IDEAS home Printed from https://ideas.repec.org/a/wsi/ccexxx/v10y2019i03ns201000781950009x.html
   My bibliography  Save this article

Evaluating India’S Climate Targets: The Implications Of Economy-Wide And Sector-Specific Policies

Author

Listed:
  • ARUN SINGH

    (The World Bank, Washington, DC 20433, USA)

  • NIVEN WINCHESTER

    (Joint Program on the Science and Policy of Global Change, Massachusetts Institute of Technology, Cambridge, MA 02139, USA3Motu Economic and Public Policy Research, Wellington, New Zealand)

  • VALERIE J. KARPLUS

    (Sloan School of Management, Massachusetts Institute of Technology, Cambridge, MA 02139, USA)

Abstract

We employ a numerical economy-wide model of India with energy sector detail to evaluate the impact of achieving India’s commitments to the Paris Climate Agreement. We simulate targets for reducing CO2 emissions intensity of GDP via an economy-wide CO2 price and for increasing non-fossil electricity capacity via a Renewable Portfolio Standard. We find that compared with the no policy scenario in 2030, the average cost per unit of emissions reduced is lowest under a CO2 pricing regime. A pure RPS costs more than 10 times the cost of a CO2 pricing regime. Projected electricity demand in 2030 decreases by 8% under the CO2 price, while introducing an RPS further suppresses electricity demand. Importantly, a reduction in the costs of wind and solar power induced by favorable policies may result in cost convergence across instruments, paving the way for more aggressive decarbonization policies in the future.

Suggested Citation

  • Arun Singh & Niven Winchester & Valerie J. Karplus, 2019. "Evaluating India’S Climate Targets: The Implications Of Economy-Wide And Sector-Specific Policies," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(03), pages 1-29, August.
    • Handle: RePEc:wsi:ccexxx:v:10:y:2019:i:03:n:s201000781950009x
    DOI: 10.1142/S201000781950009X
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S201000781950009X
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S201000781950009X?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nicholas Bull & Kevin A. Hassett & Gilbert E. Metcalf, 1994. "Who Pays Broad-Based Energy Taxes? Computing Lifetime and Regional Incidence," The Energy Journal, , vol. 15(3), pages 145-164, July.
    2. Martin L. Weitzman, 1974. "Prices vs. Quantities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(4), pages 477-491.
    3. Angel Aguiar & Badri Narayanan & Robert McDougall, 2016. "An Overview of the GTAP 9 Data Base," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(1), pages 181-208, June.
    4. Stephen P. A. Brown & Mine K. Yucel, 2008. "What Drives Natural Gas Prices?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 45-60.
    5. Jenkins, Jesse D., 2014. "Political economy constraints on carbon pricing policies: What are the implications for economic efficiency, environmental efficacy, and climate policy design?," Energy Policy, Elsevier, vol. 69(C), pages 467-477.
    6. Bruno Lanz & Thomas F Rutherford, 2016. "GTAPinGAMS: Multiregional and Small Open Economy Models," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(2), pages 1-77, December.
    7. Kristy Mayer & Sudeshna Ghosh Banerjee & Chris Trimble, 2015. "Elite Capture : Residential Tariff Subsidies in India," World Bank Publications - Books, The World Bank Group, number 20538.
    8. Kevin A. Hassett & Aparna Mathur & Gilbert E. Metcalf, 2009. "The Incidence of a U.S. Carbon Tax: A Lifetime and Regional Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 155-178.
    9. Rutherford, Thomas F., 1995. "Extension of GAMS for complementarity problems arising in applied economic analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1299-1324, November.
    10. Winchester, Niven & Reilly, John M., 2015. "The feasibility, costs, and environmental implications of large-scale biomass energy," Energy Economics, Elsevier, vol. 51(C), pages 188-203.
    11. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    12. P. R. Shukla & Subash Dhar & Diptiranjan Mahapatra, 2008. "Low-carbon society scenarios for India," Climate Policy, Taylor & Francis Journals, vol. 8(sup1), pages 156-176, December.
    13. Ojha, Vijay P., 2009. "Carbon emissions reduction strategies and poverty alleviation in India," Environment and Development Economics, Cambridge University Press, vol. 14(3), pages 323-348, June.
    14. Fisher-Vanden, K. A. & Shukla, P. R. & Edmonds, J. A. & Kim, S. H. & Pitcher, H. M., 1997. "Carbon taxes and India," Energy Economics, Elsevier, vol. 19(3), pages 289-325, July.
    15. Robert N. Stavins, 2008. "Addressing climate change with a comprehensive US cap-and-trade system," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 24(2), pages 298-321, Summer.
    16. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    17. Maksym Chepeliev & Robert McDougall & Dominique van der Mensbrugghe, 2018. "Including Fossil-fuel Consumption Subsidies in the GTAP Data Base," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 3(1), pages 84-121, June.
    18. Jeffrey C Peters, 2016. "The GTAP-Power Data Base: Disaggregating the Electricity Sector in the GTAP Data Base," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(1), pages 209-250, June.
    19. R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 11-32.
    20. Jesse D. Jenkins & Valerie J. Karplus, 2016. "Carbon pricing under binding political constraints," WIDER Working Paper Series wp-2016-44, World Institute for Development Economic Research (UNU-WIDER).
    21. McFarland, J. R. & Reilly, J. M. & Herzog, H. J., 2004. "Representing energy technologies in top-down economic models using bottom-up information," Energy Economics, Elsevier, vol. 26(4), pages 685-707, July.
    22. Sebastian Rausch & Valerie J. Karplus, 2014. "Markets versus Regulation: The Efficiency and Distributional Impacts of U.S. Climate Policy Proposals," The Energy Journal, , vol. 35(1_suppl), pages 199-228, June.
    23. James M. Poterba, 1991. "Tax Policy to Combat Global Warming: On Designing a Carbon Tax," NBER Working Papers 3649, National Bureau of Economic Research, Inc.
    24. Jesse D. Jenkins & Valerie J. Karplus, 2016. "Carbon pricing under binding political constraints," WIDER Working Paper Series 044, World Institute for Development Economic Research (UNU-WIDER).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jesse D. Jenkins & Valerie J. Karplus, 2016. "Carbon pricing under binding political constraints," WIDER Working Paper Series wp-2016-44, World Institute for Development Economic Research (UNU-WIDER).
    2. Jesse D. Jenkins & Valerie J. Karplus, 2016. "Carbon pricing under binding political constraints," WIDER Working Paper Series 044, World Institute for Development Economic Research (UNU-WIDER).
    3. Winchester, Niven & Reilly, John M., 2020. "The economic and emissions benefits of engineered wood products in a low-carbon future," Energy Economics, Elsevier, vol. 85(C).
    4. Niven Winchester & John M. Reilly, 2019. "The Economic, Energy, And Emissions Impacts Of Climate Policy In South Korea," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(03), pages 1-23, August.
    5. Niven Winchester, 2018. "Can tariffs be used to enforce Paris climate commitments?," The World Economy, Wiley Blackwell, vol. 41(10), pages 2650-2668, October.
    6. Kat, Bora & Paltsev, Sergey & Yuan, Mei, 2018. "Turkish energy sector development and the Paris Agreement goals: A CGE model assessment," Energy Policy, Elsevier, vol. 122(C), pages 84-96.
    7. Rausch, Sebastian & Yonezawa, Hidemichi, 2023. "Green technology policies versus carbon pricing: An intergenerational perspective," European Economic Review, Elsevier, vol. 154(C).
    8. Hui-Chih Chai & Wei-Hong Hong & John M. Reilly & Sergey Paltsev & Y.-H. Henry Chen, 2019. "Will Greenhouse Gases Mitigation Policies Abroad Affect The Domestic Economy? The Case Of Taiwan," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(04), pages 1-26, November.
    9. Tvinnereim, Endre & Mehling, Michael, 2018. "Carbon pricing and deep decarbonisation," Energy Policy, Elsevier, vol. 121(C), pages 185-189.
    10. Winchester, Niven & White, Dominic, 2022. "The Climate PoLicy ANalysis (C-PLAN) Model, Version 1.0," Energy Economics, Elsevier, vol. 108(C).
    11. Winchester, Niven & Ledvina, Kirby, 2017. "The impact of oil prices on bioenergy, emissions and land use," Energy Economics, Elsevier, vol. 65(C), pages 219-227.
    12. Khabbazan, Mohammad M. & von Hirschhausen, Christian, 2021. "The implication of the Paris targets for the Middle East through different cooperation options," Energy Economics, Elsevier, vol. 104(C).
    13. Botor, Benjamin & Böcker, Benjamin & Kallabis, Thomas & Weber, Christoph, 2021. "Information shocks and profitability risks for power plant investments – impacts of policy instruments," Energy Economics, Elsevier, vol. 102(C).
    14. Stavins, Robert, 2004. "Introduction to the Political Economy of Environmental Regulations," RFF Working Paper Series dp-04-12, Resources for the Future.
    15. Robert N. Stavins, 2011. "The Problem of the Commons: Still Unsettled after 100 Years," American Economic Review, American Economic Association, vol. 101(1), pages 81-108, February.
    16. Rausch, Sebastian & Metcalf, Gilbert E. & Reilly, John M., 2011. "Distributional impacts of carbon pricing: A general equilibrium approach with micro-data for households," Energy Economics, Elsevier, vol. 33(S1), pages 20-33.
    17. Teixidó, Jordi J. & Verde, Stefano F., 2017. "Is the Gasoline Tax Regressive in the Twenty-First Century? Taking Wealth into Account," Ecological Economics, Elsevier, vol. 138(C), pages 109-125.
    18. Landis, Florian & Fredriksson, Gustav & Rausch, Sebastian, 2021. "Between- and within-country distributional impacts from harmonizing carbon prices in the EU," Energy Economics, Elsevier, vol. 103(C).
    19. Taran Faehn & Gabriel Bachner & Robert Beach & Jean Chateau & Shinichiro Fujimori & Madanmohan Ghosh & Meriem Hamdi-Cherif & Elisa Lanzi & Sergey Paltsev & Toon Vandyck & Bruno Cunha & Rafael Garaffa , 2020. "Capturing Key Energy and Emission Trends in CGE models: Assessment of Status and Remaining Challenges," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 5(1), pages 196-272, June.
    20. Winchester, Niven & Ledvina, Kirby & Strzepek, Kenneth & Reilly, John M., 2018. "The impact of water scarcity on food, bioenergy and deforestation," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 62(3), July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:ccexxx:v:10:y:2019:i:03:n:s201000781950009x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/cce/cce.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.