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Energy and emissions : local and global effects of the rise of China and India

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  • Shalizi, Zmarak

Abstract

Part 1 of the paper reviews recent trends in fossil fuel use and associated externalities. It also argues that the recent run-up in international oil prices reflects growing concerns about supply constraints associated with declining spare capacity in OPEC, refining bottlenecks, and geopolitical uncertainties rather than growing incremental use of oil by China and India. Part 2 compares two business as usual scenarios with a set of alternate scenarios based on policy interventions on the demand for or supply of energy and different assumptions about rigidities in domestic and international energy markets. The results suggest that energy externalities are likely to worsen significantly if there is no shift in China's and India's energy strategies. High energy demand from China and India could constrain some developing countries'growth through higher prices on international energy markets, but for others the"growth retarding"effects of higher energy prices are partially or fully offset by the"growth stimulating"effects of the larger markets in China and India. Given that there are many inefficiencies in the energy system in both China and India, there is an opportunity to reduce energy growth without adversely affecting GDPgrowth. The cost of a decarbonizing energy strategy will be higher for China and India than a fossil fuel-based strategy, but the net present value of delaying the shift will be higher than acting now. The less fossil fuel dependent alternative strategies provide additional dividends in terms of energy security.

Suggested Citation

  • Shalizi, Zmarak, 2007. "Energy and emissions : local and global effects of the rise of China and India," Policy Research Working Paper Series 4209, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4209
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    References listed on IDEAS

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    Cited by:

    1. Emanuele Massetti, 2011. "Carbon tax scenarios for China and India: exploring politically feasible mitigation goals," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 11(3), pages 209-227, September.
    2. Lecocq, Franck & Shalizi, Zmarak, 2007. "How might climate change affect economic growth in developing countries ? a review of the growth literature with a climate lens," Policy Research Working Paper Series 4315, The World Bank.
    3. Ianchovichina, Elena & Ivanic, Maros & Martin, Will, 2009. "Implications of the growth of China and India for the other Asian giant : Russia," Policy Research Working Paper Series 5075, The World Bank.
    4. Lima, Fátima & Nunes, Manuel Lopes & Cunha, Jorge & Lucena, André F.P., 2017. "Driving forces for aggregate energy consumption: A cross-country approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P2), pages 1033-1050.

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    Keywords

    Energy Production and Transportation; Environment and Energy Efficiency; Energy and Environment; Energy Demand; Transport Economics Policy&Planning;
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