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Measuring marginal abatement costs in the Indian thermal power sector: A by-production approach

Author

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  • Sushama Murty

    (Jawaharlal Nehru University)

  • Resham Nagpal

    (Jawaharlal Nehru University)

Abstract

This paper estimates the marginal abatement costs (MACs) for CO2 emission in the Indian coal-based thermal power sector employing a non-parametric by-production approach. The estimates so obtained are compared with those from weak and joint-disposabilitybased approaches. In contrast to the other two approaches, by-production approach computes the MAC as the reduction in electricity generation necessitated by a reduction in coal (heat) input when emission generation is reduced by one unit. Under this approach, the estimates of the reduction in heat input per-unit reduction in emission generation lie in a small range around the same computed for the true data-generating process. The MACs varied widely between 58.92 to 102.28 USD/metric-ton of CO2, with a mean value of 85 USD/metric-ton in 2015, indicating a tremendous potential for emission-trading or a Pigouvian tax as policy tools for correcting the allocative ineciencies in this sector.

Suggested Citation

  • Sushama Murty & Resham Nagpal, "undated". "Measuring marginal abatement costs in the Indian thermal power sector: A by-production approach," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 19-06, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    • Handle: RePEc:ind:citdwp:19-06
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    References listed on IDEAS

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    8. Sushama Murty, 2015. "On the properties of an emission-generating technology and its parametric representation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 60(2), pages 243-282, October.
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    Cited by:

    1. Sushama Murty & R. Robert Russell, 2021. "A commentary on “Performance measurement and joint production of intended and unintended outputs” by Finn Førsund," Journal of Productivity Analysis, Springer, vol. 55(3), pages 177-184, June.

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