cities-treated-cars-as-dangerous-intruders/

We’ve come a very long way since! I and a good friend of mine, Binoy Mascarenhas, have had quite a few arguments about the redevelopment of many streets in Pune city in terms of the widening of footpaths, and whether it makes sense or not. My contention has been that this (the redevelopment) definitely makes sense eventually, but the current high priority problem for Pune city is better public transport. Widening footpaths (and thereby narrowing streets) ought to be done only if we can increase the percentage of people traveling by public transport. Once that is done, we should absolutely make our cities more pedestrian friendly. Binoy is going to be in Pune this weekend, and I look forward to continuing the debate.

But I found it amazing to note that there was a time when the cultural adoption of a car as an inevitability on our streets was a new phenomenon. With the benefit of hindsight, it is obvious – the car, and the mental model of it as being top dog on the streets – required a change in how folks would have viewed the streets back then. But even so, the idea that, for example, some passages in the excerpt made me sit up:

Some even defended children’s right to the roadway. Instead of urging parents to keep their children out of the streets, a Philadelphia judge attacked motorists for usurping children’s rights to them. He lectured drivers in his courtroom. “It won’t be long before children won’t have any rights at all in the streets,” he complained. As the usurper, the motorist, not the child, should be restricted: “Something drastic must be done to end this menace to pedestrians and to children in particular.” 

https://thereader.mitpress.mit.edu/when-cities-treated-cars-as-dangerous-intruders/

Maybe I’m far too much of a modern day individual, but I genuinely struggle to see how we could adopt our cities today to a pedestrian first framework. The volume of traffic seems far too high, and we seem far too dependent on our vehicles for us to even try and imagine what something like this might look like at a city scale.

But there was, it would seem, a time when this was not just possible, but was actually reality. At what costs, and with what benefits – and should we aspire to return back to those presumably idyllic times, is a question I look forward to debating about this weekend.

And, of course, one more book has been added to the pile. So it goes.

The Solow Model and China

If you don’t know what the Solow model is, here is a great place to get started:

There are 11 videos in that series, and if you can spare the time, please watch all of them. Just two a day (they’re not more than 5 minutes each), and you’ll be done come the weekend.

But in effect, here is what the Solow model says:

  1. Output for a nation is a function of three (actually four) things:
    1. Capital (K): Buidings, ports, dams… infrastructure, basically.
    2. Education Augmented Labor (eL): The amount of hours that a person is able to put in to their work, but with the built in assumption that an educated person is likely to be more productive than a person without education.
    3. Ideas: Read the paragraph below to get a sense of what this means in practice.

Think about this blogpost that you are reading. I wrote it using my laptop, which is my capital. I will spend about an hour (that’s my plan, I’ll update you towards the end of this post about how well it worked out) writing it, and that’s the labor that I’ll be putting into this post. The fact that I have been “educated” in economics should mean that this post will be easier to write for me than, say, a gardener. The gardener could have written this post as well, of course, but it’s safe to assume that she would first have had to learn about the Solow model, and that, presumably, would have taken longer.

So that’s K and eL where the output (this blogpost) is concerned. But now think about it this way: what if another person, with a similar level of economics education as mine were to write this blogpost instead of me? Would that person have chosen this video, and these paragraphs to explain the Solow model? Maybe they would have recommended some other video, or some other podcast, or chosen to share details of an online textbook in which the Solow model is explained. That’s one way to think about ideas.

And so when you combine the capital (the laptop), the labor (the time I spend on this blogpost, given my education levels) and the ideas (what I choose to put into this blog post, and how), you get the output you’re reading right now.

What if I double the capital? Will the blogpost be done in half the time? Say I have an external monitor attached to my laptop – will two screens mean finishing the blogpost in half the time? It will save some time, but not by a factor of two, surely. Trust me, I have tried.

What if I double the labor? Hire an assistant to write this blogpost with me? The way I work, trust me, it will probably take longer! What if I go get a post-doc, to augment my education? Will that save me time? The hysterical laughter you hear in the background is the response of any PhD/post-doc student anywhere in the world, and that sound means a loud and resounding no.

In a sense, the Solow model asks these and related questions, and answers them using some graphs and equations. Except, of course, the Solow model does it for not one guy writing one blog, but for an entire nation at a time. There is no sense in me explaining the whole model over here, for it would be a case of me reinventing what is already a very good wheel. Please watch the videos.


But the Solow model is a remarkably useful way to get a handle on the long run growth prospects of a country. Is India likely to grow in the future? Well, is it going to add to its capital stock? Yes. Is it going to augment it’s stock of education augmented labor? Yes. Is it likely to produce more ideas than it is right now? Yes. And so the growth prospects for India look reasonably good.

Of course, there is more to the Solow model. All of this holds true given a strong and stable political system, well established rules of law, and strong and capable institutions. But so long as you believe that these are likely to continue to be so in the Indian case, you should be bullish on India.

What about, say, Japan? It has a capital stock that is more in need of replacement than new construction ( a feature of the Solow model that we have not discussed here, called depreciation), so it is unlikely that it will grow its capital stock too much. Here’s an example of what I mean. What about it’s stock of education augmented labor? Well, the news ain’t very good. Ideas? Trending upwards, but not by much. So if I had to bet on which country would grow more over the next twenty years, I would bet on India, not Japan.

Bear in mind that this is a model, and like all models, it is an imprecise abstraction of reality. So it is possible that at the end of the twenty year period, we find out that I am completely wrong. But if you think the Solow Model is a reasonably good model, you ought to bet the way I did.


So what about China?

Well, now, that’s a whole different story, and one that Noah Smith talks about in a recent blog post. Long story short, he doesn’t think China’s growth prospects are that great.

But the story is a little more complicated than that. The Solow model is a good model, sure, but it’s not as if the Chinese authorities/experts aren’t aware of the problem. And in his blog post, Noah looks at arguments put forth by two people who know a thing or two about China, and analyzes them critically.

The first argument is that sure, China’s demographics are on a downward trend, but what if we raised the retirement age for Chinese workers? Would that not solve the problem? Noah says no, probably not, because firms made of exclusively old folks isn’t necessarily a good idea. I wholeheartedly agree.

What about adding to China’s urbanization, and therefore its infrastructure? After all, China’s urbanization rate is “only” 64%. The inverted quotes around only in the previous sentence is because we, in India, are officially at 31%, but as in the case of China, it very much is a function of how you define urbanization. But similarly, in China, the urbanization rate is actually way more than 64%, and the Lewis turning point has already taken place in China, or will do so any moment.

And about ideas, well, China is an even more complicated story. Noah makes the point that China’s industrial policy is essentially a one-man army that is trying something that has never been tried before, and Noah is betting on it not quite working out. And given the events of the last year and a half or so, it is hard to disagree.

And so the Solow Model would probably tell you that China is unlikely to grow as fast in the near future as it did in the recent past, and even if you take into account potential adjustments, it likely will still be the case that China’s growth rate will start to plateau.


Please, read the entire post by Noah. But if you are a student of economics who has not yet met the Solow Model, begin there, and then get on to Noah’s post – your mileage will increase considerably.

Housing in Singapore

“Solved” is, at the least, ambitious phrasing. But the video is well worth watching. Via Sahil Shaikh, a SYBSc student at GIPE

Learn Urbanization with Binoy Mascarenhas

There’s more than one way to skin a cat, and there’s more than one way to learn.

One of these ways is conversations. And so I decided to teach myself a little bit about urbanization, by speaking with a guy who’s been working in the field for a little more than a decade or so.

In this six part series (at least), Binoy Mascarenhas and I aim to speak about urbanization, and how it is a truly wonderful thing when done right.

Each episode will last for about 45 minutes, and the first one covered cities and Covid-19, a list of topics that future episodes will deal with, and Binoy’s list of cities in India that got urbanization wrong (among other things).

Delhi and Bangalore were obvious picks, but the third one might surprise you, especially if you are unfamiliar with the topic of urbanization (it’s Chandigarh).

In future conversations, you will learn about

  1. the impact of cities on the environment,
  2. urban densities
  3. mixed use neighborhoods
  4. transport policies and how they impact urbanization
  5. mistakes to avoid when doing urban planning

We speak about all of this and more in the video, and new videos will come out every Tuesday. Each video will have an associated set of links for you to read later, given in the description box below. I hope you take the time to read them, and I would love it if you would share your own links as well.

Here’s the video, please enjoy:

India and her cities

In the previous week, Livemint published an excellent article, titled “Why India has the fastest-growing cities“. Today’s post is a rumination on that article, and associated thoughts.

Urbanization, I unequivocally hold, is an good thing. This belief has come about as a consequence of learning development economics over many years. It has also come about because I have had the opportunity to read many great books about the topic, of which I think Ed Glaeser’s ‘The Triumph of the City‘ is by far the best one.

The reason I like that book so much is because it is an unapologetic paean to urbanization. It not just defends urbanization, it actively reveres it. And there is something to be said for that argument. Cities, when designed well, are worth revering! Watch this lovely TED talk by Jeff Speck, for example. The talk is ostensibly about how to make cities more walkable, but it covers a lot more ground than just that.

Here’s the most important reason, I think, that cities ought to be revered. It is because of their most important feature, and their most appropriate definition: they are labor markets, first and foremost.

What are cities?

Cities are simply a lot of people packed into a relatively tight space, most whom happen to be open to new job opportunities. That’s a paraphrased definition, and it is certainly not mine. The best way to truly understand what this means in practice is to read a lovely (but by Indian standards, prohibitively expensive) book by Alain Bertaud, called Order Without Design.

As I said, the book is expensive, but I can recommend three freely available online resources that you might want to read, listen and watch instead.

When I quit my job in the analytics industry in 2009, it was because I wanted to switch over to academia. Switching over to academia meant that I had to come to Pune. Now, Pune is my hometown, and I love it to bits, but the reason I had to come to Pune is because there were many more jobs in academia in this city than any other city in India.

Conversely, if you are looking to set up a college, a student exchange program or a university, Pune is the best place to do so, precisely because of the paragraph that precedes this one.

That’s what Alain Bertaud means when he says this:

“Sometimes when I read the papers of my fellow urban planners, I get the sense that they think cities are Disneyland or Club Med. Cities are labor markets. People go to cities to find a good job. Firms move to cities, which are expensive, because they are more likely to find the staff and specialists that they need. If a city’s attractive, that’s a bonus. But basically, they come to get a job.”

“All the jobs are in the cities” is a phrase that you will hear often enough in India, but reading Alain Bertaud’s book helps you understand that the statement is actually tautological.

But, if you think about it, and to the extent that you agree with what is written above, we’re committing a moral crime by not glorifying urbanization. Strong words? Maybe. But, I would argue, true words as well.

Urbanization in India

But then how come urbanization in India is only 31%? If all the jobs are in the cities, and people in India are crying out for jobs, why aren’t they all moving to India’s cities?

There are three responses to that.

First: we make it difficult, expensive and to begin with, potentially unremunerative for people to migrate to India’s cities. Difficult because of a whole host of laws and regulations that hamper and hinder the development of efficient urban labor markets. Expensive because of poor urban planning which means housing and transport are not cheap for first generation immigrants into India’s cities. And potentially unremunerative because a lot of our welfare schemes require their targeted beneficiaries to be citizens of rural, rather than urban India.

Second, they are too moving away from villages! Hop into an Uber in your city, and take the time out to speak to your driver. More likely than not, your driver is likely to have the following characteristics. He will be a he, he will have a parcel of land back home in his native village, and he’ll have come to the city in search of a job. That he is a he is an indictment of our culture and our labor market. That he has a parcel of land back home is an indictment of our lack of reforms when it comes to land. And the fact that he is working as an Uber driver (services) rather than in a factory (manufacturing) is an indictment of our lack of reforms when it comes to labor and land market laws. But, to loop back to the start of this paragraph, people are certainly leaving India’s villages.

Third, in spite of it being difficult, expensive and potentially unremunerative, they are migrating, but to areas just outside our country’s cities. And therein lies a trifecta of tragedies: of policy design, of incorrect measurement and therefore of a poor urban experience.

The Livemint article…

 

… has been written by three people: Kadambari Shah, Vaidehi Tandel and Harshita Agarwal. All three of them work at the excellent IDFC Institute, located in Mumbai. One reason I use the word excellent that is relevant to today’s blog post is the fact they produced a very interesting report, a somewhat abridged version of which is this article, that came out in Livemint a while ago.

In that article, they gave us India’s original definition of urbanization, as it was defined in the year 1961.

“India’s three-tiered census definition of ‘urban’—at least 5,000 inhabitants, density of 400 people per sq. km or more, and at least 75% of male working population engaged in non-farm activities—was first framed in 1961 by then census commissioner Asok Mitra.”

By this three-tier definition of urbanization, we’re at 31%. That is, roughly one-third of our population is urbanized, and the remaining is not.

But does that mean that the remaining is rural (and somehow agrarian)?

No!

Because of what we discussed above, in the section “Urbanization in India”, folks migrate out of villages, but not to India’s cities. They migrate to areas just outside of India’s cities: the so-called satellite towns.

So what’s the big deal?

Well, if you stay out of the local municipal corporation’s limit, it is not obligated to provide you the following services: “town planning, slum improvement, public amenities including street lighting, parking lots, bus stops, solid waste management, building regulations and fire services.”

Sure, of course not, you might think. It won’t be, for example, the Pune Municipal Corporation’s job, but that of the satellite town’s corporation. Ah, but because it is a town (a census town, to use the government’s definition), it will not be covered under the definition of an Urban Local Body (ULB). It will, instead, be a Regional Local Body (RLB).

And the RLB doesn’t need to provide (you might say cannot provide, given financial and other capacity constraints) the services mentioned above.

So What?

So:

  • Urbanization is good, even great
  • We don’t have enough of it in India
    • Because we make it difficult for people to move
    • When they do move, we make it difficult for them to find jobs
    • They still move, but we don’t measure the movement well enough
  • We don’t measure it accurately enough because our approach to the measurement is wrong, and woefully out of date
  • As a consequence, when (and if at all) folks attempt to urbanize, they don’t get the kind of urban amenities that they so desperately need.
  • All of this is assuming, of course, that urban amenities are provided, and ably so, by municipal corporations – but a blog post should only be so long, hey?

On the first Monday of March, we’ll come back to the topic of urbanization and India once again.

 

 

 

 

Understanding Poland’s Future

Making forecasts is a fool’s game, and while I’ll be the first to admit that the adjective in question is applicable to me more often than not, it’s not because of making forecasts!

This post, then, is not about quantitative forecasts about where Poland’s economy might go. It is, instead, about Poland’s recent trends that might continue in the near future, and what that would mean for Poland, and her neighbours.

  1. “The attractiveness of their promises are difficult to outdo, as they represent a long-desired ambition by Poles. However, on other issues the PiS is found wanting and at odds with the values and opinions of the majority of Poles. The conflict between local level activism and centralistic ambition will determine the course of the Polish politics in the next decade. Poland’s recent history surely should not let us think that the outcome is already known. ”
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    On how Poland’s recent political trends don’t bode well for the future.
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  2. “In 1989, it would have been considered utopian or plainly misplaced to imagine that, in 2019, most Polish people would live in the countryside despite only 10 per cent of the population working in agriculture. Today, the countryside is more than ever the ‘happening’ place in Poland. Four trends drive this phenomenon: re-ruralisation, de-agrarisation, de-urbanisation, and internal migration.”
    ..
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    This report came as a complete surprise to me. The notion, as an Asian and especially as an Indian, that urbanization will decline going forward was completely (pardon the pun) foreign to me. Also, the first time that I read about “water in the tap” – that’d certainly be my pick.
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  3. “The growth rate is predicted to continue slowly decreasing in the years to come and should reach -0.50% by 2035. The population is predicted to be 37,942,231 by 2020 and 36,615,500 by 2030.”
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    Those are literally the only two lines in the entire article about the future of Poland’s demographics. That being said, the article is still worth reading if you want to better understand Poland’s demographics today, about which I do not think we have learnt so far.
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  4. “They assert that the modern Polish Republic rests on “two pillars: the European Union and NATO,” and that these communities are not at odds with one another. This is the strategic balance this is needed to shield Poland. What it is pursuing at the moment is strategic imbalance. As the saying goes in Polish, “nie stawiaj wszystkiego na jedną kartę”—don’t gamble everything on one card.  ”
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    Broadly speaking, the article suggests that Poland cosying up to the United States of America might not be the best idea for securing Poland’s future, not least because it is subject to the whims and fancies of just one man.
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  5. “A few weeks ahead of COP24, the Ministry of Energy published a draft Energy Policy for Poland 2040, by the Ministry of Energy, with updated projections beyond 2030–perhaps the beginnings of a clearer path toward the green transition. The report provides a summary of Poland’s vision for eventually transforming the energy sector. Coal will remain a significant part of the energy mix through 2030 and decline more rapidly by 2040, shifting to nuclear power, renewable energy and high-efficiency cogeneration.”
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    A useful summary of Poland’s economics since 1989, its stellar performance in terms of achieving climate change goals until 2015, and then a tapering off of its enthusiasm – and some optimism about its targets in the two decades to come.