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The lowest hanging fruit on the coconut tree: India's climate transition through the price system in the power sector

Author

Listed:
  • Akshay Jaitly

    (xKDR Forum)

  • Ajay Shah

    (xKDR Forum)

Abstract

The heavy lifting in the climate transition is done in the electricity sector. Decarbonisation of the economy requires a large-scale rearrangement of technology and business models, in supply and demand, in the electricity sector. The Indian electricity sector is ill-suited to perform this role and this constitutes the major roadblock for the climate transition in India. The solution lies in electricity reform, that addresses the long-standing fundamental problems of the electricity sector, that places this sector on the foundation of the price system. Once electricity works through the price system, an escalating schedule of a carbon tax will deliver the cost-minimising climate transition through myriad actions of self-interested actors spread all over the country, without requiring central planning. Many elements are coming together, through which this reform is feasible today while it was not in the past 30 years.

Suggested Citation

  • Akshay Jaitly & Ajay Shah, 2021. "The lowest hanging fruit on the coconut tree: India's climate transition through the price system in the power sector," Working Papers 9, xKDR.
    • Handle: RePEc:anf:wpaper:9
    as

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    File URL: https://papers.xkdr.org/papers/jaitlyShah2021_lowest_coconut.pdf
    File Function: First version, 2021
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    References listed on IDEAS

    as
    1. Gautam Bambawale & Vijay Kelkar & Raghunath Mashelkar & Ganesh Natarajan & Ajit Ranade & Ajay Shah, 2021. "Strategic patience and flexible policies: How India can rise to the China challenge," Working Papers 2, xKDR.
    2. Gireesh Shrimali, 2021. "Financial Instruments to Address Renewable Energy Project Risks in India," Energies, MDPI, vol. 14(19), pages 1-19, October.
    3. Parikh, Kirit S. & Parikh, Jyoti K. & Ghosh, Probal P., 2018. "Can India grow and live within a 1.5 degree CO2 emissions budget?," Energy Policy, Elsevier, vol. 120(C), pages 24-37.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Announcements
      by Anurodh in Ajay Shah's blog on 2023-03-29 05:06:00

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    More about this item

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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